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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 8, 1996
1933 Act File No. 333-05677
1940 Act File No. 811-07669
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / /
Pre-Effective Amendment No. 2 /X/
Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / /
Amendment No. 2 /X/
(Check appropriate box or boxes)
BERGER/BIAM WORLDWIDE FUNDS TRUST
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(Exact Name of Registrant as Specified in Charter)
210 UNIVERSITY BOULEVARD, SUITE 900, DENVER, COLORADO 80206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
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Gerard M. Lavin, 210 University Boulevard, Suite 900, Denver, CO 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after the
effective date of this registration statement.
Registrant has elected to register an indefinite number of its shares of
beneficial interest pursuant to Rule 24f-2 under the Investment Company Act of
1940. Amount of registration fee previously paid: $500.00.
The series of the Berger/BIAM Worldwide Funds Trust covered by this registration
statement are "feeder funds" in a "master/feeder" fund arrangement. This
registration statement includes a signature page for the master trust,
Berger/BIAM Worldwide Portfolios Trust.
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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BERGER/BIAM WORLDWIDE FUNDS TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
I. Berger/BIAM International Fund
ITEM NO. AND CAPTION IN FORM N-1A NUMBER OF SECTION
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A. PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Sections 2, 3, 4 and 15
5. Management of the Fund Sections 5, 6 and 7
5A. Management's Discussion of Fund Performance Will be in Annual Report
6. Capital Stock and Other Securities Sections 14, 15 and 16
7. Purchase of Securities Being Offered Sections 7, 8, 9, 10, 12
and 13
8. Redemption or Repurchase Section 11
9. Pending Legal Proceedings Not Applicable
B. STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Holders
of Securities Sections 3 and 14
16. Investment Advisory and Other Services Sections 3, 4, 5 and 14
17. Brokerage Allocation and Other Practices Sections 1, 5 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing of
Securities Being Offered Sections 7, 8, 10, 11 and
12
20. Tax Status Section 9
21. Underwriters Section 7
22. Calculations of Performance Data Section 13
23. Financial Statements Financial Statements
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BERGER/BIAM WORLDWIDE FUNDS TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
II. Berger/BIAM International Institutional Fund
ITEM NO. AND CAPTION IN FORM N-1A NUMBER OF SECTION
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A. PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Sections 2, 3, 4 and 15
5. Management of the Fund Sections 5, 6 and 7
5A. Management's Discussion of Fund Performance Will be in Annual Report
6. Capital Stock and Other Securities Sections 14, 15 and 16
7. Purchase of Securities Being Offered Sections 7, 8, 9, 10, 12
and 13
8. Redemption or Repurchase Section 11
9. Pending Legal Proceedings Not Applicable
B. STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Holders
of Securities Sections 3 and 14
16. Investment Advisory and Other Services Sections 3, 4, 5 and 14
17. Brokerage Allocation and Other Practices Sections 1, 5 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing
of Securities Being Offered Sections 7, 8, 10, 11 and
12
20. Tax Status Section 9
21. Underwriters Section 7
22. Calculations of Performance Data Section 13
23. Financial Statements Financial Statements
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BERGER/BIAM WORLDWIDE FUNDS TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
III. Berger/BIAM International CORE Fund
ITEM NO. AND CAPTION IN FORM N-1A NUMBER OF SECTION
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A. PROSPECTUS
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Sections 2, 3, 4 and 15
5. Management of the Fund Sections 5, 6 and 7
5A. Management's Discussion of Fund Performance Will be in Annual Report
6. Capital Stock and Other Securities Sections 14, 15 and 16
7. Purchase of Securities Being Offered Sections 7, 8, 9, 10, 12
and 13
8. Redemption or Repurchase Section 11
9. Pending Legal Proceedings Not Applicable
B. STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Holders
of Securities Sections 3 and 14
16. Investment Advisory and Other Services Sections 3, 4, 5 and 14
17. Brokerage Allocation and Other Practices Sections 1, 5 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing
of Securities Being Offered Sections 7, 8, 10, 11 and
12
20. Tax Status Section 9
21. Underwriters Section 7
22. Calculations of Performance Data Section 13
23. Financial Statements Financial Statements
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EXPLANATORY NOTE
This Registration Statement of Berger/BIAM Worldwide Funds Trust contains
the following:
Three Prospectuses
One for the Berger/BIAM International Fund
One for the Berger/BIAM International Institutional Fund
One for the Berger/BIAM International CORE Fund
Three Statements of Additional Information
One for the Berger/BIAM International Fund
One for the Berger/BIAM International Institutional Fund
One for the Berger/BIAM International CORE Fund
One Part C
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PROSPECTUS
BERGER/BIAM INTERNATIONAL FUND
The Berger/BIAM International Fund (the "Fund") is a "no-load" mutual fund,
more technically referred to as an open-end management investment company,
organized as a diversified series of the Berger/BIAM Worldwide Funds Trust
(the "Trust"). The investment objective of the Fund is long-term capital
appreciation. The Fund seeks to achieve this objective by investing all of its
investable assets in the Berger/BIAM International Portfolio (the "Portfolio")
which, in turn, invests primarily in common stocks of well established companies
located outside the United States. The Portfolio intends to diversify its
holdings among several countries and to have, under normal market conditions, at
least 65% of the Portfolio's total assets invested in the securities of
companies located in at least five countries, not including the United States.
UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS INVESTMENT OBJECTIVE BY INVESTING
ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO, AS DESCRIBED ABOVE. Accordingly,
the investment performance of the Fund will derive from the investment
performance of the Portfolio. The Portfolio is an open-end management
investment company and a diversified series of a separate trust known as the
Berger/BIAM Worldwide Portfolios Trust ("Worldwide Portfolios"). The
Portfolio's investment objective and policies are identical to those of the
Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI Worldwide" or the
"Advisor"), which has delegated daily portfolio management of the Portfolio to
Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-Advisor").
For further information about the Fund's investment objective and structure, see
"Investment Objective and Policies and Risk Factors", "Introduction" and
"Additional Information About Master/Feeder Structure".
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should consider before investing. Investors are advised to
retain this Prospectus 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, which is incorporated in its entirety by
reference, is available upon request without charge by writing to the Fund at
P.O. Box 5005, Denver, CO 80217, or by calling 1-800-333-1001.
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
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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 October 15, 1996
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Table of Contents
Section Page
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1. Fee Tables............................................................... 1
2. Introduction............................................................. 2
3. Investment Objective and Policies and Risk Factors....................... 3
4. Portfolio Turnover....................................................... 11
5. Additional Information About Master/Feeder Structure..................... 11
6. Management and Investment Advice......................................... 12
7. Expenses of the Fund..................................................... 16
8. Policies of the Fund to Promote Sales of Fund Shares..................... 18
9. How to Purchase Shares in the Fund....................................... 19
10. How the Net Asset Value Is Determined................................... 21
11. Open Account System and Share Certificates.............................. 22
12. How To Redeem or Sell Fund Shares....................................... 22
13. Exchange Privilege and Systematic Withdrawal Plan....................... 25
14. Tax-Sheltered Retirement Plans.......................................... 26
15. Income Dividends, Capital Gains Distributions and Tax Treatment......... 27
16. Additional Information.................................................. 29
17. Performance............................................................. 30
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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%
* There will be a $10 wire service charge if redemption proceeds are
requested by wire.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
TOTAL
FUND
INVESTMENT OPERATING
ADVISORY EXPENSES*
FEE OTHER (AFTER
(AFTER WAIVER) 12B-1 FEE EXPENSES** WAIVER)
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Berger/BIAM
International Fund 0.85%*** 0.25% 0.68% 1.78%***
* Total Fund Operating Expenses are comprised of the Fund's annual operating
expenses plus the Fund's pro rata portion of the annual operating expenses
of the Portfolio in which the Fund's assets are invested. See "Expenses
of the Fund".
** Other Expenses primarily include administrative services fees and
registration fees paid by the Fund and custodian fees paid by the Portfolio
and are based on estimated expenses for the first year of operations of the
Fund and the Portfolio.
*** Although the Fund does not pay an investment advisory fee directly to an
investment advisor, it bears indirectly its pro rata portion of the advisory
fee paid to the Advisor by the Portfolio in which the assets of the Fund
are invested. Until at least April 30, 1998, the Advisor has agreed
voluntarily to waive its investment advisory fee to the extent that the
Portfolio's normal operating expenses in any fiscal year, including the
investment advisory fee and custodian fees, but excluding brokerage
commissions, interest, taxes and extraordinary expenses, exceed 1.00% of
the Portfolio's average daily net assets for that fiscal year. Absent the
waiver, the Investment Advisory Fee would be 0.90% and Total Fund Operating
Expenses would be estimated to be 1.83%.
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return, and (2) redemption at the end of each time period:
1 YEAR 3 YEARS
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Berger/BIAM International Fund $18* $56*
* Based on estimated expenses for the first year of operations of the Fund
and the Portfolio, after waiver.
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.
As a result of the 12b-1 fee paid by the Fund, over time long-term
shareholders in the Fund may pay more than the economic equivalent of the
maximum front end sales charge permitted for mutual funds by the National
Association of Securities Dealers, Inc. While the investment advisory fee for
the Portfolio is higher than that paid by most other mutual funds, it is
comparable to the investment advisory fee paid by many other international
equity funds.
Total Fund Operating Expenses include the Fund's pro rata share of the
aggregate annual operating expenses of the Portfolio, in which all of the
investable assets of the Fund are invested. The trustees of the Trust believe
that the investment in the Portfolio by investors in addition to the Fund may
enable the Portfolio to achieve economies of scale which could reduce expenses
and, accordingly, that the aggregate per share expenses of the Fund and the
Fund's pro rata share of the expenses of the Portfolio will be less than or
approximately equal to the expenses the Fund would incur if it retained the
services of an investment advisor and the assets of the Fund were invested
directly in the type of securities held by the Portfolio.
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 Fund's expenses are described in greater
detail under "Management and Investment Advice", "Expenses of the Fund", and
"Policies of the Fund to Promote Sales of Fund Shares".
2. INTRODUCTION
The Berger/BIAM International Fund is an open-end, diversified
management investment company commonly referred to as a "mutual fund". The Fund
is a "no-load" fund, meaning that a buyer pays no commissions or sales load when
buying shares of the Fund, although the Fund pays certain costs of distributing
its shares. See "Policies of the Fund to Promote Sales of Fund Shares". This
Prospectus describes the securities offered by the Fund.
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The Fund is a series of the Berger/BIAM Worldwide Funds Trust, a
Delaware business trust, and invests in the Portfolio that, in turn, invests in
securities in accordance with an investment objective, policies and limitations
that are identical to those of the Fund. This is sometimes called a
master/feeder fund structure, because the Fund and other investors who invest in
the Portfolio "feed" shareholders' investments into the Portfolio, a "master"
fund. The structure looks like this:
Shareholders
BUY SHARES IN [down arrow]
Fund
INVESTS IN [down arrow]
Portfolio
INVESTS IN [down arrow]
Stocks and
Other Securities
The trustees of the Trust believe that this structure may benefit
shareholders, since investment in the Portfolio by investors in addition to the
Fund may enable the Portfolio to achieve economies of scale which could reduce
expenses. For more information about this structure, see "Additional
Information About Master/Feeder Structure".
3. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The investment objective of the Fund is long-term capital appreciation. The
Fund seeks to achieve this objective by investing all of its investable assets
in the Portfolio which, in turn, invests 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 Portfolio may also invest in securities other than common stock if
the Sub-Advisor believes these are likely to be the best suited at that time to
achieve the Portfolio'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 Portfolio
intends to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Portfolio'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
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secondary importance as a by-product of the investment selection process used to
achieve the Fund's objective.
INVESTMENT SELECTION
In selecting its portfolio securities, the Portfolio 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 Portfolio's
investments. The Portfolio 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 Portfolio 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 Portfolio is
free to invest in companies of any size and in companies located in other
foreign countries, including developing countries.
INVESTMENT DECISION MAKING PROCESS
The Sub-Advisor's investment approach 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, 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
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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
Portfolio.
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.
WHY INVEST IN THIS FUND?
The Advisor believes there is substantial opportunity for long-term
capital growth in foreign markets, as certain foreign economies may grow more
rapidly than the U.S. economy. In addition, boundaries and borders no longer
define or confine the operations of many of the world's business entities.
Companies raise capital, purchase raw materials, manufacture and distribute
products on a worldwide basis. Many profitable, successful companies benefit
from global economic growth, including companies in foreign markets. The Fund
seeks to take advantage of the investment opportunities created by an
increasingly global economy.
One reason for investing internationally is the opportunity to earn
higher investment returns. On a total return basis, foreign stocks represented
by the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index outperformed U.S. stocks represented by the Standard & Poor's 500 Stock
Index in all but two rolling ten-year periods ended 1981 through 1995. Of
course, during this time there were shorter periods when U.S. stocks had higher
returns, and there have been periods when the EAFE Index produced negative
returns. Accordingly, investors in foreign equity securities should have a
long-term investment perspective, as international markets tend to be more
volatile than the U.S. market.
International investing also expands investment opportunities. The
U.S. percentage of the world's stock market capitalization has decreased over
the past 20 years. Today, nearly two-thirds of the world's stock market
capitalization consists of non-U.S. stocks and companies. Since foreign stocks
do not always move in tandem with U.S. stocks and with each other, international
investing also has the potential to add diversification to an all- U.S. stock
portfolio by spreading investments across a number of markets.
Investors who wish to diversify their portfolio internationally can do
so by investing directly in foreign stocks, but they may find it difficult to
make purchases and
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sales, obtain reliable information, hold securities in safekeeping and manage
the conversion of the value of their international investments into U.S.
dollars. Investing in the Fund, however, eliminates these complications. With
a single investment, the investor owns a diversified international investment
portfolio that is actively managed by experienced professionals. BIAM, the
Portfolio's Sub-Advisor, has extensive experience in dealing with foreign
markets and with brokers and custodian banks around the world. BIAM also has
the benefit of an established information network and believes the Fund offers a
convenient and cost-effective means of investing internationally.
Of course, as an international fund, the Fund entails special risks as
described below. The Fund seeks to reduce these risks through diligent research
and diversification.
SECURITIES, INVESTMENT PRACTICES AND RISK FACTORS
Since the shares of the Fund represent an investment in the Portfolio,
which in turn primarily represents an investment in common stocks, investors
should understand that the net asset value of the Fund will change as the market
value of the securities held in the Portfolio changes and that the value of a
Fund share will go up and down. 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 and the Portfolio is considered
fundamental, meaning that it cannot be changed without a vote of the
shareholders of the Fund and, as to the Portfolio's objective, of the investors
in the Portfolio. There can be no assurance that the Fund's or the Portfolio's
investment objective will be realized. Following is additional information
about some of the specific types of securities in which the Portfolio 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 Portfolio. 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 Portfolio's investments may include American Depositary Receipts
(ADRs). The Portfolio may also
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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 Portfolio
invests 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio will 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 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 currency would adversely
affect the value of the securities expressed in dollars. 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 Portfolio may purchase securities that
are convertible into common stock when the 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 Portfolio 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 Portfolio 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
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<PAGE>
Moody's Investors Service, Inc., and Standard & Poor's Corporation, or being of
similar creditworthiness in the determination of the Sub-Advisor. The Portfolio
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 Portfolio 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 Portfolio will invest less than 20% of the
market value of its net assets at the time of purchase in convertible securities
rated below investment grade. If convertible securities purchased by the
Portfolio are downgraded following purchase, or if other circumstances cause 20%
or more of the Portfolio's assets to be invested in convertible securities rated
below investment grade, the trustees of Worldwide Portfolios, 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 Portfolio may invest in
securities of companies with small or medium 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 well
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 well
established companies.
LENDING PORTFOLIO SECURITIES. The Portfolio may lend its securities
to qualified institutional investors such as brokers, dealers or other financial
organizations. This practice permits the Portfolio to earn income, which, in
turn, can be invested in additional securities to pursue its investment
objective. Loans of securities by the Portfolio 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
Portfolio bears a risk of loss in the event that the other party to a securities
lending transaction defaults on its obligations and the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio's total
assets.
HEDGING TRANSACTIONS. The Portfolio is authorized to make limited
commitments in certain forward contracts, but only for the
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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 Portfolio's securities or the price of securities that the Portfolio 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 Portfolio 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 Portfolio's assets.
Although a hedging transaction may, for example, partially protect the Portfolio
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
Portfolio 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 Portfolio owns or
intends to acquire.
The Portfolio will generally enter into forward foreign currency
exchange contracts either with respect to specific transactions or with respect
to the Portfolio's security positions. For example, the Portfolio 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 Portfolio's investments are denominated may decline compared to the U.S.
dollar, the Portfolio 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 Portfolio will be 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
Portfolio is attempting to hedge, such as a portion or all of its securities
denominated in a specific foreign currency. To ensure that the Portfolio will
be able to meet its obligations under its forward foreign currency exchange
contracts, the Portfolio 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 Portfolio involve the
potential for a loss that may exceed the amount of commitment the Portfolio
would be permitted to make in those contracts under its investment limitations.
The principal risks of the
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Portfolio's use of forward foreign currency exchange contracts are: (a) losses
resulting from currency market movements not anticipated by the Portfolio;
(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 Portfolio 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
Portfolio enters into an over-the-counter contract with a counterparty, the
Portfolio will assume counterparty credit risk, that is, the risk that the
counterparty will fail to perform its obligations, in which case the Portfolio
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
Worldwide Portfolios may, without shareholder approval, authorize the Portfolio
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 Portfolio'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 Portfolio 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 Portfolio may not purchase any security, the purchase of which
would cause the Portfolio 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 Portfolio's
net assets to be invested in illiquid securities, the trustees of Worldwide
Portfolios, 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 Portfolio 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 Portfolio might have to incur the potentially
substantial expense and delay associated with effecting registration.
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INVESTMENT RESTRICTIONS
In addition to its investment objective, the Portfolio has adopted a
number of restrictions on its investments and other activities that may not be
changed without shareholder approval. For example, the Portfolio 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
Portfolio may lend portfolio securities and enter into repurchase agreements in
accordance with its investment policies). The Portfolio may not invest in any
one industry 25% or more of the value of its total assets at the time of
investment, nor invest in commodities, except, only for the purpose of hedging,
the Portfolio may invest in forward foreign currency exchange contracts and
other instruments as specified in greater detail above and in the Statement of
Additional Information.
Further, with respect to 100% of its total assets, the Portfolio 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 Portfolio'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 Portfolio's total assets without a shareholder vote.
Also, the Portfolio does not currently intend to purchase or sell
securities on a when-issued or delayed delivery basis if as a result, more than
5% of its net assets would be invested in such securities, although this
restriction may be changed without shareholder approval. For more detail about
the Portfolio's investment restrictions, see the Statement of Additional
Information.
4. PORTFOLIO TURNOVER
In pursuit of the Portfolio's investment objective, the Sub-Advisor
continuously monitors the Portfolio's investments and makes portfolio changes
whenever changes in investment themes, the fundamentals of any portfolio company
or the price of any portfolio security indicate to the Sub-Advisor that more
attractive alternatives exist or that the Portfolio's investment 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 or interests in the
Portfolio due to economic, market or other factors that are not within the
control of management. Although the annual portfolio turnover rate of the
Portfolio will vary, it is normally expected to range from 25% to 75%.
5. ADDITIONAL INFORMATION ABOUT MASTER/FEEDER STRUCTURE
Unlike other mutual funds that directly acquire and manage their own
portfolios of securities, the Fund (referred to as a feeder fund) seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio (referred to as a
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master fund). This two-tier structure is known as a master/feeder. The Fund
has the same investment objective and policies as the Portfolio. The Fund will
invest only in the Portfolio, and the Fund's shareholders will therefore acquire
only an indirect interest in the investments of the Portfolio.
In addition to selling a beneficial interest to the Fund, the
Portfolio may sell beneficial interests to other mutual funds or institutional
investors (that is, other feeder funds). Such investors will invest in the
Portfolio on the same terms and conditions and will pay their proportionate
share of the Portfolio's expenses. However, the other investors investing in
the Portfolio are not required to issue their shares at the same public offering
price as the Fund due to potential differences in expense structures.
Accordingly, investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the different funds
that invest in the Portfolio. Such differences in returns are common in this
type of mutual fund structure and are also present in other mutual fund
structures. Information concerning other investors in the Portfolio (for
example, other feeder funds) is available from the Fund at 1-800-333-1001.
Shareholders willing to maintain an account balance of not less than $100,000
may want to consider the Berger/BIAM International Institutional Fund or, if
willing to maintain an account balance of not less than $1,000,000, they may
want to consider the Berger/BIAM International CORE Fund, which are both
other feeder funds that, like the Fund, invest all of their investable assets
in the Portfolio.
The investment objective of the Fund may not be changed without the
approval of the Fund's shareholders. The investment objective of the Portfolio
may not be changed without the approval of the investors in the Portfolio,
including the Fund. If the objective of the Portfolio changes and the
shareholders of the Fund do not approve a parallel change in the Fund's
investment objective, the trustees of the Trust will consider other
alternatives, including seeking an alternative investment vehicle or directly
retaining the Fund's own investment advisor. Shareholders will be given at
least 30 days' written notice prior to any change in the investment objective of
the Fund or the Portfolio.
Smaller funds investing in the Portfolio may be materially affected by
the actions of larger funds investing in the Portfolio. For example, if a
larger fund invests or withdraws from the Portfolio, the remaining funds may
experience lower or higher pro rata operating expenses. Lower returns could
possibly result from a large withdrawal. However, this possibility also exists
for traditionally structured funds which have large or institutional investors.
Also, a fund with a greater pro rata ownership in the Portfolio could have
effective voting control over the operations of the Portfolio.
Whenever the Fund is requested to vote as an investor in the Portfolio
on matters pertaining to the Portfolio (other than a vote by the Fund to
continue the operation of the Portfolio upon the withdrawal of another investor
in the Portfolio), the Fund will hold a meeting of its shareholders and will
cast all of its votes as an investor in the Portfolio in the same proportion as
directed by the votes of the Fund's shareholders. Fund shareholders who do not
vote will not affect the votes cast by the Fund at the meeting of the Portfolio
investors. The percentage of the votes representing the Fund's shareholders who
do not vote will be voted by the Fund in the same proportion as the Fund's
shareholders who do, in fact, vote.
The Fund may withdraw its investment in the Portfolio at any time, if
the trustees of the Trust determine that it is in the best interests of the Fund
to do so. Certain
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changes in the Portfolio's investment objective, policies and limitations may
require the Fund to withdraw its investment in the Portfolio. Upon any such
withdrawal, the trustees would consider what action might be taken, including
investing the Fund's assets in another pooled investment entity having the same
investment objective and policies as the Fund or retaining an investment advisor
to manage the Fund's assets in accordance with the investment policies described
above with respect to the Portfolio. Any such withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
from the Portfolio. If securities are distributed, the Fund could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, a distribution in kind may adversely affect the liquidity of the Fund.
This Prospectus and the Statement of Additional Information contain
more detailed information about this master/feeder organizational structure,
including information related to: (i) the investment objective, policies and
restrictions of the Fund and the Portfolio; (ii) the trustees and officers of
the Trust and Worldwide Portfolios, and the management of the Fund and the
Portfolio; (iii) portfolio transactions and brokerage commissions; (iv) the
Fund's shares, including the rights and liabilities of its shareholders; (v)
additional performance information, including the method used to calculate total
return; and (vi) the determination of the value of the shares of the Fund. The
master/feeder fund structure is still relatively new and lacks a substantial
history.
6. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major decisions relating
to the Fund's policies and objective. They also oversee the operation of the
Fund by its officers and review the investment performance of the Fund on a
regular basis. The trustees of Worldwide Portfolios have overall responsibility
for operation of the Portfolio. A majority of the trustees of the Trust and
Worldwide Portfolios who are not "interested persons" (as defined in the
Investment Company Act of 1940) of the Trust or Worldwide Portfolios
("Independent Trustees") have adopted written procedures reasonably appropriate
to deal with potential conflicts of interest arising from the fact that the same
individuals are trustees of the Trust and Worldwide Portfolios, up to and
including creating a new board of trustees for the Trust or Worldwide
Portfolios. Additional information concerning the trustees and officers of the
Trust and Worldwide Portfolios is furnished in the Statement of Additional
Information under the heading "Management of the Fund."
THE ADVISOR -- GENERAL BUSINESS MANAGEMENT AND INVESTMENT OVERSIGHT
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio, such as coordinating certain matters relating to the operations of
the Portfolio and monitoring the Portfolio's compliance with all applicable
federal and state securities laws. Currently, the Advisor serves in this
capacity only to the Portfolio.
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The Advisor is a Delaware limited liability company formed in 1996.
Since the Advisor was only recently formed, it has no prior experience as an
investment advisor. However, Berger Associates, Inc. ("Berger Associates"),
which owns 100% of the Advisor, has been in the investment advisory business for
over 20 years. Berger Associates serves as investment advisor or sub-advisor to
mutual funds, pension and profit-sharing plans, and institutional and private
investors, and has assets under management of more than $3.5 billion as of April
30, 1996. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80%
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. Also, see below under "Pending Sale of Interest in
Advisor".
THE SUB-ADVISOR -- EXPERIENCED INTERNATIONAL INVESTMENT MANAGEMENT
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. Bank of Ireland Asset Management (U.S.) Limited ("BIAM"), the Sub-
Advisor to the Portfolio, 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 $16 billion as of April 30, 1996.
As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to
BIAM, as the Sub-Advisor. As Sub-Advisor, BIAM manages the investments in the
Portfolio 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 Worldwide Portfolios.
BIAM serves as investment advisor or sub-advisor to pension and
profit-sharing plans and other institutional investors and mutual funds. 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 Portfolio by the 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 Portfolio.
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 Portfolio, including outstanding loans to such
issuers which could be repaid in whole or
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in part with the proceeds of securities purchased by the Portfolio. 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 Portfolio, the
Sub-Advisor will not take into consideration whether an issuer of securities
proposed for purchase or sale by the Portfolio is a customer of Bank of Ireland
or its affiliates.
ADVISORY FEES
Under the Investment Advisory Agreement for the Portfolio, the Advisor
is compensated for its services to the Portfolio by the payment of a fee at the
annual rate of 0.90% of the average daily net assets of the Portfolio. Until at
least April 30, 1998, the Advisor has agreed voluntarily to waive the investment
advisory fee paid by the Portfolio under the Investment Advisory Agreement to
the extent that the Portfolio's normal operating expenses in any fiscal year,
including the investment advisory fee and custodian fees, but excluding
brokerage commissions, interest, taxes and extraordinary expenses, exceed 1.00%
of the Portfolio's average daily net assets for that fiscal year. Any reduction
in the advisory fee paid by the Portfolio will also reduce the pro rata share of
the advisory fee borne indirectly by the Fund.
The Portfolio pays no fees directly to the Sub-Advisor. The Sub-
Advisor will receive from the Advisor a fee at the annual rate of 0.45% of the
average daily net assets of the Portfolio. During certain periods, the Sub-
Advisor may voluntarily waive all or a portion of its fee under the Sub-Advisory
Agreement, which will not affect the fee paid by the Portfolio to the Advisor.
PENDING SALE OF INTEREST IN ADVISOR
As mentioned above, the Portfolio's Advisor, BBOI Worldwide, is a
limited liability company formed in 1996 and 100% owned by Berger Associates.
BBOI Worldwide was organized by Berger Associates in anticipation of forming a
joint venture with BIAM for the purpose of managing international and global
mutual funds. Pursuant to the Amended and Restated Operating Agreement of BBOI
Worldwide LLC, dated as of May 1, 1996, between Berger Associates and BIAM (the
"Joint Venture Agreement"), BIAM (or an affiliate) has agreed to acquire a 50%
interest in the Advisor and thereby enter into a joint venture with Berger
Associates to become effective upon receipt of all regulatory approvals. Berger
Associates' role in the joint venture will be to provide administration and
marketing, and BIAM's role will be to provide international and global
investment management expertise. Day-to-day portfolio management of the
Portfolio will continue to be provided by BIAM under the Sub-Advisory Agreement.
The Joint Venture Agreement provides that Berger Associates and BIAM
will each own a 50% membership interest in the Advisor and each will have an
equal number of representatives on the Advisor's Board of Managers. Agreement
of representatives of both Berger Associates and BIAM will be required for all
significant management decisions.
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BIAM's acquisition of an interest in the Advisor is subject to
approval of the Federal Reserve Board of the United States and the Central Bank
of Ireland. In the event the joint venture is not consummated, Berger
Associates anticipates continuing to provide the Fund with administrative
services, and BIAM has agreed to continue to serve as the Sub-Advisor to the
Portfolio for a period of not less than six months thereafter, on usual and
customary contractual terms.
Consummation of BIAM's acquisition of a membership interest in the
Advisor might be deemed to effect a change of control in the Advisor and thereby
an "assignment" (as defined in the Investment Company Act of 1940) and
termination of the Portfolio's Investment Advisory and Sub-Advisory Agreements.
However, the trustees of Worldwide Portfolios have considered the terms of the
joint venture and various factors related to the proposal, including that the
day-to-day management of the Portfolio by BIAM is not proposed to change. On
the basis of the factors considered, the trustees, including the Independent
Trustees of Worldwide Portfolios voting separately, have approved new Investment
Advisory and Sub-Advisory Agreements that will come into effect upon
consummation of the joint venture and any change of control in the Advisor that
may be deemed to result. The new Agreements have also been approved by the
Portfolio's initial investors. The new Agreements are identical in their terms
to the initial Agreements described in this Prospectus, except for commencement
date. No further trustee or shareholder vote is anticipated to approve the new
Agreements upon consummation of the joint venture. Accordingly, prospective
investors should consider BIAM's pending acquisition of an interest in the
Advisor at the time they consider their initial investment in the Fund.
7. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest,
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taxes and extraordinary expenses, exceed 1.00% of the Portfolio's average daily
net assets for that fiscal year. Any reduction in the advisory fee paid by the
Portfolio will also reduce the pro rata share of the advisory fee borne
indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as: expenses of registering the Trust with
securities authorities; expenses of meetings of the shareholders of the Trust;
and legal fees. Expenses of the Fund also include, among others, registration
and filing fees incurred in registering shares of the Fund with securities
authorities; 12b-1 fees; taxes imposed on the Fund; the fee payable to the
Advisor under the Administrative Services Agreement; and such other non-
recurring and extraordinary items as may arise from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, printing and mailing to shareholders of prospectuses and other
required communications, and certain other administrative and recordkeeping
services, such as coordinating matters relating to the operations of the Fund,
monitoring the Fund's status as a "regulated investment company" under the
Internal Revenue Code, coordinating registration of sufficient Fund shares under
federal and state securities laws, and arranging for and supervising the
preparation of registration statements, tax returns, proxy materials, financial
statements and reports for filing with regulatory authorities and distribution
to shareholders of the Fund. Under the Administrative Services Agreement, the
Fund pays the Advisor a fee at an annual rate equal to the lesser of (i) 0.45%
of its average daily net assets, or (ii) the Advisor's annual cost to provide or
procure these services (including the fees of any services providers whose
services are procured by the Advisor), plus an additional 0.02% of the Fund's
average daily net assets. The trustees of the Trust regularly review amounts
paid to and expenditures incurred by the Advisor pursuant to the Administrative
Services Agreement. In addition, in the event that the Advisor's duties under
the Administrative Services Agreement are delegated to another party, the
Advisor may take into account, in calculating the cost of such services, only
the costs incurred by such other party in discharging the delegated duties.
Arrangements may be entered into by the Advisor or its affiliates with
certain organizations (broker-dealers, recordkeepers and administrators) to
provide sub-transfer agency, recordkeeping, shareholder communications,
sub-accounting and/or other services to investors purchasing shares of the Fund
through investment programs or pension plans
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established or serviced by those organizations. The Advisor or its affiliates
may pay fees to these organizations for their services. For purposes of
determining the Advisor's cost of providing or procuring transfer agency,
dividend disbursing or other services under the Administrative Services
Agreement, the Advisor may take into account only the fees that otherwise would
be paid for by the Advisor if all the investors who own Fund shares through the
organization were instead direct registered record holders of shares in the
Fund.
Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to the
Advisor under the Administrative Services Agreement. Investors Fiduciary Trust
Company ("IFTC") has been appointed to provide recordkeeping and pricing
services to the Fund, including calculating the daily net asset value of the
Fund, and to perform certain accounting and recordkeeping functions that it
requires. In addition, IFTC has been appointed to serve as the Fund's
custodian, transfer agent and dividend disbursing agent. IFTC has engaged DST
Systems, Inc. ("DST"), as sub-transfer agent to provide transfer agency and
dividend disbursing services for the Fund. The fees of Berger Associates, IFTC
and DST are all paid by the Advisor. Approximately 40% of the outstanding
shares of DST are owned by KCSI, which also owns approximately 80% of the
outstanding shares of Berger Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such as
compliance monitoring and preparing investor communications, which have been
delegated to Berger Associates as part of the Sub-Administration Agreement
discussed above. Other services are procured from third party service providers
at the Portfolio's own expense, such as custody, recordkeeping and pricing
services. The Portfolio has appointed IFTC as recordkeeping and pricing agent
to calculate the daily net asset value of the Portfolio and to perform certain
accounting and recordkeeping functions required by the Portfolio. In addition,
the Portfolio has appointed IFTC as its custodian and transfer agent. IFTC has
engaged State Street Bank and Trust Company ("State Street") as sub-custodian
for the Portfolio. For custodian, recordkeeping and pricing services, the
Portfolio pays fees directly to IFTC based on a percentage of its net assets,
subject to certain minimums.
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reimburses IFTC for certain out-of-pocket expenses.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First
Fund Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite
261-E, Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its
costs in distributing Fund shares by Berger Associates. See "Policies of the
Fund to Promote Sales of Fund Shares" below.
8. POLICIES OF THE FUND TO PROMOTE SALES OF FUND SHARES
The Fund has adopted a Rule 12b-1 plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, which permits the Fund to
pay certain costs for the distribution of its own shares. The Plan provides for
the payment to Berger Associates of a 12b-1 fee of 0.25% per annum of the Fund's
average daily net assets to finance activities primarily intended to result in
the sale of Fund shares. The expenses paid by Berger Associates under the Plan
may include, but are not limited to, payments made to, and costs incurred by,
the Fund's Distributor in connection with the distribution of the Fund's shares;
payments made to and expenses of persons (including employees of Berger
Associates) who are engaged in, or provide support services in connection with,
the distribution of Fund shares, such as answering routine telephone inquiries
and processing shareholder requests for information; compensation (including
incentive compensation and/or continuing compensation based on the amount of
customer assets maintained in the Fund) paid to securities dealers, financial
institutions and other organizations which render distribution and
administrative services in connection with the distribution of the Fund's
shares, including services to shareholders of the Fund and prospective
investors; costs related to the formulation and implementation of marketing and
promotional activities, including direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; costs of printing and
distributing prospectuses and reports to prospective shareholders of the Fund;
costs involved in preparing, printing and distributing sales literature for the
Fund; costs involved in obtaining whatever information, analyses and reports
with respect to marketing and
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promotional activities on behalf of the Fund that Berger Associates or the
Distributor deems advisable; and such other costs as may from time to time be
agreed upon by the Fund. Such payments are to be made by the Fund to Berger
Associates with respect to each fiscal year of the Fund without regard to the
actual distribution expenses incurred by Berger Associates in such year; that
is, if the distribution expenditures incurred by Berger Associates are less than
the total of such payments in such year, the difference is not to be reimbursed
to the Fund by Berger Associates, and if the distribution expenditures incurred
by Berger Associates are more than the total of such payments, the excess is not
to be reimbursed to Berger Associates by the Fund. From time to time Berger
Associates or the Distributor may engage in activities which jointly promote the
sale of the shares of all or other Berger Funds or Berger/BIAM Funds, which
costs are not readily identifiable as related to any one fund. In such cases,
the cost of the activity will be allocated among the funds involved on the basis
of their respective net assets, unless otherwise directed by the trustees.
The current 12b-1 Plan will continue in effect until April 1997, and
from year to year thereafter if approved at least annually by the trustees and
the Independent Trustees of the Trust who have no direct or indirect financial
interest in the operation of the Plan or any related agreements by votes cast in
person at a meeting called for such purpose. The Plan may not be amended to
increase materially the amount to be spent on distribution of shares of the Fund
without shareholder approval.
The trustees of Worldwide Portfolios have authorized the Sub-Advisor
to consider sales of shares of the Fund by a broker-dealer or the
recommendations of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute securities
transactions for the Portfolio. In placing portfolio business with such broker-
dealers, the Sub-Advisor will seek the best execution of each transaction.
9. HOW TO PURCHASE SHARES IN THE FUND
(i) Minimum Initial Investment -- $2,000.00. To purchase shares in
the Fund, simply complete the application form enclosed with this Prospectus.
Then mail it with a check payable to "Berger Funds" to the Fund in care of DST
Systems, Inc., the Fund's sub-transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
A confirmation indicating the details of the transaction will be sent to you
promptly. Unless you specify full shares only, the purchase will be made in
full and fractional shares calculated to three decimal places.
In addition, Fund shares may be purchased through certain
broker-dealers that have established mutual fund programs and certain other
organizations connected with pension and retirement plans. These
broker-dealers and other organizations may charge
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investors a transaction or other fee for their services, may require different
minimum initial and subsequent investments than the Fund and may impose other
charges or restrictions different from those applicable to shareholders who
invest in the Fund directly. Fees charged by these organizations will have the
effect of reducing a shareholder's total return on an investment in Fund shares.
No such charge will be paid by an investor who purchases the Fund shares
directly from the Fund as described above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days
after acceptance of the order. The price at which a purchase will be effected
is based on the next calculation of net asset value after the order is received
by the Fund's transfer agent, sub-transfer agent or any other authorized agent
of the Fund.
(ii) MINIMUM SUBSEQUENT INVESTMENTS -- $50.00. Shareholders may, at
any time, purchase additional shares subject to a minimum investment of $50.00.
A check made payable to "Berger Funds" in the amount to be invested, should be
sent to the Fund, c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO
64141. Please be sure to give your name and account number. You will receive a
confirmation of every transaction.
(iii) AUTOMATIC INVESTMENT PLAN. By completing the Automatic
Investment Plan section of the application, you may authorize the Fund to debit
your bank account for the periodic purchase of Fund shares on or about the
5th or 20th day of each month. Automatic investments are subject to the minimum
initial investment of $2,000, a minimum investment of $50.00 per month and are
unrestricted as to the permitted maximum. You will receive confirmation of
automatic investments after the end of each calendar quarter.
(iv) TELEPHONE AND ON-LINE INVESTMENTS. The Fund will, at its
discretion, accept purchase orders from existing shareholders by telephone or,
via their personal computer, through on-line service providers or other on-line
access points approved by the Fund, although not accompanied by payment for the
shares being purchased. To receive the net asset value for a specific day, a
telephone or on-line purchase request must be received before the close of the
New York Stock Exchange on that day. Payment for shares ordered in this way
must be received by the Fund's transfer agent within three business days after
acceptance of the order. In order to make sure that payment is received on
time, shareholders are encouraged to remit payment by wire or electronic funds
transfer, or by overnight delivery. If payment is not received on time, the
Fund may cancel the order and redeem shares held in the shareholder's account to
compensate the Fund for any decline in the value of the purchased shares.
Telephone and on-line purchase orders may not exceed four times the value of an
account on the date the order is placed (shares previously purchased by
telephone or on-line are included in computing such value only if payment has
been received). See "How to Redeem or Sell Fund Shares - Telephone and On-line
Redemptions" for procedures for telephone transactions.
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(v) PAYMENT AND TERMS OF OFFERING. Payment for shares purchased
should be made by check or money order drawn on a United States bank and made
payable to the Berger Funds. Checks not made payable to the Berger Funds, the
account registrant, transfer agent or retirement account custodian will not be
accepted. Alternatively, payment for shares purchased may be made by wire or
electronic funds transfer from the investor's bank to DST Systems, Inc., after
ordering shares by telephone or on-line. Please call 1-800-551-5849 for current
wire or electronic funds transfer instructions. The Fund will not accept
purchases by cash or credit card or checks drawn on foreign banks unless
provision is made for payment through a U.S. bank in U.S. dollars.
The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering made by this Prospectus or to reject purchase orders,
when in the judgment of management, such withdrawal or rejection is in the best
interest of the Fund. The Fund also reserves the right at any time to waive the
minimum investment requirements applicable to initial or subsequent investments
or to increase the minimums following notice. No application to purchase shares
is binding on the Fund until accepted in writing.
10. 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 assets, less liabilities, by the
total number of shares outstanding. Since the Fund will invest all of its
investable assets in the Portfolio, the value of the Fund's investable assets
will be equal to the value of its beneficial interest in the Portfolio.
The Portfolio's securities and other assets are valued as follows:
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
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determined in good faith pursuant to consistently applied procedures established
by the trustees.
The Portfolio'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 a Fund share are the
same and will be equal to the next calculated net asset value of a share of the
Fund.
11. OPEN ACCOUNT SYSTEM AND SHARE CERTIFICATES
Unless otherwise directed, all investor accounts are maintained on a
book-entry basis. Share certificates will not be issued unless requested by the
shareholder. Shares purchased by dividend reinvestment or under an Automatic
Investment Plan, and shares redeemed under a Systematic Withdrawal Plan, will be
confirmed after the end of each calendar quarter. Following any other
investment or redemption, the investor will receive a printed confirmation
indicating the dollar amount of the transaction, the per share price of the
transaction and the number of shares purchased or redeemed.
12. HOW TO REDEEM OR SELL FUND SHARES
(i) SHARE REDEMPTIONS BY MAIL. The Fund will buy back (redeem), at
current net asset value, all shares of the Fund offered for redemption. The
redemption price of shares tendered for redemption will be the net asset value
next determined after receipt of all required documents by the Fund's transfer
agent, sub-transfer agent or other authorized agent of the Fund. To receive the
net asset value for a specific day, a redemption request must be received before
the close of the Exchange on that day. Shareholders who purchased their shares
directly from the Fund may redeem all or part of their shares in the Fund by
sending a written request to the Fund, c/o DST Systems, Inc., P.O. Box 419958,
Kansas City, MO 64141. The written request for redemption must be signed by
each registered owner exactly as the shares are registered and must clearly
identify the account and the number of shares or the dollar amount to be
redeemed. If a share certificate has been issued, the certificate, properly
endorsed by the registered owner, must be submitted with the written redemption
request.
The signatures of the redeeming shareholders must be guaranteed by a
national or state bank, a member firm of a domestic stock exchange or the
National Association of Securities Dealers (NASD), a credit union, a federal
savings and loan association or another eligible guarantor institution if the
redemption: exceeds $100,000; is being made payable other than exactly as
registered; is being mailed to an address which has been changed within 30 days
of the redemption request; or is being mailed to an address other than the one
on record. A notary public is not an acceptable guarantor. The Fund also
reserves the right to
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require a signature guarantee under other circumstances. The signature
guarantees must appear, together with the signatures of the registered owners,
(i) on the written request for redemption which clearly identifies the account
and the number of shares to be redeemed, (ii) on a separate instrument of
assignment ("stock power") which may be obtained from a bank or broker, or
(iii) on any share certificates tendered for redemption. The use of signature
guarantees is intended to protect the shareholder and the Fund from a possibly
fraudulent application for redemption.
Additional documents are required for redemptions by corporations,
executors, administrators, trustees and guardians. If there is doubt as to what
additional documents are required, please write the Fund, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141, or call DST at 1-800-551-5849.
(ii) TELEPHONE AND ON-LINE REDEMPTIONS. All shareholders have
Telephone and On-line Transaction Privileges to authorize purchases,
exchanges or redemptions unless they specifically decline this service on the
account application or by writing to the Fund, c/o DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141. Shareholders may redeem shares by
telephone or, via their personal computer, through on-line service providers
or other on-line access points approved by the Fund. The telephone and
on-line redemption option is not available for shares held in retirement
accounts sponsored by the Fund. Telephone redemption requests may be made by
calling DST Systems, Inc., at 1-800-551-5849. To receive the net asset value
for a specific day, a redemption request must be received before the close of
the Exchange on that day. As discussed above, certain requests must be in
writing and the signature of a redeeming shareholder must be signature
guaranteed, and therefore shares may not be redeemed by telephone or on-line,
if the redemption: exceeds $100,000; is being made payable other than
exactly as registered; is being mailed to an address which has been changed
within 30 days of the redemption request; is being mailed to an address other
than the one on record; or the shares are represented by share certificates
issued to the shareholder.
All telephone and on-line transactions are recorded and written
confirmations indicating the details of all telephone and on-line
transactions will promptly be sent to the shareholder of record. Prior to
accepting a telephone or on-line order, the shareholder placing the order may
be required to provide certain identifying information. A shareholder
electing to communicate instructions by telephone or on-line may be giving up
some level of security that would otherwise be present were the shareholder
to request a transaction in writing. Neither the Fund nor its transfer agent
or Advisor assume responsibility for the authenticity of instructions
communicated by telephone or on-line which are reasonably believed to be
genuine and which comply with the foregoing procedures. The Fund, and/or its
transfer agent, may be liable for losses resulting from unauthorized or
fraudulent telephone or on-line instructions in the event these procedures
are not followed.
In times of extreme economic or market conditions, redeeming shares by
telephone or on-line may be difficult. The Fund may terminate or modify the
procedures concerning the telephone or on-line redemption and wire transfer
services at any time,
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<PAGE>
although shareholders of the Fund will be given at least 60 days' prior notice
of any termination or material modification. The Advisor may, at its own risk,
waive certain of these redemption requirements.
(iii) PAYMENT FOR REDEEMED SHARES. Payment for shares redeemed upon
written request will be made by check and generally will be mailed within three
business days after receipt by the transfer agent of the properly executed
redemption request and any outstanding certificates for the shares to be
redeemed. Payment for shares redeemed by telephone or on-line will be made by
check payable to the account name(s) and address exactly as registered, and
generally will be mailed within three business days following the date of the
request for redemption.
A shareholder may request that payment for redeemed shares of the Fund
be made by wire or electronic funds transfer. Shareholders may elect to use
these services on the account application or by providing the Fund with a
signature guaranteed letter requesting these services and designating the bank
to receive all wire or electronic funds transfers. A shareholder may change the
predesignated bank of record by providing the Fund with written, signature
guaranteed instructions. Wire and electronic funds transfers are subject to a
$1,000 minimum and a $100,000 maximum limitation. Redemption proceeds paid by
wire transfer will be transmitted to the shareholder's predesignated bank
account on the next business day after receipt of the shareholder's redemption
request. There is a $10 fee for each wire payment for shares redeemed by the
Fund. Redemption proceeds paid by electronic funds transfer will be
electronically transmitted to the shareholder's predesignated bank account on
the second business day after receipt of the shareholder's redemption request.
There is no fee for electronic funds transfer of proceeds from the redemption of
Fund shares.
A shareholder may also request that payment for redeemed shares of a
Cash Account Trust portfolio be made by wire or electronic funds transfer and
should review the Cash Account Trust portfolio prospectus for procedures and
charges applicable to redemptions by wire and electronic funds transfers. See
below under "Exchange Privilege and Systematic Withdrawal Plan" for more
information concerning the Cash Account Trust portfolios.
Shareholders may encounter delays in redeeming shares purchased by
check (other than cashier's or certified checks), electronic funds transfer or
through the Automatic Investment Program if the redemption request is made
within 15 days after the date of purchase. In those situations, the redemption
check will be mailed within 15 days after the transfer agent's receipt of the
purchase instrument, provided that it has not been dishonored or cancelled
during that time. The foregoing policy is to ensure that all payments for the
shares being redeemed have been honored. In addition to the foregoing
restrictions, no redemption payment can be made for shares which have been
purchased by telephone or on-line order until full payment for the shares has
been received. In any event, valid redemption requests concerning shares for
which full payment has been made will be priced at the net asset value next
determined after receipt of the request.
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<PAGE>
(iv) REDEMPTIONS BY THE FUND. As a means of reducing its expenses,
the Fund is authorized to redeem involuntarily all shares held in accounts with
a value of less than $2,000. Such redemptions will be permitted only when the
account is reduced below the minimum value by redemption, and not by declines in
per share net asset value. As a result, accounts established with the
applicable minimum investment might be subject to redemption after only a small
redemption has been made by the shareholder. At least 60 days' written notice
will be given to a shareholder before such an account is redeemed. During that
time, the shareholder may add sufficient funds to the account to meet or exceed
the minimum. If this condition is not met, the shares will be redeemed at the
per share net asset value next determined after the 60th day following the
notice. A check for the proceeds will be sent to the shareholder unless a share
certificate has been issued, in which case payment will be made upon surrender
of the certificate.
13. EXCHANGE PRIVILEGE AND SYSTEMATIC WITHDRAWAL PLAN
(i) EXCHANGES. By telephoning the Fund at 1-800-551-5849, writing
to the Fund, in care of DST at P.O. Box 419958, Kansas City, MO 64141, or,
via their personal computer through on-line service providers or other
on-line access points approved by the Fund, any shareholder may exchange,
without charge, any or all of the shareholder's shares in the Fund, subject
to stated minimums, for shares of any of the publicly available Berger Funds
or Berger/BIAM Funds or for shares of the Money Market Portfolio, the
Government Securities Portfolio or the Tax-Exempt Portfolio of the Cash
Account Trust (the "CAT Portfolios"), separately managed, unaffiliated money
market funds. Exchanges may be made only if the Berger Fund, Berger/BIAM
Fund or CAT Portfolio with which you wish to exchange your shares is
registered in your state of residence. The exchange privilege with the CAT
Portfolios does not constitute an offering or recommendation of the shares of
any such CAT Portfolio by the Fund, its Advisor or Sub-Advisor or Berger
Associates. Berger Associates is compensated for administrative services it
performs with respect to the CAT Portfolios.
It is your responsibility to obtain and read a prospectus of the
Berger Fund, Berger/BIAM Fund or CAT Portfolio into which you are exchanging.
By giving exchange instructions, a shareholder will be deemed to have
acknowledged receipt of the prospectus for the Berger Fund, Berger/BIAM Fund or
CAT Portfolio being purchased. You may make up to four exchanges out of the
Fund during the calendar year. This limit helps keep the Fund's net asset base
stable and reduces the Fund's administrative expenses. There currently is no
limit on exchanges out of the three CAT Portfolios. In times of extreme
economic or market conditions, exchanging Fund or CAT Portfolio shares by
telephone or on-line may be difficult. See "How to Redeem or Sell Fund Shares -
Telephone and On-line Redemptions" for procedures for telephone and on-line
transactions.
Redemptions of shares in connection with exchanges into or out of the
Fund are made at the net asset value per share next determined after the
exchange request is received. To receive a specific day's price, your letter,
call or on-line order must be received before that day's close of the Exchange.
A day or more delay may be experienced prior to the investment of the redemption
proceeds into a CAT Portfolio. Each exchange
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<PAGE>
represents the sale of shares from one fund and the purchase of shares in
another, which may produce a gain or loss for U.S. Federal income tax purposes.
All exchanges out of the Fund are subject to the minimum and
subsequent investment requirements of the fund or CAT Portfolio into which
shares are being exchanged. Exchanges will be accepted only if the
registration of the two accounts is identical. Neither the Fund, the Berger
Funds, the Berger/BIAM Funds or the CAT Portfolios, nor their transfer agents
or advisors, assume responsibility for the authenticity of exchange
instructions communicated in writing, by telephone or on-line which are
believed to be genuine. See "How to Redeem or Sell Fund Shares - Telephone
and On-line Redemptions" for procedures for telephone and on-line
transactions. All shareholders have Telephone and On-line Transaction
Privileges to authorize exchanges unless they specifically decline this
service on the account application or by writing to the Fund, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141.
(ii) SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the
Fund worth at least $5,000 at the current net asset value may establish a
Systematic Withdrawal account from which a fixed sum, minimum of $50, will be
paid to the shareholder monthly, quarterly, semiannually or annually. You will
receive confirmation of systematic withdrawals after the end of each calendar
quarter.
For more information regarding the Systematic Withdrawal Plan and
forms to open such accounts, please write to the Fund, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141, or call 1-800-551-5849.
14. TAX-SHELTERED RETIREMENT PLANS
The Fund offers several tax-qualified retirement plans for adoption by
individuals and employers. Participants in these plans can accumulate shares of
the Fund on a tax-deferred basis.
The Fund offers both a profit-sharing plan and a money purchase
pension plan for employers and self-employed persons. Contributions to these
plans are tax-deductible and earnings are tax-exempt until distributed. Under
the profit-sharing plan, the employer or self-employed person can adjust their
contributions from year to year. Under the money purchase pension plan, the
employer or self-employed person must commit to a contribution each year. When
these plans are adopted by self-employed persons, they are commonly referred to
as Keogh or HR 10 plans.
The Fund also offers an Individual Retirement Account ("IRA").
Individuals who have compensation, but who are either not covered by existing
qualified retirement plans and do not have spouses covered by such plans, or do
not have incomes which exceed certain amounts, may contribute tax-deductible
dollars to an IRA. Individuals who are covered by existing retirement plans or
have spouses covered by such plans, and whose incomes exceed the applicable
amounts, are not permitted to deduct their IRA contributions for U.S. Federal
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income tax purposes. However, whether an individual's contributions are
deductible or not, the earnings on his or her IRA are not taxed until the
account is distributed.
The Fund also offers a 403(b) Custodial Account. Employees of certain
tax-exempt organizations and public schools may contribute tax-deductible
dollars to these accounts, on which earnings are tax-exempt until distributed.
In order to receive the necessary materials to create a profit-sharing
or money purchase pension plan account, an IRA account or a 403(b) Custodial
Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, CO
80217, or call 1-800-333-1001. Trustees for existing 401(k) or other plans
interested in utilizing Fund shares as an investment or investment alternative
in their plans should contact the Fund at 1-800-333-1001.
15. 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.
Dividends declared and payable to shareholders of record on a specified date in
December will be deemed to have been received by shareholders on December 31 for
tax purposes if paid during January the following year.
The Fund is treated as a separate entity for tax purposes and intends
to elect and maintain qualification to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended.
The Fund's qualification as a regulated investment company will depend on the
Portfolio maintaining its status as a partnership for tax purposes. If the Fund
qualifies under Subchapter M and meets certain minimum distribution
requirements, the Fund generally will not be liable for U.S. Federal income tax
on the amount of its earnings that are timely distributed. If the Fund
distributes annually less than 98% of its income and gain, it may be subject to
a nondeductible excise tax equal to 4% of the shortfall.
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 investor specifically requests that either dividends or
distributions, or both, be paid in cash. The election to receive dividends or
distributions in cash or to reinvest them in Fund shares may be changed by
calling the Fund at 1-800-551-5849 or by written request to the Fund, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141, and must be received at
least ten days prior to the record date of any dividend or capital gains
distribution.
The Fund will inform its shareholders of the amount and nature of such
income or gains resulting from their investment in the Fund. Dividends paid by
the Fund from net investment income and distributions from net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term
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capital gains (net of capital losses), whether received in cash or reinvested,
will be taxable as long-term capital gains without regard to the length of time
a shareholder has owned shares in the Fund. Any loss on the redemption or other
sale or exchange of the Fund's shares held for six months or less will be
treated as a long-term capital loss to the extent of any long-term capital gain
distribution received on the shares. If a shareholder is exempt from U.S.
Federal income tax, the shareholder will not generally be taxed on amounts
distributed by the Fund.
Investment income received by the Fund, directly or through the
Portfolio, from sources within foreign countries may be subject to foreign
withholding and other taxes withheld at the source. The U.S. has entered into
tax treaties with many foreign countries that, in some circumstances, may
entitle the Fund or Portfolio to a reduced rate of tax or exemption from tax on
such income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Portfolio's assets to be invested within various
countries will fluctuate and the extent to which tax refunds will be recovered
is uncertain. If, directly or through the Portfolio, more than 50% in value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund may elect to "pass-through" to its
shareholders the income taxes paid by the Fund to foreign governments during a
year. Under this election, each shareholder will be required to include the
shareholder's pro rata portion of these foreign taxes in gross income, but will
be able to deduct (as an itemized deduction for shareholders who itemize) or
claim a foreign tax credit for such amount (subject to various limitations). If
the election is not made, foreign taxes will be treated as an expense of the
Fund.
At certain levels of taxable income, the Internal Revenue Code
provides a preferential tax rate for long-term capital gains. Long-term capital
gains of taxpayers other than corporations are taxed at a 28% maximum rate,
whereas ordinary income is taxed at a 39.6% maximum rate. Capital losses
continue to be deductible only against capital gains plus (in the case of
taxpayers other than corporations) $3,000 of ordinary income annually ($1,500
for married individuals filing separately).
Some shareholders may be subject to 31% "backup withholding" on
dividends, capital gains distributions and redemption payments made by the Fund.
Backup withholding generally will apply to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications. Backup withholding is not an additional tax. Any amounts
withheld may be credited against a shareholder's U.S. Federal income tax
liability.
The foregoing is only a brief summary of the U.S. Federal income tax
considerations affecting the Fund and its shareholders. See "Income Dividends,
Capital Gains Distributions and Tax Treatment" in the Statement of Additional
Information for more information regarding taxation. Potential investors should
consult their tax advisors with specific reference to their own tax situation.
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16. ADDITIONAL INFORMATION
The Trust is a Delaware business trust organized on May 31, 1996. The
Fund was established on May 31, 1996, as a series or fund under the Trust.
Since the Trust and the Fund were only recently organized, they have no prior
operating history, although the Fund calculates its performance taking into
account the prior performance of a trust fund whose assets were transferred into
the Portfolio as described under "Performance" below. As of the date of this
Prospectus, all of the outstanding shares of the Fund were held by Berger
Associates, which provided the seed capital necessary to establish the Trust.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest in series. The Trust is also authorized to establish
multiple classes of shares representing differing interests in an existing or
new series. As of the date of this Prospectus, the series comprising the
Berger/BIAM International Fund is one of three series 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.
Shareholders of the Berger/BIAM International Fund and the other funds
or series of the Berger/BIAM Worldwide Funds Trust generally vote separately on
matters relating to those respective funds, although they vote together and with
the holders of any other series of the Trust issued in the future 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
Berger/BIAM Worldwide Funds 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 Trust will facilitate appropriate communications by
shareholders desiring to call a special meeting for the purpose of considering
the removal of a trustee.
The Fund invests all of its investable assets in the Portfolio, a
series of Worldwide Portfolios, which is also a Delaware business trust divided
into series. Investors in each series of Worldwide Portfolios will vote
separately or together in the same manner as shareholders of the Trust's series.
For more information on the Trust and Worldwide Portfolios, see "Additional
Information" in the Statement of Additional Information.
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<PAGE>
The Glass-Steagall Act prohibits a depository institution (such as a
bank) 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.
State laws on this issue may differ from the interpretations of relevant Federal
law and banks and financial institutions may be required to register as dealers
pursuant to state securities law. If the circumstances described above should
change, the trustees of the Trust and Worldwide Portfolios would review the
relationships with BIAM and consider taking all actions appropriate under the
circumstances.
17. 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.,
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 Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Dow Jones World Index, the Standard & Poor's
500 Stock Index, 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.
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
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<PAGE>
will fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost.
The Portfolio commenced operations upon the transfer to the
Portfolio of assets held in a pooled trust (the "Pool") maintained by
Citizens Bank New Hampshire, for which BIAM has provided day-to-day portfolio
management as sub-advisor since the inception of the Pool. BIAM's bank
holding company parent indirectly owns a 23.5% interest in the parent of
Citizens Bank New Hampshire. The Pool had substantially the same investment
objective, policies and limitations of the Fund and the Portfolio. Assets
from the Pool were transferred to a separate "feeder" fund investing in the
Portfolio which, in turn, transferred those assets to the Portfolio in
exchange for an interest in the Portfolio. As a result of this transaction,
the investment holdings in the Portfolio (in which the Fund invests all of
its investable assets) were the same as the investment holdings in the
portfolio of the Pool immediately prior to the transfer, except for the seed
capital provided by Berger Associates.
The Pool was not a registered investment company since it was exempt
from registration under the Investment Company Act of 1940 (the "1940 Act").
Since, in a practical sense, the Pool constitutes the "predecessor" of the
Portfolio, the Fund calculates its performance for periods commencing prior to
the transfer of the Pool's assets to the Portfolio by including the Pool's total
return, adjusted to reflect the deduction of fees and expenses applicable to the
Fund as stated in the Fee Table above in this Prospectus (that is, adjusted to
reflect estimated expenses, including the Fund's pro rata share of the aggregate
annual operating expenses, net of fee waivers, of the Portfolio in which all of
the investable assets of the Fund are invested). These fees and expenses
include 12b-1 fees.
The performance data set forth below includes the performance of the
Pool for periods before the Fund's and the Portfolio's registration statements
became effective. As noted above, the Pool was not registered under the 1940
Act and thus was not subject to certain investment restrictions that are imposed
by the 1940 Act. If the Pool had been registered under the 1940 Act, the Pool's
performance might have been adversely affected.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 1996
BERGER/BIAM
INTERNATIONAL FUND(1) EAFE INDEX(2)
1-YEAR 17.95% 13.62%
3-YEAR 13.59% 10.76%
5-YEAR 14.84% 10.33%
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<PAGE>
SINCE INCEPTION(3) 13.19% 4.26%
(1) Total return for the Fund has been adjusted to reflect estimated expenses
of the Fund, including the Fund's pro rata share of the aggregate annual
operating expenses, net of fee waivers, of the Portfolio in which all of the
investable assets of the Fund are invested.
(2) Source: Morgan Stanley Capital International (MSCI). The MSCI EAFE
Index is a market capitalization weighted index composed of companies
representative of the market structure of 20 developed market countries in
Europe, Australasia and the Far East.
(3) Covers the period since July 31, 1989.
All of the foregoing performance data were calculated in accordance
with methods prescribed by the Securities and Exchange Commission which are
discussed in more detail under the heading "Performance Information" in the
Statement of Additional Information.
Shareholders with questions should write to the Fund, c/o BBOI
Worldwide, P.O. Box 5005, Denver, CO 80217, or call 1-303-329-0200 or
1-800-333-1001. Prospectuses are also available upon request for the following
funds advised by Berger Associates, Inc.: the Berger 100 Fund, the Berger
Growth and Income Fund, the Berger Small Company Growth Fund and the Berger
New Generation Fund. Please call 1-800-333-1001 for information.
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<PAGE>
PROSPECTUS
BERGER/BIAM INTERNATIONAL INSTITUTIONAL FUND
The Berger/BIAM International Institutional Fund (the "Fund") is a
"no-load" mutual fund, more technically referred to as an open-end management
investment company, organized as a diversified series of the Berger/BIAM
Worldwide Funds Trust (the "Trust"). The investment objective of the Fund is
long-term capital appreciation. The Fund seeks to achieve this objective by
investing all of its investable assets in the Berger/BIAM International
Portfolio (the "Portfolio") which, in turn, invests primarily in common stocks
of well established companies located outside the United States. The Portfolio
intends to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Portfolio's total assets invested
in the securities of companies located in at least five countries, not including
the United States.
UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR
OWN PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS INVESTMENT OBJECTIVE BY
INVESTING ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO, AS DESCRIBED ABOVE.
Accordingly, the investment performance of the Fund will derive from the
investment performance of the Portfolio. The Portfolio is an open-end
management investment company and a diversified series of a separate trust known
as the Berger/BIAM Worldwide Portfolios Trust ("Worldwide Portfolios"). The
Portfolio's investment objective and policies are identical to those of the
Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI Worldwide" or the
"Advisor"), which has delegated daily portfolio management of the Portfolio to
Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-Advisor").
For further information about the Fund's investment objective and structure, see
"Investment Objective and Policies and Risk Factors", "Introduction" and
"Additional Information About Master/Feeder Structure".
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
This Prospectus sets forth concisely the information about the Fund
that a prospective investor should consider before investing. Investors are
advised to retain this Prospectus 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, which is incorporated in its
entirety by reference, is available upon request without charge by writing to
the Fund at P.O. Box 5005, Denver, CO 80217, or by calling 1-800-706-0539.
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
<PAGE>
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 October 15, 1996
<PAGE>
Table of Contents
SECTION PAGE
- ------- ----
1. Fee Tables............................................................... 1
2. Introduction............................................................. 2
3. Investment Objective and Policies and Risk Factors....................... 3
4. Portfolio Turnover....................................................... 11
5. Additional Information About Master/Feeder Structure..................... 11
6. Management and Investment Advice......................................... 12
7. Expenses of the Fund..................................................... 16
8. Purchase of Shares in the Fund........................................... 18
9. Net Asset Value.......................................................... 20
10. Open Account System and Share Certificates.............................. 21
11. Redemption of Fund Shares............................................... 21
12. Exchange Privilege...................................................... 24
13. Plans and Programs...................................................... 25
14. Income Dividends, Capital Gains Distributions and Tax Treatment......... 25
15. Additional Information.................................................. 27
16. Performance............................................................. 28
<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)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL
FUND
INVESTMENT OPERATING
ADVISORY EXPENSES*
FEE OTHER (AFTER
(AFTER WAIVER) EXPENSES** WAIVER)
- --------------------------------------------------------------------------------
Berger/BIAM International
Institutional Fund 0.85%*** 0.50% 1.35%***
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Total Fund Operating Expenses are comprised of the Fund's annual operating
expenses plus the Fund's pro rata portion of the annual operating expenses
of the Portfolio in which the Fund's assets are invested. See "Expenses of
the Fund".
** Other Expenses primarily include administrative services fees paid by the
Fund and custodian fees paid by the Portfolio and are based on estimated
expenses for the first year of operations of the Fund and the Portfolio.
*** Although the Fund does not pay an investment advisory fee directly to an
investment advisor, it bears indirectly its pro rata portion of the advisory
fee paid to the Advisor by the Portfolio in which the assets of the Fund are
invested. Until at least April 30, 1998, the Advisor has agreed voluntarily
to waive its investment advisory fee to the extent that the Portfolio's
normal operating expenses in any fiscal year, including the investment
advisory fee and custodian fees, but excluding brokerage commissions,
interest, taxes and extraordinary expenses, exceed 1.00% of the Portfolio's
average daily net assets for that fiscal year. Absent the waiver, the
Investment Advisory Fee would be 0.90% and Total Fund Operating Expenses
would be estimated to be 1.40%.
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return, and (2) redemption at the end of each time period:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS
- --------------------------------------------------------------------------------
-1-
<PAGE>
- --------------------------------------------------------------------------------
Berger/BIAM International Institutional Fund $14* $43*
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* Based on estimated expenses for the first year of operations of the Fund
and the Portfolio, after waiver.
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.
Total Fund Operating Expenses include the Fund's pro rata share of the
aggregate annual operating expenses of the Portfolio, in which all of the
investable assets of the Fund are invested. The trustees of the Trust believe
that the investment in the Portfolio by investors in addition to the Fund may
enable the Portfolio to achieve economies of scale which could reduce expenses
and, accordingly, that the aggregate per share expenses of the Fund and the
Fund's pro rata share of the expenses of the Portfolio will be less than or
approximately equal to the expenses the Fund would incur if it retained the
services of an investment advisor and the assets of the Fund were invested
directly in the type of securities held by the Portfolio. While the investment
advisory fee for the Portfolio is higher than that paid by most other mutual
funds, it is comparable to the investment advisory fee paid by many other
international equity funds.
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 Fund's expenses are described in greater
detail under "Management and Investment Advice", and "Expenses of the Fund".
2. INTRODUCTION
The Berger/BIAM International Institutional Fund is an open-end,
diversified management investment company commonly referred to as a "mutual
fund". The Fund is a "no-load" fund, meaning that a buyer pays no commissions
or sales load when buying shares of the Fund. This Prospectus describes the
securities offered by the Fund.
The Fund is a series of the Berger/BIAM Worldwide Funds Trust, a Delaware
business trust, and invests in the Portfolio that, in turn, invests in
securities in accordance with an investment objective, policies and limitations
that are identical to those of the Fund. This is sometimes called a
master/feeder fund structure, because the Fund and other investors who invest in
the Portfolio "feed" shareholders' investments into the Portfolio, a "master"
fund. The structure looks like this:
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Shareholders
BUY SHARES IN [down arrow]
Fund
INVESTS IN [down arrow]
Portfolio
INVESTS IN [down arrow]
Stocks and
Other Securities
The trustees of the Trust believe that this structure may benefit
shareholders, since investment in the Portfolio by investors in addition to the
Fund may enable the Portfolio to achieve economies of scale which could reduce
expenses. For more information about this structure, see "Additional
Information About Master/Feeder Structure".
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
3. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The investment objective of the Fund is long-term capital
appreciation. The Fund seeks to achieve this objective by investing all of its
investable assets in the Portfolio which, in turn, invests 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 Portfolio may also invest in securities other
than common stock if the Sub-Advisor believes these are likely to be the best
suited at that time to achieve the Portfolio'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 Portfolio intends to diversify its holdings among several countries
and to have, under normal market conditions, at least 65% of the Portfolio'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
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<PAGE>
secondary importance as a by-product of the investment selection process used to
achieve the Fund's objective.
INVESTMENT SELECTION
In selecting its portfolio securities, the Portfolio 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 Portfolio's
investments. The Portfolio 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 Portfolio 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 Portfolio is
free to invest in companies of any size and in companies located in other
foreign countries, including developing countries.
INVESTMENT DECISION MAKING PROCESS
The Sub-Advisor's investment approach 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, 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
-4-
<PAGE>
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
Portfolio.
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.
WHY INVEST IN THIS FUND?
The Advisor believes there is substantial opportunity for long-term
capital growth in foreign markets, as certain foreign economies may grow more
rapidly than the U.S. economy. In addition, boundaries and borders no longer
define or confine the operations of many of the world's business entities.
Companies raise capital, purchase raw materials, manufacture and distribute
products on a worldwide basis. Many profitable, successful companies benefit
from global economic growth, including companies in foreign markets. The Fund
seeks to take advantage of the investment opportunities created by an
increasingly global economy.
One reason for investing internationally is the opportunity to earn
higher investment returns. On a total return basis, foreign stocks represented
by the Morgan Stanley Capital International EAFE (Europe, Australasia, Far East)
Index outperformed U.S. stocks represented by the Standard & Poor's 500 Stock
Index in all but two rolling ten-year periods ended 1981 through 1995. Of
course, during this time there were shorter periods when U.S. stocks had higher
returns, and there have been periods when the EAFE Index produced negative
returns. Accordingly, investors in foreign equity securities should have a
long-term investment perspective, as international markets tend to be more
volatile than the U.S. market.
International investing also expands investment opportunities. The
U.S. percentage of the world's stock market capitalization has decreased over
the past 20 years. Today, nearly two-thirds of the world's stock market
capitalization consists of non-U.S. stocks and companies. Since foreign stocks
do not always move in tandem with U.S. stocks and with each other, international
investing also has the potential to add diversification to an all- U.S. stock
portfolio by spreading investments across a number of markets.
Investors who wish to diversify their portfolio internationally can do
so by investing directly in foreign stocks, but they may find it difficult to
make purchases and
-5-
<PAGE>
sales, obtain reliable information, hold securities in safekeeping and manage
the conversion of the value of their international investments into U.S.
dollars. Investing in the Fund, however, eliminates these complications. With
a single investment, the investor owns a diversified international investment
portfolio that is actively managed by experienced professionals. BIAM, the
Portfolio's Sub-Advisor, has extensive experience in dealing with foreign
markets and with brokers and custodian banks around the world. BIAM also has
the benefit of an established information network and believes the Fund offers a
convenient and cost-effective means of investing internationally.
Of course, as an international fund, the Fund entails special risks as
described below. The Fund seeks to reduce these risks through diligent research
and diversification.
SECURITIES, INVESTMENT PRACTICES AND RISK FACTORS
Since the shares of the Fund represent an investment in the Portfolio,
which in turn primarily represents an investment in common stocks, investors
should understand that the net asset value of the Fund will change as the market
value of the securities held in the Portfolio changes and that the value of a
Fund share will go up and down. 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 and the Portfolio is considered
fundamental, meaning that it cannot be changed without a vote of the
shareholders of the Fund and, as to the Portfolio's objective, of the investors
in the Portfolio. There can be no assurance that the Fund's or the Portfolio's
investment objective will be realized. Following is additional information
about some of the specific types of securities in which the Portfolio 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 Portfolio. 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 Portfolio's investments may include American Depositary Receipts
(ADRs). The Portfolio may also
-6-
<PAGE>
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 Portfolio
invests 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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio will 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 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 currency would adversely
affect the value of the securities expressed in dollars. 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 Portfolio may purchase securities that
are convertible into common stock when the 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 Portfolio 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 Portfolio 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
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Moody's Investors Service, Inc., and Standard & Poor's Corporation, or being of
similar creditworthiness in the determination of the Sub-Advisor. The Portfolio
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 Portfolio 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 Portfolio will invest less than 20% of the
market value of its net assets at the time of purchase in convertible securities
rated below investment grade. If convertible securities purchased by the
Portfolio are downgraded following purchase, or if other circumstances cause 20%
or more of the Portfolio's assets to be invested in convertible securities rated
below investment grade, the trustees of Worldwide Portfolios, 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 Portfolio may invest in
securities of companies with small or medium 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 well
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 well
established companies.
LENDING PORTFOLIO SECURITIES. The Portfolio may lend its securities
to qualified institutional investors such as brokers, dealers or other financial
organizations. This practice permits the Portfolio to earn income, which, in
turn, can be invested in additional securities to pursue its investment
objective. Loans of securities by the Portfolio 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
Portfolio bears a risk of loss in the event that the other party to a securities
lending transaction defaults on its obligations and the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio's total
assets.
HEDGING TRANSACTIONS. The Portfolio is authorized to make limited
commitments in certain forward contracts, but only for the
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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 Portfolio's securities or the price of securities that the Portfolio 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 Portfolio 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 Portfolio's assets.
Although a hedging transaction may, for example, partially protect the Portfolio
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
Portfolio 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 Portfolio owns or
intends to acquire.
The Portfolio will generally enter into forward foreign currency
exchange contracts either with respect to specific transactions or with respect
to the Portfolio's security positions. For example, the Portfolio 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 Portfolio's investments are denominated may decline compared to the U.S.
dollar, the Portfolio 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 Portfolio will be 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
Portfolio is attempting to hedge, such as a portion or all of its securities
denominated in a specific foreign currency. To ensure that the Portfolio will
be able to meet its obligations under its forward foreign currency exchange
contracts, the Portfolio 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 Portfolio involve the
potential for a loss that may exceed the amount of commitment the Portfolio
would be permitted to make in those contracts under its investment limitations.
The principal risks of the
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Portfolio's use of forward foreign currency exchange contracts are: (a) losses
resulting from currency market movements not anticipated by the Portfolio;
(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 Portfolio 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
Portfolio enters into an over-the-counter contract with a counterparty, the
Portfolio will assume counterparty credit risk, that is, the risk that the
counterparty will fail to perform its obligations, in which case the Portfolio
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
Worldwide Portfolios may, without shareholder approval, authorize the Portfolio
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 Portfolio'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 Portfolio 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 Portfolio may not purchase any security, the purchase of which
would cause the Portfolio 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 Portfolio's
net assets to be invested in illiquid securities, the trustees of Worldwide
Portfolios, 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 Portfolio 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 Portfolio might have to incur the potentially
substantial expense and delay associated with effecting registration.
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INVESTMENT RESTRICTIONS
In addition to its investment objective, the Portfolio has adopted a
number of restrictions on its investments and other activities that may not be
changed without shareholder approval. For example, the Portfolio 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
Portfolio may lend portfolio securities and enter into repurchase agreements in
accordance with its investment policies). The Portfolio may not invest in any
one industry 25% or more of the value of its total assets at the time of
investment, nor invest in commodities, except, only for the purpose of hedging,
the Portfolio may invest in forward foreign currency exchange contracts and
other instruments as specified in greater detail above and in the Statement of
Additional Information.
Further, with respect to 100% of its total assets, the Portfolio 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 Portfolio'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 Portfolio's total assets without a shareholder vote.
Also, the Portfolio does not currently intend to purchase or sell
securities on a when-issued or delayed delivery basis if as a result, more than
5% of its net assets would be invested in such securities, although this
restriction may be changed without shareholder approval. For more detail about
the Portfolio's investment restrictions, see the Statement of Additional
Information.
4. PORTFOLIO TURNOVER
In pursuit of the Portfolio's investment objective, the Sub-Advisor
continuously monitors the Portfolio's investments and makes portfolio changes
whenever changes in investment themes, the fundamentals of any portfolio company
or the price of any portfolio security indicate to the Sub-Advisor that more
attractive alternatives exist or that the Portfolio's investment 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 or interests in the
Portfolio due to economic, market or other factors that are not within the
control of management. Although the annual portfolio turnover rate of the
Portfolio will vary, it is normally expected to range from 25% to 75%.
5. ADDITIONAL INFORMATION ABOUT MASTER/FEEDER STRUCTURE
Unlike other mutual funds that directly acquire and manage their own
portfolios of securities, the Fund (referred to as a feeder fund) seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio (referred to as a
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master fund). This two-tier structure is known as a master/feeder. The Fund
has the same investment objective and policies as the Portfolio. The Fund will
invest only in the Portfolio, and the Fund's shareholders will therefore acquire
only an indirect interest in the investments of the Portfolio.
In addition to selling a beneficial interest to the Fund, the
Portfolio may sell beneficial interests to other mutual funds or institutional
investors (that is, other feeder funds). Such investors will invest in the
Portfolio on the same terms and conditions and will pay their proportionate
share of the Portfolio's expenses. However, the other investors investing in
the Portfolio are not required to issue their shares at the same public offering
price as the Fund due to potential differences in expense structures.
Accordingly, investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the different funds
that invest in the Portfolio. Such differences in returns are common in this
type of mutual fund structure and are also present in other mutual fund
structures. Information concerning other investors in the Portfolio (for
example, other feeder funds) is available from the Fund at 1-800-706-0539.
Shareholders willing to maintain an account balance of not less than
$1,000,000 may want to consider the Berger/BIAM International CORE Fund,
which is another feeder fund that, like the Fund, invests all of its
investable assets in the Portfolio.
The investment objective of the Fund may not be changed without the
approval of the Fund's shareholders. The investment objective of the Portfolio
may not be changed without the approval of the investors in the Portfolio,
including the Fund. If the objective of the Portfolio changes and the
shareholders of the Fund do not approve a parallel change in the Fund's
investment objective, the trustees of the Trust will consider other
alternatives, including seeking an alternative investment vehicle or directly
retaining the Fund's own investment advisor. Shareholders will be given at
least 30 days' written notice prior to any change in the investment objective of
the Fund or the Portfolio.
Smaller funds investing in the Portfolio may be materially affected by
the actions of larger funds investing in the Portfolio. For example, if a
larger fund invests or withdraws from the Portfolio, the remaining funds may
experience lower or higher pro rata operating expenses. Lower returns could
possibly result from a large withdrawal. However, this possibility also exists
for traditionally structured funds which have large or institutional investors.
Also, a fund with a greater pro rata ownership in the Portfolio could have
effective voting control over the operations of the Portfolio.
Whenever the Fund is requested to vote as an investor in the Portfolio
on matters pertaining to the Portfolio (other than a vote by the Fund to
continue the operation of the Portfolio upon the withdrawal of another investor
in the Portfolio), the Fund will hold a meeting of its shareholders and will
cast all of its votes as an investor in the Portfolio in the same proportion as
directed by the votes of the Fund's shareholders. Fund shareholders who do not
vote will not affect the votes cast by the Fund at the meeting of the Portfolio
investors. The percentage of the votes representing the Fund's shareholders who
do not vote will be voted by the Fund in the same proportion as the Fund's
shareholders who do, in fact, vote.
The Fund may withdraw its investment in the Portfolio at any time, if
the trustees of the Trust determine that it is in the best interests of the Fund
to do so. Certain
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changes in the Portfolio's investment objective, policies and limitations may
require the Fund to withdraw its investment in the Portfolio. Upon any such
withdrawal, the trustees would consider what action might be taken, including
investing the Fund's assets in another pooled investment entity having the same
investment objective and policies as the Fund or retaining an investment advisor
to manage the Fund's assets in accordance with the investment policies described
above with respect to the Portfolio. Any such withdrawal could result in a
distribution in kind of portfolio securities (as opposed to a cash distribution)
from the Portfolio. If securities are distributed, the Fund could incur
brokerage, tax or other charges in converting the securities to cash. In
addition, a distribution in kind may adversely affect the liquidity of the Fund.
This Prospectus and the Statement of Additional Information contain
more detailed information about this master/feeder organizational structure,
including information related to: (i) the investment objective, policies and
restrictions of the Fund and the Portfolio; (ii) the trustees and officers of
the Trust and Worldwide Portfolios, and the management of the Fund and the
Portfolio; (iii) portfolio transactions and brokerage commissions; (iv) the
Fund's shares, including the rights and liabilities of its shareholders; (v)
additional performance information, including the method used to calculate total
return; and (vi) the determination of the value of the shares of the Fund. The
master/feeder fund structure is still relatively new and lacks a substantial
history.
6. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major decisions relating
to the Fund's policies and objective. They also oversee the operation of the
Fund by its officers and review the investment performance of the Fund on a
regular basis. The trustees of Worldwide Portfolios have overall responsibility
for operation of the Portfolio. A majority of the trustees of the Trust and
Worldwide Portfolios who are not "interested persons" (as defined in the
Investment Company Act of 1940) of the Trust or Worldwide Portfolios
("Independent Trustees") have adopted written procedures reasonably appropriate
to deal with potential conflicts of interest arising from the fact that the same
individuals are trustees of the Trust and Worldwide Portfolios, up to and
including creating a new board of trustees for the Trust or Worldwide
Portfolios. Additional information concerning the trustees and the officers of
the Trust and Worldwide Portfolios is furnished in the Statement of Additional
Information under the heading "Management of the Fund."
THE ADVISOR -- GENERAL BUSINESS MANAGEMENT AND INVESTMENT OVERSIGHT
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio, such as coordinating certain matters relating to the operations of
the Portfolio and monitoring the Portfolio's compliance with all applicable
federal and state securities laws. Currently, the Advisor serves in this
capacity only to the Portfolio.
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The Advisor is a Delaware limited liability company formed in 1996.
Since the Advisor was only recently formed, it has no prior experience as an
investment advisor. However, Berger Associates, Inc. ("Berger Associates"),
which owns 100% of the Advisor has been in the investment advisory business for
over 20 years. Berger Associates serves as investment advisor or sub-advisor to
mutual funds, pension and profit-sharing plans, and institutional and private
investors, and has assets under management of more than $3.5 billion as of April
30, 1996. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80%
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. Also, see below under "Pending Sale of Interest in
Advisor".
THE SUB-ADVISOR -- EXPERIENCED INTERNATIONAL INVESTMENT MANAGEMENT
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. Bank of Ireland Asset Management (U.S.) Limited ("BIAM"), the Sub-
Advisor to the Portfolio, 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 $16 billion as of April 30, 1996.
As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to
BIAM, as the Sub-Advisor. As Sub-Advisor, BIAM manages the investments in the
Portfolio 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 Worldwide Portfolios.
BIAM serves as investment advisor or sub-advisor to pension and
profit-sharing plans and other institutional investors and mutual funds. 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 Portfolio by the 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 Portfolio.
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 Portfolio, including outstanding loans to such
issuers which could be repaid in whole or
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in part with the proceeds of securities purchased by the Portfolio. 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 Portfolio, the
Sub-Advisor will not take into consideration whether an issuer of securities
proposed for purchase or sale by the Portfolio is a customer of Bank of Ireland
or its affiliates.
The trustees of Worldwide Portfolios have authorized the Sub-Advisor
to consider sales of shares of the Fund by a broker-dealer or the
recommendations of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute securities
transactions for the Portfolio. In placing portfolio business with such broker-
dealers, the Sub-Advisor will seek the best execution of each transaction.
ADVISORY FEES
Under the Investment Advisory Agreement for the Portfolio, the Advisor
is compensated for its services to the Portfolio by the payment of a fee at the
annual rate of 0.90% of the average daily net assets of the Portfolio. Until at
least April 30, 1998, the Advisor has agreed voluntarily to waive the investment
advisory fee paid by the Portfolio under the Investment Advisory Agreement to
the extent that the Portfolio's normal operating expenses in any fiscal year,
including the investment advisory fee and custodian fees, but excluding
brokerage commissions, interest, taxes and extraordinary expenses, exceed 1.00%
of the Portfolio's average daily net assets for that fiscal year. Any reduction
in the advisory fee paid by the Portfolio will also reduce the pro rata share of
the advisory fee borne indirectly by the Fund.
The Portfolio pays no fees directly to the Sub-Advisor. The Sub-
Advisor will receive from the Advisor a fee at the annual rate of 0.45% of the
average daily net assets of the Portfolio. During certain periods, the Sub-
Advisor may voluntarily waive all or a portion of its fee under the Sub-Advisory
Agreement, which will not affect the fee paid by the Portfolio to the Advisor.
PENDING SALE OF INTEREST IN ADVISOR
As mentioned above, the Portfolio's Advisor, BBOI Worldwide, is a
limited liability company formed in 1996 and 100% owned by Berger Associates.
BBOI Worldwide was organized by Berger Associates in anticipation of forming a
joint venture with BIAM for the purpose of managing international and global
mutual funds. Pursuant to the Amended and Restated Operating Agreement of BBOI
Worldwide LLC, dated as of May 1, 1996, between Berger Associates and BIAM (the
"Joint Venture Agreement"), BIAM (or an affiliate) has agreed to acquire a 50%
interest in the Advisor and thereby enter into a joint venture with Berger
Associates to become effective upon receipt of all regulatory approvals. Berger
Associates' role in the joint venture will be to provide administration and
marketing, and BIAM's role will be to provide international and global
investment management expertise. Day-to-day portfolio management of the
Portfolio will continue to be provided by BIAM under the Sub-Advisory Agreement.
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The Joint Venture Agreement provides that Berger Associates and BIAM
will each own a 50% membership interest in the Advisor and each will have an
equal number of representatives on the Advisor's Board of Managers. Agreement
of representatives of both Berger Associates and BIAM will be required for all
significant management decisions.
BIAM's acquisition of an interest in the Advisor is subject to
approval of the Federal Reserve Board of the United States and the Central Bank
of Ireland. In the event the joint venture is not consummated, Berger
Associates anticipates continuing to provide the Fund with administrative
services, and BIAM has agreed to continue to serve as the Sub-Advisor to the
Portfolio for a period of not less than six months thereafter, on usual and
customary contractual terms.
Consummation of BIAM's acquisition of a membership interest in the
Advisor might be deemed to effect a change of control in the Advisor and thereby
an "assignment" (as defined in the Investment Company Act of 1940) and
termination of the Portfolio's Investment Advisory and Sub-Advisory Agreements.
However, the trustees of Worldwide Portfolios have considered the terms of the
joint venture and various factors related to the proposal, including that the
day-to-day management of the Portfolio by BIAM is not proposed to change. On
the basis of the factors considered, the trustees, including the Independent
Trustees of Worldwide Portfolios voting separately, have approved new Investment
Advisory and Sub-Advisory Agreements that will come into effect upon
consummation of the joint venture and any change of control in the Advisor that
may be deemed to result. The new Agreements have also been approved by the
Portfolio's initial investors. The new Agreements are identical in their terms
to the initial Agreements described in this Prospectus, except for commencement
date. No further trustee or shareholder vote is anticipated to approve the new
Agreements upon consummation of the joint venture. Accordingly, prospective
investors should consider BIAM's pending acquisition of an interest in the
Advisor at the time they consider their initial investment in the Fund.
7. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
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Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as expenses of meetings of the shareholders of the
Trust. Expenses of the Fund also include, among others, taxes imposed on the
Fund; the fee payable to the Advisor under the Administrative Services
Agreement; and such other non-recurring and extraordinary items as may arise
from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, legal services, printing and mailing to shareholders of prospectuses
and other required communications, and certain other administrative and
recordkeeping services, such as coordinating matters relating to the operations
of the Fund, monitoring the Fund's status as a "regulated investment company"
under the Internal Revenue Code of 1986, registering sufficient Fund shares
under federal and state securities laws, and arranging for and supervising the
preparation of registration statements, tax returns, proxy materials, financial
statements and reports for filing with regulatory authorities and distribution
to shareholders of the Fund. Under the Administrative Services Agreement, the
Fund pays the Advisor a fee at an annual rate equal to the lesser of (i) 0.35%
of its average daily net assets, or (ii) the Advisor's annual cost to provide or
procure these services (including the fees of any services providers whose
services are procured by the Advisor), plus an additional 0.02% of the Fund's
average daily net assets. The trustees of the Trust regularly review amounts
paid to and expenditures incurred by the Advisor pursuant to the Administrative
Services Agreement. In addition, in the event that the Advisor's duties under
the Administrative Services Agreement are delegated to another party, the
Advisor may take into account, in calculating the cost of such services, only
the costs incurred by such other party in discharging the delegated duties.
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Arrangements may be entered into by the Advisor or its affiliates with
certain organizations (broker-dealers, recordkeepers and administrators) to
provide sub-transfer agency, recordkeeping, shareholder communications,
sub-accounting and/or other services to investors purchasing shares of the Fund
through investment programs or pension plans established or serviced by those
organizations. The Advisor or its affiliates may pay fees to these
organizations for their services. For purposes of determining the Advisor's
cost of providing or procuring transfer agency, dividend disbursing or other
services under the Administrative Services Agreement, the Advisor may take into
account only the fees that otherwise would be paid for by the Advisor if all the
investors who own Fund shares through the organization were instead direct
registered record holders of shares in the Fund.
Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to the
Advisor under the Administrative Services Agreement. Investors Fiduciary Trust
Company ("IFTC") has been appointed to provide recordkeeping and pricing
services to the Fund, including calculating the daily net asset value of the
Fund, and to perform certain accounting and recordkeeping functions that it
requires. In addition, IFTC has been appointed to serve as the Fund's
custodian, transfer agent and dividend disbursing agent. IFTC has engaged DST
Systems, Inc. ("DST"), as sub-transfer agent to provide transfer agency and
dividend disbursing services for the Fund. The fees of Berger Associates, IFTC
and DST are all paid by the Advisor. Approximately 40% of the outstanding
shares of DST are owned by KCSI, which also owns approximately 80% of the
outstanding shares of Berger Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such as
compliance monitoring and preparing investor communications, which have been
delegated to Berger Associates as part of the Sub-Administration Agreement
discussed above. Other services are procured from third party service providers
at the Portfolio's own expense, such as custody, recordkeeping and pricing
services. The Portfolio has appointed IFTC as recordkeeping and pricing agent
to calculate the daily net asset value of the Portfolio and to perform certain
accounting and recordkeeping functions required by the Portfolio. In addition,
the Portfolio has appointed IFTC as its custodian and transfer agent. IFTC has
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engaged State Street Bank and Trust Company ("State Street") as sub-custodian
for the Portfolio. For custodian, recordkeeping and pricing services, the
Portfolio pays fees directly to IFTC based on a percentage of its net assets,
subject to certain minimums, and reimburses IFTC for certain out-of-pocket
expenses.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First
Fund Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite
261-E, Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its
costs in distributing Fund shares by Berger Associates.
8. PURCHASE OF SHARES IN THE FUND
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
Shares in the Fund may be purchased at the relevant net asset value
without a sales charge. The minimum initial investment for shares of the Fund
is $100,000. To purchase shares in the Fund, simply complete the application
form enclosed with this Prospectus and mail it to the Fund in care of DST
Systems, Inc., the Fund's transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
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Additional investments may be made at any time by telephone or by mail
at the relevant net asset value by calling or writing the Fund.
A confirmation indicating the details of the transaction will be sent
promptly. Unless full shares only are specified, all purchases will be made in
full and fractional shares calculated to three decimal places.
All purchase orders are effected at the relevant net asset value per
share of the Fund next determined after receipt of the purchase order, completed
application and payment. A purchase order, together with payment in proper
form, received by the transfer agent, sub-transfer agent or any other authorized
agent of the Fund prior to the close of the New York Stock Exchange (the
"Exchange") on a day the Fund is open for business will be effected at that
day's net asset value. An order received after that time will be effected at
the net asset value determined on the next business day. See "Redemptions of
Fund Shares - Redemptions by Telephone" for the Fund's policies and procedures
on effecting transactions by telephone.
Payment for shares purchased may be made as follows:
BY WIRE OR ELECTRONIC FUNDS TRANSFER. Payment for shares purchased
may be made by wire or electronic funds transfer from the investor's bank to DST
Systems, Inc. Please call 1-800-551-5849 for current wire or electronic
funds transfer instructions. The following information may be requested: name
of authorized person; shareholder name; shareholder account number; name of
Fund; amount being wired or transferred; and name of wiring or transferring
bank.
BY MAIL. Alternatively, payment for shares purchased may be made by
mail, so long as payment is accompanied or preceded by a completed account
application. Payment should be made by check or money order drawn on a United
States bank and made payable to the "Berger Funds". Checks not made payable to
the Berger Funds, the account registrant, transfer agent or retirement account
custodian will not be accepted. The Fund will not accept purchases by cash or
credit card or checks drawn on foreign banks unless provision is made for
payment through a U.S. bank in U.S. dollars.
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Fund shares may also be purchased through certain organizations
connected with pension and retirement plans. These organizations may charge
investors a transaction or other fee for their services, may require different
minimum initial and subsequent investments than the Fund and may impose other
charges or restrictions different from those applicable to shareholders who
invest in the Fund directly. Fees charged by these organizations will have the
effect of reducing a shareholder's total return on an investment in Fund shares.
No such charge will be paid by an investor who purchases the Fund shares
directly from the Fund as described above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days
after acceptance of the order. The price at which a purchase will be effected
is based on the next calculation of net asset value after the order is received
by the Fund's transfer agent, sub-transfer agent or any other authorized agent
of the Fund.
The Fund reserves the right in its sole discretion to withdraw all or
any part of the offering made by this Prospectus or to reject purchase orders,
when in the judgment of management, such withdrawal or rejection is in the best
interest of the Fund. The Fund also reserves the right at any time to waive the
minimum investment requirements applicable to initial investments or to increase
the minimums following notice. No application to purchase shares is binding on
the Fund until accepted in writing.
Investors may, subject to the approval of the Trust and Worldwide
Portfolios, purchase shares of the Fund with liquid securities that are eligible
for purchase by the Portfolio (consistent with the Fund's and the Portfolio's
investment policies and restrictions) and that have a value that is readily
ascertainable in accordance with the valuation policies of the Trust and
Worldwide Portfolios. These transactions will be effected only if the Sub-
Advisor intends to retain the securities in the Portfolio as an investment.
Assets so purchased will be valued in generally the same manner as they would be
valued for purposes of pricing the Fund's shares, if such assets were included
in the Portfolio's assets at the time of purchase. The Trust and Worldwide
Portfolios reserve the right to amend or terminate this practice at any time.
9. NET ASSET VALUE
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
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 assets, less liabilities, by the total number of shares
outstanding. Since the Fund will invest all of its investable assets
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in the Portfolio, the value of the Fund's investable assets will be equal to the
value of its beneficial interest in the Portfolio.
The Portfolio's securities and other assets are valued as follows:
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 Portfolio'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 a Fund share are the
same and will be equal to the next calculated net asset value of a share of the
Fund.
10. OPEN ACCOUNT SYSTEM AND SHARE CERTIFICATES
Unless otherwise directed, all investor accounts are maintained on a
book-entry basis. Share certificates will not be issued unless requested by the
shareholder. Shares purchased by dividend reinvestment, and shares redeemed
under a Systematic Withdrawal Plan, will be confirmed after the end of each
calendar quarter. Following any other investment or redemption, the investor
will receive a printed confirmation indicating the dollar amount of the
transaction, the per share price of the transaction and the number of shares
purchased or redeemed.
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11. REDEMPTION OF FUND SHARES
(i) SHARE REDEMPTIONS BY MAIL. The Fund will redeem, at current net
asset value, all shares of the Fund offered for redemption. The redemption
price of shares tendered for redemption will be the net asset value next
determined after receipt of all required documents by the Fund's transfer agent,
sub-transfer agent or other authorized agent of the Fund. To receive the net
asset value for a specific day, a redemption request must be received before the
close of the Exchange on that day. Shareholders who purchased their shares
directly from the Fund may redeem all or part of their shares in the Fund by
sending a written request to the Fund, c/o DST Systems, Inc., P.O. Box 419958,
Kansas City, MO 64141. The written request for redemption must be signed by
each registered owner exactly as the shares are registered and must clearly
identify the account and the number of shares or the dollar amount to be
redeemed.
The signatures of the redeeming shareholders must be guaranteed by a
national or state bank, a member firm of a domestic stock exchange or the
National Association of Securities Dealers (NASD), a credit union, a federal
savings and loan association or another eligible guarantor institution if the
redemption: is being made payable other than exactly as registered; is being
mailed to an address which has been changed within 30 days of the redemption
request; or is being mailed to an address other than the one on record. A
notary public is not an acceptable guarantor. The Fund also reserves the right
to require a signature guarantee under other circumstances. The signature
guarantees must appear, together with the signatures of the registered owners,
(i) on the written request for redemption which clearly identifies the account
and the number of shares to be redeemed, (ii) on a separate instrument of
assignment ("stock power") which may be obtained from a bank or broker, or
(iii) on any share certificates tendered for redemption. The use of signature
guarantees is intended to protect the shareholder and the Fund from a possibly
fraudulent application for redemption.
(ii) REDEMPTIONS BY TELEPHONE. All shareholders have Telephone
Transaction Privileges to authorize purchases, exchanges or redemptions unless
they specifically decline this service on the account application or by writing
to the Fund, c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO 64141. The
telephone redemption option is not available for shares held in retirement
accounts sponsored by the Fund. Redemption requests may be made by telephoning
DST Systems, Inc., at 1-800-[551-5849]. To receive the net asset value for a
specific day, a redemption request must be received before the close of the
Exchange on that day. As discussed above, certain requests must be in writing
and the signature of a redeeming shareholder must be signature guaranteed, and
therefore shares may not be redeemed by telephone, if the redemption: is being
made payable other than exactly as registered; is being mailed to an address
which has been changed within 30 days of the redemption request; is being mailed
to an address other than the one on record; or the shares are represented by
share certificates issued to the shareholder.
All telephone transactions are recorded and written confirmations
indicating the details of all telephone transactions will promptly be sent to
the shareholder of record. Prior to accepting a telephone transaction,
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the shareholder placing the order may be required to provide certain identifying
information. A shareholder electing to communicate instructions by telephone
may be giving up some level of security that would otherwise be present were the
shareholder to request a transaction in writing. Neither the Fund nor its
transfer agent or Advisor assume responsibility for the authenticity of
instructions communicated by telephone which are reasonably believed to be
genuine and which comply with the foregoing procedures. The Fund, and/or its
transfer agent, may be liable for losses resulting from unauthorized or
fraudulent telephone instructions in the event these procedures are not
followed.
In times of extreme economic or market conditions, redeeming shares by
telephone may be difficult. The Fund may terminate or modify the procedures
concerning the telephone redemption and wire transfer services at any time,
although shareholders of the Fund will be given at least 60 days' prior notice
of any termination or material modification. The Advisor may, at its own risk,
waive certain of the redemption requirements described in the preceding
paragraphs.
(iii) PAYMENT FOR REDEEMED SHARES. Payment for shares redeemed upon
written request will be made by check and generally will be mailed within three
business days after receipt by the transfer agent of the properly executed
redemption request and any outstanding certificates for the shares to be
redeemed. Payment for shares redeemed by telephone will be made by check
payable to the account name(s) and address exactly as registered, and generally
will be mailed within three business days following the date of the request for
redemption.
A shareholder may request that payment for redeemed shares of the Fund
be made by wire or electronic funds transfer. Shareholders may elect to use
these services on the account application or by providing the Fund with a
signature guaranteed letter requesting these services and designating the bank
to receive all wire or electronic funds transfers. A shareholder may change the
predesignated bank of record by providing the Fund with written, signature
guaranteed instructions. Redemption proceeds paid by wire transfer will be
transmitted to the shareholder's predesignated bank account on the next business
day after receipt of the shareholder's redemption request. Redemption proceeds
paid by electronic funds transfer will be electronically transmitted to the
shareholder's predesignated bank account on the second business day after
receipt of the shareholder's redemption request. There is no fee for wire or
electronic funds transfer of proceeds from the redemption of Fund shares.
Shareholders may encounter delays in redeeming shares purchased by
check (other than cashier's or certified checks) or electronic funds transfer if
the redemption request is made within 15 days after the date of purchase. In
those situations, the redemption check will be mailed within 15 days after the
transfer agent's receipt of the purchase instrument, provided that it has not
been dishonored or cancelled during that time. The foregoing policy is to
ensure that all payments for the shares being redeemed have been
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honored. In addition to the foregoing restrictions, no redemption payment can
be made for shares which have been purchased by telephone order until full
payment for the shares has been received. In any event, valid redemption
requests concerning shares for which full payment has been made will be priced
at the net asset value next determined after receipt of the request.
(iv) REDEMPTION IN-KIND. The 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. The Fund is, however, governed by Rule 18f-1 under the Investment
Company Act of 1940 pursuant to which the Fund is obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. Should redemptions by any
shareholder during any 90-day period exceed such limitation, the Fund will have
the option of redeeming the excess in cash or in-kind. If shares are redeemed
in-kind, the redeeming shareholder generally will incur brokerage costs in
converting the assets to cash.
(v) REDEMPTIONS BY THE FUND. As a means of reducing its expenses, the
Fund is authorized to redeem involuntarily all shares held in accounts with a
value of less than $100,000. Such redemptions will be permitted only when the
account is reduced below the minimum value by redemption, and not by declines in
per share net asset value. As a result, accounts established with the
applicable minimum investment might be subject to redemption after only a small
redemption has been made by the shareholder. At least 60 days' written notice
will be given to a shareholder before such an account is redeemed. During that
time, the shareholder may add sufficient funds to the account to meet or exceed
the minimum. If this condition is not met, the shares will be redeemed at the
per share net asset value next determined after the 60th day following the
notice. A check for the proceeds will be sent to the shareholder unless a share
certificate has been issued, in which case payment will be made upon surrender
of the certificate.
12. EXCHANGE PRIVILEGE
(i) EXCHANGES. By telephoning the Fund at 1-800-551-5849, or writing
to the Fund, in care of DST at P.O. Box 419958, Kansas City, MO 64141, any
shareholder may exchange, without charge, any or all of his shares in the Fund,
subject to stated minimums, for shares of any of the publicly available Berger
Funds or Berger/BIAM Funds. Exchanges may be made only if the Berger Fund or
Berger/BIAM Fund into which a shareholder wishes to exchange shares is
registered in the shareholder's state of residence.
It is each investor's responsibility to obtain and read a prospectus
of the Berger Fund or Berger/BIAM Fund into which the investor is exchanging.
By giving exchange instructions, a shareholder will be deemed to have
acknowledged receipt of the prospectus for the Berger Fund or Berger/BIAM Fund
being purchased. Up to four exchanges out of the Fund are permitted during the
calendar year. This limit helps keep the Fund's net asset base stable and
reduces the Fund's administrative expenses. In times of extreme economic or
market conditions, exchanging Fund shares by telephone may be
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difficult. See "Redemption of Fund Shares - Redemptions by Telephone" for
procedures for telephone transactions.
Redemptions of shares in connection with exchanges into or out of the
Fund are made at the net asset value per share next determined after the
exchange request is received. To receive a specific day's price, a letter or
call must be received before that day's close of the Exchange. Each exchange
represents the sale of shares from one fund and the purchase of shares in
another, which may produce a gain or loss for U.S. Federal income tax purposes.
All exchanges out of the Fund are subject to the minimum and
subsequent investment requirements of the fund into which shares are being
exchanged. Exchanges will be accepted only if the registration of the two
accounts is identical. Neither the Fund, the Berger Funds, the Berger/BIAM
Funds, nor their transfer agents or advisors assume responsibility for the
authenticity of exchange instructions communicated by telephone or in writing
which are believed to be genuine. See "Redemption of Fund Shares - Redemptions
by Telephone" for procedures for telephone transactions. All shareholders have
Telephone Transaction Privileges to authorize exchanges unless they specifically
decline this service on the account application or by writing to the Fund,
c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO 64141.
13. PLANS AND PROGRAMS
The Fund offers several tax-qualified retirement plans for adoption by
individuals and employers. The Fund also offers both a profit-sharing plan and
a money purchase pension plan for employers and self-employed persons, an
Individual Retirement Account ("IRA") and a 403(b) Custodial Account.
In order to receive the necessary materials to create a profit-sharing
or money purchase pension plan account, an IRA account or a 403(b) Custodial
Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, CO
80217, or call 1-800-706-0539. Trustees for existing 401(k) or other plans
interested in utilizing Fund shares as an investment or investment alternative
in their plans should contact the Fund at 1-800-551-5849.
The Fund also offers a systematic withdrawal plan. Forms to open such
an account may be obtained by writing to the Fund, c/o DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141, or call 1-800-551-5849.
14. 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.
Dividends declared and payable to shareholders of record on a specified date in
December will be deemed to have been received by shareholders on December 31 for
tax purposes if paid during January the following year.
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The Fund is treated as a separate entity for tax purposes and intends
to elect and maintain qualification to be treated as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended.
The Fund's qualification as a regulated investment company will depend on the
Portfolio maintaining its status as a partnership for tax purposes. If the Fund
qualifies under Subchapter M and meets certain minimum distribution
requirements, the Fund generally will not be liable for U.S. Federal income tax
on the amount of its earnings that are timely distributed. If the Fund
distributes annually less than 98% of its income and gain, it may be subject to
a nondeductible excise tax equal to 4% of the shortfall.
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 investor specifically requests that either dividends or
distributions, or both, be paid in cash. The election to receive dividends or
distributions in cash or to reinvest them in Fund shares may be changed by
calling the Fund at 1-800-[551-5849] or by written request to the Fund, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141, and must be received at
least ten days prior to the record date of any dividend or capital gains
distribution.
The Fund will inform its shareholders of the amount and nature of such
income or gains resulting from their investment in the Fund. Dividends paid by
the Fund from net investment income and distributions from net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term capital gains (net of capital
losses), whether received in cash or reinvested, will be taxable as long-term
capital gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. If a shareholder is exempt from U.S. Federal income tax, the
shareholder will not generally be taxed on amounts distributed by the Fund.
Under the Internal Revenue Code, gains recognized by the Portfolio
upon a disposition of assets contributed in-kind to it by the Fund will be
specially allocated to the Fund and not to other investors in the Portfolio to
the extent of the unrealized appreciation in those assets at the time of their
transfer. As a result, shareholders of the Fund may receive distributions of a
greater amount of gains than if the Portfolio had purchased those assets in the
open market upon commencement of Fund operations or in a transaction that did
not involve contributions of assets in-kind.
Investment income received by the Fund, directly or through the
Portfolio, from sources within foreign countries may be subject to foreign
withholding and other taxes withheld at the source. The U.S. has entered into
tax treaties with many foreign countries that, in some circumstances, may
entitle the Fund or Portfolio to a reduced rate of tax or exemption from tax on
such income. It is impossible to determine the effective rate of foreign tax in
advance since the amount of the Portfolio's assets to be invested within various
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countries will fluctuate and the extent to which tax refunds will be recovered
is uncertain. If, directly or through the Portfolio, more than 50% in value of
the Fund's total assets at the close of its taxable year consists of securities
of foreign corporations, the Fund may elect to "pass-through" to its
shareholders the income taxes paid by the Fund to foreign governments during a
year. Under this election, each shareholder will be required to include the
shareholder's pro rata portion of these foreign taxes in gross income, but will
be able to deduct (as an itemized deduction for shareholders who itemize) or
claim a foreign tax credit for such amount (subject to various limitations). If
the election is not made, foreign taxes will be treated as an expense of the
Fund.
At certain levels of taxable income, the Internal Revenue Code
provides a preferential tax rate for long-term capital gains. Long-term capital
gains of taxpayers other than corporations are taxed at a 28% maximum rate,
whereas ordinary income is taxed at a 39.6% maximum rate. Capital losses
continue to be deductible only against capital gains plus (in the case of
taxpayers other than corporations) $3,000 of ordinary income annually ($1,500
for married individuals filing separately).
Some shareholders may be subject to 31% "backup withholding" on
dividends, capital gains distributions and redemption payments made by the Fund.
Backup withholding generally will apply to shareholders who fail to provide the
Fund with their correct taxpayer identification number or to make required
certifications. Backup withholding is not an additional tax. Any amounts
withheld may be credited against a shareholder's U.S. Federal income tax
liability.
The foregoing is only a brief summary of the U.S. Federal income tax
considerations affecting the Fund and its shareholders. See "Income Dividends,
Capital Gains Distributions and Tax Treatment" in the Statement of Additional
Information for more information regarding taxation. Potential investors should
consult their tax advisors with specific reference to their own tax situation.
15. ADDITIONAL INFORMATION
The Trust is a Delaware business trust organized on May 31, 1996. The
Fund was established on May 31, 1996, as a series or fund under the Trust.
Since the Trust and the Fund were only recently organized, they have no prior
operating history, although the Fund calculates its performance taking into
account the prior performance of a trust fund whose assets were transferred into
the Portfolio as described under "Performance" below.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest in series. The Trust is also authorized to establish
multiple classes of shares representing differing interests in an existing or
new series. As of the date of this Prospectus, the series comprising the
Berger/BIAM International Institutional Fund is one of three series 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
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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.
Shareholders of the Berger/BIAM International Institutional Fund and
the other funds or series of the Berger/BIAM Worldwide Funds Trust generally
vote separately on matters relating to those respective funds, although they
vote together and with the holders of any other series of the Trust issued in
the future 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
Berger/BIAM Worldwide Funds 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 Trust will facilitate appropriate communications by
shareholders desiring to call a special meeting for the purpose of considering
the removal of a trustee.
The Fund invests all of its investable assets in the Portfolio, a
series of Worldwide Portfolios, which is also a Delaware business trust divided
into series. Investors in each series of Worldwide Portfolios will vote
separately or together in the same manner as shareholders of the Trust's series.
For more information on the Trust and Worldwide Portfolios, see "Additional
Information" in the Statement of Additional Information.
The Glass-Steagall Act prohibits a depository institution (such as a
bank) 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.
State laws on this issue may differ from the interpretations of relevant Federal
law and banks and financial institutions may be required to register as dealers
pursuant to state securities law. If the circumstances described above should
change, the trustees of the Trust and Worldwide Portfolios would review the
relationships with BIAM and consider taking all actions appropriate under the
circumstances.
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16. 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.,
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 Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Dow Jones World Index, the Standard & Poor's
500 Stock Index, 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.
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.
The Portfolio commenced operations upon the transfer to the Portfolio
of assets held in a pooled trust (the "Pool") maintained by Citizens Bank New
Hampshire, for which BIAM has provided day-to-day portfolio management as
sub-advisor since the inception of the Pool. BIAM's bank holding company
parent indirectly owns a 23.5% interest in the parent of Citizens Bank New
Hampshire. The Pool had substantially the same investment objective,
policies and limitations of the Fund and the Portfolio. Assets from the Pool
were transferred to the Fund which, in turn, transferred those assets to the
Portfolio in exchange for an interest in the Portfolio. As a result of this
transaction, the investment holdings in the Portfolio (in which the Fund
invests all of its investable assets) were the same as the investment
holdings in the portfolio of
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<PAGE>
the Pool immediately prior to the transfer, except for the seed capital provided
by Berger Associates.
The Pool was not a registered investment company since it was exempt
from registration under the Investment Company Act of 1940 (the "1940 Act").
Since, in a practical sense, the Pool constitutes the "predecessor" of the
Portfolio, the Fund calculates its performance for periods commencing prior to
the transfer of the Pool's assets to the Portfolio by including the Pool's total
return, adjusted to reflect the deduction of fees and expenses applicable to the
Fund as stated in the Fee Table above in this Prospectus (that is, adjusted to
reflect estimated expenses, including the Fund's pro rata share of the aggregate
annual operating expenses, net of fee waivers, of the Portfolio in which all of
the investable assets of the Fund are invested).
The performance data set forth below includes the performance of the
Pool for periods before the Fund's and the Portfolio's registration statements
became effective. As noted above, the Pool was not registered under the 1940
Act and thus was not subject to certain investment restrictions that are imposed
by the 1940 Act. If the Pool had been registered under the 1940 Act, the Pool's
performance might have been adversely affected.
AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BERGER/BIAM EAFE INDEX(2)
INTERNATIONAL
INSTITUTIONAL FUND(1)
- --------------------------------------------------------------------------------
1-YEAR 18.38% 13.62%
- --------------------------------------------------------------------------------
3-YEAR 14.02% 10.76%
- --------------------------------------------------------------------------------
5-YEAR 15.29% 10.33%
- --------------------------------------------------------------------------------
SINCE INCEPTION(3) 13.64% 4.26%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Total return for the Fund has been adjusted to reflect estimated expenses
of the Fund, including the Fund's pro rata share of the aggregate annual
operating expenses, net of fee waivers, of the Portfolio in which all of the
investable assets of the Fund are invested.
(2) Source: Morgan Stanley Capital International (MSCI). The MSCI EAFE Index
is a market capitalization weighted index composed of companies representative
of the market structure of 20 developed market countries in Europe, Australasia
and the Far East.
(3) Covers the period since July 31, 1989.
All of the foregoing performance data were calculated in accordance
with methods prescribed by the Securities and Exchange Commission which are
discussed in more detail under the heading "Performance Information" in the
Statement of Additional Information.
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<PAGE>
Shareholders with questions should write to the Fund, c/o BBOI
Worldwide, P.O. Box 5005, Denver, CO 80217, or call 1-303-329-0200 or
1-800-706-0539. Prospectuses are also available upon request for the
following funds advised by Berger Associates, Inc.: the Berger 100 Fund, the
Berger Growth and Income Fund, the Berger Small Company Growth Fund and the
Berger New Generation Fund. Please call 1-800-706-0539 for information.
-32-
<PAGE>
PROSPECTUS
BERGER/BIAM INTERNATIONAL CORE FUND
The Berger/BIAM International CORE Fund (the "Fund") is a "no-load" mutual
fund, more technically referred to as an open-end management investment company,
organized as a diversified series of the Berger/BIAM Worldwide Funds Trust
(the "Trust"). The investment objective of the Fund is long-term capital
appreciation. The Fund seeks to achieve this objective by investing all of its
investable assets in the Berger/BIAM International Portfolio (the "Portfolio")
which, in turn, invests primarily in common stocks of well established companies
located outside the United States. The Portfolio intends to diversify its
holdings among several countries and to have, under normal market conditions, at
least 65% of the Portfolio's total assets invested in the securities of
companies located in at least five countries, not including the United States.
UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY ACQUIRE AND MANAGE THEIR OWN
PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS INVESTMENT OBJECTIVE BY INVESTING
ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO, AS DESCRIBED ABOVE. Accordingly,
the investment performance of the Fund will derive from the investment
performance of the Portfolio. The Portfolio is an open-end management
investment company and a diversified series of a separate trust known as the
Berger/BIAM Worldwide Portfolios Trust ("Worldwide Portfolios"). The
Portfolio's investment objective and policies are identical to those of the
Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI Worldwide" or the
"Advisor"), which has delegated daily portfolio management of the Portfolio to
Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-Advisor").
For further information about the Fund's investment objective and structure, see
"Investment Objective and Policies and Risk Factors", "Introduction" and
"Additional Information About Master/Feeder Structure".
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
This Prospectus sets forth concisely the information about the Fund that a
prospective investor should consider before investing. Investors are advised to
retain this Prospectus 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, which is incorporated in its entirety by
reference, is available upon request without charge by writing to the Fund at
P.O. Box 5005, Denver, CO 80217, or by calling 1-800-706-0539.
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
<PAGE>
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 October 15, 1996
<PAGE>
Table of Contents
SECTION PAGE
1. Fee
Tables.................................................................. 1
2. Introduction............................................................ 2
3. Investment Objective and Policies and Risk
Factors................................................................. 3
4. Portfolio
Turnover................................................................ 11
5. Additional Information About Master/Feeder
Structure............................................................... 11
6. Management and Investment
Advice.................................................................. 12
7. Expenses of the
Fund.................................................................... 16
8. Purchase of Shares in the
Fund.................................................................... 18
9. Net Asset
Value................................................................... 20
10. Open Account System and Share
Certificates............................................................ 21
11. Redemption of Fund
Shares.................................................................. 21
12. Exchange
Privilege............................................................... 24
13. Plans and
Programs................................................................ 25
14. Income Dividends, Capital Gains Distributions and Tax
Treatment............................................................... 25
15. Additional
Information............................................................. 27
16. Performance............................................................ 28
<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)
TOTAL
FUND
INVESTMENT OPERATING
ADVISORY EXPENSES*
FEE OTHER (AFTER
(AFTER WAIVER) EXPENSES** WAIVER)
Berger/BIAM International 0.85%*** 0.25% 1.10%***
CORE Fund
* Total Fund Operating Expenses are comprised of the Fund's annual
operating expenses plus the Fund's pro rata portion of the annual
operating expenses of the Portfolio in which the Fund's assets are
invested. See "Expenses of the Fund".
** Other Expenses primarily include administrative services fees paid by the
Fund and custodian fees paid by the Portfolio and are based on estimated
expenses for the first year of operations of the Fund and the Portfolio.
*** Although the Fund does not pay an investment advisory fee directly to an
investment advisor, it bears indirectly its pro rata portion of the
advisory fee paid to the Advisor by the Portfolio in which the assets of
the Fund are invested. Until at least April 30, 1998, the Advisor has
agreed voluntarily to waive its investment advisory fee to the extent that
the Portfolio's normal operating expenses in any fiscal year, including the
investment advisory fee and custodian fees, but excluding brokerage
commissions, interest, taxes and extraordinary expenses, exceed 1.00% of
the Portfolio's average daily net assets for that fiscal year. Absent the
waiver, the Investment Advisory Fee would be 0.90% and Total Fund Operating
Expenses would be estimated to be 1.15%.
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming
(1) 5% annual return, and (2) redemption at the end of each time period:
1 YEAR 3 YEARS
Berger/BIAM International CORE Fund $11* $35*
* Based on estimated expenses for the first year of operations of the Fund
and the Portfolio, after waiver.
-1-
<PAGE>
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.
Total Fund Operating Expenses include the Fund's pro rata share of the
aggregate annual operating expenses of the Portfolio, in which all of the
investable assets of the Fund are invested. The trustees of the Trust believe
that the investment in the Portfolio by investors in addition to the Fund may
enable the Portfolio to achieve economies of scale which could reduce expenses
and, accordingly, that the aggregate per share expenses of the Fund and the
Fund's pro rata share of the expenses of the Portfolio will be less than or
approximately equal to the expenses the Fund would incur if it retained the
services of an investment advisor and the assets of the Fund were invested
directly in the type of securities held by the Portfolio. While the investment
advisory fee for the Portfolio is higher than that paid by most other mutual
funds, it is comparable to the investment advisory fee paid by many other
international equity funds.
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 Fund's expenses are described in greater
detail under "Management and Investment Advice", and "Expenses of the Fund".
2. INTRODUCTION
The Berger/BIAM International CORE Fund is an open-end, diversified
management investment company commonly referred to as a "mutual fund". The Fund
is a "no-load" fund, meaning that a buyer pays no commissions or sales load when
buying shares of the Fund. This Prospectus describes the securities offered by
the Fund.
The Fund is a series of the Berger/BIAM Worldwide Funds Trust, a Delaware
business trust, and invests in the Portfolio that, in turn, invests in
securities in accordance with an investment objective, policies and limitations
that are identical to those of the Fund. This is sometimes called a
master/feeder fund structure, because the Fund and other investors who invest in
the Portfolio "feed" shareholders' investments into the Portfolio, a "master"
fund. The structure looks like this:
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<PAGE>
Shareholders
BUY SHARES IN [down arrow]
Fund
INVESTS IN [down arrow]
Portfolio
INVESTS IN [down arrow]
Stocks and
Other Securities
The trustees of the Trust believe that this structure may benefit
shareholders, since investment in the Portfolio by investors in addition to the
Fund may enable the Portfolio to achieve economies of scale which could reduce
expenses. For more information about this structure, see "Additional
Information About Master/Feeder Structure".
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
3. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The investment objective of the Fund is long-term capital appreciation.
The Fund seeks to achieve this objective by investing all of its investable
assets in the Portfolio which, in turn, invests 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 Portfolio may also invest in securities other than common stock if
the Sub-Advisor believes these are likely to be the best suited at that time to
achieve the Portfolio'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 Portfolio
intends to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Portfolio'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.
-3-
<PAGE>
INVESTMENT SELECTION
In selecting its portfolio securities, the Portfolio 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 Portfolio's
investments. The Portfolio 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 Portfolio 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 Portfolio is
free to invest in companies of any size and in companies located in other
foreign countries, including developing countries.
INVESTMENT DECISION MAKING PROCESS
The Sub-Advisor's investment approach 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, 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 Portfolio.
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-
-4-
<PAGE>
Advisor to be less important than the diversity of its sources of earnings and
earnings growth.
WHY INVEST IN THIS FUND?
The Advisor believes there is substantial opportunity for long-term capital
growth in foreign markets, as certain foreign economies may grow more rapidly
than the U.S. economy. In addition, boundaries and borders no longer define or
confine the operations of many of the world's business entities. Companies
raise capital, purchase raw materials, manufacture and distribute products on a
worldwide basis. Many profitable, successful companies benefit from global
economic growth, including companies in foreign markets. The Fund seeks to take
advantage of the investment opportunities created by an increasingly global
economy.
One reason for investing internationally is the opportunity to earn higher
investment returns. On a total return basis, foreign stocks represented by the
Morgan Stanley Capital International EAFE (Europe, Australasia, Far East) Index
outperformed U.S. stocks represented by the Standard & Poor's 500 Stock Index in
all but two rolling ten-year periods ended 1981 through 1995. Of course, during
this time there were shorter periods when U.S. stocks had higher returns, and
there have been periods when the EAFE Index produced negative returns.
Accordingly, investors in foreign equity securities should have a long-term
investment perspective, as international markets tend to be more volatile than
the U.S. market.
International investing also expands investment opportunities. The U.S.
percentage of the world's stock market capitalization has decreased over the
past 20 years. Today, nearly two-thirds of the world's stock market
capitalization consists of non-U.S. stocks and companies. Since foreign stocks
do not always move in tandem with U.S. stocks and with each other, international
investing also has the potential to add diversification to an all-U.S. stock
portfolio by spreading investments across a number of markets.
Investors who wish to diversify their portfolio internationally can do so
by investing directly in foreign stocks, but they may find it difficult to make
purchases and sales, obtain reliable information, hold securities in safekeeping
and manage the conversion of the value of their international investments into
U.S. dollars. Investing in the Fund, however, eliminates these complications.
With a single investment, the investor owns a diversified international
investment portfolio that is actively managed by experienced professionals.
BIAM, the Portfolio's Sub-Advisor, has extensive experience in dealing with
foreign markets and with brokers and custodian banks around the world. BIAM
also has the benefit of an established information network and believes the Fund
offers a convenient and cost-effective means of investing internationally.
Of course, as an international fund, the Fund entails special risks as
described below. The Fund seeks to reduce these risks through diligent research
and diversification.
-5-
<PAGE>
SECURITIES, INVESTMENT PRACTICES AND RISK FACTORS
Since the shares of the Fund represent an investment in the Portfolio,
which in turn primarily represents an investment in common stocks, investors
should understand that the net asset value of the Fund will change as the market
value of the securities held in the Portfolio changes and that the value of a
Fund share will go up and down. 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 and the Portfolio is considered
fundamental, meaning that it cannot be changed without a vote of the
shareholders of the Fund and, as to the Portfolio's objective, of the investors
in the Portfolio. There can be no assurance that the Fund's or the Portfolio's
investment objective will be realized. Following is additional information
about some of the specific types of securities in which the Portfolio 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 Portfolio. 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 Portfolio's investments may include American Depositary Receipts
(ADRs). The Portfolio 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 Portfolio invests 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
-6-
<PAGE>
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 Portfolio 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 Portfolio 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 Portfolio 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 Portfolio will 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 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 currency would adversely
affect the value of the securities expressed in dollars. 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 Portfolio may purchase securities that are
convertible into common stock when the 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 Portfolio 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 Portfolio 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., and
Standard & Poor's Corporation, or being of similar creditworthiness in the
determination of the Sub-Advisor. The Portfolio 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 Portfolio 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 Portfolio will invest less than 20% of the market value of its net
assets at the time of purchase in convertible securities rated below investment
grade. If convertible securities purchased by the Portfolio are downgraded
following purchase, or if other circumstances cause 20% or more of the
Portfolio's assets to be invested in convertible securities rated below
investment grade, the trustees of Worldwide Portfolios, in consultation with the
Sub-Advisor, will determine what
-7-
<PAGE>
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 Portfolio may invest in securities of
companies with small or medium 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 well 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 well established companies.
LENDING PORTFOLIO SECURITIES. The Portfolio may lend its securities to
qualified institutional investors such as brokers, dealers or other financial
organizations. This practice permits the Portfolio to earn income, which, in
turn, can be invested in additional securities to pursue its investment
objective. Loans of securities by the Portfolio 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
Portfolio bears a risk of loss in the event that the other party to a securities
lending transaction defaults on its obligations and the Portfolio 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 Portfolio 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 Portfolio 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 Portfolio's total
assets.
HEDGING TRANSACTIONS. The Portfolio 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 Portfolio's
securities or the price of securities that the Portfolio 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 Portfolio 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 Portfolio's assets. Although a hedging
transaction may, for example, partially protect the Portfolio 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 Portfolio 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
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eliminate fluctuations in the prices of the underlying securities the Portfolio
owns or intends to acquire.
The Portfolio will generally enter into forward foreign currency exchange
contracts either with respect to specific transactions or with respect to the
Portfolio's security positions. For example, the Portfolio 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
Portfolio's investments are denominated may decline compared to the U.S. dollar,
the Portfolio 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 Portfolio will be 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
Portfolio is attempting to hedge, such as a portion or all of its securities
denominated in a specific foreign currency. To ensure that the Portfolio will
be able to meet its obligations under its forward foreign currency exchange
contracts, the Portfolio 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 Portfolio
involve the potential for a loss that may exceed the amount of commitment the
Portfolio would be permitted to make in those contracts under its investment
limitations. The principal risks of the Portfolio's use of forward foreign
currency exchange contracts are: (a) losses resulting from currency market
movements not anticipated by the Portfolio; (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 Portfolio 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 Portfolio enters into an over-the-counter contract with a
counterparty, the Portfolio will assume counterparty credit risk, that is,
the risk that the counterparty will fail to perform its obligations, in which
case the Portfolio 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
Worldwide Portfolios may, without shareholder approval, authorize the Portfolio
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 Portfolio's transactions in forwards,
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futures and options and the risks of such investments can be found in the
Statement of Additional Information.
ILLIQUID SECURITIES. The Portfolio 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 Portfolio may not purchase any security, the purchase of which
would cause the Portfolio 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 Portfolio's
net assets to be invested in illiquid securities, the trustees of Worldwide
Portfolios, 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 Portfolio 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 Portfolio might have to incur the potentially
substantial expense and delay associated with effecting registration.
INVESTMENT RESTRICTIONS
In addition to its investment objective, the Portfolio has adopted a number
of restrictions on its investments and other activities that may not be changed
without shareholder approval. For example, the Portfolio 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 Portfolio may lend
portfolio securities and enter into repurchase agreements in accordance with its
investment policies). The Portfolio may not invest in any one industry 25% or
more of the value of its total assets at the time of investment, nor invest in
commodities, except, only for the purpose of hedging, the Portfolio may invest
in forward foreign currency exchange contracts and other instruments as
specified in greater detail above and in the Statement of Additional
Information.
Further, with respect to 100% of its total assets, the Portfolio 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 Portfolio'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 Portfolio's total assets without a shareholder vote.
Also, the Portfolio does not currently intend to purchase or sell
securities on a when-issued or delayed delivery basis if as a result, more than
5% of its net assets would be invested in such securities, although this
restriction may be changed without shareholder
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approval. For more detail about the Portfolio's investment restrictions, see
the Statement of Additional Information.
4. PORTFOLIO TURNOVER
In pursuit of the Portfolio's investment objective, the Sub-Advisor
continuously monitors the Portfolio's investments and makes portfolio changes
whenever changes in investment themes, the fundamentals of any portfolio company
or the price of any portfolio security indicate to the Sub-Advisor that more
attractive alternatives exist or that the Portfolio's investment 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 or interests in the
Portfolio due to economic, market or other factors that are not within the
control of management. Although the annual portfolio turnover rate of the
Portfolio will vary, it is normally expected to range from 25% to 75%.
5. ADDITIONAL INFORMATION ABOUT MASTER/FEEDER STRUCTURE
Unlike other mutual funds that directly acquire and manage their own
portfolios of securities, the Fund (referred to as a feeder fund) seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio (referred to as a master fund). This two-tier structure is known
as a master/feeder. The Fund has the same investment objective and policies as
the Portfolio. The Fund will invest only in the Portfolio, and the Fund's
shareholders will therefore acquire only an indirect interest in the investments
of the Portfolio.
In addition to selling a beneficial interest to the Fund, the Portfolio may
sell beneficial interests to other mutual funds or institutional investors (that
is, other feeder funds). Such investors will invest in the Portfolio on the
same terms and conditions and will pay their proportionate share of the
Portfolio's expenses. However, the other investors investing in the Portfolio
are not required to issue their shares at the same public offering price as the
Fund due to potential differences in expense structures. Accordingly, investors
in the Fund should be aware that these differences may result in differences in
returns experienced by investors in the different funds that invest in the
Portfolio. Such differences in returns are common in this type of mutual fund
structure and are also present in other mutual fund structures. Information
concerning other investors in the Portfolio (for example, other feeder funds) is
available from the Fund at 1-800-706-0539.
The investment objective of the Fund may not be changed without the
approval of the Fund's shareholders. The investment objective of the Portfolio
may not be changed without the approval of the investors in the Portfolio,
including the Fund. If the objective of the Portfolio changes and the
shareholders of the Fund do not approve a parallel change in the Fund's
investment objective, the trustees of the Trust will consider other
alternatives, including seeking an alternative investment vehicle or directly
retaining the Fund's own investment advisor. Shareholders will be given at
least 30 days' written notice prior to any change in the investment objective of
the Fund or the Portfolio.
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Smaller funds investing in the Portfolio may be materially affected by the
actions of larger funds investing in the Portfolio. For example, if a larger
fund invests or withdraws from the Portfolio, the remaining funds may experience
lower or higher pro rata operating expenses. Lower returns could possibly
result from a large withdrawal. However, this possibility also exists for
traditionally structured funds which have large or institutional investors.
Also, a fund with a greater pro rata ownership in the Portfolio could have
effective voting control over the operations of the Portfolio.
Whenever the Fund is requested to vote as an investor in the Portfolio on
matters pertaining to the Portfolio (other than a vote by the Fund to continue
the operation of the Portfolio upon the withdrawal of another investor in the
Portfolio), the Fund will hold a meeting of its shareholders and will cast all
of its votes as an investor in the Portfolio in the same proportion as directed
by the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the votes cast by the Fund at the meeting of the Portfolio investors.
The percentage of the votes representing the Fund's shareholders who do not vote
will be voted by the Fund in the same proportion as the Fund's shareholders who
do, in fact, vote.
The Fund may withdraw its investment in the Portfolio at any time, if the
trustees of the Trust determine that it is in the best interests of the Fund to
do so. Certain changes in the Portfolio's investment objective, policies and
limitations may require the Fund to withdraw its investment in the Portfolio.
Upon any such withdrawal, the trustees would consider what action might be
taken, including investing the Fund's assets in another pooled investment entity
having the same investment objective and policies as the Fund or retaining an
investment advisor to manage the Fund's assets in accordance with the investment
policies described above with respect to the Portfolio. Any such withdrawal
could result in a distribution in kind of portfolio securities (as opposed to a
cash distribution) from the Portfolio. If securities are distributed, the Fund
could incur brokerage, tax or other charges in converting the securities to
cash. In addition, a distribution in kind may adversely affect the liquidity of
the Fund.
This Prospectus and the Statement of Additional Information contain more
detailed information about this master/feeder organizational structure,
including information related to: (i) the investment objective, policies and
restrictions of the Fund and the Portfolio; (ii) the trustees and officers of
the Trust and Worldwide Portfolios, and the management of the Fund and the
Portfolio; (iii) portfolio transactions and brokerage commissions; (iv) the
Fund's shares, including the rights and liabilities of its shareholders; (v)
additional performance information, including the method used to calculate total
return; and (vi) the determination of the value of the shares of the Fund. The
master/feeder fund structure is still relatively new and lacks a substantial
history.
6. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Trust are responsible for major decisions relating to
the Fund's policies and objective. They also oversee the operation of the Fund
by its officers and review the investment performance of the Fund on a regular
basis. The trustees of
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Worldwide Portfolios have overall responsibility for operation of the
Portfolio. A majority of the trustees of the Trust and Worldwide Portfolios who
are not "interested persons" (as defined in the Investment Company Act of 1940)
of the Trust or Worldwide Portfolios ("Independent Trustees") have adopted
written procedures reasonably appropriate to deal with potential conflicts of
interest arising from the fact that the same individuals are trustees of the
Trust and Worldwide Portfolios, up to and including creating a new board of
trustees for the Trust or Worldwide Portfolios. Additional information
concerning the trustees and the officers of the Trust and Worldwide Portfolios
is furnished in the Statement of Additional Information under the heading
"Management of the Fund."
THE ADVISOR -- GENERAL BUSINESS MANAGEMENT AND INVESTMENT OVERSIGHT
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio, such as coordinating certain matters relating to the operations of
the Portfolio and monitoring the Portfolio's compliance with all applicable
federal and state securities laws. Currently, the Advisor serves in this
capacity only to the Portfolio.
The Advisor is a Delaware limited liability company formed in 1996. Since
the Advisor was only recently formed, it has no prior experience as an
investment advisor. However, Berger Associates, Inc. ("Berger Associates"),
which owns 100% of the Advisor has been in the investment advisory business for
over 20 years. Berger Associates serves as investment advisor or sub-advisor to
mutual funds, pension and profit-sharing plans, and institutional and private
investors, and has assets under management of more than $3.5 billion as of April
30, 1996. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80%
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. Also, see below under "Pending Sale of Interest in
Advisor".
THE SUB-ADVISOR -- EXPERIENCED INTERNATIONAL INVESTMENT MANAGEMENT
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. Bank of Ireland Asset Management (U.S.) Limited ("BIAM"), the
Sub-Advisor to the Portfolio, 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 $16 billion as of April 30,
1996.
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As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to
BIAM, as the Sub-Advisor. As Sub-Advisor, BIAM manages the investments in
the Portfolio 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 Worldwide Portfolios.
BIAM serves as investment advisor or sub-advisor to pension and
profit-sharing plans and other institutional investors and mutual funds.
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 Portfolio by the 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 Portfolio.
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 Portfolio, including outstanding loans to such
issuers which could be repaid in whole or in part with the proceeds of
securities purchased by the Portfolio. 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 Portfolio, the Sub-Advisor will not take
into consideration whether an issuer of securities proposed for purchase or sale
by the Portfolio is a customer of Bank of Ireland or its affiliates.
The trustees of Worldwide Portfolios have authorized the Sub-Advisor to
consider sales of shares of the Fund by a broker-dealer or the
recommendations of a broker-dealer to its customers that they purchase Fund
shares as a factor in the selection of broker-dealers to execute securities
transactions for the Portfolio. In placing portfolio business with such
broker-dealers, the Sub-Advisor will seek the best execution of each
transaction.
ADVISORY FEES
Under the Investment Advisory Agreement for the Portfolio, the Advisor is
compensated for its services to the Portfolio by the payment of a fee at the
annual rate of 0.90% of the average daily net assets of the Portfolio. Until at
least April 30, 1998, the Advisor has agreed voluntarily to waive the investment
advisory fee paid by the Portfolio under the Investment Advisory Agreement to
the extent that the Portfolio's normal operating expenses in any fiscal year,
including the investment advisory fee and custodian fees, but excluding
brokerage commissions, interest, taxes and extraordinary expenses, exceed 1.00%
of the Portfolio's average daily net assets for that fiscal year. Any reduction
in the advisory fee paid by the Portfolio will also reduce the pro rata share of
the advisory fee borne indirectly by the Fund.
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The Portfolio pays no fees directly to the Sub-Advisor. The Sub-Advisor
will receive from the Advisor a fee at the annual rate of 0.45% of the average
daily net assets of the Portfolio. During certain periods, the Sub-Advisor may
voluntarily waive all or a portion of its fee under the Sub-Advisory Agreement,
which will not affect the fee paid by the Portfolio to the Advisor.
PENDING SALE OF INTEREST IN ADVISOR
As mentioned above, the Portfolio's Advisor, BBOI Worldwide, is a limited
liability company formed in 1996 and 100% owned by Berger Associates. BBOI
Worldwide was organized by Berger Associates in anticipation of forming a joint
venture with BIAM for the purpose of managing international and global mutual
funds. Pursuant to the Amended and Restated Operating Agreement of BBOI
Worldwide LLC, dated as of May 1, 1996, between Berger Associates and BIAM (the
"Joint Venture Agreement"), BIAM (or an affiliate) has agreed to acquire a 50%
interest in the Advisor and thereby enter into a joint venture with Berger
Associates to become effective upon receipt of all regulatory approvals. Berger
Associates' role in the joint venture will be to provide administration and
marketing, and BIAM's role will be to provide international and global
investment management expertise. Day-to-day portfolio management of the
Portfolio will continue to be provided by BIAM under the Sub-Advisory Agreement.
The Joint Venture Agreement provides that Berger Associates and BIAM will
each own a 50% membership interest in the Advisor and each will have an equal
number of representatives on the Advisor's Board of Managers. Agreement of
representatives of both Berger Associates and BIAM will be required for all
significant management decisions.
BIAM's acquisition of an interest in the Advisor is subject to approval of
the Federal Reserve Board of the United States and the Central Bank of Ireland.
In the event the joint venture is not consummated, Berger Associates anticipates
continuing to provide the Fund with administrative services, and BIAM has agreed
to continue to serve as the Sub-Advisor to the Portfolio for a period of not
less than six months thereafter, on usual and customary contractual terms.
Consummation of BIAM's acquisition of a membership interest in the
Advisor might be deemed to effect a change of control in the Advisor and
thereby an "assignment" (as defined in the Investment Company Act of 1940)
and termination of the Portfolio's Investment Advisory and Sub-Advisory
Agreements. However, the trustees of Worldwide Portfolios have considered
the terms of the joint venture and various factors related to the proposal,
including that the day-to-day management of the Portfolio by BIAM is not
proposed to change. On the basis of the factors considered, the trustees,
including the Independent Trustees of Worldwide Portfolios voting separately,
have approved new Investment Advisory and Sub-Advisory Agreements that will
come into effect upon consummation of the joint venture and any change of
control in the Advisor that may be deemed to result. The new Agreements have
also been approved by the Portfolio's initial investors. The new Agreements
are identical in their terms to the initial Agreements described in this
Prospectus, except for commencement date. No further trustee or
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shareholder vote is anticipated to approve the new Agreements upon consummation
of the joint venture. Accordingly, prospective investors should consider BIAM's
pending acquisition of an interest in the Advisor at the time they consider
their initial investment in the Fund.
7. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
Until at least April 30, 1998, the Advisor has agreed voluntarily to waive
the investment advisory fee paid by the Portfolio under the Investment Advisory
Agreement to the extent that the Portfolio's normal operating expenses in any
fiscal year, including the investment advisory fee and custodian fees, but
excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as expenses of meetings of the shareholders of the
Trust. Expenses of the Fund also include, among others, taxes imposed on the
Fund; the fee payable to the Advisor under the Administrative Services
Agreement; and such other non-recurring and extraordinary items as may arise
from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, legal services, printing and mailing to shareholders of prospectuses
and other required communications, and certain
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other administrative and recordkeeping services, such as coordinating matters
relating to the operations of the Fund, monitoring the Fund's status as a
"regulated investment company" under the Internal Revenue Code of 1986,
registering sufficient Fund shares under federal and state securities laws, and
arranging for and supervising the preparation of registration statements, tax
returns, proxy materials, financial statements and reports for filing with
regulatory authorities and distribution to shareholders of the Fund. Under the
Administrative Services Agreement, the Fund pays the Advisor a fee at an annual
rate equal to the lesser of (i) 0.10% of its average daily net assets, or (ii)
the Advisor's annual cost to provide or procure these services (including the
fees of any services providers whose services are procured by the Advisor), plus
an additional 0.01% of the Fund's average daily net assets. The trustees of the
Trust regularly review amounts paid to and expenditures incurred by the Advisor
pursuant to the Administrative Services Agreement. In addition, in the event
that the Advisor's duties under the Administrative Services Agreement are
delegated to another party, the Advisor may take into account, in calculating
the cost of such services, only the costs incurred by such other party in
discharging the delegated duties.
Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to the
Advisor under the Administrative Services Agreement. Investors Fiduciary Trust
Company ("IFTC") has been appointed to provide recordkeeping and pricing
services to the Fund, including calculating the daily net asset value of the
Fund, and to perform certain accounting and recordkeeping functions that it
requires. In addition, IFTC has been appointed to serve as the Fund's
custodian, transfer agent and dividend disbursing agent. IFTC has engaged DST
Systems, Inc. ("DST"), as sub-transfer agent to provide transfer agency and
dividend disbursing services for the Fund. The fees of Berger Associates, IFTC
and DST are all paid by the Advisor. Approximately 40% of the outstanding
shares of DST are owned by KCSI, which also owns approximately 80% of the
outstanding shares of Berger Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such as
compliance monitoring and preparing investor communications, which have been
delegated to Berger Associates as part of the Sub-Administration Agreement
discussed above. Other services are procured from third party service providers
at the Portfolio's own expense, such as custody, recordkeeping and pricing
services. The Portfolio has appointed IFTC as recordkeeping and pricing agent
to calculate the daily net asset value of the Portfolio and to perform certain
accounting and recordkeeping functions required by the Portfolio. In
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addition, the Portfolio has appointed IFTC as its custodian and transfer
agent. IFTC has engaged State Street Bank and Trust Company ("State Street")
as sub-custodian for the Portfolio. For custodian, recordkeeping and pricing
services, the Portfolio pays fees directly to IFTC based on a percentage of
its net assets, subject to certain minimums, and reimburses IFTC for certain
out-of-pocket expenses.
The trustees of Worldwide Portfolios 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
are effected through DSTS, the commission received by DSTS is credited
against, and thereby reduces, certain operating expenses that the Portfolio
would otherwise be obligated to pay. No portion of the commission is
retained by DSTS.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First Fund
Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite 261-E,
Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its costs
in distributing Fund shares by Berger Associates.
8. PURCHASE OF SHARES IN THE FUND
The Fund is designed primarily for direct investment by institutional
investors such as pension and profit-sharing plans, employee benefit trusts,
endowments, foundations and corporations, as well as high net worth individuals.
Shares of the Fund are also offered through certain financial intermediaries
that may charge their customers transaction or other fees with respect to the
customers' investment in the Fund.
Shares in the Fund may be purchased at the relevant net asset value without
a sales charge. The minimum initial investment for shares of the Fund is
$1,000,000. To purchase shares in the Fund, simply complete the application
form enclosed with this Prospectus and mail it to the Fund in care of DST
Systems, Inc., the Fund's transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
Additional investments may be made at any time by telephone or by mail at
the relevant net asset value by calling or writing the Fund.
A confirmation indicating the details of the transaction will be sent
promptly. Unless full shares only are specified, all purchases will be made in
full and fractional shares calculated to three decimal places.
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All purchase orders are effected at the relevant net asset value per share
of the Fund next determined after receipt of the purchase order, completed
application and payment. A purchase order, together with payment in proper
form, received by the transfer agent, sub-transfer agent or any other authorized
agent of the Fund prior to the close of the New York Stock Exchange (the
"Exchange") on a day the Fund is open for business will be effected at that
day's net asset value. An order received after that time will be effected at
the net asset value determined on the next business day. See "Redemptions of
Fund Shares - Redemptions by Telephone" for the Fund's policies and procedures
on effecting transactions by telephone.
Payment for shares purchased may be made as follows:
BY WIRE OR ELECTRONIC FUNDS TRANSFER. Payment for shares purchased may be
made by wire or electronic funds transfer from the investor's bank to DST
Systems, Inc. Please call 1-800-551-5849 for current wire or electronic
funds transfer instructions. The following information may be requested: name
of authorized person; shareholder name; shareholder account number; name of
Fund; amount being wired or transferred; and name of wiring or transferring
bank.
BY MAIL. Alternatively, payment for shares purchased may be made by mail,
so long as payment is accompanied or preceded by a completed account
application. Payment should be made by check or money order drawn on a United
States bank and made payable to the "Berger Funds". Checks not made payable to
the Berger Funds, the account registrant, transfer agent or retirement account
custodian will not be accepted. The Fund will not accept purchases by cash or
credit card or checks drawn on foreign banks unless provision is made for
payment through a U.S. bank in U.S. dollars.
Fund shares may also be purchased through certain organizations connected
with pension and retirement plans. These organizations may charge investors a
transaction or other fee for their services, may require different minimum
initial and subsequent investments than the Fund and may impose other charges or
restrictions different from those applicable to shareholders who invest in the
Fund directly. Fees charged by these organizations will have the effect of
reducing a shareholder's total return on an investment in Fund shares. No such
charge will be paid by an investor who purchases the Fund shares directly from
the Fund as described above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days
after acceptance of the order. The price at which a purchase will be effected
is based on the next calculation of net asset value after the order is received
by the Fund's transfer agent, sub-transfer agent or any other authorized agent
of the Fund.
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The Fund reserves the right in its sole discretion to withdraw all or any
part of the offering made by this Prospectus or to reject purchase orders, when
in the judgment of management, such withdrawal or rejection is in the best
interest of the Fund. The Fund also reserves the right at any time to waive the
minimum investment requirements applicable to initial investments or to increase
the minimums following notice. No application to purchase shares is binding on
the Fund until accepted in writing.
Investors may, subject to the approval of the Trust and Worldwide
Portfolios, purchase shares of the Fund with liquid securities that are
eligible for purchase by the Portfolio (consistent with the Fund's and the
Portfolio's investment policies and restrictions) and that have a value that
is readily ascertainable in accordance with the valuation policies of the
Trust and Worldwide Portfolios. These transactions will be effected only if
the Sub-Advisor intends to retain the securities in the Portfolio as an
investment. Assets so purchased will be valued in generally the same manner
as they would be valued for purposes of pricing the Fund's shares, if such
assets were included in the Portfolio's assets at the time of purchase. The
Trust and Worldwide Portfolios reserve the right to amend or terminate this
practice at any time.
9. NET ASSET VALUE
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 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 assets, less liabilities, by the total number of shares outstanding. Since
the Fund will invest all of its investable assets in the Portfolio, the value of
the Fund's investable assets will be equal to the value of its beneficial
interest in the Portfolio.
The Portfolio's securities and other assets are valued as follows:
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
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determined in good faith pursuant to consistently applied procedures established
by the trustees.
The Portfolio'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 a Fund share are the same
and will be equal to the next calculated net asset value of a share of the Fund.
10. OPEN ACCOUNT SYSTEM AND SHARE CERTIFICATES
Unless otherwise directed, all investor accounts are maintained on a
book-entry basis. Share certificates will not be issued unless requested by
the shareholder. Shares purchased by dividend reinvestment, and shares
redeemed under a Systematic Withdrawal Plan, will be confirmed after the end
of each calendar quarter. Following any other investment or redemption, the
investor will receive a printed confirmation indicating the dollar amount of
the transaction, the per share price of the transaction and the number of
shares purchased or redeemed.
11. REDEMPTION OF FUND SHARES
(i) SHARE REDEMPTIONS BY MAIL. The Fund will redeem, at current net asset
value, all shares of the Fund offered for redemption. The redemption price of
shares tendered for redemption will be the net asset value next determined after
receipt of all required documents by the Fund's transfer agent, sub-transfer
agent or other authorized agent of the Fund. To receive the net asset value for
a specific day, a redemption request must be received before the close of the
Exchange on that day. Shareholders who purchased their shares directly from the
Fund may redeem all or part of their shares in the Fund by sending a written
request to the Fund, c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO
64141. The written request for redemption must be signed by each registered
owner exactly as the shares are registered and must clearly identify the account
and the number of shares or the dollar amount to be redeemed.
The signatures of the redeeming shareholders must be guaranteed by a
national or state bank, a member firm of a domestic stock exchange or the
National Association of Securities Dealers (NASD), a credit union, a federal
savings and loan association or another eligible guarantor institution if the
redemption: is being made payable other than exactly as registered; is being
mailed to an address which has been changed within 30 days of the redemption
request; or is being mailed to an address other than the one on record. A
notary public is not an acceptable guarantor. The Fund also reserves the right
to require a signature guarantee under other circumstances. The signature
guarantees must appear, together with the signatures of the registered owners,
(i) on the written request for redemption which
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clearly identifies the account and the number of shares to be redeemed, (ii) on
a separate instrument of assignment ("stock power") which may be obtained from a
bank or broker, or (iii) on any share certificates tendered for redemption. The
use of signature guarantees is intended to protect the shareholder and the Fund
from a possibly fraudulent application for redemption.
(ii) REDEMPTIONS BY TELEPHONE. All shareholders have Telephone Transaction
Privileges to authorize purchases, exchanges or redemptions unless they
specifically decline this service on the account application or by writing to
the Fund, c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO 64141. The
telephone redemption option is not available for shares held in retirement
accounts sponsored by the Fund. Redemption requests may be made by telephoning
DST Systems, Inc., at 1-800-551-5849. To receive the net asset value for a
specific day, a redemption request must be received before the close of the
Exchange on that day. As discussed above, certain requests must be in writing
and the signature of a redeeming shareholder must be signature guaranteed, and
therefore shares may not be redeemed by telephone, if the redemption: is being
made payable other than exactly as registered; is being mailed to an address
which has been changed within 30 days of the redemption request; is being mailed
to an address other than the one on record; or the shares are represented by
share certificates issued to the shareholder.
All telephone transactions are recorded and written confirmations
indicating the details of all telephone transactions will promptly be sent to
the shareholder of record. Prior to accepting a telephone transaction, the
shareholder placing the order may be required to provide certain identifying
information. A shareholder electing to communicate instructions by telephone
may be giving up some level of security that would otherwise be present were the
shareholder to request a transaction in writing. Neither the Fund nor its
transfer agent or Advisor assume responsibility for the authenticity of
instructions communicated by telephone which are reasonably believed to be
genuine and which comply with the foregoing procedures. The Fund, and/or its
transfer agent, may be liable for losses resulting from unauthorized or
fraudulent telephone instructions in the event these procedures are not
followed.
In times of extreme economic or market conditions, redeeming shares by
telephone may be difficult. The Fund may terminate or modify the procedures
concerning the telephone redemption and wire transfer services at any time,
although shareholders of the Fund will be given at least 60 days' prior notice
of any termination or material modification. The Advisor may, at its own risk,
waive certain of the redemption requirements described in the preceding
paragraphs.
(iii) PAYMENT FOR REDEEMED SHARES. Payment for shares redeemed upon
written request will be made by check and generally will be mailed within three
business days after receipt by the transfer agent of the properly executed
redemption request and any outstanding certificates for the shares to be
redeemed. Payment for shares redeemed by telephone will be made by check
payable to the account name(s) and address exactly as
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registered, and generally will be mailed within three business days following
the date of the request for redemption.
A shareholder may request that payment for redeemed shares of the Fund be
made by wire or electronic funds transfer. Shareholders may elect to use these
services on the account application or by providing the Fund with a signature
guaranteed letter requesting these services and designating the bank to receive
all wire or electronic funds transfers. A shareholder may change the
predesignated bank of record by providing the Fund with written, signature
guaranteed instructions. Redemption proceeds paid by wire transfer will be
transmitted to the shareholder's predesignated bank account on the next business
day after receipt of the shareholder's redemption request. Redemption proceeds
paid by electronic funds transfer will be electronically transmitted to the
shareholder's predesignated bank account on the second business day after
receipt of the shareholder's redemption request. There is no fee for wire or
electronic funds transfer of proceeds from the redemption of Fund shares.
Shareholders may encounter delays in redeeming shares purchased by check
(other than cashier's or certified checks) or electronic funds transfer if the
redemption request is made within 15 days after the date of purchase. In those
situations, the redemption check will be mailed within 15 days after the
transfer agent's receipt of the purchase instrument, provided that it has not
been dishonored or cancelled during that time. The foregoing policy is to
ensure that all payments for the shares being redeemed have been honored. In
addition to the foregoing restrictions, no redemption payment can be made for
shares which have been purchased by telephone order until full payment for the
shares has been received. In any event, valid redemption requests concerning
shares for which full payment has been made will be priced at the net asset
value next determined after receipt of the request.
(iv) REDEMPTION IN-KIND. The 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. The
Fund is, however, governed by Rule 18f-1 under the Investment Company Act of
1940 pursuant to which the Fund is obligated to redeem shares solely in cash up
to the lesser of $250,000 or 1% of the net assets of the Fund during any 90-day
period for any one shareholder. Should redemptions by any shareholder during
any 90-day period exceed such limitation, the Fund will have the option of
redeeming the excess in cash or in-kind. If shares are redeemed in-kind, the
redeeming shareholder generally will incur brokerage costs in converting the
assets to cash.
(v) REDEMPTIONS BY THE FUND. As a means of reducing its expenses, the Fund
is authorized to redeem involuntarily all shares held in accounts with a value
of less than $1,000,000. Such redemptions will be permitted only when the
account is reduced below the minimum value by redemption, and not by declines in
per share net asset value. As a result, accounts established with the
applicable minimum investment might be subject to redemption after only a small
redemption has been made by the shareholder. At least 60 days' written notice
will be given to a shareholder before such an account is redeemed. During that
time,
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the shareholder may add sufficient funds to the account to meet or exceed the
minimum. If this condition is not met, the shares will be redeemed at the per
share net asset value next determined after the 60th day following the notice.
A check for the proceeds will be sent to the shareholder unless a share
certificate has been issued, in which case payment will be made upon surrender
of the certificate.
12. EXCHANGE PRIVILEGE
(i) EXCHANGES. By telephoning the Fund at 1-800-551-5849, or writing to
the Fund, in care of DST at P.O. Box 419958, Kansas City, MO 64141, any
shareholder may exchange, without charge, any or all of his shares in the Fund,
subject to stated minimums, for shares of any of the publicly available Berger
Funds or Berger/BIAM Funds. Exchanges may be made only if the Berger Fund or
Berger/BIAM Fund into which a shareholder wishes to exchange shares is
registered in the shareholder's state of residence.
It is each investor's responsibility to obtain and read a prospectus of the
Berger Fund or Berger/BIAM Fund into which the investor is exchanging. By
giving exchange instructions, a shareholder will be deemed to have acknowledged
receipt of the prospectus for the Berger Fund or Berger/BIAM Fund being
purchased. Up to four exchanges out of the Fund are permitted during the
calendar year. This limit helps keep the Fund's net asset base stable and
reduces the Fund's administrative expenses. In times of extreme economic or
market conditions, exchanging Fund shares by telephone may be difficult. See
"Redemption of Fund Shares - Redemptions by Telephone" for procedures for
telephone transactions.
Redemptions of shares in connection with exchanges into or out of the Fund
are made at the net asset value per share next determined after the exchange
request is received. To receive a specific day's price, a letter or call must
be received before that day's close of the Exchange. Each exchange represents
the sale of shares from one fund and the purchase of shares in another, which
may produce a gain or loss for U.S. Federal income tax purposes.
All exchanges out of the Fund are subject to the minimum and subsequent
investment requirements of the fund into which shares are being exchanged.
Exchanges will be accepted only if the registration of the two accounts is
identical. Neither the Fund, the Berger Funds, the Berger/BIAM Funds, nor their
transfer agents or advisors assume responsibility for the authenticity of
exchange instructions communicated by telephone or in writing which are believed
to be genuine. See "Redemption of Fund Shares - Redemptions by Telephone" for
procedures for telephone transactions. All shareholders have Telephone
Transaction Privileges to authorize exchanges unless they specifically decline
this service on the account application or by writing to the Fund, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141.
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13. PLANS AND PROGRAMS
The Fund offers several tax-qualified retirement plans for adoption by
individuals and employers. The Fund also offers both a profit-sharing plan and
a money purchase pension plan for employers and self-employed persons, an
Individual Retirement Account ("IRA") and a 403(b) Custodial Account.
In order to receive the necessary materials to create a profit-sharing or
money purchase pension plan account, an IRA account or a 403(b) Custodial
Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, CO
80217, or call 1-800-706-0539. Trustees for existing 401(k) or other plans
interested in utilizing Fund shares as an investment or investment alternative
in their plans should contact the Fund at 1-800-551-5849.
The Fund also offers a systematic withdrawal plan. Forms to open such an
account may be obtained by writing to the Fund, c/o DST Systems, Inc., P.O. Box
419958, Kansas City, MO 64141, or call 1-800-551-5849.
14. 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.
Dividends declared and payable to shareholders of record on a specified date in
December will be deemed to have been received by shareholders on December 31 for
tax purposes if paid during January the following year.
The Fund is treated as a separate entity for tax purposes and intends to
elect and maintain qualification to be treated as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended. The Fund's
qualification as a regulated investment company will depend on the Portfolio
maintaining its status as a partnership for tax purposes. If the Fund qualifies
under Subchapter M and meets certain minimum distribution requirements, the Fund
generally will not be liable for U.S. Federal income tax on the amount of its
earnings that are timely distributed. If the Fund distributes annually less
than 98% of its income and gain, it may be subject to a nondeductible excise tax
equal to 4% of the shortfall.
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 investor specifically requests that either
dividends or distributions, or both, be paid in cash. The election to
receive dividends or distributions in cash or to reinvest them in Fund shares
may be changed by calling the Fund at 1-800-551-5849 or by written request
to the Fund, c/o DST Systems, Inc., P.O. Box 419958, Kansas City, MO 64141,
and must be received at least ten days prior to the record date of any
dividend or capital gains distribution.
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The Fund will inform its shareholders of the amount and nature of such
income or gains resulting from their investment in the Fund. Dividends paid by
the Fund from net investment income and distributions from net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term capital gains (net of capital
losses), whether received in cash or reinvested, will be taxable as long-term
capital gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. If a shareholder is exempt from U.S. Federal income tax, the
shareholder will not generally be taxed on amounts distributed by the Fund.
Under the Internal Revenue Code, gains recognized by the Portfolio upon a
disposition of assets contributed in-kind to it by the Fund will be specially
allocated to the Fund and not to other investors in the Portfolio to the extent
of the unrealized appreciation in those assets at the time of their transfer.
As a result, shareholders of the Fund may receive distributions of a greater
amount of gains than if the Portfolio had purchased those assets in the open
market upon commencement of Fund operations or in a transaction that did not
involve contributions of assets in-kind.
Investment income received by the Fund, directly or through the Portfolio,
from sources within foreign countries may be subject to foreign withholding and
other taxes withheld at the source. The U.S. has entered into tax treaties with
many foreign countries that, in some circumstances, may entitle the Fund or
Portfolio to a reduced rate of tax or exemption from tax on such income. It is
impossible to determine the effective rate of foreign tax in advance since the
amount of the Portfolio's assets to be invested within various countries will
fluctuate and the extent to which tax refunds will be recovered is uncertain.
If, directly or through the Portfolio, more than 50% in value of the Fund's
total assets at the close of its taxable year consists of securities of foreign
corporations, the Fund may elect to "pass-through" to its shareholders the
income taxes paid by the Fund to foreign governments during a year. Under this
election, each shareholder will be required to include the shareholder's pro
rata portion of these foreign taxes in gross income, but will be able to deduct
(as an itemized deduction for shareholders who itemize) or claim a foreign tax
credit for such amount (subject to various limitations). If the election is not
made, foreign taxes will be treated as an expense of the Fund.
At certain levels of taxable income, the Internal Revenue Code provides a
preferential tax rate for long-term capital gains. Long-term capital gains of
taxpayers other than corporations are taxed at a 28% maximum rate, whereas
ordinary income is taxed at a 39.6% maximum rate. Capital losses continue to be
deductible only against capital gains plus (in the case of taxpayers other than
corporations) $3,000 of ordinary income annually ($1,500 for married individuals
filing separately).
Some shareholders may be subject to 31% "backup withholding" on dividends,
capital gains distributions and redemption payments made by the Fund. Backup
withholding
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generally will apply to shareholders who fail to provide the Fund with their
correct taxpayer identification number or to make required certifications.
Backup withholding is not an additional tax. Any amounts withheld may be
credited against a shareholder's U.S. Federal income tax liability.
The foregoing is only a brief summary of the U.S. Federal income tax
considerations affecting the Fund and its shareholders. See "Income Dividends,
Capital Gains Distributions and Tax Treatment" in the Statement of Additional
Information for more information regarding taxation. Potential investors should
consult their tax advisors with specific reference to their own tax situation.
15. ADDITIONAL INFORMATION
The Trust is a Delaware business trust organized on May 31, 1996. The Fund
was established on May 31, 1996, as a series or fund under the Trust. Since the
Trust and the Fund were only recently organized, they have no prior operating
history, although the Fund calculates its performance taking into account the
prior performance of a trust fund whose assets were transferred into the
Portfolio as described under "Performance" below. As of the date of this
Prospectus, all of the outstanding shares of the Fund were held by Berger
Associates, which provided the seed capital necessary to establish the Trust.
The Trust is authorized to issue an unlimited number of shares of
beneficial interest in series. The Trust is also authorized to establish
multiple classes of shares representing differing interests in an existing or
new series. As of the date of this Prospectus, the series comprising the
Berger/BIAM International CORE Fund is one of three series 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.
Shareholders of the Berger/BIAM International CORE Fund and the other funds
or series of the Berger/BIAM Worldwide Funds Trust generally vote separately on
matters relating to those respective funds, although they vote together and with
the holders of any other series of the Trust issued in the future 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
Berger/BIAM Worldwide Funds 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
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Trust so request. Subject to certain limitations, the Trust will facilitate
appropriate communications by shareholders desiring to call a special meeting
for the purpose of considering the removal of a trustee.
The Fund invests all of its investable assets in the Portfolio, a series of
Worldwide Portfolios, which is also a Delaware business trust divided into
series. Investors in each series of Worldwide Portfolios will vote separately
or together in the same manner as shareholders of the Trust's series. For more
information on the Trust and Worldwide Portfolios, see "Additional Information"
in the Statement of Additional Information.
The Glass-Steagall Act prohibits a depository institution (such as a bank)
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.
State laws on this issue may differ from the interpretations of relevant Federal
law and banks and financial institutions may be required to register as dealers
pursuant to state securities law. If the circumstances described above should
change, the trustees of the Trust and Worldwide Portfolios would review the
relationships with BIAM and consider taking all actions appropriate under the
circumstances.
16. 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.,
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 Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Dow Jones World Index, the Standard & Poor's
500 Stock Index, 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.
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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.
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.
The Portfolio commenced operations upon the transfer to the Portfolio of
assets held in a pooled trust (the "Pool") maintained by Citizens Bank New
Hampshire, for which BIAM has provided day-to-day portfolio management as
sub-advisor since the inception of the Pool. BIAM's bank holding company parent
indirectly owns a 23.5% interest in the parent of Citizens Bank New Hampshire.
The Pool had substantially the same investment objective, policies and
limitations of the Fund and the Portfolio. Assets from the Pool were
transferred to the Fund which, in turn, transferred those assets to the
Portfolio in exchange for an interest in the Portfolio. As a result of this
transaction, the investment holdings in the Portfolio (in which the Fund invests
all of its investable assets) were the same as the investment holdings in the
portfolio of the Pool immediately prior to the transfer, except for the seed
capital provided by Berger Associates.
The Pool was not a registered investment company since it was exempt from
registration under the Investment Company Act of 1940 (the "1940 Act"). Since,
in a practical sense, the Pool constitutes the "predecessor" of the Portfolio,
the Fund calculates its performance for periods commencing prior to the transfer
of the Pool's assets to the Portfolio by including the Pool's total return,
adjusted to reflect the deduction of fees and expenses applicable to the Fund as
stated in the Fee Table above in this Prospectus (that is, adjusted to reflect
estimated expenses, including the Fund's pro rata share of the aggregate annual
operating expenses, net of fee waivers, of the Portfolio in which all of the
investable assets of the Fund are invested).
The performance data set forth below includes the performance of the Pool
for periods before the Fund's and the Portfolio's registration statements became
effective. As noted above, the Pool was not registered under the 1940 Act and
thus was not subject to certain investment restrictions that are imposed by the
1940 Act. If the Pool had been registered under the 1940 Act, the Pool's
performance might have been adversely affected.
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AVERAGE ANNUAL TOTAL RETURN
FOR PERIODS ENDED JUNE 30, 1996
BERGER/BIAM EAFE INDEX(2)
INTERNATIONAL
CORE FUND(1)
1-YEAR 18.38% 13.62%
3-YEAR 14.05% 10.76%
5-YEAR 15.39% 10.33%
SINCE INCEPTION(3) 13.72% 4.26%
1 Total return for the Fund has been adjusted to reflect estimated expenses of
the Fund, including the Fund's pro rata share of the aggregate annual operating
expenses, net of fee waivers, of the Portfolio in which all of the investable
assets of the Fund are invested.
2 Source: Morgan Stanley Capital International (MSCI). The MSCI EAFE Index is
a market capitalization weighted index composed of companies representative of
the market structure of 20 developed market countries in Europe, Australasia and
the Far East.
3 Covers the period since July 31, 1989.
All of the foregoing performance data were calculated in accordance with
methods prescribed by the Securities and Exchange Commission which are discussed
in more detail under the heading "Performance Information" in the Statement of
Additional Information.
Shareholders with questions should write to the Fund, c/o BBOI Worldwide,
P.O. Box 5005, Denver, CO 80217, or call 1-303-329-0200 or 1-800-706-0539.
Prospectuses are also available upon request for the following funds advised by
Berger Associates, Inc.: the Berger 100 Fund, the Berger Growth and Income
Fund, the Berger Small Company Growth Fund and the Berger New Generation Fund.
Please call 1-800-706-0539 for information.
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BERGER/BIAM INTERNATIONAL FUND
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information about the Berger/BIAM
International Fund (the "Fund"), a series of the Berger/BIAM Worldwide Funds
Trust (the "Trust"), is not a prospectus. It should be read in conjunction with
the Prospectus describing the Fund, dated October 15, 1996, which may be
obtained by writing the Fund at P.O. Box 5005, Denver, Colorado 80217, or
calling 1-800-333-1001. The Fund is a no-load mutual fund.
The investment objective of the Fund is long-term capital appreciation.
The Fund seeks to achieve this objective by investing all of its investable
assets in the Berger/BIAM International Portfolio (the "Portfolio") which, in
turn, invests 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 Portfolio intends
to diversify its holdings among several countries and to have, under normal
market conditions, at least 65% of the Portfolio's total assets invested in the
securities of companies located in at least five countries, not including the
United States.
The Fund is an open-end management investment company organized as a
diversified series of the Trust. UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY
ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS
INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO,
AS DESCRIBED ABOVE. Accordingly, the investment performance of the Fund will
derive from the investment performance of the Portfolio. The Portfolio is an
open-end management investment company and a diversified series of a separate
trust known as the Berger/BIAM Worldwide Portfolios Trust ("Worldwide
Portfolios"). The Portfolio's investment objective and policies are identical
to those of the Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI" or
the "Advisor"), which has delegated daily portfolio management of the Portfolio
to Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-
Advisor").
October 15, 1996
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
CROSS-REFERENCES TO
RELATED DISCLOSURES
TABLE OF CONTENTS IN PROSPECTUS
Introduction Section 2
1. Investment Policies Section 2, 3, 4
2. Investment Restrictions Section 3
3. Management of the Fund Section 6
4. Investment Advisor and Sub-Advisor Section 6
5. Expenses of the Fund Section 6, 7
6. Brokerage Policy Section 6, 7
7. How to Purchase Shares in Section 9
the Fund
8. How the Net Asset Value is Section 10
Determined
9. Income Dividends, Capital Gains Section 15
Distributions and Tax Treatment
10. Suspension of Redemption Rights Section 12
11. Tax-Sheltered Retirement Plans Section 14
12. Special Purchase and Exchange Plans Section 13
13. Performance Information Section 17
14. Additional Information Section 16
Financial Statements
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INTRODUCTION
The Berger/BIAM International Fund is a mutual fund, or open-end,
diversified management investment company. The investment objective of the Fund
is long-term capital appreciation. This is also the investment objective of the
Portfolio in which the Fund invests all of its investable assets. 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.
1. INVESTMENT POLICIES
The Prospectus discusses the investment objective of the Fund and the
Portfolio 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 Portfolio may invest, the investment policies and
portfolio strategies that the Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
ILLIQUID AND RESTRICTED SECURITIES. The Portfolio 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 Portfolio may not purchase any security, the
purchase of which would cause the Portfolio 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 the Portfolio
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 Portfolio 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 the Portfolio's net assets to be invested
in illiquid securities, the
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trustees of Worldwide Portfolios, 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. Pursuant to guidelines
established by the trustees, the Portfolio's Sub-Advisor will determine whether
securities eligible for resale to qualified institutional buyers pursuant to
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 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 the Portfolio's investments in Rule 144A
securities could be impaired if qualified institutional buyers become
uninterested in purchasing these securities.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase
agreements with various financial organizations, including commercial banks,
registered broker-dealers and registered government securities dealers. A
repurchase agreement is a means of investing cash for a short period. A
repurchase agreement is an agreement under which the Portfolio 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 the Portfolio and is unrelated to the interest rate on the underlying
instrument.
In these transactions, the securities acquired by the Portfolio
(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
Portfolio's custodian bank until repurchased. In addition, the trustees will
establish guidelines and standards for review by the Sub-Advisor of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with the Portfolio. The Portfolio will not enter into a repurchase agreement
maturing in more than seven days if as a result more than 15% of the Portfolio's
net 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
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when the value of the security has declined, the Portfolio 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 or
other laws, a court may determine that the underlying security is collateral for
a loan by the Portfolio not within the control of the Portfolio and therefore
the realization by the Portfolio on such collateral may automatically be stayed.
Finally, it is possible that the Portfolio 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.
UNSEASONED ISSUERS. The Portfolio 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
Portfolio may invest up to 5% of its total assets in securities of unseasoned
issuers.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS). The Portfolio may
purchase the securities of certain foreign investment funds or trusts considered
Passive Foreign Investment Companies (PFICs) under U.S. tax laws. In addition
to bearing their proportionate share of the Portfolio's expenses (management
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fees and operating expenses), shareholders will also indirectly bear similar
expenses of such PFIC. PFIC investments also may be subject to less favorable
U.S. tax treatment, as discussed in Section 9 below.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may
purchase and sell securities on a when-issued or delayed delivery basis.
However, the Portfolio does not currently intend to 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. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Portfolio 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 the Portfolio 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 the Portfolio until it receives delivery or
payment from the other party to the transaction.
When the Portfolio 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 Portfolio's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, the Portfolio
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, the Portfolio 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 Portfolio'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 the
Portfolio. The Portfolio 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
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interpretations of the Securities and Exchange Commission (the "Commission")
thereunder, which currently require that (a) the borrower pledge and maintain
with the Portfolio collateral consisting of cash, an irrevocable letter of
credit or securities issued or guaranteed by the U.S. 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 Portfolio at any time and (d) the
Portfolio receive reasonable interest on the loan, which interest may include
the Portfolio's investing cash collateral in interest bearing short-term
investments, and (e) the Portfolio receive all dividends and distributions on
the loaned securities and any increase in the market value of the loaned
securities.
The Portfolio bears a risk of loss in the event that the other party
to a securities lending transaction defaults on its obligations and the
Portfolio 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 Portfolio 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 Portfolio will not lend its portfolio securities if, as a result, the
aggregate value of such loans would exceed 33-1/3% of the value of the
Portfolio's total assets. Loan arrangements made by the Portfolio 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 Worldwide
Portfolio's trustees.
HEDGING TRANSACTIONS. As described in the Prospectus, the Portfolio
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 Portfolio's securities or the price of securities that the
Portfolio is considering purchasing. A hedging transaction may partially
protect the Portfolio from a decline in the value of a particular security or
its portfolio generally, although the cost of the transaction will reduce the
potential return on the security or the portfolio. In addition, hedging
transactions do not eliminate fluctuations in the prices of the underlying
securities the Portfolio owns or intends to acquire.
Any utilization of forwards or any other hedging technique (investing,
for example, in futures or options) is
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<PAGE>
subject to policies and procedures which may be established and changed by the
trustees from time to time without shareholder vote. Currently, the Portfolio
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 Portfolio to invest in futures or options, such investments would be
permitted solely for hedging purposes, and the Portfolio 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 may be required to obtain bank regulatory
approval before the Portfolio engages in futures and options transactions. The
following information should be read in conjunction with the information
concerning the Portfolio's investment in forwards and the risks of such
investments contained in the Prospectus.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward contract is an
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 asset at the time
of delivery. The Portfolio currently intends that the only forward contracts or
commitments that it might enter into are forward foreign currency exchange
contracts and that it may enter into such contracts solely for hedging purposes,
although the Portfolio may enter into additional forms of forward contracts or
commitments in the future for hedging purposes if they become available and
advisable in light of the Portfolio's objective 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 Portfolio's principal uses of
forward foreign currency exchange contracts ("forward currency contracts"). The
Portfolio may enter into forward currency contracts with aggregate stated
contract values of up to the value of the Portfolio'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). The Portfolio 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"). The Portfolio also may hedge some or all of its
investments denominated in foreign currency against a decline in the value of
that currency relative to the U.S. dollar by entering into forward currency
contracts to sell
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an amount of that currency (or a proxy currency whose price movements are
expected to have a high degree of correlation with the currency being hedged)
approximating the value of some or all of its portfolio securities denominated
in that currency ("position hedge"). The Portfolio also may enter into a
forward currency contract with respect to a currency where the Portfolio 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 the Portfolio's
foreign currency denominated portfolio securities. The matching of the increase
in value of a forward foreign currency exchange 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 the
Portfolio's currency exposure from one foreign currency to another limits the
Portfolio's opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses to the Portfolio if the Sub-
Advisor's projection of future exchange rates is inaccurate.
The Portfolio 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 the
Portfolio is not able to cover its forward currency positions with underlying
portfolio securities, the Portfolio's custodian will segregate cash or liquid
assets having a value equal to the aggregate amount of the Portfolio'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 Portfolio 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 the Portfolio's commitments with respect to such
contracts.
While forward contracts are not currently regulated by the Commodity
Futures Trading Commission ("CFTC"), the CFTC may in the future assert authority
to regulate forward contracts. In such event, the Portfolio's ability to
utilize forward contracts may be restricted. The Portfolio 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 Portfolio assets. In addition, when
the Portfolio enters into a privately negotiated forward contract with a
counterparty, the Portfolio assumes counterparty credit risk, that is, the risk
that the counterparty will fail to perform its obligations, in which case the
Portfolio
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could be worse off than if the contract had not been entered into. Unlike many
exchange-traded futures contracts and options on futures, there are no daily
price fluctuation limits with respect to forward contracts and other negotiated
or over-the-counter instruments, and with respect to those contracts, adverse
market movements could therefore continue to an unlimited extent over a period
of time. However, the Portfolio intends to monitor its investments closely and
will attempt to renegotiate or close its positions when the risk of loss to the
Portfolio becomes unacceptably high.
PORTFOLIO TURNOVER. Although the annual portfolio turnover rate of
the Portfolio will vary, it is normally expected to range from 25% to 75%. In
pursuit of the Portfolio's investment objective, the Sub-Advisor continuously
monitors the Portfolio's investments and makes portfolio changes whenever
changes in investment themes, the fundamentals of any portfolio company or the
price of any portfolio security indicate to the Sub-Advisor that more attractive
alternatives exist or that the Portfolio's investment 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 Portfolio due to economic, market or
other factors that are not within the control of management.
2. INVESTMENT RESTRICTIONS
The Fund has adopted the investment policy that it may,
notwithstanding any other fundamental or non-fundamental investment policy or
restriction, invest all of its investable assets in the securities of another
open-end investment company or series thereof with substantially the same
investment objective, policies and limitations as the Fund.
All other fundamental and non-fundamental investment policies and
restrictions of the Fund and the Portfolio are identical. Therefore, although
the following investment restrictions refer to the Portfolio and the trustees of
Worldwide Portfolios, they apply equally to the Fund and the trustees of the
Trust.
The Portfolio 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
Portfolio 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
Portfolio. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders.
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The following fundamental restrictions apply to the Portfolio. The
Portfolio may not:
1. With respect to 75% of the Portfolio'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
Portfolio in the securities of such issuer exceeds 5% of the value of the
Portfolio's total assets or (b) the Portfolio 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 Portfolio'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 Portfolio's
total assets taken at market value. When borrowings exceed 5% of the
Portfolio's total assets, the Portfolio will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Portfolio 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 Portfolio may enter into repurchase
agreements and may lend portfolio securities in accordance with the Portfolio's
investment policies. The Portfolio 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 Portfolio uses the industry groups designated by the Financial Times
World Index Service.
The trustees have adopted additional non-fundamental investment
restrictions for the Portfolio. These limitations may
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be changed by the trustees without a shareholder vote. The non-fundamental
investment restrictions include the following:
1. With respect to 100% of the Portfolio's total assets, the
Portfolio 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 Portfolio in the securities of such issuer
exceeds 5% of the value of the Portfolio's total assets or (b) the Portfolio
owns more than 10% of the outstanding voting securities of such issuer.
2. The Portfolio 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 Portfolio's investments
in all such companies taken at cost to exceed 5% of the value of the Portfolio's
total assets.
3. The Portfolio may not purchase securities on margin from a broker
or dealer, except that the Portfolio 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 Portfolio from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
4. The Portfolio 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 Portfolio may not invest in companies for the purposes of
exercising control of management.
6. The Portfolio 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 Portfolio, taken at market
value at the time of purchase would be invested in such securities.
7. The Portfolio may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Portfolio may enter
into forward foreign currency exchange contracts with stated contract values of
up to the value of the Portfolio's assets.
8. The Portfolio 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 Portfolio may not purchase or sell any interest in an oil,
gas or mineral development or exploration
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program, including investments in oil, gas or other mineral leases, rights or
royalty contracts (except that the Portfolio may invest in the securities of
issuers engaged in the foregoing activities).
10. The Portfolio 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 Portfolio in units or attached to
securities are not subject to these limits.
The Trust has undertaken to the State of Ohio that the Fund will
prohibit the purchase or retention by the Fund of the securities of any issuer
if the officers, directors or trustees of the Fund, its advisors, or managers
owning beneficially more than 1/2 of 1% of the securities of an issuer together
own beneficially more than 5% of the securities of that issuer.
3. MANAGEMENT OF THE FUND
The trustees and executive officers of the Trust are listed below,
together with information which includes their principal occupations during the
past five years and other principal business affiliations. The trustees and
executive officers of the Trust also serve in the same capacities as trustees
and officers of Worldwide Portfolios.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO 80206, age
53. 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 Institutional Products Trust since its
inception in October 1995. President and a director since April 1995 of
Berger Associates, Inc. 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.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, age 67.
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 and Berger/BIAM Worldwide
Portfolios Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900, Denver, CO
80206, age 70. Director and, formerly,
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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 Institutional Products Trust since its inception in
October 1995. Trustee of Berger/BIAM Worldwide Funds Trust and
Berger/BIAM Worldwide Portfolios Trust since their inception in May
1996. Chairman (since 1994) and a Director (since 1973) and, formerly,
President (1973-1994) of Berger Associates, Inc.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 70. 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 and Berger/BIAM Worldwide Portfolios
Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age 51.
President, Cattanach & Associates, Ltd. (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 and Berger/BIAM Worldwide Portfolios
Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age 68.
Associate, University College, University of Denver. Formerly,
President of the Colorado State Board of Land Commissioners (1989-1995),
and Vice President and Economist (1983-1988) and Consulting Economist
(1989) for First Interstate Bank of Denver. Ph.D. in Economics (Harvard
University). Director of Berger 100 Fund and Berger Growth and Income
Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust and
Berger/BIAM Worldwide Portfolios Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL 60602, age
50. 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 and
Berger/BIAM Worldwide Portfolios Trust.
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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 and Berger/BIAM Worldwide Portfolios Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT 59717,
age 59. Since 1994, Dean, and since 1989, 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 and Berger/BIAM Worldwide Portfolios
Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, age 67.
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 and Berger/BIAM Worldwide Portfolios
Trust.
* CRAIG D. CLOYED, 210 University Boulevard, Suite 900, Denver, CO 80206, age
50. Vice President of Berger/BIAM Worldwide Funds Trust and Berger/BIAM
Worldwide Portfolios Trust since their inception in May 1996. Also,
Vice President and Chief Marketing Officer of Berger Associates, Inc.,
since August 1995, and President, CEO and a director of Berger
Distributors, Inc., since its inception in May 1996. Formerly
(September 1989 to August 1995), Senior Vice President of INVESCO Funds
Group (mutual funds).
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver, CO 80206, age
40. Vice President, Secretary and Treasurer of Berger 100 Fund and
Berger Growth and Income Fund since October 1991, of Berger Investment
Portfolio Trust since its inception in August 1993, of Berger
Institutional Products Trust since its inception in October 1995 and of
Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust since their inception in May 1996. Also, Vice President-Finance
and Administration, Secretary and Treasurer of Berger Associates, Inc.,
since September 1991, 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
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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 the
Fund and of the Portfolio's Advisor or Sub-Advisor.
TRUSTEE COMPENSATION
Officers of the Trust receive no compensation from the Trust.
However, trustees of the Trust who are not interested persons of the Portfolio's
Advisor or Sub-Advisor, who are also trustees of Worldwide Portfolios, are
compensated for their services according to a fee schedule, allocated among the
Berger and Berger/BIAM Funds, which includes an annual fee component and a per
meeting fee component. Neither the officers of the Trust nor the trustees
receive any form of pension or retirement benefit compensation from the Trust.
Set forth below is information regarding compensation (including
reimbursement of expenses) estimated to be paid or accrued during the current
fiscal year ended July 31, 1997, for each trustee of the Trust and of the other
funds in the Berger Fund and Berger/BIAM Fund complex.
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME AND POSITION WITH AGGREGATE AGGREGATE
BERGER AND BERGER/BIAM COMPENSATION COMPENSATION
FUNDS FROM FROM
THE FUND(1) ALL BERGER
AND
BERGER/BIAM
FUNDS(2)
- --------------------------------------------------------------------------------
Dennis E. Baldwin(3) $ 830 $41,083
- --------------------------------------------------------------------------------
William M.B. Berger(3),(5) $ 0 $ 0
- --------------------------------------------------------------------------------
Louis R. Bindner(3) $ 706 $34,965
- --------------------------------------------------------------------------------
Katherine A. Cattanach(3) $ 801 $39,657
- --------------------------------------------------------------------------------
Lucy Black Creighton(3) $ 679 $33,602
- --------------------------------------------------------------------------------
Paul R. Knapp(3) $ 907 $44,919
- --------------------------------------------------------------------------------
Gerard M. Lavin(4),(5) $ 0 $ 0
- --------------------------------------------------------------------------------
Harry T. Lewis(3) $ 775 $38,357
- --------------------------------------------------------------------------------
Michael Owen(3) $1,025 $50,720
- --------------------------------------------------------------------------------
William Sinclaire(3) $ 681 $33,697
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Comprised of the portion of the estimated trustee compensation to be paid
by Worldwide Portfolios to its trustees and allocated to the Fund.
(2) Consisting of Berger 100 Fund, Berger Growth and Income Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios Trust.
(3) 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 and Berger/BIAM Worldwide Portfolios Trust.
(4) Trustee of Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust and Berger/BIAM Worldwide Portfolios Trust.
(5) Interested person of the Berger/BIAM Worldwide Funds Trust and/or the
Portfolio's Advisor or Sub-Advisor.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by the Berger/BIAM Worldwide Portfolios
Trust. Under the plan, deferred fees are credited to an account and adjusted
thereafter to reflect the investment experience of whichever of the Berger or
Berger/BIAM Funds (or approved money market funds) is designated by the trustees
for this purpose. Pursuant to an exemptive order of the Commission, Worldwide
Portfolios 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.
Worldwide Portfolios' obligation to make payments of deferred
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<PAGE>
fees under the plan is a general obligation of Worldwide Portfolios.
As of the date of this Statement of Additional Information, the
officers and trustees of the Trust as a group owned of record or beneficially no
shares of the Berger/BIAM International Fund.
4. INVESTMENT ADVISOR AND SUB-ADVISOR
INVESTMENT ADVISOR
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio.
The Advisor is a limited liability company formed in 1996. Since the
Advisor was only recently formed, it has no prior experience as an investment
advisor. However, Berger Associates, Inc. ("Berger Associates"), which owns
100% of the Advisor, has been in the investment advisory business for over 20
years. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80% 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. Also, see in the Prospectus under "Pending Sale of Interest in
Advisor" for more information concerning ownership of the Advisor.
SUB-ADVISOR
As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to Bank
of Ireland Asset Management (U.S.) Limited (the "Sub-Advisor" or "BIAM"). As
Sub-Advisor, BIAM manages the investments in the Portfolio 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 Worldwide Portfolios. BIAM's main offices are at 26 Fitzwilliam
Place, Dublin 2, Ireland. BIAM maintains a representative office at 2 Greenwich
Plaza, Greenwich, CT 06830. BIAM is an indirect wholly-owned subsidiary of Bank
of Ireland, a publicly traded, diversified financial services group with
business operations worldwide.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT AND SUB-ADVISORY AGREEMENT
Under the Investment Advisory Agreement between the Advisor and
Berger/BIAM Worldwide Portfolios Trust with respect to the Portfolio, the
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Sub-Advisor and is responsible for furnishing
general business management and administrative services to the Portfolio. Under
the Investment Advisory Agreement for the Portfolio, the Advisor is compensated
for its services to the Portfolio by the payment of a fee at the annual rate of
0.90% of the average daily net assets of the Portfolio. The Fund bears a pro
rata portion of the fee paid by the Portfolio to the Advisor.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
The Investment Advisory Agreement will continue in effect until 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 Portfolio and in either case by vote of a majority of
the trustees of Worldwide Portfolios who are not "interested persons" (as that
term is defined in the Investment Company Act of 1940) of the Portfolio or the
Advisor. The Agreement is subject to termination by the Portfolio or the
Advisor on 60 days' written notice, and terminates automatically in the event of
its assignment.
Under the Sub-Advisory Agreement between the Advisor and the Sub-
Advisor, the Advisor has delegated day-to-day portfolio management
responsibility to the Sub-Advisor. The Sub-Advisor manages the investments in
the Portfolio 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 Worldwide Portfolios. The Portfolio
pays no fees directly to the Sub-Advisor. The Sub-Advisor will receive from the
Advisor a fee at the annual rate of 0.45% of the average daily net assets of the
Portfolio. During certain periods, the Sub-Advisor may voluntarily waive all or
a portion of its fee under the Sub-Advisory Agreement, which will not affect the
fee paid by the Portfolio to the Advisor.
The Sub-Advisory Agreement will continue in effect until April 1998,
and thereafter from year to year if such
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<PAGE>
continuation is specifically approved at least annually by the trustees or by
vote of a majority of the outstanding shares of the Portfolio and in either case
by vote of a majority of the trustees of Worldwide Portfolios who are not
"interested persons" (as that term is defined in the Investment Company Act of
1940) of the Portfolio or the Advisor or the Sub-Advisor. The Sub-Advisory
Agreement is subject to termination by the Portfolio, the Advisor or the Sub-
Advisor 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.
TRADE ALLOCATIONS
Investment decisions for the Portfolio and other accounts advised by
the Sub-Advisor 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 the Portfolio and one or more such accounts. If the Portfolio and other
accounts advised by the Sub-Advisor 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 Portfolio and
each participating account. While in some cases, this policy might adversely
affect the price paid or received by the Portfolio or other participating
accounts, or the size of the position obtained or liquidated, the Sub-Advisor
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
The Advisor has adopted a Code of Ethics covering all board members,
officers, employees and other access persons (as defined below) of the Advisor
who are not also covered by an approved Code of Ethics of an affiliated person
who is an investment advisor ("covered persons"). At present, there are no
persons who would be covered by the Advisor's Code of Ethics who are not also
covered by the Code of Ethics of Berger Associates, which is an investment
advisor affiliated with the Advisor.
The Advisor's Code, which is substantially similar to the Code of
Ethics adopted by Berger Associates, permits its covered persons to purchase and
sell securities for their own accounts in accordance with provisions governing
personal investing. 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 Fund or the Portfolio or the Advisor's other advisory
clients. Board members and officers of the Advisor (including those who also
serve as trustees of the Trust or of Worldwide Portfolios), investment
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<PAGE>
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 Fund or the Portfolio.
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 the Advisor's Code. Those covered persons (as well
as board members, officers, employees and other access persons of the Advisor
covered by an approved Code of Ethics of an affiliated investment advisor) also
may be required under certain circumstances to forfeit their profits made from
personal trading. The Code is administered by the Advisor and the provisions of
the Code are subject to interpretation by and exceptions authorized by its board
of managers.
The Sub-Advisor 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 the Sub-Advisor 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 the Sub-Advisor are required to pre-clear all transactions in securities
not otherwise exempt under the Code of Ethics and must instruct their broker
to provide the Sub-Advisor with duplicate confirmations of all such personal
trades.
5. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
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<PAGE>
Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as: expenses of registering the Trust with
securities authorities; expenses of meetings of the shareholders of the Trust;
and legal fees. Expenses of the Fund also include, among others, registration
and filing fees incurred in registering shares of the Fund with securities
authorities; 12b-1 fees; taxes imposed on the Fund; the fee payable to the
Advisor under the Administrative Services Agreement; and such other non-
recurring and extraordinary items as may arise from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, printing and mailing to shareholders of prospectuses and other
required communications,
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<PAGE>
and certain other administrative and recordkeeping services, such as
coordinating matters relating to the operations of the Fund, monitoring the
Fund's status as a "regulated investment company" under the Internal Revenue
Code, coordinating registration of sufficient Fund shares under federal and
state securities laws, arranging for and supervising the preparation of
registration statements, tax returns, proxy materials, financial statements and
reports for filing with regulatory authorities and distribution to shareholders
of the Fund. Under the Administrative Services Agreement, the Fund pays the
Advisor a fee at an annual rate equal to the lesser of (i) 0.45% of its average
daily net assets, or (ii) the Advisor's annual cost to provide or procure these
services (including the fees of any services providers whose services are
procured by the Advisor), plus an additional 0.02% of the Fund's average daily
net assets. The trustees of the Trust regularly review amounts paid to and
expenditures incurred by the Advisor pursuant to the Administrative Services
Agreement. In addition, in the event that the Advisor's duties under the
Administrative Services Agreement are delegated to another party, the Advisor
may take into account, in calculating the cost of such services, only the costs
incurred by such other party in discharging the delegated duties.
Arrangements may be entered into by the Advisor or its affiliates with
certain organizations (broker-dealers, recordkeepers and administrators) to
provide sub-transfer agency, recordkeeping, shareholder communications,
sub-accounting and/or other services to investors purchasing shares of the Fund
through investment programs or pension plans established or serviced by those
organizations. The Advisor or its affiliates may pay fees to these
organizations for their services. For purposes of determining the Advisor's
cost of providing or procuring transfer agency, dividend disbursing or other
services under the Administrative Services Agreement, the Advisor may take into
account only the fees that otherwise would be paid for by the Advisor if all the
investors who own Fund shares through the organization were instead direct
registered record holders of shares in the Fund.
Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to the
Advisor under the Administrative Services Agreement.
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<PAGE>
Investors Fiduciary Trust Company ("IFTC"), 127 W. 10th Street, Kansas City, MO
64105, has been appointed to provide recordkeeping and pricing services to the
Fund, including calculating the daily net asset value of the Fund, and to
perform certain accounting and recordkeeping functions that it requires. In
addition, IFTC has been appointed to serve as the Fund's custodian, transfer
agent and dividend disbursing agent. IFTC has engaged DST Systems, Inc.
("DST"), P.O. Box 419958, Kansas City, MO 64141, as sub-transfer agent to
provide transfer agency and dividend disbursing services for the Fund. The fees
of Berger Associates, IFTC and DST are all paid by the Advisor. Approximately
40% of the outstanding shares of DST are owned by KCSI, which also owns
approximately 80% of the outstanding shares of Berger Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such as
compliance monitoring and preparing investor communications, which have been
delegated to Berger Associates as part of the Sub-Administration Agreement
discussed above. Other services are procured from third party service providers
at the Portfolio's own expense, such as custody, recordkeeping and pricing
services. The Portfolio has appointed IFTC as recordkeeping and pricing agent
to calculate the daily net asset value of the Portfolio and to perform certain
accounting and recordkeeping functions required by the Portfolio. In addition,
the Portfolio has appointed IFTC as its custodian and transfer agent. IFTC has
engaged State Street Bank and Trust Company ("State Street"), P.O. Box 351,
Boston, MA 02101, as sub-custodian for the Portfolio. For custodian,
recordkeeping and pricing services, the Portfolio pays fees directly to IFTC
based on a percentage of its net assets, subject to certain minimums, and
reimburses IFTC for certain out-of-pocket expenses.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
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<PAGE>
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First
Fund Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite
261-E, Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its
costs in distributing Fund shares by Berger Associates.
The Fund has adopted a Rule 12b-1 plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, which provides for the
payment to Berger Associates of a 12b-1 fee of 0.25% per annum of the Fund's
average daily net assets to finance activities primarily intended to result in
the sale of Fund shares. The expenses paid by Berger Associates may include
payments made to the Fund's Distributor in connection with the distribution of
the Fund's shares, the costs of preparing, printing and mailing prospectuses to
other than existing shareholders, as well as promotional expenses directed at
increasing the sale of Fund shares. The Rule 12b-1 Plan for the Fund came into
effect at the inception of the Fund. A further discussion of the Plan is
contained in Section 8 of the Prospectus.
6. BROKERAGE POLICY
Although the Portfolio retains full control over its own investment
policies, the Sub-Advisor is authorized to place the portfolio transactions of
the Portfolio. The Sub-Advisor is required to report on the placement of
brokerage business to the trustees of Worldwide Portfolios every quarter,
indicating the brokers with whom portfolio business was placed and the basis for
such placement.
The Investment Advisory Agreement that the Portfolio has with the
Advisor and the Sub-Advisory Agreement between the Advisor and the Sub-Advisor
authorizes and directs portfolio transactions for the Portfolio to be placed
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, the Sub-Advisor is specifically authorized 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 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 Sub-Advisor.
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In accordance with these provisions, the Sub-Advisor may place
portfolio brokerage business of the Portfolio with brokers who provide useful
research services to the Sub-Advisor. Such research services would 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 the Sub-Advisor may be apprised of current
developments in the above-mentioned factors.
The research services received from brokers could be helpful to the
Sub-Advisor in performing its investment advisory responsibilities to the
Portfolio, but they are not essential, and the availability of such services
from brokers does not reduce the responsibility of the Sub-Advisor's advisory
personnel to analyze and evaluate the securities in which the Portfolio invests.
The research services obtained as a result of the Portfolio's brokerage business
may also be useful to the Sub-Advisor 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 the Sub-
Advisor in rendering investment advice to the Portfolio. Although such research
services may be deemed to be of value to the Sub-Advisor, they are not expected
to decrease the expenses that the Sub-Advisor would otherwise incur in
performing its investment advisory services for the Portfolio nor will the fee
that is received by the Sub-Advisor from the Advisor or the advisory fee
received by the Advisor from the Portfolio be reduced as a result of the
availability of such research services from brokers.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
7. HOW TO PURCHASE SHARES IN THE FUND
Minimum Initial Investment $2,000.00
Minimum Subsequent Investment $ 50.00
To purchase shares in the Fund, simply complete the application form
enclosed with the Prospectus. Then mail it with a check payable to "Berger
Funds" to the Fund in care of DST Systems, Inc., the Fund's sub-transfer agent,
as follows:
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Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
If a shareholder is adding to an existing account, shares may also be
purchased by placing an order by telephone call to the Fund at 1-800-551-5849 or
via personal computer through on-line service providers or other on-line access
points approved by the Fund, and remitting payment to DST Systems, Inc. In
order to make sure that payment for telephone purchases is received on time,
shareholders are encouraged to remit payment by wire or electronic funds
transfer, or by overnight delivery.
In addition, Fund shares may be purchased through certain broker-
dealers that have established mutual fund programs and certain other
organizations connected with pension and retirement plans. These broker-dealers
and other organizations may charge investors a transaction or other fee for
their services, may require different minimum initial and subsequent investments
than the Fund and may impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's total
return on an investment in Fund shares. No such charge will be paid by an
investor who purchases the Fund shares directly from the Fund as described
above.
8. HOW THE NET ASSET VALUE IS DETERMINED
The net asset value of the 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 Fund 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 the Fund is determined by dividing
the total value of its assets, less liabilities, by the total number of shares
outstanding. Since the Fund invests all of its investable assets in the
Portfolio, the value of the Fund's investable assets will be equal to the value
of its beneficial interest in the Portfolio.
The Portfolio's securities and other assets are valued as follows:
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 the Portfolio will be determined by
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using prices provided by pricing services which provide market prices to other
mutual funds or, as needed, by obtaining market quotations from independent
broker/dealers. Short-term money market securities maturing within 60 days are
valued on the amortized cost basis, which approximates market value. All assets
and liabilities initially expressed in terms of non-U.S. dollar currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers shortly before the close of the Exchange. Securities and
assets for which quotations are not readily available are valued at fair values
determined in good faith pursuant to consistently applied procedures established
by the trustees.
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 Portfolio are determined as of the earlier of such market close or the
closing time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in good faith pursuant to consistently
applied procedures established by the trustees.
The Portfolio'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 the Fund
may be significantly affected by such trading on days when shareholders cannot
purchase or redeem shares of the Fund.
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9. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
TAX STATUS OF THE FUND AND THE PORTFOLIO
The Fund intends to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") and to distribute to its
investors all or substantially all of its taxable income as defined in the Code.
If the Fund meets the Subchapter M requirements, it generally is not liable for
U.S. Federal income taxes to the extent its earnings are timely distributed.
Qualification as a regulated investment company ("RIC") under the Code does not,
however, involve any federal supervision of management or of the investment
practices or policies of the Fund. If the Fund distributes annually less than
98% of its income and gain, it may be subject to a nondeductible excise tax
equal to 4% of the shortfall.
The Trust anticipates that (1) the Portfolio will be treated for U.S.
Federal income tax purposes as a partnership, and (2) for purposes of
determining whether the Fund satisfies the income and diversification
requirements to maintain its status as a RIC, the Fund, as an investor in the
Portfolio, will be deemed to own a proportionate share of the Portfolio's assets
and will be deemed to be entitled to the Portfolio's income or loss attributable
to that share. The Portfolio has advised the Fund that it intends to conduct
its operations so as to enable its investors, including the Fund, to satisfy
those requirements.
TAXATION OF FUND DISTRIBUTIONS
Advice as to the tax status of each year's dividends and distributions
will be mailed annually to the shareholders of the Fund. Dividends paid by the
Fund from net investment income and distributions from the Fund's net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term capital gains (net of capital
losses), whether received in cash or reinvested, will be taxable as long-term
capital gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. A portion of the dividends (but not capital gains distributions) paid
by the Fund may be eligible for the dividends received deduction for corporate
shareholders to the extent that the Fund's income consists of dividends paid by
United States corporations. If a shareholder is exempt from U.S. Federal income
tax, the shareholder will not generally be taxed on amounts distributed by the
Fund.
If the amount of the Fund's distributions for a taxable year exceeds
the Fund's tax earnings and profits available for
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distribution, all or portion or the distributions may be treated as a return of
capital or as capital gains. In the event a distribution is treated as a return
of capital, the shareholder's basis in his or her Fund shares will be reduced to
the extent the distribution is so treated.
At certain levels of taxable income, the Code provides a preferential
tax rate for long-term capital gains. Long-term capital gains of taxpayers
other than corporations are taxed at a 28% maximum rate, whereas ordinary income
is taxed at a 39.6% maximum rate. Capital losses continue to be deductible only
against capital gains plus (in the case of taxpayers other than corporations)
$3,000 of ordinary income annually ($1,500 for married individuals filing
separately).
FOREIGN SOURCE INCOME
Income received by the Fund, directly or through the Portfolio, from
sources within foreign countries may be subject to withholding and other income
or similar taxes imposed by such countries. The U.S. has entered into tax
treaties with many foreign countries that, in some circumstances, may entitle
the Fund or the Portfolio to a reduced rate of tax or exemption from tax on such
income. If, directly or through the Portfolio, more than 50% in value of the
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund may elect to "pass-through" to its shareholders
the amount of foreign income taxes paid by the Fund and the foreign-source
character of the income received by the Fund. Under this election, each
shareholder will be required to include the shareholder's pro rata portion of
these foreign taxes in gross income, but will be able to deduct (as an itemized
deduction) or claim a foreign tax credit for such amount (subject to various
limitations).
Depending upon their particular tax circumstances, shareholders may be
unable to claim a full credit for their proportionate share of the foreign
income taxes passed through by the Fund. Further limitations as to the credit
or deduction of the foreign income taxes may apply for purposes of the
alternative minimum tax. If the election to pass through foreign income taxes
is not made, foreign taxes will be treated as an expense of the Fund, reducing
its investment company taxable income, and the distributions by the Fund will be
treated as United States source income.
OTHER TAX CONSIDERATIONS
The amount, timing and character of Fund income taxed to Fund
shareholders may be affected by certain special U.S. tax rules that may apply to
various investments of the Fund and the Portfolio, including the following:
CURRENCY TRANSACTIONS. On the disposition of foreign currency,
foreign currency denominated debt
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securities and certain financial contracts, forward contracts and
options, gains or losses attributable to currency fluctuations are
treated as ordinary gain or loss. These gains or losses, termed
"section 988" gains or losses, may increase, decrease or eliminate the
amount to be distributed to shareholders as ordinary income. If
section 988 losses exceed other net investment income during a taxable
year the Fund generally would not be able to make ordinary dividend
distributions, or distributions made before the losses were realized
would be recharacterized as return of capital to shareholders for U.S.
Federal income tax purposes (reducing each shareholder's basis in his
or her Fund shares) or as a capital gain. To minimize the risk of
such distributions, the Fund may adjust its dividends (if any) to take
currency fluctuations into account.
HEDGING TRANSACTIONS. On the disposition of certain contracts,
such as options, futures contracts and forward contracts (termed
"section 1256 contracts"), the resulting gains or losses generally are
considered 60% long-term and 40% short-term capital gains or losses,
regardless of the time the Fund or the Portfolio has held the
contract. However, foreign currency gains or losses (as discussed
above) arising from certain section 1256 contracts may be treated as
ordinary income or loss. In addition, section 1256 contracts held by
the Fund, directly or through the Portfolio, at the end of each
taxable year and on certain other dates prescribed by the tax laws are
"marked-to-market" such that unrealized gains or losses are treated as
though they were realized. Further, requirements relating to the
Fund's tax status as a regulated investment company may limit the
extent to which the Fund and the Portfolio will be able to engage in
transactions in such contracts.
Hedging transactions undertaken by the Fund and the Portfolio may
result in "straddles" for U.S. Federal income tax purposes, affecting
the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on straddle positions may be deferred.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Portfolio may invest
in foreign entities that are classified as passive foreign investment
companies ("PFICs") for U.S. tax purposes. If the Fund or the
Portfolio receives an "excess distribution" with respect to PFIC
stock, the Portfolio or the Fund itself may be subject to tax on a
portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. However,
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the Fund or the Portfolio may be eligible to elect one of two
alternative tax treatments with respect to PFIC shares which would
avoid the foregoing "excess distribution" taxes, but also may affect,
among other things, the amount and character of gain or loss and the
timing of the recognition of income with respect to PFIC shares.
Accordingly, the amounts, character and timing of income distributed
to shareholders of the Fund may differ substantially as compared to a
fund that did not invest in PFIC shares.
FOREIGN SHAREHOLDERS
Foreign shareholders of the Fund generally will be subject to a 30%
U.S. withholding tax on ordinary income dividends paid by the Fund. This
withholding may be reduced by an applicable tax treaty. Foreign shareholders
are urged to consult with their own tax advisors with respect to this
withholding tax and the other particular U.S. and foreign tax consequences to
them of an investment in the Fund.
The foregoing discussion relates only to U.S. Federal income tax law.
Ordinary income and capital gains dividends also may be subject to state and
local taxes, which may differ from the U.S. Federal treatment. Shareholders are
urged to consult with their tax advisors with respect to the particular tax
consequences to them of an investment in the Fund, including the application and
effect of state and local taxes.
10. SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended for any period during which
the Exchange is closed or the Commission determines that trading on the Exchange
is restricted, or when there is an emergency as determined by the Commission as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to determine the value of its net assets, or for
such other period as the Commission may by order permit for the protection of
shareholders of the Fund.
The 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. The Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in kind. If shares are redeemed in kind, the redeeming shareholder
generally will
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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 under Section 8. Shareholders have the
ability to request in writing a review of the valuation of in-kind redemptions,
which will be considered by the trustees of the Trust within 90 days of such
written request.
11. TAX-SHELTERED RETIREMENT PLANS
The Fund offers a Profit-Sharing Plan, a Money Purchase Pension Plan,
an Individual Retirement Account and a 403(b) Custodial Account for adoption by
employers and individuals who wish to participate in such Plans by accumulating
shares of the Fund with tax-deductible dollars.
PROFIT-SHARING AND MONEY PURCHASE PENSION PLANS
Employers, self-employed individuals and partnerships may make tax-
deductible contributions to the tax-qualified retirement plans offered by the
Fund. All income and capital gains in the Plans are tax free until withdrawn.
The amounts that are deductible depend upon the type of Plan or Plans adopted.
If you, as an employer, self-employed person or partnership, adopt the
Profit-Sharing Plan, you may vary the amount of your contributions from year to
year and may elect to make no contribution at all for some years. If you adopt
the Money Purchase Pension Plan, you must commit yourself to make a contribution
each year according to a formula in the Plan that is based upon your and your
employees' compensation or earned income. By adopting both the Profit-Sharing
and the Money Purchase Pension Plan, you can increase the amount of
contributions that you may deduct in any one year.
If you wish to purchase shares of the Fund in conjunction with one or
both of these tax-qualified plans, you may use an Internal Revenue Service
approved prototype Trust Agreement and Retirement Plan available from the Fund.
IFTC serves as trustee of the Plan, for which it charges an annual trustee's fee
of $12 for each Berger or Berger/BIAM Fund or Cash Account Trust Money Market
Portfolio (discussed below) in which the participant's account is invested.
Contributions under the Plans are invested exclusively in shares of the Berger
and Berger/BIAM Funds or the Cash Account Trust Money Market Portfolios, which
are then held by the trustee under the terms of the Plans to create a retirement
fund in accordance with the tax code.
Distributions from the Profit-Sharing and Money Purchase Pension Plans
generally may not be made without penalty until the participant reaches age 59
1/2 and must begin no later than April 1 of the calendar year following the year
in which the participant attains age 70 1/2. Except for required distributions
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after age 70 1/2, periodic distributions over more than 10 years and the
distribution of any after-tax contributions, distributions are subject to 20%
U.S. Federal income tax withholding unless those distributions are rolled
directly to another qualified plan or an individual retirement account (IRA).
Participants may not be able to receive distributions immediately upon request
because of certain requirements under U.S. Federal tax law. Since distributions
which do not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor regarding the Plans is recommended.
In order to receive the necessary materials to create a Profit-Sharing
or Money Purchase Pension Plan, please write to the Fund, c/o BBOI Worldwide,
P.O. Box 5005, Denver, Colorado 80217, or call 1-800-333-1001. Trustees for
401(k) or other existing plans interested in utilizing Fund shares as an
investment or investment alternative in their plans should contact the Fund at
1-800-333-1001.
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
If you are an individual with compensation or earned income, whether
or not you are actively participating in an existing qualified retirement plan,
you can provide for your own retirement by adopting an IRA. Under an IRA, you
can contribute each year up to the lesser of 100% of your compensation or
$2,000. If you have a nonemployed spouse (or if your spouse elects to be
treated as having no compensation), you may make contributions totaling up to
$2,250 to two IRAs. If neither you nor your spouse are covered by an existing
qualified retirement plan, or if your income does not exceed certain amounts,
the amounts contributed to your IRA can be deducted for U.S. Federal income tax
purposes whether or not your deductions are itemized. If you or your spouse are
covered by an existing qualified retirement plan, and your income exceeds the
applicable amounts, your IRA contributions are not deductible for U.S. Federal
income tax purposes. However, whether your contributions are deductible or not,
the income and capital gains on your IRA are not taxed until the account is
distributed.
If you wish to create an IRA to invest in shares of the Fund, you may
use the Fund's IRA custodial agreement form which is an adaptation of the form
provided by the Internal Revenue Service. Under the IRA custodial agreement,
IFTC will serve as custodian, for which it will charge an annual custodian fee
of $12 per Berger or Berger/BIAM Fund or Cash Account Trust Money Market
Portfolio in which the IRA is invested.
Distributions from an IRA generally may not be made without penalty
until you reach age 59 1/2 and must begin no later than April 1 of the calendar
year following the year in which you attain age 70 1/2. Since distributions
which do not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor is recommended.
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In order to receive the necessary materials to create an IRA account,
please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, Colorado
80217, or call 1-800-333-1001.
403(b) CUSTODIAL ACCOUNTS
If you are employed by a public school system or certain tax-exempt
organizations such as private schools, colleges, universities, hospitals,
religious and charitable or other nonprofit organizations, you may establish a
403(b) Custodial Account. Your employer must participate in the establishment
of the account.
Your employer will automatically deduct the amount you designate from
your gross salary and contribute it to your 403(b) Custodial Account. The
amount which you may contribute annually under a salary reduction agreement is
generally the lesser of $9,500 or your exclusion allowance, which is based upon
a specified formula. There is a $50 minimum investment in the 403(b) Custodial
Account. Contributions made to the account reduce the amount of your current
income subject to U.S. Federal income tax. U.S. Federal income tax is not paid
on your contribution until you begin making withdrawals. In addition, all
income and capital gains in the account are tax-free until withdrawn.
Withdrawals from your 403(b) Custodial Agreement may begin as soon as
you reach age 59-1/2 and must begin no later than April 1 of the year following
the calendar year in which you attain age 70 1/2. Except for required
distributions after age 70 1/2 and periodic distributions over more than 10
years, distributions are subject to 20% U.S. Federal income tax withholding
unless those distributions are rolled directly to another 403(b) account or
annuity or an individual retirement account (IRA). You may not be able to
receive distributions immediately upon request because of certain notice
requirements under U.S. Federal tax law. Since distributions which do not
satisfy these requirements can result in adverse tax consequences, consultation
with an attorney or tax advisor regarding the 403(b) Custodial Account is
recommended.
Individuals who wish to purchase shares of the Fund in conjunction
with a 403(b) Custodial Account may use a Custodian Account Agreement and
related forms available from the Fund. IFTC serves as custodian of the 403(b)
Custodial Account, for which it charges an annual custodian fee of $12 per
Berger and Berger/BIAM Fund in which the participant's account is invested.
In order to receive the necessary materials to create a 403(b)
Custodial Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005,
Denver, Colorado 80217, or call 1-800-333-1001.
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12. EXCHANGE PRIVILEGE AND SYSTEMATIC WITHDRAWAL PLAN
A shareholder who owns shares of the Fund worth at least $5,000 at the
current net asset value may establish a Systematic Withdrawal account from which
a fixed sum will be paid to the shareholder at regular intervals by the Fund.
To establish a Systematic Withdrawal account, the shareholder deposits
Fund shares with the Fund and appoints the Fund as agent to redeem shares in the
shareholder's account in order to make monthly, quarterly, semi-annual or annual
withdrawal payments to the shareholder of a fixed amount. The minimum
withdrawal payment is $50.00. These payments generally will be made on the 25th
day of each month.
Withdrawal payments are not yield or income on the shareholder's
investment, since portions of each payment will normally consist of a return of
the shareholder's investment. Depending on the size of the disbursements
requested and the fluctuation in value of the Fund, redemptions for the purpose
of making such disbursements may reduce or even exhaust the shareholder's
account.
The shareholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying the Fund. The shareholder may, of course, make
additional deposits of Fund shares in the shareholder's account at any time.
Since redemption of shares to make withdrawal payments is a taxable
event, each investor should consult a tax advisor concerning proper tax
treatment of the redemption.
Any shareholder may exchange any or all of the shareholder's shares in
the Fund, subject to stated minimums, for shares of any of the publicly
available Berger Funds or Berger/BIAM Funds or for shares of the Money Market
Portfolio, the Government Securities Portfolio or the Tax-Exempt Portfolio of
the Cash Account Trust ("CAT Portfolios"), separately managed, unaffiliated
money market funds, without charge, after receiving a current prospectus of the
other Berger Fund, Berger/BIAM Fund or CAT Portfolio. The exchange privilege
with the CAT Portfolios does not constitute an offering or recommendation of the
shares of any such CAT Portfolio by the Fund or the Advisor or Sub-Advisor.
Exchanges into or out of the Fund are made at the net asset value per share next
determined after the exchange request is received. Each exchange represents the
sale of shares from one fund and the purchase of shares in another, which may
produce a gain or loss for U.S. Federal income tax purposes. An exchange of
shares may be made by written request directed to the Fund, in care of DST
Systems, Inc., via a personal computer through on-line service providers or
other on-line access points approved by the Fund, or simply by telephoning the
Fund at 1-800-551-5849. This privilege is revocable by the Fund, and is not
available in any state in which the shares of the Berger or Berger/BIAM Fund or
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CAT Portfolio being acquired in the exchange are not registered for sale.
Shareholders automatically have telephone and on-line privileges to authorize
exchanges unless they specifically decline this service in the account
application or in writing.
13. PERFORMANCE INFORMATION
The Prospectus contains a brief description of how total return is
calculated.
Quotations of average annual total return for the Fund 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 for
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.
14. ADDITIONAL INFORMATION
BERGER/BIAM WORLDWIDE FUNDS TRUST AND THE FUND
The Trust is a Delaware business trust organized on May 31, 1996. The
Fund was established on May 31, 1996, as a series of the Trust. The Trust is
authorized to issue an unlimited number of shares of beneficial interest in
series or portfolios. Currently, the series comprising the Fund is one of three
series established under the Trust, although others may be added in the future.
The Trust is also authorized to establish multiple classes of shares
representing differing interests in an existing or new series.
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
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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 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 Berger/BIAM International Fund shareholder
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 the Fund is remote. The trustees intend to conduct the
operations of the Trust and the Fund so as to avoid, to the extent possible,
liability of shareholders for liabilities of the Trust or the Fund.
Shares of the Fund have no preemptive rights, and since the 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.
As of the date of this Statement of Additional Information, all of the
outstanding shares of the Fund were held by Berger Associates, Inc., a Delaware
corporation and controlling person of the Advisor, which provided the seed
capital necessary to establish the Trust.
BERGER/BIAM WORLDWIDE PORTFOLIOS TRUST AND THE PORTFOLIO
Worldwide Portfolios is also a Delaware business trust organized on
May 31, 1996. The Portfolio was established on May 31, 1996, as a series of
Worldwide Portfolios. The Portfolio commenced operations upon the transfer to
the Portfolio of assets held in a pooled trust. See "Performance" in the
Prospectus for additional information on the asset transfer.
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Worldwide Portfolios is authorized to sell unlimited interests in
series or portfolios. Currently, the series comprising the Portfolio is the
only series established under Worldwide Portfolios, although others may be added
in the future. The Delaware law information set forth above with respect to the
Trust also applies to Worldwide Portfolios and investors in the Portfolio.
Each investor in the Portfolio, including the Fund, is entitled to a
vote in proportion to the amount of its investment in the Portfolio. Whenever
the Fund is requested to vote as an investor in the Portfolio on matters
pertaining to the Portfolio (other than a vote by the Fund to continue the
operation of the Portfolio upon the withdrawal of another investor in the
Portfolio), the Fund will hold a meeting of its shareholders and will cast all
of its votes as an investor in the Portfolio in the same proportion as directed
by the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the votes cast by the Fund at the meeting of the Portfolio investors.
The percentage of the votes representing the Fund's shareholders who do not vote
will be voted by the Fund in the same proportion as the Fund's shareholders who
do, in fact, vote.
DISTRIBUTION
The Distributor is the principal underwriter of the Fund's shares.
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 Fund in connection with the sale of its
shares in all states in which the shares are registered and in which the
Distributor is qualified as a broker-dealer.
The Trust, on behalf of the Fund, and the Distributor are parties to a
Distribution Agreement that continues for two years from its date of execution
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 the Fund or the Distributor
on not more than 60 days' nor less than 30 days' prior written notice, and
terminates automatically in the event of its assignment. Under the Distribution
Agreement, the Distributor continuously offers the Fund's shares and solicits
orders to purchase Fund shares at net asset value.
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OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
has acted as counsel for the Trust and the Fund. Dechert Price & Rhoads, 1500 K
Street, N.W., Washington, DC, has acted as special counsel for the Trust and the
Fund.
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado, has
been appointed to act as independent accountants for the Fund and the Portfolio
for the fiscal year ended July 31, 1997.
The Berger/BIAM Worldwide Funds Trust has filed with the Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities of the Berger/BIAM International Fund,
of which this Statement of Additional Information is a part. If further
information is desired with respect to the Fund or its securities, reference is
made to the Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The following financial statements appear attached to the end of this
Statement of Additional Information:
For Berger/BIAM International Fund:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International Fund,
as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4, 1996
For Berger/BIAM International Portfolio:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International
Portfolio, as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4, 1996
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<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Portfolio may purchase securities which are convertible into common
stock when the Portfolio'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 Portfolio 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 Portfolio 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 the Portfolio 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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<PAGE>
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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<PAGE>
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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<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International Fund (one of three funds comprising Berger/BIAM Worldwide Funds
Trust, hereafter referred to as the "Fund") at October 4, 1996, in conformity
with generally accepted accounting principles. This financial statement is the
responsibility of the Fund's management; our responsibility is to express an
opinion on this financial statement in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement, assessing the accounting
principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
F-1
<PAGE>
BERGER/BIAM INTERNATIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Cash $ 10,000
---------
Total Assets 10,000
---------
Liabilities
Total Liabilities 0
---------
Net Assets $ 10,000
---------
---------
Net Asset Value per share (1,000 shares of beneficial interest
outstanding; unlimited authorized shares of beneficial interest
of $0.01 par value). Offering and Redemption Price Per Share $ 10.00
---------
---------
NOTES TO FINANCIAL STATEMENT
NOTE 1 - ORGANIZATION
The Berger/BIAM International Fund (the "Fund") is a series of the Berger/BIAM
Worldwide Funds Trust, a Delaware business trust (the "Trust") organized on
May 31, 1996, and has been inactive since that date except for matters relating
to its organization and registration as an investment company under the
Investment Company Act of 1940, as amended, and the sale of 1,000 shares of the
Fund to Berger Associates, Inc. ("Berger"), which currently owns 100% of BBOI
Worldwide LLC ("BBOI"), the administrator of the Fund.
The Fund will invest all of its investable assets in the Berger/BIAM
International Portfolio (the "Portfolio"), a series of the Berger/BIAM Worldwide
Portfolios Trust. The Portfolio is an open-end management investment company
and has the same investment objectives and policies as the Fund. As an investor
in the Portfolio, the Fund is allocated and bears indirectly its pro rata share
of the aggregate annual operating expenses of the Portfolio including the
investment advisory fee, custodian fees, auditor's fees, transfer agent,
recordkeeping and pricing agent fees.
All costs in organizing the Trust were paid by Berger.
F-2
<PAGE>
BERGER/BIAM INTERNATIONAL FUND
NOTES TO FINANCIAL STATEMENT (CONTINUED)
OCTOBER 4, 1996
NOTE 2 - AGREEMENTS
Under an Administrative Services Agreement, the Fund pays BBOI a fee at an
annual rate equal to the lesser of 0.45% of its average daily net assets or
BBOI's annual cost to provide or procure administrative services plus 0.02% of
the Fund's average daily net assets. Under that Agreement, BBOI is responsible,
at its expense, for providing or procuring all administrative services
reasonably necessary for the operation of the Fund, including recordkeeping and
pricing services, custodian services, transfer agency and dividend disbursing
services, tax and audit services, insurance, printing and mailing to
shareholders of prospectuses and other required communications and certain other
administrative services.
The Fund has adopted a Rule 12b-1 plan (the "Plan") pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, which permits the Fund to pay
certain costs for the distribution of its own shares. The Plan provides for the
payment to Berger of a 12b-1 fee of 0.25% per annum of the Fund's average daily
net assets to finance activities primarily intended to result in the sale of
Fund shares.
NOTE 3 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-3
<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International Portfolio
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International Portfolio (the sole portfolio comprising Berger/BIAM Worldwide
Portfolios Trust, hereafter referred to as the "Portfolio") at October 4, 1996,
in conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Portfolio's management; our
responsibility is to express an opinion on this financial statement in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
F-4
<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Cash $ 100,000
----------
Total Assets 100,000
----------
Liabilities
Total Liabilities 0
----------
Net Assets $ 100,000
----------
----------
NOTES TO FINANCIAL STATEMENT
NOTE 1 - ORGANIZATION
The Berger/BIAM International Portfolio (the "Portfolio") is a series of the
Berger/ BIAM Worldwide Portfolios Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on May 31, 1996, and has been
inactive since that date except for matters relating to its organization and
registration as an investment company under the Investment Company Act of 1940,
as amended, and the sales of beneficial interests in the Portfolio in the
respective amounts of $70,000 and $30,000 to the Berger/BIAM International CORE
Fund and the Berger/BIAM International Institutional Fund, respectively, each a
series of the Berger/BIAM Worldwide Funds Trust.
All costs in organizing the Trust were paid by Berger Associates, Inc.
("Berger"), which currently owns 100% of BBOI Worldwide LLC ("BBOI"), the
investment advisor to the Portfolio.
NOTE 2 - INVESTMENT VALUATION
The Portfolio's securities and other assets are valued 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 the Exchange is open. The value of
an investor's beneficial interest in the Portfolio is equal to the product of
(i) the aggregate net asset value of the Portfolio, effective for that day,
multiplied by (ii) the percentage representing that investor's share of the
aggregate beneficial interest in the Portfolio, effective for that day.
F-5
<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENT (CONTINUED)
OCTOBER 4, 1996
NOTE 3 - AGREEMENTS
The Portfolio has entered into an Investment Advisory Agreement with BBOI, under
which BBOI is responsible for providing investment advisory and related
administrative services to the Portfolio. Pursuant to the Investment Advisory
Agreement, BBOI has delegated day-to-day management of the Portfolio to Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), and has delegated certain
administrative duties to Berger.
The Portfolio pays no fees directly to Berger or BIAM.
NOTE 4 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-6
<PAGE>
BERGER/BIAM INTERNATIONAL INSTITUTIONAL FUND
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information about the Berger/BIAM
International Institutional Fund (the "Fund"), a series of the Berger/BIAM
Worldwide Funds Trust (the "Trust"), is not a prospectus. It should be read in
conjunction with the Prospectus describing the Fund, dated October 15, 1996,
which may be obtained by writing the Fund at P.O. Box 5005, Denver, Colorado
80217, or calling 1-800-706-0539. The Fund is a no-load mutual fund.
The investment objective of the Fund is long-term capital
appreciation. The Fund seeks to achieve this objective by investing all of its
investable assets in the Berger/BIAM International Portfolio (the "Portfolio")
which, in turn, invests 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 Portfolio
intends to diversify its holdings among several countries and to have, under
normal market conditions, at least 65% of the Portfolio's total assets invested
in the securities of companies located in at least five countries, not including
the United States.
The Fund is an open-end management investment company organized as a
diversified series of the Trust. UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY
ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS
INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO,
AS DESCRIBED ABOVE. Accordingly, the investment performance of the Fund will
derive from the investment performance of the Portfolio. The Portfolio is an
open-end management investment company and a diversified series of a separate
trust known as the Berger/BIAM Worldwide Portfolios Trust ("Worldwide
Portfolios"). The Portfolio's investment objective and policies are identical
to those of the Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI" or
the "Advisor"), which has delegated daily portfolio management of the Portfolio
to Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-
Advisor").
October 15, 1996
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
TABLE OF CONTENTS in Prospectus
----------------- --------------------
Introduction Section 2
1. Investment Policies Section 2, 3, 4
2. Investment Restrictions Section 3
3. Management of the Fund Section 6
4. Investment Advisor and Sub-Advisor Section 6
5. Expenses of the Fund Section 6, 7
6. Brokerage Policy Section 6, 7
7. Purchase of Shares Section 8
8. Net Asset Value Section 9
9. Income Dividends, Capital Gains Section 14
Distributions and Tax Treatment
10. Suspension of Redemption Rights Section 11
11. Tax-Sheltered Retirement Plans Section 13
12. Special Purchase and Exchange Plans Section 12, 13
13. Performance Information Section 16
14. Additional Information Section 15
Financial Statements
-i-
<PAGE>
INTRODUCTION
The Berger/BIAM International Institutional Fund is a mutual fund, or
open-end, diversified management investment company. The investment objective
of the Fund is long-term capital appreciation. This is also the investment
objective of the Portfolio in which the Fund invests all of its investable
assets. 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.
1. INVESTMENT POLICIES
The Prospectus discusses the investment objective of the Fund and the
Portfolio 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 Portfolio may invest, the investment policies and
portfolio strategies that the Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
ILLIQUID AND RESTRICTED SECURITIES. The Portfolio 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 Portfolio may not purchase any security, the
purchase of which would cause the Portfolio 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 the Portfolio
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 Portfolio 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 the Portfolio's net assets to be invested
in illiquid securities, the
-1-
<PAGE>
trustees of Worldwide Portfolios, 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. Pursuant to guidelines
established by the trustees, the Portfolio's Sub-Advisor will determine whether
securities eligible for resale to qualified institutional buyers pursuant to
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 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 the Portfolio's investments in Rule 144A
securities could be impaired if qualified institutional buyers become
uninterested in purchasing these securities.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase
agreements with various financial organizations, including commercial banks,
registered broker-dealers and registered government securities dealers. A
repurchase agreement is a means of investing cash for a short period. A
repurchase agreement is an agreement under which the Portfolio 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 the Portfolio and is unrelated to the interest rate on the underlying
instrument.
In these transactions, the securities acquired by the Portfolio
(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
Portfolio's custodian bank until repurchased. In addition, the trustees will
establish guidelines and standards for review by the Sub-Advisor of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with the Portfolio. The Portfolio will not enter into a repurchase agreement
maturing in more than seven days if as a result more than 15% of the Portfolio's
net 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
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<PAGE>
when the value of the security has declined, the Portfolio 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 or
other laws, a court may determine that the underlying security is collateral for
a loan by the Portfolio not within the control of the Portfolio and therefore
the realization by the Portfolio on such collateral may automatically be stayed.
Finally, it is possible that the Portfolio 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.
UNSEASONED ISSUERS. The Portfolio 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
Portfolio may invest up to 5% of its total assets in securities of unseasoned
issuers.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS). The Portfolio may
purchase the securities of certain foreign investment funds or trusts considered
Passive Foreign Investment Companies (PFICs) under U.S. tax laws. In addition
to bearing their proportionate share of the Portfolio's expenses (management
-3-
<PAGE>
fees and operating expenses), shareholders will also indirectly bear similar
expenses of such PFIC. PFIC investments also may be subject to less favorable
U.S. tax treatment, as discussed in Section 9 below.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may
purchase and sell securities on a when-issued or delayed delivery basis.
However, the Portfolio does not currently intend to 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. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Portfolio 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 the Portfolio 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 the Portfolio until it receives delivery or
payment from the other party to the transaction.
When the Portfolio 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 Portfolio's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, the Portfolio
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, the Portfolio 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 Portfolio'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 the
Portfolio. The Portfolio 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
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<PAGE>
interpretations of the Securities and Exchange Commission (the "Commission")
thereunder, which currently require that (a) the borrower pledge and maintain
with the Portfolio collateral consisting of cash, an irrevocable letter of
credit or securities issued or guaranteed by the U.S. 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 Portfolio at any time and (d) the
Portfolio receive reasonable interest on the loan, which interest may include
the Portfolio's investing cash collateral in interest bearing short-term
investments, and (e) the Portfolio receive all dividends and distributions on
the loaned securities and any increase in the market value of the loaned
securities.
The Portfolio bears a risk of loss in the event that the other party
to a securities lending transaction defaults on its obligations and the
Portfolio 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 Portfolio 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 Portfolio will not lend its portfolio securities if, as a result, the
aggregate value of such loans would exceed 33-1/3% of the value of the
Portfolio's total assets. Loan arrangements made by the Portfolio 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 Worldwide
Portfolio's trustees.
HEDGING TRANSACTIONS. As described in the Prospectus, the Portfolio
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 Portfolio's securities or the price of securities that the
Portfolio is considering purchasing. A hedging transaction may partially
protect the Portfolio from a decline in the value of a particular security or
its portfolio generally, although the cost of the transaction will reduce the
potential return on the security or the portfolio. In addition, hedging
transactions do not eliminate fluctuations in the prices of the underlying
securities the Portfolio owns or intends to acquire.
Any utilization of forwards or any other hedging technique (investing,
for example, in futures or options) is
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<PAGE>
subject to policies and procedures which may be established and changed by the
trustees from time to time without shareholder vote. Currently, the Portfolio
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 Portfolio to invest in futures or options, such investments would be
permitted solely for hedging purposes, and the Portfolio 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 may be required to obtain bank regulatory
approval before the Portfolio engages in futures and options transactions. The
following information should be read in conjunction with the information
concerning the Portfolio's investment in forwards and the risks of such
investments contained in the Prospectus.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward contract is an
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 asset at the time
of delivery. The Portfolio currently intends that the only forward contracts or
commitments that it might enter into are forward foreign currency exchange
contracts and that it may enter into such contracts solely for hedging purposes,
although the Portfolio may enter into additional forms of forward contracts or
commitments in the future for hedging purposes if they become available and
advisable in light of the Portfolio's objective 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 Portfolio's principal uses of
forward foreign currency exchange contracts ("forward currency contracts"). The
Portfolio may enter into forward currency contracts with aggregate stated
contract values of up to the value of the Portfolio'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). The Portfolio 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"). The Portfolio also may hedge some or all of its
investments denominated in foreign currency against a decline in the value of
that currency relative to the U.S. dollar by entering into forward currency
contracts to sell
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<PAGE>
an amount of that currency (or a proxy currency whose price movements are
expected to have a high degree of correlation with the currency being hedged)
approximating the value of some or all of its portfolio securities denominated
in that currency ("position hedge"). The Portfolio also may enter into a
forward currency contract with respect to a currency where the Portfolio 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 the Portfolio's
foreign currency denominated portfolio securities. The matching of the increase
in value of a forward foreign currency exchange 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 the
Portfolio's currency exposure from one foreign currency to another limits the
Portfolio's opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses to the Portfolio if the Sub-
Advisor's projection of future exchange rates is inaccurate.
The Portfolio 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 the
Portfolio is not able to cover its forward currency positions with underlying
portfolio securities, the Portfolio's custodian will segregate cash or liquid
assets having a value equal to the aggregate amount of the Portfolio'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 Portfolio 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 the Portfolio's commitments with respect to such
contracts.
While forward contracts are not currently regulated by the Commodity
Futures Trading Commission ("CFTC"), the CFTC may in the future assert authority
to regulate forward contracts. In such event, the Portfolio's ability to
utilize forward contracts may be restricted. The Portfolio 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 Portfolio assets. In addition, when
the Portfolio enters into a privately negotiated forward contract with a
counterparty, the Portfolio assumes counterparty credit risk, that is, the risk
that the counterparty will fail to perform its obligations, in which case the
Portfolio
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<PAGE>
could be worse off than if the contract had not been entered into. Unlike many
exchange-traded futures contracts and options on futures, there are no daily
price fluctuation limits with respect to forward contracts and other negotiated
or over-the-counter instruments, and with respect to those contracts, adverse
market movements could therefore continue to an unlimited extent over a period
of time. However, the Portfolio intends to monitor its investments closely and
will attempt to renegotiate or close its positions when the risk of loss to the
Portfolio becomes unacceptably high.
PORTFOLIO TURNOVER. Although the annual portfolio turnover rate of
the Portfolio will vary, it is normally expected to range from 25% to 75%. In
pursuit of the Portfolio's investment objective, the Sub-Advisor continuously
monitors the Portfolio's investments and makes portfolio changes whenever
changes in investment themes, the fundamentals of any portfolio company or the
price of any portfolio security indicate to the Sub-Advisor that more attractive
alternatives exist or that the Portfolio's investment 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 Portfolio due to economic, market or
other factors that are not within the control of management.
2. INVESTMENT RESTRICTIONS
The Fund has adopted the investment policy that it may,
notwithstanding any other fundamental or non-fundamental investment policy or
restriction, invest all of its investable assets in the securities of another
open-end investment company or series thereof with substantially the same
investment objective, policies and limitations as the Fund.
All other fundamental and non-fundamental investment policies and
restrictions of the Fund and the Portfolio are identical. Therefore, although
the following investment restrictions refer to the Portfolio and the trustees of
Worldwide Portfolios, they apply equally to the Fund and the trustees of the
Trust.
The Portfolio 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
Portfolio 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
Portfolio. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders.
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<PAGE>
The following fundamental restrictions apply to the Portfolio. The
Portfolio may not:
1. With respect to 75% of the Portfolio'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
Portfolio in the securities of such issuer exceeds 5% of the value of the
Portfolio's total assets or (b) the Portfolio 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 Portfolio'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 Portfolio's
total assets taken at market value. When borrowings exceed 5% of the
Portfolio's total assets, the Portfolio will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Portfolio 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 Portfolio may enter into repurchase
agreements and may lend portfolio securities in accordance with the Portfolio's
investment policies. The Portfolio 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 Portfolio uses the industry groups designated by the Financial Times
World Index Service.
The trustees have adopted additional non-fundamental investment
restrictions for the Portfolio. These limitations may
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<PAGE>
be changed by the trustees without a shareholder vote. The non-fundamental
investment restrictions include the following:
1. With respect to 100% of the Portfolio's total assets, the
Portfolio 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 Portfolio in the securities of such issuer
exceeds 5% of the value of the Portfolio's total assets or (b) the Portfolio
owns more than 10% of the outstanding voting securities of such issuer.
2. The Portfolio 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 Portfolio's investments
in all such companies taken at cost to exceed 5% of the value of the Portfolio's
total assets.
3. The Portfolio may not purchase securities on margin from a broker
or dealer, except that the Portfolio 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 Portfolio from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
4. The Portfolio 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 Portfolio may not invest in companies for the purposes of
exercising control of management.
6. The Portfolio 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 Portfolio, taken at market
value at the time of purchase would be invested in such securities.
7. The Portfolio may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Portfolio may enter
into forward foreign currency exchange contracts with stated contract values of
up to the value of the Portfolio's assets.
8. The Portfolio 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 Portfolio may not purchase or sell any interest in an oil,
gas or mineral development or exploration
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<PAGE>
program, including investments in oil, gas or other mineral leases, rights or
royalty contracts (except that the Portfolio may invest in the securities of
issuers engaged in the foregoing activities).
10. The Portfolio 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 Portfolio in units or attached to
securities are not subject to these limits.
The Trust has undertaken to the State of Ohio that the Fund will
prohibit the purchase or retention by the Fund of the securities of any issuer
if the officers, directors or trustees of the Fund, its advisors, or managers
owning beneficially more than 1/2 of 1% of the securities of an issuer together
own beneficially more than 5% of the securities of that issuer.
3. MANAGEMENT OF THE FUND
The trustees and executive officers of the Trust are listed below,
together with information which includes their principal occupations during the
past five years and other principal business affiliations. The trustees and
executive officers of the Trust also serve in the same capacities as trustees
and officers of Worldwide Portfolios.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO 80206,
age 53. 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 Institutional Products
Trust since its inception in October 1995. President and a director
since April 1995 of Berger Associates, Inc. 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.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, age 67.
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 and Berger/BIAM
Worldwide Portfolios Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900, Denver, CO
80206, age 70. Director and, formerly,
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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 Institutional Products Trust
since its inception in October 1995. Trustee of Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust since their inception in May 1996. Chairman (since 1994)
and a Director (since 1973) and, formerly, President (1973-1994)
of Berger Associates, Inc.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 70. 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 and Berger/BIAM Worldwide
Portfolios Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age 51.
President, Cattanach & Associates, Ltd. (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 and Berger/BIAM
Worldwide Portfolios Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age 68.
Associate, University College, University of Denver. Formerly,
President of the Colorado State Board of Land Commissioners (1989-
1995), and Vice President and Economist (1983-1988) and Consulting
Economist (1989) for First Interstate Bank of Denver. Ph.D. in
Economics (Harvard University). Director of Berger 100 Fund and
Berger Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger/BIAM Worldwide
Funds Trust and Berger/BIAM Worldwide Portfolios Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL 60602, age
50. 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 and
Berger/BIAM Worldwide Portfolios Trust.
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<PAGE>
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 and Berger/BIAM Worldwide
Portfolios Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT 59717,
age 59. Since 1994, Dean, and since 1989, 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 and Berger/BIAM Worldwide
Portfolios Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, age 67.
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 and Berger/BIAM Worldwide Portfolios
Trust.
* CRAIG D. CLOYED, 210 University Boulevard, Suite 900, Denver, CO 80206, age
50. Vice President of Berger/BIAM Worldwide Funds Trust and
Berger/BIAM Worldwide Portfolios Trust since their inception in May
1996. Also, Vice President and Chief Marketing Officer of Berger
Associates, Inc., since August 1995, and President, CEO and a director
of Berger Distributors, Inc., since its inception in May 1996.
Formerly (September 1989 to August 1995), Senior Vice President of
INVESCO Funds Group (mutual funds).
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver, CO 80206, age
40. Vice President, Secretary and Treasurer of Berger 100 Fund and
Berger Growth and Income Fund since October 1991, of Berger Investment
Portfolio Trust since its inception in August 1993, of Berger
Institutional Products Trust since its inception in October 1995 and
of Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide
Portfolios Trust since their inception in May 1996. Also, Vice
President-Finance and Administration, Secretary and Treasurer of
Berger Associates, Inc., since September 1991, 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
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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 the
Fund and of the Portfolio's Advisor or Sub-Advisor.
TRUSTEE COMPENSATION
Officers of the Trust receive no compensation from the Trust.
However, trustees of the Trust who are not interested persons of the Portfolio's
Advisor or Sub-Advisor, who are also trustees of Worldwide Portfolios, are
compensated for their services according to a fee schedule, allocated among the
Berger and Berger/BIAM Funds, which includes an annual fee component and a per
meeting fee component. Neither the officers of the Trust nor the trustees
receive any form of pension or retirement benefit compensation from the Trust.
Set forth below is information regarding compensation (including
reimbursement of expenses) estimated to be paid or accrued during the current
fiscal year ended July 31, 1997, for each trustee of the Trust and of the other
funds in the Berger Fund and Berger/BIAM Fund complex.
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NAME AND POSITION WITH AGGREGATE AGGREGATE
BERGER AND BERGER/BIAM COMPENSATION COMPENSATION
FUNDS FROM FROM
THE FUND(1) ALL BERGER
AND
BERGER/BIAM
FUNDS(2)
- ----------------------------------------------------------------------
Dennis E. Baldwin(3) $82 $41,083
William M.B. Berger(3),(5) $0 $0
Louis R. Bindner(3) $70 $34,965
Katherine A. Cattanach(3) $79 $39,657
Lucy Black Creighton(3) $67 $33,602
Paul R. Knapp(3) $90 $44,919
Gerard M. Lavin(4),(5) $0 $0
Harry T. Lewis(3) $77 $38,357
Michael Owen(3) $101 $50,720
William Sinclaire(3) $67 $33,697
(1) Comprised of the portion of the estimated trustee compensation to be paid
by Worldwide Portfolios to its trustees and allocated to the Fund.
(2) Consisting of Berger 100 Fund, Berger Growth and Income Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios Trust.
(3) 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 and Berger/BIAM Worldwide Portfolios Trust.
(4) Trustee of Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust and Berger/BIAM Worldwide Portfolios Trust.
(5) Interested person of the Berger/BIAM Worldwide Funds Trust and/or the
Portfolio's Advisor or Sub-Advisor.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by the Berger/BIAM Worldwide Portfolios
Trust. Under the plan, deferred fees are credited to an account and adjusted
thereafter to reflect the investment experience of whichever of the Berger or
Berger/BIAM Funds (or approved money market funds) is designated by the trustees
for this purpose. Pursuant to an exemptive order of the Commission, Worldwide
Portfolios 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.
Worldwide Portfolios' obligation to make payments of deferred
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fees under the plan is a general obligation of Worldwide Portfolios.
As of the date of this Statement of Additional Information, the
officers and trustees of the Trust as a group owned of record or beneficially no
shares of the Berger/BIAM International Institutional Fund.
4. INVESTMENT ADVISOR AND SUB-ADVISOR
INVESTMENT ADVISOR
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio.
The Advisor is a limited liability company formed in 1996. Since the
Advisor was only recently formed, it has no prior experience as an investment
advisor. However, Berger Associates, Inc. ("Berger Associates"), which owns
100% of the Advisor, has been in the investment advisory business for over 20
years. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80% 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. Also, see in the Prospectus under "Pending Sale of Interest in
Advisor" for more information concerning ownership of the Advisor.
SUB-ADVISOR
As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to Bank
of Ireland Asset Management (U.S.) Limited (the "Sub-Advisor" or "BIAM"). As
Sub-Advisor, BIAM manages the investments in the Portfolio 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 Worldwide Portfolios. BIAM's main offices are at 26 Fitzwilliam
Place, Dublin 2, Ireland. BIAM maintains a representative office at 2 Greenwich
Plaza, Greenwich, CT 06830. BIAM is an indirect wholly-owned subsidiary of Bank
of Ireland, a publicly traded, diversified financial services group with
business operations worldwide.
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<PAGE>
INVESTMENT ADVISORY AGREEMENT AND SUB-ADVISORY AGREEMENT
Under the Investment Advisory Agreement between the Advisor and
Berger/BIAM Worldwide Portfolios Trust with respect to the Portfolio, the
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio. Under the Investment Advisory Agreement for the Portfolio, the
Advisor is compensated for its services to the Portfolio by the payment of a
fee at the annual rate of 0.90% of the average daily net assets of the
Portfolio. The Fund bears a pro rata portion of the fee paid by the
Portfolio to the Advisor.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
The Investment Advisory Agreement will continue in effect until 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 Portfolio and in either case by vote of a majority of
the trustees of Worldwide Portfolios who are not "interested persons" (as that
term is defined in the Investment Company Act of 1940) of the Portfolio or the
Advisor. The Agreement is subject to termination by the Portfolio or the
Advisor on 60 days' written notice, and terminates automatically in the event of
its assignment.
Under the Sub-Advisory Agreement between the Advisor and the Sub-
Advisor, the Advisor has delegated day-to-day portfolio management
responsibility to the Sub-Advisor. The Sub-Advisor manages the investments in
the Portfolio 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 Worldwide Portfolios. The Portfolio
pays no fees directly to the Sub-Advisor. The Sub-Advisor will receive from the
Advisor a fee at the annual rate of 0.45% of the average daily net assets of the
Portfolio. During certain periods, the Sub-Advisor may voluntarily waive all or
a portion of its fee under the Sub-Advisory Agreement, which will not affect the
fee paid by the Portfolio to the Advisor.
The Sub-Advisory Agreement will continue in effect until April 1998,
and thereafter from year to year if such
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continuation is specifically approved at least annually by the trustees or by
vote of a majority of the outstanding shares of the Portfolio and in either case
by vote of a majority of the trustees of Worldwide Portfolios who are not
"interested persons" (as that term is defined in the Investment Company Act of
1940) of the Portfolio or the Advisor or the Sub-Advisor. The Sub-Advisory
Agreement is subject to termination by the Portfolio, the Advisor or the Sub-
Advisor 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.
TRADE ALLOCATIONS
Investment decisions for the Portfolio and other accounts advised by
the Sub-Advisor 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 the Portfolio and one or more such accounts. If the Portfolio and other
accounts advised by the Sub-Advisor 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 Portfolio and
each participating account. While in some cases, this policy might adversely
affect the price paid or received by the Portfolio or other participating
accounts, or the size of the position obtained or liquidated, the Sub-Advisor
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
The Advisor has adopted a Code of Ethics covering all board members,
officers, employees and other access persons (as defined below) of the Advisor
who are not also covered by an approved Code of Ethics of an affiliated person
who is an investment advisor ("covered persons"). At present, there are no
persons who would be covered by the Advisor's Code of Ethics who are not also
covered by the Code of Ethics of Berger Associates, which is an investment
advisor affiliated with the Advisor.
The Advisor's Code, which is substantially similar to the Code of
Ethics adopted by Berger Associates, permits its covered persons to purchase and
sell securities for their own accounts in accordance with provisions governing
personal investing. 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 Fund or the Portfolio or the Advisor's other advisory
clients. Board members and officers of the Advisor (including those who also
serve as trustees of the Trust or of Worldwide Portfolios), investment
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<PAGE>
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 Fund or the Portfolio.
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 the Advisor's Code. Those covered persons (as well
as board members, officers, employees and other access persons of the Advisor
covered by an approved Code of Ethics of an affiliated investment advisor) also
may be required under certain circumstances to forfeit their profits made from
personal trading. The Code is administered by the Advisor and the provisions of
the Code are subject to interpretation by and exceptions authorized by its board
of managers.
The Sub-Advisor 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 the Sub-Advisor 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 the Sub-Advisor are required to pre-clear all transactions in securities
not otherwise exempt under the Code of Ethics and must instruct their broker
to provide the Sub-Advisor with duplicate confirmations of all such personal
trades.
5. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
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Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as expenses of meetings of the shareholders of the
Trust. Expenses of the Fund also include, among others, taxes imposed on the
Fund; the fee payable to the Advisor under the Administrative Services
Agreement; and such other non-recurring and extraordinary items as may arise
from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, legal services, printing and mailing to shareholders of prospectuses
and other required
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communications, and certain other administrative and recordkeeping services,
such as coordinating matters relating to the operations of the Fund, monitoring
the Fund's status as a "regulated investment company" under the Internal Revenue
Code of 1986, registering sufficient Fund shares under federal and state
securities laws, arranging for and supervising the preparation of registration
statements, tax returns, proxy materials, financial statements and reports for
filing with regulatory authorities and distribution to shareholders of the Fund.
Under the Administrative Services Agreement, the Fund pays the Advisor a fee at
an annual rate equal to the lesser of (i) 0.35% of its average daily net assets,
or (ii) the Advisor's annual cost to provide or procure these services
(including the fees of any services providers whose services are procured by the
Advisor), plus an additional 0.02% of the Fund's average daily net assets. The
trustees of the Trust regularly review amounts paid to and expenditures incurred
by the Advisor pursuant to the Administrative Services Agreement. In addition,
in the event that the Advisor's duties under the Administrative Services
Agreement are delegated to another party, the Advisor may take into account, in
calculating the cost of such services, only the costs incurred by such other
party in discharging the delegated duties.
Arrangements may be entered into by the Advisor or its affiliates with
certain organizations (broker-dealers, recordkeepers and administrators) to
provide sub-transfer agency, recordkeeping, shareholder communications,
sub-accounting and/or other services to investors purchasing shares of the Fund
through investment programs or pension plans established or serviced by those
organizations. The Advisor or its affiliates may pay fees to these
organizations for their services. For purposes of determining the Advisor's
cost of providing or procuring transfer agency, dividend disbursing or other
services under the Administrative Services Agreement, the Advisor may take into
account only the fees that otherwise would be paid for by the Advisor if all the
investors who own Fund shares through the organization were instead direct
registered record holders of shares in the Fund.
Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to
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the Advisor under the Administrative Services Agreement. Investors Fiduciary
Trust Company ("IFTC"), 127 W. 10th Street, Kansas City, MO 64105, has been
appointed to provide recordkeeping and pricing services to the Fund, including
calculating the daily net asset value of the Fund, and to perform certain
accounting and recordkeeping functions that it requires. In addition, IFTC has
been appointed to serve as the Fund's custodian, transfer agent and dividend
disbursing agent. IFTC has engaged DST Systems, Inc. ("DST"), P.O. Box 419958,
Kansas City, MO 64141, as sub-transfer agent to provide transfer agency and
dividend disbursing services for the Fund. The fees of Berger Associates, IFTC
and DST are all paid by the Advisor. Approximately 40% of the outstanding
shares of DST are owned by KCSI, which also owns approximately 80% of the
outstanding shares of Berger Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such as
compliance monitoring and preparing investor communications, which have been
delegated to Berger Associates as part of the Sub-Administration Agreement
discussed above. Other services are procured from third party service providers
at the Portfolio's own expense, such as custody, recordkeeping and pricing
services. The Portfolio has appointed IFTC as recordkeeping and pricing agent
to calculate the daily net asset value of the Portfolio and to perform certain
accounting and recordkeeping functions required by the Portfolio. In addition,
the Portfolio has appointed IFTC as its custodian and transfer agent. IFTC has
engaged State Street Bank and Trust Company ("State Street"), P.O. Box 351,
Boston, MA 02101, as sub-custodian for the Portfolio. For custodian,
recordkeeping and pricing services, the Portfolio pays fees directly to IFTC
based on a percentage of its net assets, subject to certain minimums, and
reimburses IFTC for certain out-of-pocket expenses.
The trustees of Worldwide Portfolios 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
are effected through DSTS, the commission received by DSTS is credited against,
and thereby reduces, certain operating expenses that the Portfolio would
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otherwise be obligated to pay. No portion of the commission is retained by
DSTS.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First
Fund Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite
261-E, Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its
costs in distributing Fund shares by Berger Associates.
6. BROKERAGE POLICY
Although the Portfolio retains full control over its own investment
policies, the Sub-Advisor is authorized to place the portfolio transactions of
the Portfolio. The Sub-Advisor is required to report on the placement of
brokerage business to the trustees of Worldwide Portfolios every quarter,
indicating the brokers with whom portfolio business was placed and the basis for
such placement.
The Investment Advisory Agreement that the Portfolio has with the
Advisor and the Sub-Advisory Agreement between the Advisor and the Sub-Advisor
authorizes and directs portfolio transactions for the Portfolio to be placed
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, the Sub-Advisor is specifically authorized 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 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 Sub-Advisor.
In accordance with these provisions, the Sub-Advisor may place
portfolio brokerage business of the Portfolio with brokers who provide useful
research services to the Sub-Advisor. Such research services would 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 the Sub-Advisor may be apprised of current
developments in the above-mentioned factors.
The research services received from brokers could be helpful to the
Sub-Advisor in performing its investment advisory
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responsibilities to the Portfolio, but they are not essential, and the
availability of such services from brokers does not reduce the responsibility of
the Sub-Advisor's advisory personnel to analyze and evaluate the securities in
which the Portfolio invests. The research services obtained as a result of the
Portfolio's brokerage business may also be useful to the Sub-Advisor 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 the Sub-Advisor in rendering investment advice to the
Portfolio. Although such research services may be deemed to be of value to the
Sub-Advisor, they are not expected to decrease the expenses that the Sub-Advisor
would otherwise incur in performing its investment advisory services for the
Portfolio nor will the fee that is received by the Sub-Advisor from the Advisor
or the advisory fee received by the Advisor from the Portfolio be reduced as a
result of the availability of such research services from brokers.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
7. PURCHASE OF SHARES
Minimum Initial Investment $100,000.00
Shares in the Fund may be purchased at the relevant net asset value
without a sales charge. The minimum initial investment for shares of the Fund
is $100,000. To purchase shares in the Fund, simply complete the application
form enclosed with the Prospectus and mail it to the Fund in care of DST
Systems, Inc., the Fund's transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
Payment for shares purchased may be made by wire, electronic funds
transfer or mail. All purchase orders are effected at the relevant net asset
value per share of the Fund next determined after receipt of the purchase order,
completed application and payment. A purchase order, together with payment in
proper form, received by the transfer agent, subtransfer agent or any other
authorized agent of the Fund prior to the close of the New York Stock Exchange
(the "Exchange") on a day the Fund is open for business will be effected at that
day's net asset value. An order received after that time will be
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effected at the net asset value determined on the next business day.
Additional investments may be made at any time by telephone or by mail
at the relevant net asset value by calling or writing the Fund and making
payment by wire or electronic funds transfer as outlined above.
In addition, Fund shares may be purchased certain organizations
connected with pension and retirement plans. These organizations may charge
investors a transaction or other fee for their services, may require different
minimum initial and subsequent investments than the Fund and may impose other
charges or restrictions different from those applicable to shareholders who
invest in the Fund directly. Fees charged by these organizations will have the
effect of reducing a shareholder's total return on an investment in Fund shares.
No such charge will be paid by an investor who purchases the Fund shares
directly from the Fund as described above.
8. NET ASSET VALUE
The net asset value of the Fund is determined once daily, at the close
of the regular trading session of 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 Fund 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 the Fund is determined by dividing the total value of its assets,
less liabilities, by the total number of shares outstanding. Since the Fund
invests all of its investable assets in the Portfolio, the value of the Fund's
investable assets will be equal to the value of its beneficial interest in the
Portfolio.
The Portfolio's securities and other assets are valued as follows:
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 the Portfolio 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
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prevailing market rates as quoted by one or more banks or dealers shortly before
the close of the Exchange. Securities and assets for which quotations are not
readily available are valued at fair values determined in good faith pursuant to
consistently applied procedures established by the trustees.
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 Portfolio are determined as of the earlier of such market close or the
closing time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in good faith pursuant to consistently
applied procedures established by the trustees.
The Portfolio'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 the Fund
may be significantly affected by such trading on days when shareholders cannot
purchase or redeem shares of the Fund.
9. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
TAX STATUS OF THE FUND AND THE PORTFOLIO
The Fund intends to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") and to distribute to its
investors all or substantially all of its taxable income as defined in the Code.
If the Fund meets the Subchapter M requirements, it generally is not liable for
U.S. Federal income taxes to the extent its earnings are timely distributed.
Qualification as a regulated investment company
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("RIC") under the Code does not, however, involve any federal supervision of
management or of the investment practices or policies of the Fund. If the Fund
distributes annually less than 98% of its income and gain, it may be subject to
a nondeductible excise tax equal to 4% of the shortfall.
The Trust anticipates that (1) the Portfolio will be treated for U.S.
Federal income tax purposes as a partnership, and (2) for purposes of
determining whether the Fund satisfies the income and diversification
requirements to maintain its status as a RIC, the Fund, as an investor in the
Portfolio, will be deemed to own a proportionate share of the Portfolio's assets
and will be deemed to be entitled to the Portfolio's income or loss attributable
to that share. The Portfolio has advised the Fund that it intends to conduct
its operations so as to enable its investors, including the Fund, to satisfy
those requirements.
TAXATION OF FUND DISTRIBUTIONS
Advice as to the tax status of each year's dividends and distributions
will be mailed annually to the shareholders of the Fund. Dividends paid by the
Fund from net investment income and distributions from the Fund's net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term capital gains (net of capital
losses), whether received in cash or reinvested, will be taxable as long-term
capital gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. A portion of the dividends (but not capital gains distributions) paid
by the Fund may be eligible for the dividends received deduction for corporate
shareholders to the extent that the Fund's income consists of dividends paid by
United States corporations. If a shareholder is exempt from U.S. Federal income
tax, the shareholder will not generally be taxed on amounts distributed by the
Fund.
Under the Internal Revenue Code, gains recognized by the Portfolio
upon a disposition of assets contributed in-kind to it by the Fund will be
specially allocated to the Fund and not to other investors in the Portfolio to
the extent of the unrealized appreciation in those assets at the time of their
transfer. As a result, shareholders of the Fund may receive distributions of a
greater amount of gains than if the Portfolio had purchased those assets in the
open market upon commencement of Fund operations or in a transaction that did
not involve contributions of assets in-kind.
If the amount of the Fund's distributions for a taxable year exceeds
the Fund's tax earnings and profits available for distribution, all or portion
or the distributions may be treated
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as a return of capital or as capital gains. In the event a distribution is
treated as a return of capital, the shareholder's basis in his or her Fund
shares will be reduced to the extent the distribution is so treated.
At certain levels of taxable income, the Code provides a preferential
tax rate for long-term capital gains. Long-term capital gains of taxpayers
other than corporations are taxed at a 28% maximum rate, whereas ordinary income
is taxed at a 39.6% maximum rate. Capital losses continue to be deductible only
against capital gains plus (in the case of taxpayers other than corporations)
$3,000 of ordinary income annually ($1,500 for married individuals filing
separately).
FOREIGN SOURCE INCOME
Income received by the Fund, directly or through the Portfolio, from
sources within foreign countries may be subject to withholding and other income
or similar taxes imposed by such countries. The U.S. has entered into tax
treaties with many foreign countries that, in some circumstances, may entitle
the Fund or the Portfolio to a reduced rate of tax or exemption from tax on such
income. If, directly or through the Portfolio, more than 50% in value of the
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund may elect to "pass-through" to its shareholders
the amount of foreign income taxes paid by the Fund and the foreign-source
character of the income received by the Fund. Under this election, each
shareholder will be required to include the shareholder's pro rata portion of
these foreign taxes in gross income, but will be able to deduct (as an itemized
deduction) or claim a foreign tax credit for such amount (subject to various
limitations).
Depending upon their particular tax circumstances, shareholders may be
unable to claim a full credit for their proportionate share of the foreign
income taxes passed through by the Fund. Further limitations as to the credit
or deduction of the foreign income taxes may apply for purposes of the
alternative minimum tax. If the election to pass through foreign income taxes
is not made, foreign taxes will be treated as an expense of the Fund, reducing
its investment company taxable income, and the distributions by the Fund will be
treated as United States source income.
OTHER TAX CONSIDERATIONS
The amount, timing and character of Fund income taxed to Fund
shareholders may be affected by certain special U.S. tax rules that may apply to
various investments of the Fund and the Portfolio, including the following:
CURRENCY TRANSACTIONS. On the disposition of foreign currency,
foreign currency denominated debt securities and certain financial
contracts, forward
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contracts and options, gains or losses attributable to currency
fluctuations are treated as ordinary gain or loss. These gains or
losses, termed "section 988" gains or losses, may increase, decrease
or eliminate the amount to be distributed to shareholders as ordinary
income. If section 988 losses exceed other net investment income
during a taxable year the Fund generally would not be able to make
ordinary dividend distributions, or distributions made before the
losses were realized would be recharacterized as return of capital to
shareholders for U.S. Federal income tax purposes (reducing each
shareholder's basis in his or her Fund shares) or as a capital gain.
To minimize the risk of such distributions, the Fund may adjust its
dividends (if any) to take currency fluctuations into account.
HEDGING TRANSACTIONS. On the disposition of certain contracts,
such as options, futures contracts and forward contracts (termed
"section 1256 contracts"), the resulting gains or losses generally are
considered 60% long-term and 40% short-term capital gains or losses,
regardless of the time the Fund or the Portfolio has held the
contract. However, foreign currency gains or losses (as discussed
above) arising from certain section 1256 contracts may be treated as
ordinary income or loss. In addition, section 1256 contracts held by
the Fund, directly or through the Portfolio, at the end of each
taxable year and on certain other dates prescribed by the tax laws are
"marked-to-market" such that unrealized gains or losses are treated as
though they were realized. Further, requirements relating to the
Fund's tax status as a regulated investment company may limit the
extent to which the Fund and the Portfolio will be able to engage in
transactions in such contracts.
Hedging transactions undertaken by the Fund and the Portfolio may
result in "straddles" for U.S. Federal income tax purposes, affecting
the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on straddle positions may be deferred.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Portfolio may invest
in foreign entities that are classified as passive foreign investment
companies ("PFICs") for U.S. tax purposes. If the Fund or the
Portfolio receives an "excess distribution" with respect to PFIC
stock, the Portfolio or the Fund itself may be subject to tax on a
portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. However, the Fund
or the Portfolio may be eligible to elect one
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of two alternative tax treatments with respect to PFIC shares which
would avoid the foregoing "excess distribution" taxes, but also may
affect, among other things, the amount and character of gain or loss
and the timing of the recognition of income with respect to PFIC
shares. Accordingly, the amounts, character and timing of income
distributed to shareholders of the Fund may differ substantially as
compared to a fund that did not invest in PFIC shares.
FOREIGN SHAREHOLDERS
Foreign shareholders of the Fund generally will be subject to a 30%
U.S. withholding tax on ordinary income dividends paid by the Fund. This
withholding may be reduced by an applicable tax treaty. Foreign shareholders
are urged to consult with their own tax advisors with respect to this
withholding tax and the other particular U.S. and foreign tax consequences to
them of an investment in the Fund.
The foregoing discussion relates only to U.S. Federal income tax law.
Ordinary income and capital gains dividends also may be subject to state and
local taxes, which may differ from the U.S. Federal treatment. Shareholders are
urged to consult with their tax advisors with respect to the particular tax
consequences to them of an investment in the Fund, including the application and
effect of state and local taxes.
10. SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended for any period during which
the Exchange is closed or the Commission determines that trading on the Exchange
is restricted, or when there is an emergency as determined by the Commission as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to determine the value of its net assets, or for
such other period as the Commission may by order permit for the protection of
shareholders of the Fund.
The 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. The Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder
generally will incur brokerage costs in converting the assets to cash. The
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method of valuing securities used to make redemption in-kind will be the same as
the method of valuing portfolio securities described under Section 8.
Shareholders have the ability to request in writing a review of the valuation of
in-kind redemptions, which will be considered by the trustees of the Trust
within 90 days of such written request.
11. PLANS AND PROGRAMS
The Fund offers several tax-qualified retirement plans for adoption by
individuals and employers. The Fund also offers both a profit-sharing plan and
a money purchase pension plan for employers and self-employed persons, an
Individual Retirement Account ("IRA") and a 403(b) Custodial Account.
In order to receive the necessary materials to create a profit-sharing
or money purchase pension plan account, an IRA account or a 403(b) Custodial
Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, CO
80217, or call 1-800-706-0539. Trustees for 401(k) or other existing plans
interested in utilizing Fund shares as an investment or investment alternative
in their plans should contact the Fund at 1-800-551-5849.
The Fund also offers a systematic withdrawal plan. Forms to open such
an account may be obtained by writing to the Fund, c/o DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141, or call 1-800-551-5849.
12. EXCHANGE PRIVILEGE
Any shareholder may exchange any or all of the shareholder's shares in
the Fund, subject to stated minimums, for shares of any of the publicly
available Berger Funds or Berger/BIAM Funds, without charge, after receiving a
current prospectus of the other Berger Fund or Berger/BIAM Fund. Exchanges into
or out of the Fund are made at the net asset value per share next determined
after the exchange request is received. Each exchange represents the sale of
shares from one fund and the purchase of shares in another, which may produce a
gain or loss for U.S. Federal income tax purposes. An exchange of shares may be
made by written request directed to the Fund, in care of DST Systems, Inc., or
simply by telephoning the Fund at 1-800-551-5849. This privilege is
revocable by the Fund, and is not available in any state in which the shares of
the Berger or Berger/BIAM Fund being acquired in the exchange are not registered
for sale. Shareholders automatically have telephone privileges to authorize
exchanges unless they specifically decline this service in the account
application or in writing.
13. PERFORMANCE INFORMATION
The Prospectus contains a brief description of how total return is
calculated.
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Quotations of average annual total return for the Fund 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 for
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.
14. ADDITIONAL INFORMATION
BERGER/BIAM WORLDWIDE FUNDS TRUST AND THE FUND
The Trust is a Delaware business trust organized on May 31, 1996. The
Fund was established on May 31, 1996, as a series of the Trust. The Trust is
authorized to issue an unlimited number of shares of beneficial interest in
series or portfolios. Currently, the series comprising the Fund is one of three
series established under the Trust, although others may be added in the future.
The Trust is also authorized to establish multiple classes of shares
representing differing interests in an existing or new series.
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.
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<PAGE>
In order to protect shareholders from such potential liability, the
Trust Instrument requires that every written obligation of the Trust or any
series thereof contain a statement to the effect that such obligation may only
be enforced against the assets of the Trust or such series. The Trust
Instrument also provides for indemnification from the assets of the relevant
series for all losses and expenses incurred by any shareholder by reason of
being or having been a shareholder, and that the Trust shall, upon request,
assume the defense of any such claim made against such shareholder for any act
or obligation of the relevant series and satisfy any judgment thereon from the
assets of that series.
As a result, the risk of a Berger/BIAM International Institutional
Fund shareholder 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 the Fund is remote. The trustees intend
to conduct the operations of the Trust and the Fund so as to avoid, to the
extent possible, liability of shareholders for liabilities of the Trust or the
Fund.
Shares of the Fund have no preemptive rights, and since the 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.
BERGER/BIAM WORLDWIDE PORTFOLIOS TRUST AND THE PORTFOLIO
Worldwide Portfolios is also a Delaware business trust organized on
May 31, 1996. The Portfolio was established on May 31, 1996, as a series of
Worldwide Portfolios. The Portfolio commenced operations upon the transfer to
the Portfolio of assets held in a pooled trust. See "Performance" in the
Prospectus for additional information on the asset transfer.
Worldwide Portfolios is authorized to sell unlimited interests in
series or portfolios. Currently, the series comprising the Portfolio is the
only series established under Worldwide Portfolios, although others may be added
in the future. The Delaware law information set forth above with respect to the
Trust also applies to Worldwide Portfolios and investors in the Portfolio.
Each investor in the Portfolio, including the Fund, is entitled to a
vote in proportion to the amount of its investment
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<PAGE>
in the Portfolio. Whenever the Fund is requested to vote as an investor in the
Portfolio on matters pertaining to the Portfolio (other than a vote by the Fund
to continue the operation of the Portfolio upon the withdrawal of another
investor in the Portfolio), the Fund will hold a meeting of its shareholders and
will cast all of its votes as an investor in the Portfolio in the same
proportion as directed by the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the votes cast by the Fund at the
meeting of the Portfolio investors. The percentage of the votes representing
the Fund's shareholders who do not vote will be voted by the Fund in the same
proportion as the Fund's shareholders who do, in fact, vote.
DISTRIBUTION
The Distributor is the principal underwriter of the Fund's shares.
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 Fund in connection with the sale of its
shares in all states in which the shares are registered and in which the
Distributor is qualified as a broker-dealer.
The Trust, on behalf of the Fund, and the Distributor are parties to a
Distribution Agreement that continues for two years from its date of execution
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 the Fund or the Distributor
on not more than 60 days' nor less than 30 days' prior written notice, and
terminates automatically in the event of its assignment. Under the Distribution
Agreement, the Distributor continuously offers the Fund's shares and solicits
orders to purchase Fund shares at net asset value.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
has acted as counsel for the Trust and the Fund. Dechert Price & Rhoads, 1500 K
Street, N.W., Washington, DC, has acted as special counsel for the Trust and the
Fund.
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado, has
been appointed to act as independent accountants for the Fund and the Portfolio
for the fiscal year ended July 31, 1997.
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<PAGE>
The Berger/BIAM Worldwide Funds Trust has filed with the Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities of the Berger/BIAM International
Institutional Fund, of which this Statement of Additional Information is a part.
If further information is desired with respect to the Fund or its securities,
reference is made to the Registration Statement and the exhibits filed as a part
thereof.
FINANCIAL STATEMENTS
The following financial statements appear attached to the end of this
Statement of Additional Information:
For Berger/BIAM International Institutional Fund:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International
Institutional Fund, as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4, 1996
For Berger/BIAM International Portfolio:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International
Portfolio, as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4, 1996
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<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Portfolio may purchase securities which are convertible into
common stock when the Portfolio'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 Portfolio 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 Portfolio 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 the Portfolio 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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<PAGE>
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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<PAGE>
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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<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International Institutional Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International Institutional Fund (one of three funds comprising Berger/BIAM
Worldwide Funds Trust, hereafter referred to as the "Fund") at October 4, 1996,
in conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Fund's management; our responsibility is
to express an opinion on this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
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<PAGE>
BERGER/BIAM INTERNATIONAL INSTITUTIONAL FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Investment in the Berger/BIAM International Portfolio $ 30,000
---------
Total Assets 30,000
---------
Liabilities
Total Liabilities 0
---------
Net Assets $ 30,000
---------
---------
Net Asset Value per share (3,000 shares of beneficial interest
outstanding; unlimited authorized shares of beneficial interest
of $0.01 par value). Offering and Redemption Price Per Share $ 10.00
---------
---------
NOTES TO FINANCIAL STATEMENT
NOTE 1 - ORGANIZATION
The Berger/BIAM International Institutional Fund (the "Fund") is a series of the
Berger/BIAM Worldwide Funds Trust, a Delaware business trust (the "Trust")
organized on May 31, 1996, and has been inactive since that date except for
matters relating to its organization and registration as an investment company
under the Investment Company Act of 1940, as amended, and the sale of 3,000
shares of the Fund to Berger Associates, Inc. ("Berger"), which currently owns
100% of BBOI Worldwide LLC ("BBOI"), the administrator of the Fund.
The Fund will invest all of its investable assets in the Berger/BIAM
International Portfolio (the "Portfolio"), a series of the Berger/BIAM Worldwide
Portfolios Trust. The Portfolio is an open-end management investment company
and has the same investment objectives and policies as the Fund. As an investor
in the Portfolio, the Fund is allocated and bears indirectly its pro rata share
of the aggregate annual operating expenses of the Portfolio including the
investment advisory fee, custodian fees, auditor's fees, transfer agent,
recordkeeping and pricing agent fees.
All costs in organizing the Trust were paid by Berger.
F-2
<PAGE>
BERGER/BIAM INTERNATIONAL INSTITUTIONAL FUND
NOTES TO FINANCIAL STATEMENT (CONTINUED)
OCTOBER 4, 1996
NOTE 2 - AGREEMENTS
Under an Administrative Services Agreement, the Fund pays BBOI a fee at an
annual rate equal to the lesser of 0.35% of its average daily net assets or
BBOI's annual cost to provide or procure administrative services plus 0.02% of
the Fund's average daily net assets. Under that Agreement, BBOI is responsible,
at its expense, for providing or procuring all administrative services
reasonably necessary for the operation of the Fund, including recordkeeping and
pricing services, custodian services, transfer agency and dividend disbursing
services, tax and audit services, insurance, legal services, printing and
mailing to shareholders of prospectuses and other required communications and
certain other administrative services.
NOTE 3 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-3
<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International Portfolio
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International Portfolio (the sole portfolio comprising Berger/BIAM Worldwide
Portfolios Trust, hereafter referred to as the "Portfolio") at October 4, 1996,
in conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Portfolio's management; our
responsibility is to express an opinion on this financial statement in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
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<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Cash $ 100,000
---------
Total Assets 100,000
---------
Liabilities
Total Liabilities 0
---------
Net Assets $ 100,000
---------
---------
Notes to Financial Statement
NOTE 1 - ORGANIZATION
The Berger/BIAM International Portfolio (the "Portfolio") is a series of the
Berger/ BIAM Worldwide Portfolios Trust (the "Trust"), a business trust
organized under the laws of the State of Delaware on May 31, 1996, and has been
inactive since that date except for matters relating to its organization and
registration as an investment company under the Investment Company Act of 1940,
as amended, and the sales of beneficial interests in the Portfolio in the
respective amounts of $70,000 and $30,000 to the Berger/BIAM International CORE
Fund and the Berger/BIAM International Institutional Fund, respectively, each a
series of the Berger/BIAM Worldwide Funds Trust.
All costs in organizing the Trust were paid by Berger Associates, Inc.
("Berger"), which currently owns 100% of BBOI Worldwide LLC ("BBOI"), the
investment advisor to the Portfolio.
NOTE 2 - INVESTMENT VALUATION
The Portfolio's securities and other assets are valued 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 the Exchange is open. The value of
an investor's beneficial interest in the Portfolio is equal to the product of
(i) the aggregate net asset value of the Portfolio, effective for that day,
multiplied by (ii) the percentage representing that investor's share of the
aggregate beneficial interest in the Portfolio, effective for that day.
F-5
<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENT (CONTINUED)
OCTOBER 4, 1996
NOTE 3 - AGREEMENTS
The Portfolio has entered into an Investment Advisory Agreement with BBOI, under
which BBOI is responsible for providing investment advisory and related
administrative services to the Portfolio. Pursuant to the Investment Advisory
Agreement, BBOI has delegated day-to-day management of the Portfolio to Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), and has delegated certain
administrative duties to Berger.
The Portfolio pays no fees directly to Berger or BIAM.
NOTE 4 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-6
<PAGE>
BERGER/BIAM INTERNATIONAL CORE FUND
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information about the Berger/BIAM
International CORE Fund (the "Fund"), a series of the Berger/BIAM Worldwide
Funds Trust (the "Trust"), is not a prospectus. It should be read in
conjunction with the Prospectus describing the Fund, dated October 15, 1996,
which may be obtained by writing the Fund at P.O. Box 5005, Denver, Colorado
80217, or calling 1-800-706-0539. The Fund is a no-load mutual fund.
The investment objective of the Fund is long-term capital appreciation.
The Fund seeks to achieve this objective by investing all of its investable
assets in the Berger/BIAM International Portfolio (the "Portfolio") which, in
turn, invests 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 Portfolio intends
to diversify its holdings among several countries and to have, under normal
market conditions, at least 65% of the Portfolio's total assets invested in the
securities of companies located in at least five countries, not including the
United States.
The Fund is an open-end management investment company organized as a
diversified series of the Trust. UNLIKE MANY OTHER MUTUAL FUNDS WHICH DIRECTLY
ACQUIRE AND MANAGE THEIR OWN PORTFOLIOS OF SECURITIES, THE FUND SEEKS ITS
INVESTMENT OBJECTIVE BY INVESTING ALL OF ITS INVESTABLE ASSETS IN THE PORTFOLIO,
AS DESCRIBED ABOVE. Accordingly, the investment performance of the Fund will
derive from the investment performance of the Portfolio. The Portfolio is an
open-end management investment company and a diversified series of a separate
trust known as the Berger/BIAM Worldwide Portfolios Trust ("Worldwide
Portfolios"). The Portfolio's investment objective and policies are identical
to those of the Fund. The Portfolio is advised by BBOI Worldwide LLC ("BBOI" or
the "Advisor"), which has delegated daily portfolio management of the Portfolio
to Bank of Ireland Asset Management (U.S.) Limited ("BIAM" or the "Sub-
Advisor").
October 15, 1996
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
Table of Contents in Prospectus
----------------- -------------------
Introduction Section 2
1. Investment Policies Section 2, 3, 4
2. Investment Restrictions Section 3
3. Management of the Fund Section 6
4. Investment Advisor and Sub-Advisor Section 6
5. Expenses of the Fund Section 6, 7
6. Brokerage Policy Section 6, 7
7. Purchase of Shares Section 8
8. Net Asset Value Section 9
9. Income Dividends, Capital Gains Section 14
Distributions and Tax Treatment
10. Suspension of Redemption Rights Section 11
11. Tax-Sheltered Retirement Plans Section 13
12. Special Purchase and Exchange Plans Section 12, 13
13. Performance Information Section 16
14. Additional Information Section 15
Financial Statements
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<PAGE>
INTRODUCTION
The Berger/BIAM International CORE Fund is a mutual fund, or open-end,
diversified management investment company. The investment objective of the Fund
is long-term capital appreciation. This is also the investment objective of the
Portfolio in which the Fund invests all of its investable assets. 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.
1. INVESTMENT POLICIES
The Prospectus discusses the investment objective of the Fund and the
Portfolio 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 Portfolio may invest, the investment policies and
portfolio strategies that the Portfolio may utilize and certain risks attendant
to those investments, policies and strategies.
ILLIQUID AND RESTRICTED SECURITIES. The Portfolio 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 Portfolio may not purchase any security, the
purchase of which would cause the Portfolio 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 the Portfolio
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 Portfolio 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 the Portfolio's net assets to be invested
in illiquid securities, the trustees of Worldwide Portfolios, 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. Pursuant to guidelines
established by the trustees, the Portfolio's Sub-Advisor will determine whether
securities eligible for resale to qualified institutional buyers pursuant to
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
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<PAGE>
sell the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of the transfer).
The liquidity of the Portfolio's investments in Rule 144A securities could be
impaired if qualified institutional buyers become uninterested in purchasing
these securities.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase
agreements with various financial organizations, including commercial banks,
registered broker-dealers and registered government securities dealers. A
repurchase agreement is a means of investing cash for a short period. A
repurchase agreement is an agreement under which the Portfolio 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 the Portfolio and is unrelated to the interest rate on the underlying
instrument.
In these transactions, the securities acquired by the Portfolio
(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
Portfolio's custodian bank until repurchased. In addition, the trustees will
establish guidelines and standards for review by the Sub-Advisor of the
creditworthiness of any bank, broker or dealer party to a repurchase agreement
with the Portfolio. The Portfolio will not enter into a repurchase agreement
maturing in more than seven days if as a result more than 15% of the Portfolio's
net 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, the
Portfolio 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 or other laws, a court may determine that the underlying
security is collateral for a loan by the Portfolio not within the control of the
Portfolio and therefore the realization by the Portfolio on such collateral may
automatically be stayed. Finally, it is possible that the Portfolio 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.
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<PAGE>
UNSEASONED ISSUERS. The Portfolio 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
Portfolio may invest up to 5% of its total assets in securities of unseasoned
issuers.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS). The Portfolio may
purchase the securities of certain foreign investment funds or trusts considered
Passive Foreign Investment Companies (PFICs) under U.S. tax laws. In addition
to bearing their proportionate share of the Portfolio's expenses (management
fees and operating expenses), shareholders will also indirectly bear similar
expenses of such PFIC. PFIC investments also may be subject to less favorable
U.S. tax treatment, as discussed in Section 9 below.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Portfolio may
purchase and sell securities on a when-issued or delayed delivery basis.
However, the Portfolio does not currently intend to 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. When-issued or delayed delivery transactions arise when
securities are purchased or sold by the Portfolio 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 the Portfolio 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 the Portfolio until it receives delivery or
payment from the other party to the transaction.
When the Portfolio 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
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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 Portfolio's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, the Portfolio
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, the Portfolio 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 Portfolio'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 the
Portfolio. The Portfolio 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 Portfolio collateral consisting of cash, an irrevocable letter of
credit or securities issued or guaranteed by the U.S. 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 Portfolio at any time and (d) the
Portfolio receive reasonable interest on the loan, which interest may include
the Portfolio's investing cash collateral in interest bearing short-term
investments, and (e) the Portfolio receive all dividends and distributions on
the loaned securities and any increase in the market value of the loaned
securities.
The Portfolio bears a risk of loss in the event that the other party
to a securities lending transaction defaults on its obligations and the
Portfolio 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 Portfolio 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 Portfolio will not lend its portfolio securities if, as a result, the
aggregate value of such loans would exceed 33-1/3% of the value of the
Portfolio's total assets. Loan arrangements made by the Portfolio 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
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creditworthiness of the broker, dealer or institution, will be considered in
making decisions with respect to the lending of securities, subject to review by
Worldwide Portfolio's trustees.
HEDGING TRANSACTIONS. As described in the Prospectus, the Portfolio
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 Portfolio's securities or the price of securities that the
Portfolio is considering purchasing. A hedging transaction may partially
protect the Portfolio from a decline in the value of a particular security or
its portfolio generally, although the cost of the transaction will reduce the
potential return on the security or the portfolio. In addition, hedging
transactions do not eliminate fluctuations in the prices of the underlying
securities the Portfolio owns or intends to acquire.
Any utilization of forwards or any other hedging technique (investing,
for example, in futures or options) is subject to policies and procedures which
may be established and changed by the trustees from time to time without
shareholder vote. Currently, the Portfolio 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 Portfolio to invest in futures
or options, such investments would be permitted solely for hedging purposes, and
the Portfolio 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 may be required
to obtain bank regulatory approval before the Portfolio engages in futures and
options transactions. The following information should be read in conjunction
with the information concerning the Portfolio's investment in forwards and the
risks of such investments contained in the Prospectus.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. A forward contract is an
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 asset at the time
of delivery. The Portfolio currently intends that the only forward contracts or
commitments that it might enter into are forward foreign currency exchange
contracts and that it may enter into such contracts solely for hedging purposes,
although the Portfolio may enter into additional forms of forward contracts or
commitments in the future for hedging purposes if they become available and
advisable in light of the Portfolio's objective 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
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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 Portfolio's principal uses of
forward foreign currency exchange contracts ("forward currency contracts"). The
Portfolio may enter into forward currency contracts with aggregate stated
contract values of up to the value of the Portfolio'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). The Portfolio 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"). The Portfolio also may hedge some or all of its
investments denominated in foreign currency against a decline in the value of
that currency relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency (or a proxy currency whose price
movements are expected to have a high degree of correlation with the currency
being hedged) approximating the value of some or all of its portfolio
securities denominated in that currency ("position hedge"). The Portfolio also
may enter into a forward currency contract with respect to a currency where the
Portfolio 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 the Portfolio's
foreign currency denominated portfolio securities. The matching of the increase
in value of a forward foreign currency exchange 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 the
Portfolio's currency exposure from one foreign currency to another limits the
Portfolio's opportunity to profit from increases in the value of the original
currency and involves a risk of increased losses to the Portfolio if the Sub-
Advisor's projection of future exchange rates is inaccurate.
The Portfolio 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 the
Portfolio is not able to cover its forward currency positions with underlying
portfolio securities, the Portfolio's custodian will segregate cash or liquid
assets having a value equal to the aggregate amount of the Portfolio's
commitments under forward contracts entered into. If the value of the
securities used to cover a position or the value
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of segregated assets declines, the Portfolio 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 the Portfolio's
commitments with respect to such contracts.
While forward contracts are not currently regulated by the Commodity
Futures Trading Commission ("CFTC"), the CFTC may in the future assert authority
to regulate forward contracts. In such event, the Portfolio's ability to
utilize forward contracts may be restricted. The Portfolio 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 Portfolio assets. In addition, when
the Portfolio enters into a privately negotiated forward contract with a
counterparty, the Portfolio assumes counterparty credit risk, that is, the risk
that the counterparty will fail to perform its obligations, in which case the
Portfolio could be worse off than if the contract had not been entered into.
Unlike many exchange-traded futures contracts and options on futures, there are
no daily price fluctuation limits with respect to forward contracts and other
negotiated or over-the-counter instruments, and with respect to those contracts,
adverse market movements could therefore continue to an unlimited extent over a
period of time. However, the Portfolio intends to monitor its investments
closely and will attempt to renegotiate or close its positions when the risk of
loss to the Portfolio becomes unacceptably high.
PORTFOLIO TURNOVER. Although the annual portfolio turnover rate of
the Portfolio will vary, it is normally expected to range from 25% to 75%. In
pursuit of the Portfolio's investment objective, the Sub-Advisor continuously
monitors the Portfolio's investments and makes portfolio changes whenever
changes in investment themes, the fundamentals of any portfolio company or the
price of any portfolio security indicate to the Sub-Advisor that more attractive
alternatives exist or that the Portfolio's investment 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 Portfolio due to economic, market or
other factors that are not within the control of management.
2. INVESTMENT RESTRICTIONS
The Fund has adopted the investment policy that it may,
notwithstanding any other fundamental or non-fundamental investment policy or
restriction, invest all of its investable assets in the securities of another
open-end investment company or series thereof with substantially the same
investment objective, policies and limitations as the Fund.
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All other fundamental and non-fundamental investment policies and
restrictions of the Fund and the Portfolio are identical. Therefore, although
the following investment restrictions refer to the Portfolio and the trustees of
Worldwide Portfolios, they apply equally to the Fund and the trustees of the
Trust.
The Portfolio 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
Portfolio 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
Portfolio. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders.
The following fundamental restrictions apply to the Portfolio. The
Portfolio may not:
1. With respect to 75% of the Portfolio'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
Portfolio in the securities of such issuer exceeds 5% of the value of the
Portfolio's total assets or (b) the Portfolio 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 Portfolio'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 Portfolio's
total assets taken at market value. When borrowings exceed 5% of the
Portfolio's total assets, the Portfolio will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Portfolio 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
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exchange contracts, forward commitments or securities index put or call options.
5. Make loans, except that the Portfolio may enter into repurchase
agreements and may lend portfolio securities in accordance with the Portfolio's
investment policies. The Portfolio 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 Portfolio uses the industry groups designated by the Financial Times
World Index Service.
The trustees have adopted additional non-fundamental investment
restrictions for the Portfolio. 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 Portfolio's total assets, the
Portfolio 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 Portfolio in the securities of such issuer
exceeds 5% of the value of the Portfolio's total assets or (b) the Portfolio
owns more than 10% of the outstanding voting securities of such issuer.
2. The Portfolio 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 Portfolio's investments
in all such companies taken at cost to exceed 5% of the value of the Portfolio's
total assets.
3. The Portfolio may not purchase securities on margin from a broker
or dealer, except that the Portfolio 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 Portfolio from
entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
4. The Portfolio 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 Portfolio may not invest in companies for the purposes of
exercising control of management.
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6. The Portfolio 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 Portfolio, taken at market
value at the time of purchase would be invested in such securities.
7. The Portfolio may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Portfolio may enter
into forward foreign currency exchange contracts with stated contract values of
up to the value of the Portfolio's assets.
8. The Portfolio 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 Portfolio 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
Portfolio may invest in the securities of issuers engaged in the foregoing
activities).
10. The Portfolio 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 Portfolio in units or attached to
securities are not subject to these limits.
The Trust has undertaken to the State of Ohio that the Fund will
prohibit the purchase or retention by the Fund of the securities of any issuer
if the officers, directors or trustees of the Fund, its advisors, or managers
owning beneficially more than 1/2 of 1% of the securities of an issuer together
own beneficially more than 5% of the securities of that issuer.
3. MANAGEMENT OF THE FUND
The trustees and executive officers of the Trust are listed below,
together with information which includes their principal occupations during the
past five years and other principal business affiliations. The trustees and
executive officers of the Trust also serve in the same capacities as trustees
and officers of Worldwide Portfolios.
*GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO 80206, age
53. 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 Institutional Products Trust since its
inception in October 1995. President and a director since April 1995 of
Berger Associates, Inc. A Vice President of DST Systems, Inc. (data
processing) since July 1995.
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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.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, age 67.
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 and Berger/BIAM Worldwide Portfolios
Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900, Denver, CO 80206,
age 70. 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 Institutional Products Trust since its
inception in October 1995. Trustee of Berger/BIAM Worldwide Funds Trust
and Berger/BIAM Worldwide Portfolios Trust since their inception in May
1996. Chairman (since 1994) and a Director (since 1973) and, formerly,
President (1973-1994) of Berger Associates, Inc.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 70. 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 and Berger/BIAM Worldwide Portfolios Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age 51. President,
Cattanach & Associates, Ltd. (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 and Berger/BIAM Worldwide Portfolios Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age 68. 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
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(Harvard University). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust and
Berger/BIAM Worldwide Portfolios Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL 60602, age 50.
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 and Berger/BIAM Worldwide Portfolios
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 and Berger/BIAM Worldwide Portfolios Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT 59717, age
59. Since 1994, Dean, and since 1989, 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 and Berger/BIAM Worldwide Portfolios Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, age 67.
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 and Berger/BIAM Worldwide Portfolios Trust.
* CRAIG D. CLOYED, 210 University Boulevard, Suite 900, Denver, CO 80206, age
50. Vice President of Berger/BIAM Worldwide Funds Trust and Berger/BIAM
Worldwide Portfolios Trust since their inception in May 1996. Also, Vice
President
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and Chief Marketing Officer of Berger Associates, Inc., since August 1995,
and President, CEO and a director of Berger Distributors, Inc., since its
inception in May 1996. Formerly (September 1989 to August 1995), Senior
Vice President of INVESCO Funds Group (mutual funds).
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver, CO 80206, age 40.
Vice President, Secretary and Treasurer of Berger 100 Fund and Berger
Growth and Income Fund since October 1991, of Berger Investment Portfolio
Trust since its inception in August 1993, of Berger Institutional Products
Trust since its inception in October 1995 and of Berger/BIAM Worldwide
Funds Trust and Berger/BIAM Worldwide Portfolios Trust since their
inception in May 1996. Also, Vice President-Finance and Administration,
Secretary and Treasurer of Berger Associates, Inc., since September 1991,
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 the
Fund and of the Portfolio's Advisor or Sub-Advisor.
TRUSTEE COMPENSATION
Officers of the Trust receive no compensation from the Trust.
However, trustees of the Trust who are not interested persons of the Portfolio's
Advisor or Sub-Advisor, who are also trustees of Worldwide Portfolios, are
compensated for their services according to a fee schedule, allocated among the
Berger and Berger/BIAM Funds, which includes an annual fee component and a per
meeting fee component. Neither the officers of the Trust nor the trustees
receive any form of pension or retirement benefit compensation from the Trust.
Set forth below is information regarding compensation (including
reimbursement of expenses) estimated to be paid or accrued during the current
fiscal year ended July 31, 1997, for each trustee of the Trust and of the other
funds in the Berger Fund and Berger/BIAM Fund complex.
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NAME AND POSITION WITH AGGREGATE AGGREGATE
BERGER AND BERGER/BIAM COMPENSATION COMPENSATION
FUNDS FROM FROM
THE FUND(1) ALL BERGER
AND
BERGER/BIAM
FUNDS(2)
- --------------------------------------------------------------------------------
Dennis E. Baldwin(3) $333 $41,083
William M.B. Berger(3),(5) $0 $0
Louis R. Bindner(3) $283 $34,965
Katherine A. Cattanach(3) $321 $39,657
Lucy Black Creighton(3) $272 $33,602
Paul R. Knapp(3) $364 $44,919
Gerard M. Lavin(4),(5) $0 $0
Harry T. Lewis(3) $311 $38,357
Michael Owen(3) $411 $50,720
William Sinclaire(3) $273 $33,697
- --------------------------------------------------------------------------------
(1) Comprised of the portion of the estimated trustee compensation to be paid
by Worldwide Portfolios to its trustees and allocated to the Fund.
(2) Consisting of Berger 100 Fund, Berger Growth and Income Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios Trust.
(3) 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 and Berger/BIAM Worldwide Portfolios Trust.
(4) Trustee of Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust and Berger/BIAM Worldwide Portfolios Trust.
(5) Interested person of the Berger/BIAM Worldwide Funds Trust and/or the
Portfolio's Advisor or Sub-Advisor.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by the Berger/BIAM Worldwide Portfolios
Trust. Under the plan, deferred fees are credited to an account and adjusted
thereafter to reflect the investment experience of whichever of the Berger or
Berger/BIAM Funds (or approved money market funds) is designated by the trustees
for this purpose. Pursuant to an exemptive order of the Commission, Worldwide
Portfolios 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.
Worldwide Portfolios' obligation to make payments of deferred fees under the
plan is a general obligation of Worldwide Portfolios.
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As of the date of this Statement of Additional Information, the
officers and trustees of the Trust as a group owned of record or beneficially no
shares of the Berger/BIAM International CORE Fund.
4. INVESTMENT ADVISOR AND SUB-ADVISOR
INVESTMENT ADVISOR
The investment advisor to the Portfolio is BBOI Worldwide LLC (the
"Advisor" or "BBOI Worldwide"), 210 University Boulevard, Denver, CO 80206. The
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Portfolio's Sub-Advisor and is responsible for
furnishing general business management and administrative services to the
Portfolio.
The Advisor is a limited liability company formed in 1996. Since the
Advisor was only recently formed, it has no prior experience as an investment
advisor. However, Berger Associates, Inc. ("Berger Associates"), which owns
100% of the Advisor, has been in the investment advisory business for over 20
years. Kansas City Southern Industries, Inc. ("KCSI") owns approximately 80% 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. Also, see in the Prospectus under "Pending Sale of Interest in
Advisor" for more information concerning ownership of the Advisor.
SUB-ADVISOR
As permitted in its Investment Advisory Agreement with the Portfolio,
the Advisor has delegated day-to-day portfolio management responsibility to Bank
of Ireland Asset Management (U.S.) Limited (the "Sub-Advisor" or "BIAM"). As
Sub-Advisor, BIAM manages the investments in the Portfolio 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 Worldwide Portfolios. BIAM's main offices are at 26 Fitzwilliam
Place, Dublin 2, Ireland. BIAM maintains a representative office at 2 Greenwich
Plaza, Greenwich, CT 06830. BIAM is an indirect wholly-owned subsidiary of Bank
of Ireland, a publicly traded, diversified financial services group with
business operations worldwide.
INVESTMENT ADVISORY AGREEMENT AND SUB-ADVISORY AGREEMENT
Under the Investment Advisory Agreement between the Advisor and
Berger/BIAM Worldwide Portfolios Trust with respect to the Portfolio, the
Advisor oversees, evaluates and monitors the investment advisory services
provided to the Portfolio by the Sub-Advisor and is responsible for furnishing
general business management and administrative services to the Portfolio.
Under the Investment
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Advisory Agreement for the Portfolio, the Advisor is compensated for its
Services to the Portfolio by the payment of a fee at the annual rate of 0.90% of
the average daily net assets of the Portfolio. The Fund bears a pro rata
portion of the fee paid by the Portfolio to the Advisor.
Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
The Investment Advisory Agreement will continue in effect until 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 Portfolio and in either case by vote of a majority of
the trustees of Worldwide Portfolios who are not "interested persons" (as that
term is defined in the Investment Company Act of 1940) of the Portfolio or the
Advisor. The Agreement is subject to termination by the Portfolio or the
Advisor on 60 days' written notice, and terminates automatically in the event of
its assignment.
Under the Sub-Advisory Agreement between the Advisor and the Sub-
Advisor, the Advisor has delegated day-to-day portfolio management
responsibility to the Sub-Advisor. The Sub-Advisor manages the investments in
the Portfolio 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 Worldwide Portfolios. The Portfolio
pays no fees directly to the Sub-Advisor. The Sub-Advisor will receive from the
Advisor a fee at the annual rate of 0.45% of the average daily net assets of the
Portfolio. During certain periods, the Sub-Advisor may voluntarily waive all or
a portion of its fee under the Sub-Advisory Agreement, which will not affect the
fee paid by the Portfolio to the Advisor.
The Sub-Advisory Agreement will continue in effect until 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 Portfolio and in either case by vote of a majority of the trustees
of Worldwide Portfolios who are not "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the Portfolio or the Advisor
or the Sub-Advisor. The Sub-Advisory Agreement is subject to termination by the
Portfolio, the Advisor or the Sub-Advisor on 60 days' written notice, and
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terminates automatically in the event of its assignment and in the event of
termination of the Investment Advisory Agreement.
TRADE ALLOCATIONS
Investment decisions for the Portfolio and other accounts advised by
the Sub-Advisor 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 the Portfolio and one or more such accounts. If the Portfolio and other
accounts advised by the Sub-Advisor 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 Portfolio and
each participating account. While in some cases, this policy might adversely
affect the price paid or received by the Portfolio or other participating
accounts, or the size of the position obtained or liquidated, the Sub-Advisor
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
The Advisor has adopted a Code of Ethics covering all board members,
officers, employees and other access persons (as defined below) of the Advisor
who are not also covered by an approved Code of Ethics of an affiliated person
who is an investment advisor ("covered persons"). At present, there are no
persons who would be covered by the Advisor's Code of Ethics who are not also
covered by the Code of Ethics of Berger Associates, which is an investment
advisor affiliated with the Advisor.
The Advisor's Code, which is substantially similar to the Code of
Ethics adopted by Berger Associates, permits its covered persons to purchase and
sell securities for their own accounts in accordance with provisions governing
personal investing. 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 Fund or the Portfolio or the Advisor's other advisory
clients. Board members and officers of the Advisor (including those who also
serve as trustees of the Trust or of Worldwide Portfolios), 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 Fund or
the Portfolio.
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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 the Advisor's Code. Those covered persons (as well
as board members, officers, employees and other access persons of the Advisor
covered by an approved Code of Ethics of an affiliated investment advisor) also
may be required under certain circumstances to forfeit their profits made from
personal trading. The Code is administered by the Advisor and the provisions of
the Code are subject to interpretation by and exceptions authorized by its board
of managers.
The Sub-Advisor 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 the Sub-Advisor
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 the Sub-Advisor are required
to pre-clear all transactions in securities not otherwise exempt under the Code
of Ethics and must instruct their broker to provide the Sub-Advisor with
duplicate confirmations of all such personal trades.
5. EXPENSES OF THE FUND
The Fund is allocated and bears indirectly its pro rata share of the
aggregate annual operating expenses of the Portfolio, since all of the
investable assets of the Fund are invested in the Portfolio. Expenses of the
Portfolio include, among others, its pro rata share of the expenses of Worldwide
Portfolios of which the Portfolio is a series, such as: expenses of registering
Worldwide Portfolios with securities authorities; the compensation of its
Independent Trustees; expenses of preparing reports to investors and to
governmental offices and commissions; expenses of meetings of investors and
trustees of Worldwide Portfolios; legal fees; and insurance premiums of
Worldwide Portfolios. Expenses of the Portfolio also include, among others,
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; the fees payable to the Advisor under the Investment
Advisory Agreement; and such other non-recurring and extraordinary items as may
arise from time to time.
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Until at least April 30, 1998, the Advisor has agreed voluntarily to
waive the investment advisory fee paid by the Portfolio under the Investment
Advisory Agreement to the extent that the Portfolio's normal operating expenses
in any fiscal year, including the investment advisory fee and custodian fees,
but excluding brokerage commissions, interest, taxes and extraordinary expenses,
exceed 1.00% of the Portfolio's average daily net assets for that fiscal year.
Any reduction in the advisory fee paid by the Portfolio will also reduce the pro
rata share of the advisory fee borne indirectly by the Fund.
Expenses of the Fund include, among others, its pro rata share of the
expenses of the Trust, such as expenses of meetings of the shareholders of the
Trust. Expenses of the Fund also include, among others, taxes imposed on the
Fund; the fee payable to the Advisor under the Administrative Services
Agreement; and such other non-recurring and extraordinary items as may arise
from time to time.
SERVICE ARRANGEMENTS FOR THE FUND
Under the Administrative Services Agreement with the Fund, the Advisor
serves as the administrator of the Fund. In this capacity, it is responsible
for administering and managing all aspects of the Fund's day-to-day operations,
subject to the oversight of the trustees of the Trust. The Advisor is
responsible, at its expense, for furnishing (or procuring other parties to
furnish) all administrative services reasonably necessary for the operation of
the Fund, including recordkeeping and pricing services, custodian services,
transfer agency and dividend disbursing services, tax and audit services,
insurance, legal services, printing and mailing to shareholders of prospectuses
and other required communications, and certain other administrative and
recordkeeping services, such as coordinating matters relating to the operations
of the Fund, monitoring the Fund's status as a "regulated investment company"
under the Internal Revenue Code of 1986, registering sufficient Fund shares
under federal and state securities laws, arranging for and supervising the
preparation of registration statements, tax returns, proxy materials, financial
statements and reports for filing with regulatory authorities and distribution
to shareholders of the Fund. Under the Administrative Services Agreement, the
Fund pays the Advisor a fee at an annual rate equal to the lesser of (i) 0.10%
of its average daily net assets, or (ii) the Advisor's annual cost to provide or
procure these services (including the fees of any services providers whose
services are procured by the Advisor), plus an additional 0.01% of the Fund's
average daily net assets. The trustees of the Trust regularly review amounts
paid to and expenditures incurred by the Advisor pursuant to the Administrative
Services Agreement. In addition, in the event that the Advisor's duties under
the Administrative Services Agreement are delegated to another party, the
Advisor may take into account, in calculating the cost of such services, only
the costs incurred by such other party in discharging the delegated duties.
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Under a Sub-Administration Agreement between the Advisor and Berger
Associates, Berger Associates has been delegated the responsibility to perform
certain of the administrative and recordkeeping services required under the
Administrative Services Agreement and to procure, at the Advisor's expense,
third parties to provide the services not provided by Berger Associates. Under
the Sub-Administration Agreement, Berger Associates is paid a fee by the Advisor
of 0.25% of the Fund's average daily net assets for its services. During
certain periods, Berger Associates may voluntarily waive all or a portion of its
fee from the Advisor, which will not affect the fee paid by the Fund to the
Advisor under the Administrative Services Agreement. Investors Fiduciary Trust
Company ("IFTC"), 127 W. 10th Street, Kansas City, MO 64105, has been appointed
to provide recordkeeping and pricing services to the Fund, including calculating
the daily net asset value of the Fund, and to perform certain accounting and
recordkeeping functions that it requires. In addition, IFTC has been appointed
to serve as the Fund's custodian, transfer agent and dividend disbursing agent.
IFTC has engaged DST Systems, Inc. ("DST"), P.O. Box 419958, Kansas City, MO
64141, as sub-transfer agent to provide transfer agency and dividend disbursing
services for the Fund. The fees of Berger Associates, IFTC and DST are all paid
by the Advisor. Approximately 40% of the outstanding shares of DST are owned by
KCSI, which also owns approximately 80% of the outstanding shares of Berger
Associates.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO
Under the Investment Advisory Agreement between the Advisor and the
Portfolio, in addition to providing advisory services, the Advisor is
responsible for providing or arranging for all managerial and administrative
services necessary for the operations of the Portfolio. The Advisor is
responsible for providing certain of these services at its own expense, such
as compliance monitoring and preparing investor communications, which have
been delegated to Berger Associates as part of the Sub-Administration
Agreement discussed above. Other services are procured from third party
service providers at the Portfolio's own expense, such as custody,
recordkeeping and pricing services. The Portfolio has appointed IFTC as
recordkeeping and pricing agent to calculate the daily net asset value of the
Portfolio and to perform certain accounting and recordkeeping functions
required by the Portfolio. In addition, the Portfolio has appointed IFTC as
its custodian and transfer agent. IFTC has engaged State Street Bank and
Trust Company ("State Street"), P.O. Box 351, Boston, MA 02101, as
sub-custodian for the Portfolio. For custodian, recordkeeping and pricing
services, the Portfolio pays fees directly to IFTC based on a percentage of
its net assets, subject to certain minimums, and reimburses IFTC for certain
out-of-pocket expenses.
The trustees of Worldwide Portfolios have authorized portfolio
transactions to be placed on an agency basis through DST Securities, Inc.
("DSTS"), a wholly-owned broker-dealer
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subsidiary of DST. When transactions are effected through DSTS, the commission
received by DSTS is credited against, and thereby reduces, certain operating
expenses that the Portfolio would otherwise be obligated to pay. No portion of
the commission is retained by DSTS.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is First
Fund Distributors, Inc. (the "Distributor"), 4455 East Camelback Road, Suite
261-E, Phoenix, AZ 85018. The Distributor is compensated and reimbursed for its
costs in distributing Fund shares by Berger Associates.
6. BROKERAGE POLICY
Although the Portfolio retains full control over its own investment
policies, the Sub-Advisor is authorized to place the portfolio transactions of
the Portfolio. The Sub-Advisor is required to report on the placement of
brokerage business to the trustees of Worldwide Portfolios every quarter,
indicating the brokers with whom portfolio business was placed and the basis for
such placement.
The Investment Advisory Agreement that the Portfolio has with the
Advisor and the Sub-Advisory Agreement between the Advisor and the Sub-Advisor
authorizes and directs portfolio transactions for the Portfolio to be placed
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, the Sub-Advisor is specifically authorized 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 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 Sub-Advisor.
In accordance with these provisions, the Sub-Advisor may place
portfolio brokerage business of the Portfolio with brokers who provide useful
research services to the Sub-Advisor. Such research services would 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 the Sub-Advisor may be apprised of current
developments in the above-mentioned factors.
The research services received from brokers could be helpful to the
Sub-Advisor in performing its investment advisory
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responsibilities to the Portfolio, but they are not essential, and the
availability of such services from brokers does not reduce the responsibility of
the Sub-Advisor's advisory personnel to analyze and evaluate the securities in
which the Portfolio invests. The research services obtained as a result of the
Portfolio's brokerage business may also be useful to the Sub-Advisor 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 the Sub-Advisor in rendering investment advice to the
Portfolio. Although such research services may be deemed to be of value to the
Sub-Advisor, they are not expected to decrease the expenses that the Sub-Advisor
would otherwise incur in performing its investment advisory services for the
Portfolio nor will the fee that is received by the Sub-Advisor from the Advisor
or the advisory fee received by the Advisor from the Portfolio be reduced as a
result of the availability of such research services from brokers.
The trustees of Worldwide Portfolios 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 are
effected through DSTS, the commission received by DSTS is credited against, and
thereby reduces, certain operating expenses that the Portfolio would otherwise
be obligated to pay. No portion of the commission is retained by DSTS.
7. PURCHASE OF SHARES
Minimum Initial Investment $1,000,000.00
Shares in the Fund may be purchased at the relevant net asset value
without a sales charge. The minimum initial investment for shares of the Fund
is $1,000,000. To purchase shares in the Fund, simply complete the application
form enclosed with the Prospectus and mail it to the Fund in care of DST
Systems, Inc., the Fund's transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
Payment for shares purchased may be made by wire, electronic funds
transfer or mail. All purchase orders are effected at the relevant net asset
value per share of the Fund next determined after receipt of the purchase
order, completed application and payment. A purchase order, together with
payment in proper form, received by the transfer agent, subtransfer agent or
any other authorized agent of the Fund prior to the close of the New York
Stock Exchange (the "Exchange") on a day the Fund is open for business will
be effected at that day's net asset value. An order received after that time
will be effected at the net asset value determined on the next business day.
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Additional investments may be made at any time by telephone or by mail
at the relevant net asset value by calling or writing the Fund and making
payment by wire or electronic funds transfer as outlined above.
In addition, Fund shares may be purchased through certain
organizations connected with pension and retirement plans. These organizations
may charge investors a transaction or other fee for their services, may require
different minimum initial and subsequent investments than the Fund and may
impose other charges or restrictions different from those applicable to
shareholders who invest in the Fund directly. Fees charged by these
organizations will have the effect of reducing a shareholder's total return on
an investment in Fund shares. No such charge will be paid by an investor who
purchases the Fund shares directly from the Fund as described above.
8. NET ASSET VALUE
The net asset value of the Fund is determined once daily, at the close
of the regular trading session of 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 Fund 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 the Fund is determined by dividing the total value of its assets,
less liabilities, by the total number of shares outstanding. Since the Fund
invests all of its investable assets in the Portfolio, the value of the Fund's
investable assets will be equal to the value of its beneficial interest in the
Portfolio.
The Portfolio's securities and other assets are valued as follows:
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 the Portfolio will be determined by using
prices provided by pricing services which provide market prices to other mutual
funds or, as needed, by obtaining market quotations from independent
broker/dealers. Short-term money market securities maturing within 60 days are
valued on the amortized cost basis, which approximates market value. All assets
and liabilities initially expressed in terms of non-U.S. dollar currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers shortly before the close of the Exchange. Securities and
assets for which quotations are not readily available are valued at fair values
determined in good faith pursuant to consistently applied procedures established
by the trustees.
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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 Portfolio are determined as of the earlier of such market close or the
closing time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities will be valued at
their fair market value as determined in good faith pursuant to consistently
applied procedures established by the trustees.
The Portfolio'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 the Fund
may be significantly affected by such trading on days when shareholders cannot
purchase or redeem shares of the Fund.
9. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
TAX STATUS OF THE FUND AND THE PORTFOLIO
The Fund intends to meet the requirements of Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code") and to distribute to its
investors all or substantially all of its taxable income as defined in the Code.
If the Fund meets the Subchapter M requirements, it generally is not liable for
U.S. Federal income taxes to the extent its earnings are timely distributed.
Qualification as a regulated investment company ("RIC") under the Code does not,
however, involve any federal supervision of management or of the investment
practices or policies of the Fund. If the Fund distributes annually less than
98% of its income and gain, it may be subject to a nondeductible excise tax
equal to 4% of the shortfall.
The Trust anticipates that (1) the Portfolio will be treated for U.S.
Federal income tax purposes as a partnership, and (2) for purposes of
determining whether the Fund satisfies the income and diversification
requirements to maintain its status as a RIC, the Fund, as an investor in the
Portfolio, will be deemed to own a proportionate share of the Portfolio's assets
and will be deemed to be entitled to the Portfolio's income or loss attributable
to that share. The Portfolio has advised the Fund that it intends to conduct
its operations so as to enable its investors, including the Fund, to satisfy
those requirements.
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TAXATION OF FUND DISTRIBUTIONS
Advice as to the tax status of each year's dividends and distributions
will be mailed annually to the shareholders of the Fund. Dividends paid by the
Fund from net investment income and distributions from the Fund's net short-term
capital gains in excess of any net long-term capital losses, whether received in
cash or reinvested, generally will be taxable as ordinary income. Distributions
received from the Fund designated as long-term capital gains (net of capital
losses), whether received in cash or reinvested, will be taxable as long-term
capital gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. A portion of the dividends (but not capital gains distributions) paid
by the Fund may be eligible for the dividends received deduction for corporate
shareholders to the extent that the Fund's income consists of dividends paid by
United States corporations. If a shareholder is exempt from U.S. Federal income
tax, the shareholder will not generally be taxed on amounts distributed by the
Fund.
Under the Internal Revenue Code, gains recognized by the Portfolio
upon a disposition of assets contributed in-kind to it by the Fund will be
specially allocated to the Fund and not to other investors in the Portfolio to
the extent of the unrealized appreciation in those assets at the time of their
transfer. As a result, shareholders of the Fund may receive distributions of a
greater amount of gains than if the Portfolio had purchased those assets in the
open market upon commencement of Fund operations or in a transaction that did
not involve contributions of assets in-kind.
If the amount of the Fund's distributions for a taxable year exceeds
the Fund's tax earnings and profits available for distribution, all or portion
or the distributions may be treated as a return of capital or as capital gains.
In the event a distribution is treated as a return of capital, the shareholder's
basis in his or her Fund shares will be reduced to the extent the distribution
is so treated.
At certain levels of taxable income, the Code provides a preferential
tax rate for long-term capital gains. Long-term capital gains of taxpayers
other than corporations are taxed at a 28% maximum rate, whereas ordinary income
is taxed at a 39.6% maximum rate. Capital losses continue to be deductible only
against capital gains plus (in the case of taxpayers other than corporations)
$3,000 of ordinary income annually ($1,500 for married individuals filing
separately).
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FOREIGN SOURCE INCOME
Income received by the Fund, directly or through the Portfolio, from
sources within foreign countries may be subject to withholding and other income
or similar taxes imposed by such countries. The U.S. has entered into tax
treaties with many foreign countries that, in some circumstances, may entitle
the Fund or the Portfolio to a reduced rate of tax or exemption from tax on such
income. If, directly or through the Portfolio, more than 50% in value of the
Fund's total assets at the close of its taxable year consists of securities of
foreign corporations, the Fund may elect to "pass-through" to its shareholders
the amount of foreign income taxes paid by the Fund and the foreign-source
character of the income received by the Fund. Under this election, each
shareholder will be required to include the shareholder's pro rata portion of
these foreign taxes in gross income, but will be able to deduct (as an itemized
deduction) or claim a foreign tax credit for such amount (subject to various
limitations).
Depending upon their particular tax circumstances, shareholders may be
unable to claim a full credit for their proportionate share of the foreign
income taxes passed through by the Fund. Further limitations as to the credit
or deduction of the foreign income taxes may apply for purposes of the
alternative minimum tax. If the election to pass through foreign income taxes
is not made, foreign taxes will be treated as an expense of the Fund, reducing
its investment company taxable income, and the distributions by the Fund will be
treated as United States source income.
OTHER TAX CONSIDERATIONS
The amount, timing and character of Fund income taxed to Fund
shareholders may be affected by certain special U.S. tax rules that may apply to
various investments of the Fund and the Portfolio, including the following:
CURRENCY TRANSACTIONS. On the disposition of foreign currency,
foreign currency denominated debt securities and certain financial
contracts, forward contracts and options, gains or losses attributable
to currency fluctuations are treated as ordinary gain or loss. These
gains or losses, termed "section 988" gains or losses, may increase,
decrease or eliminate the amount to be distributed to shareholders as
ordinary income. If section 988 losses exceed other net investment
income during a taxable year the Fund generally would not be able to
make ordinary dividend distributions, or distributions made before the
losses were realized would be recharacterized as return of capital to
shareholders for U.S. Federal income tax purposes (reducing each
shareholder's basis in his or her Fund shares) or as a capital gain.
To minimize the risk of such distributions, the Fund may adjust its
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dividends (if any) to take currency fluctuations into account.
HEDGING TRANSACTIONS. On the disposition of certain contracts,
such as options, futures contracts and forward contracts (termed
"section 1256 contracts"), the resulting gains or losses generally are
considered 60% long-term and 40% short-term capital gains or losses,
regardless of the time the Fund or the Portfolio has held the
contract. However, foreign currency gains or losses (as discussed
above) arising from certain section 1256 contracts may be treated as
ordinary income or loss. In addition, section 1256 contracts held by
the Fund, directly or through the Portfolio, at the end of each
taxable year and on certain other dates prescribed by the tax laws are
"marked-to-market" such that unrealized gains or losses are treated as
though they were realized. Further, requirements relating to the
Fund's tax status as a regulated investment company may limit the
extent to which the Fund and the Portfolio will be able to engage in
transactions in such contracts.
Hedging transactions undertaken by the Fund and the Portfolio may
result in "straddles" for U.S. Federal income tax purposes, affecting
the character of gains (or losses) realized by the Fund. In addition,
losses realized by the Fund on straddle positions may be deferred.
PASSIVE FOREIGN INVESTMENT COMPANIES. The Portfolio may invest
in foreign entities that are classified as passive foreign investment
companies ("PFICs") for U.S. tax purposes. If the Fund or the
Portfolio receives an "excess distribution" with respect to PFIC
stock, the Portfolio or the Fund itself may be subject to tax on a
portion of the excess distribution, whether or not the corresponding
income is distributed by the Fund to shareholders. However, the Fund
or the Portfolio may be eligible to elect one of two alternative tax
treatments with respect to PFIC shares which would avoid the foregoing
"excess distribution" taxes, but also may affect, among other things,
the amount and character of gain or loss and the timing of the
recognition of income with respect to PFIC shares. Accordingly, the
amounts, character and timing of income distributed to shareholders of
the Fund may differ substantially as compared to a fund that did not
invest in PFIC shares.
FOREIGN SHAREHOLDERS
Foreign shareholders of the Fund generally will be subject to a 30%
U.S. withholding tax on ordinary income dividends paid by the Fund. This
withholding may be reduced by
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an applicable tax treaty. Foreign shareholders are urged to consult with their
own tax advisors with respect to this withholding tax and the other particular
U.S. and foreign tax consequences to them of an investment in the Fund.
The foregoing discussion relates only to U.S. Federal income tax law.
Ordinary income and capital gains dividends also may be subject to state and
local taxes, which may differ from the U.S. Federal treatment. Shareholders are
urged to consult with their tax advisors with respect to the particular tax
consequences to them of an investment in the Fund, including the application and
effect of state and local taxes.
10. SUSPENSION OF REDEMPTION RIGHTS
The right of redemption may be suspended for any period during which
the Exchange is closed or the Commission determines that trading on the Exchange
is restricted, or when there is an emergency as determined by the Commission as
a result of which it is not reasonably practicable for the Portfolio to dispose
of securities owned by it or to determine the value of its net assets, or for
such other period as the Commission may by order permit for the protection of
shareholders of the Fund.
The 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. The Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in kind. 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 under Section 8.
Shareholders have the ability to request in writing a review of the valuation of
in-kind redemptions, which will be considered by the trustees of the Trust
within 90 days of such written request.
11. PLANS AND PROGRAMS
The Fund offers several tax-qualified retirement plans for adoption by
individuals and employers. The Fund also offers both a profit-sharing plan and
a money purchase pension plan for employers and self-employed persons, an
Individual Retirement Account ("IRA") and a 403(b) Custodial Account.
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In order to receive the necessary materials to create a profit-sharing
or money purchase pension plan account, an IRA account or a 403(b) Custodial
Account, please write to the Fund, c/o BBOI Worldwide, P.O. Box 5005, Denver, CO
80217, or call 1-800-706-0539. Trustees for 401(k) or other existing plans
interested in utilizing Fund shares as an investment or investment alternative
in their plans should contact the Fund at 1-800-551-5849.
The Fund also offers a systematic withdrawal plan. Forms to open such
an account may be obtained by writing to the Fund, c/o DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141, or call 1-800-551-5849.
12. EXCHANGE PRIVILEGE
Any shareholder may exchange any or all of the shareholder's shares in
the Fund, subject to stated minimums, for shares of any of the publicly
available Berger Funds or Berger/BIAM Funds, without charge, after receiving a
current prospectus of the other Berger Fund or Berger/BIAM Fund. Exchanges into
or out of the Fund are made at the net asset value per share next determined
after the exchange request is received. Each exchange represents the sale of
shares from one fund and the purchase of shares in another, which may produce a
gain or loss for U.S. Federal income tax purposes. An exchange of shares may be
made by written request directed to the Fund, in care of DST Systems, Inc., or
simply by telephoning the Fund at 1-800-551-5849. This privilege is
revocable by the Fund, and is not available in any state in which the shares of
the Berger or Berger/BIAM Fund being acquired in the exchange are not registered
for sale. Shareholders automatically have telephone privileges to authorize
exchanges unless they specifically decline this service in the account
application or in writing.
13. PERFORMANCE INFORMATION
The Prospectus contains a brief description of how total return is
calculated.
Quotations of average annual total return for the Fund 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 for
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.
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14. ADDITIONAL INFORMATION
BERGER/BIAM WORLDWIDE FUNDS TRUST AND THE FUND
The Trust is a Delaware business trust organized on May 31, 1996. The
Fund was established on May 31, 1996, as a series of the Trust. The Trust is
authorized to issue an unlimited number of shares of beneficial interest in
series or portfolios. Currently, the series comprising the Fund is one of three
series established under the Trust, although others may be added in the future.
The Trust is also authorized to establish multiple classes of shares
representing differing interests in an existing or new series.
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 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 Berger/BIAM International CORE Fund
shareholder 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 the Fund is remote. The trustees
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<PAGE>
intend to conduct the operations of the Trust and the Fund so as to avoid, to
the extent possible, liability of shareholders for liabilities of the Trust or
the Fund.
Shares of the Fund have no preemptive rights, and since the 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.
As of the date of this Statement of Additional Information, all of the
outstanding shares of the Fund were held by Berger Associates, Inc., a Delaware
corporation and controlling person of the Advisor, which provided the seed
capital necessary to establish the Trust.
BERGER/BIAM WORLDWIDE PORTFOLIOS TRUST AND THE PORTFOLIO
Worldwide Portfolios is also a Delaware business trust organized on
May 31, 1996. The Portfolio was established on May 31, 1996, as a series of
Worldwide Portfolios. The Portfolio commenced operations upon the transfer to
the Portfolio of assets held in a pooled trust. See "Performance" in the
Prospectus for additional information on the asset transfer.
Worldwide Portfolios is authorized to sell unlimited interests in
series or portfolios. Currently, the series comprising the Portfolio is the
only series established under Worldwide Portfolios, although others may be added
in the future. The Delaware law information set forth above with respect to the
Trust also applies to Worldwide Portfolios and investors in the Portfolio.
Each investor in the Portfolio, including the Fund, is entitled to a
vote in proportion to the amount of its investment in the Portfolio. Whenever
the Fund is requested to vote as an investor in the Portfolio on matters
pertaining to the Portfolio (other than a vote by the Fund to continue the
operation of the Portfolio upon the withdrawal of another investor in the
Portfolio), the Fund will hold a meeting of its shareholders and will cast all
of its votes as an investor in the Portfolio in the same proportion as directed
by the votes of the Fund's shareholders. Fund shareholders who do not vote will
not affect the votes cast by the Fund at the meeting of the Portfolio investors.
The percentage of the votes representing the Fund's shareholders who do not vote
will be voted by the Fund in the same proportion as the Fund's shareholders who
do, in fact, vote.
DISTRIBUTION
The Distributor is the principal underwriter of the Fund's shares.
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 Fund in connection with the sale of its
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<PAGE>
shares in all states in which the shares are registered and in which the
Distributor is qualified as a broker-dealer.
The Trust, on behalf of the Fund, and the Distributor are parties to a
Distribution Agreement that continues for two years from its date of execution
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 the Fund or the Distributor
on not more than 60 days' nor less than 30 days' prior written notice, and
terminates automatically in the event of its assignment. Under the Distribution
Agreement, the Distributor continuously offers the Fund's shares and solicits
orders to purchase Fund shares at net asset value.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
has acted as counsel for the Trust and the Fund. Dechert Price & Rhoads, 1500 K
Street, N.W., Washington, DC, has acted as special counsel for the Trust and the
Fund.
Price Waterhouse LLP, 950 Seventeenth Street, Denver, Colorado, has
been appointed to act as independent accountants for the Fund and the Portfolio
for the fiscal year ended July 31, 1997.
The Berger/BIAM Worldwide Funds Trust has filed with the Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities of the Berger/BIAM International CORE
Fund, of which this Statement of Additional Information is a part. If further
information is desired with respect to the Fund or its securities, reference is
made to the Registration Statement and the exhibits filed as a part thereof.
FINANCIAL STATEMENTS
The following financial statements appear attached to the end of this
Statement of Additional Information:
For Berger/BIAM International CORE Fund:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International
CORE Fund, as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4,
1996
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<PAGE>
For Berger/BIAM Interantional Portfolio:
Report of the Independent Accountants, dated October 7, 1996
Statement of Assets and Liabilities of the Berger/BIAM International
Portfolio, as of October 4, 1996
Notes to Statement of Assets and Liabilities, dated October 4,
1996
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<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Portfolio may purchase securities which are convertible into
common stock when the Portfolio'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 Portfolio 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 Portfolio 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 the Portfolio 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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<PAGE>
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bbonds 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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<PAGE>
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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<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International CORE Fund
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International CORE Fund (one of three funds comprising Berger/BIAM Worldwide
Funds Trust, hereafter referred to as the "Fund") at October 4, 1996, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Fund's management; our responsibility is
to express an opinion on this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
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<PAGE>
BERGER/BIAM INTERNATIONAL CORE FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Investment in the Berger/BIAM International Portfolio $ 70,000
---------
Total Assets 70,000
---------
Liabilities
Total Liabilities 0
---------
Net Assets $ 70,000
---------
---------
Net Asset Value per share (7,000 shares of beneficial interest
outstanding; unlimited authorized shares of beneficial interest
of $0.01 par value). Offering and Redemption Price Per Share $ 10.00
---------
---------
NOTES TO FINANCIAL STATEMENT
NOTE 1 - ORGANIZATION
The Berger/BIAM International CORE Fund (the "Fund") is a series of the Berger/
BIAM Worldwide Funds Trust, a Delaware business trust (the "Trust") organized on
May 31, 1996, and has been inactive since that date except for matters relating
to its organization and registration as an investment company under the
Investment Company Act of 1940, as amended, and the sale of 7,000 shares of the
Fund to Berger Associates, Inc. ("Berger"), which currently owns 100% of BBOI
Worldwide LLC ("BBOI"), the administrator of the Fund.
The Fund will invest all of its investable assets in the Berger/BIAM
International Portfolio (the "Portfolio"), a series of the Berger/BIAM Worldwide
Portfolios Trust. The Portfolio is an open-end management investment company
and has the same investment objectives and policies as the Fund. As an investor
in the Portfolio, the Fund is allocated and bears indirectly its pro rata share
of the aggregate annual operating expenses of the Portfolio including the
investment advisory fee, custodian fees, auditor's fees, transfer agent,
recordkeeping and pricing agent fees.
All costs in organizing the Trust were paid by Berger.
F-2
<PAGE>
BERGER/BIAM INTERNATIONAL CORE FUND
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 4, 1996
NOTE 2 - AGREEMENTS
Under an Administrative Services Agreement, the Fund pays BBOI a fee at an
annual rate equal to the lesser of 0.10% of its average daily net assets or
BBOI's annual cost to provide or procure administrative services plus 0.01% of
the Fund's average daily net assets. Under that Agreement, BBOI is responsible,
at its expense, for providing or procuring all administrative services
reasonably necessary for the operation of the Fund, including recordkeeping and
pricing services, custodian services, transfer agency and dividend disbursing
services, tax and audit services, insurance, legal services, printing and
mailing to shareholders of prospectuses and other required communications and
certain other administrative services.
NOTE 3 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-3
<PAGE>
Report of Independent Accountants
To the Investors and Trustees of
Berger/BIAM International Portfolio
In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of Berger/BIAM
International Portfolio (the sole portfolio comprising Berger/BIAM Worldwide
Portfolios Trust, hereafter referred to as the "Portfolio") at October 4, 1996,
in conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Portfolio's management; our
responsibility is to express an opinion on this financial statement in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statement is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statement, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
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<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 4, 1996
Assets
Cash $ 100,000
---------
Total Assets 100,000
---------
Liabilities
Total Liabilities 0
---------
Net Assets $ 100,000
---------
---------
NOTES TO FINANCIAL STATEMENT
NOTE 1 - ORGANIZATION
The Berger/BIAM International Portfolio (the "Portfolio") is a series of the
Berger/BIAM Worldwide Portfolios Trust (the "Trust"), a business trust organized
under the laws of the State of Delaware on May 31, 1996, and has been inactive
since that date except for matters relating to its organization and registration
as an investment company under the Investment Company Act of 1940, as amended,
and the sales of beneficial interests in the Portfolio in the respective amounts
of $70,000 and $30,000 to the Berger/BIAM International CORE Fund and the
Berger/BIAM International Institutional Fund, respectively, each a series of the
Berger/BIAM Worldwide Funds Trust.
All costs in organizing the Trust were paid by Berger Associates, Inc.
("Berger"), which currently owns 100% of BBOI Worldwide LLC ("BBOI"), the
investment advisor to the Portfolio.
NOTE 2 - INVESTMENT VALUATION
The Portfolio's securities and other assets are valued 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 the Exchange is open. The value of
an investor's beneficial interest in the Portfolio is equal to the product of
(i) the aggregate net asset value of the Portfolio, effective for that day,
multiplied by (ii) the percentage representing that investor's share of the
aggregate beneficial interest in the Portfolio, effective for that day.
F-5
<PAGE>
BERGER/BIAM INTERNATIONAL PORTFOLIO
NOTES TO FINANCIAL STATEMENT (CONTINUED)
OCTOBER 4, 1996
NOTE 3 - AGREEMENTS
The Portfolio has entered into an Investment Advisory Agreement with BBOI, under
which BBOI is responsible for providing investment advisory and related
administrative services to the Portfolio. Pursuant to the Investment Advisory
Agreement, BBOI has delegated day-to-day management of the Portfolio to Bank of
Ireland Asset Management (U.S.) Limited ("BIAM"), and has delegated certain
administrative duties to Berger.
The Portfolio pays no fees directly to Berger or BIAM.
NOTE 4 - OTHER
Certain officers and trustees of the Trust are also officers and directors of
Berger.
F-6
<PAGE>
PART C. OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS:
(a) FINANCIAL STATEMENTS.
In Part A of the Registration Statement (Prospectus):
None.
In Part B of the Registration Statement (Statement of Additional
Information):
BERGER/BIAM WORLDWIDE FUNDS TRUST
In the Statement of Additional Information for the Berger/BIAM
International Fund:
1. Report of Independent Accountants, dated October 7, 1996
2. Statement of Assets and Liabilities of the Berger/BIAM
International Fund, as of October 4, 1996
3. Notes to Statement of Assets and Liabilities, dated
October 4, 1996
In the Statement of Additional Information for the Berger/BIAM
International Institutional Fund:
1. Report of Independent Accountants, dated October 7, 1996
2. Statement of Assets and Liabilities of the Berger/BIAM
International Institutional Fund, as of October 4, 1996
3. Notes to Statements of Assets and Liabilities, dated
October 4, 1996
In the Statement of Additional Information for the Berger/BIAM
International CORE Fund:
1. Report of Independent Accountants, dated October 7, 1996
2. Statement of Assets and Liabilities of the Berger/BIAM
International CORE Fund, as of October 4, 1996
3. Notes to Statement of Assets and Liabilities, dated
October 4, 1996
BERGER/BIAM WORLDWIDE PORTFOLIOS TRUST
In the Statement of Additional Information for each of the
Berger/BIAM International Fund, the Berger/BIAM International
Institutional Fund and the Berger/BIAM International CORE Fund
1. Report of Independent Accountants, dated October 7, 1996
2. Statement of Assets and Liabilities of the Berger/BIAM
International Portfolio, as of October 4, 1996
3. Notes to Statement of Assets and Liabilities, dated
October 4, 1996
In Part C of the Registration Statement:
None.
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<PAGE>
(b) EXHIBITS.
The Exhibit Index following the signature pages below is incorporated
herein by reference.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
On the date that this Registration Statement is declared effective, Berger
Associates, Inc. ("Berger Associates"), a Delaware corporation and controlling
person of BBOI Worldwide LLC ("BBOI Worldwide"), will own all of the outstanding
shares of the Registrant, having provided all the initial seed capital to
establish the Registrant. Consequently, Berger Associates will be a control
person of the Registrant. Berger Associates will continue to be a control
person of the Registrant so long as it holds more than 25% of the Registrant's
outstanding shares, as the term "control" is defined in the Investment Company
Act of 1940. So long as the Registrant is controlled by Berger Associates, it
will also be under the control of the corporate parent of Berger Associates,
Kansas City Southern Industries, Inc. ("KCSI"). See "Management and Investment
Advice" in the Prospectus and "Investment Advisor" in the Statement of
Additional Information for more information on KCSI and its affiliates.
Item 26. NUMBER OF HOLDERS OF SECURITIES
The number of record holders of shares of beneficial interest in the
Registrant as of the effective date of this Registration Statement, was as
follows:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SERIES OR FUND NUMBER OF HOLDERS
OF SHARES
- --------------------------------------------------------------------------------
Berger/BIAM International Fund 1
- --------------------------------------------------------------------------------
Berger/BIAM International 1
Institutional Fund
- --------------------------------------------------------------------------------
Berger/BIAM International CORE Fund 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Item 27. INDEMNIFICATION
Article IX, Section 2 of the Trust Instrument for Berger/BIAM
Worldwide Funds Trust (the "Trust") provides for indemnification of certain
persons acting on behalf of the Trust to the fullest extent permitted by the
law. In general, trustees, officers, employees and agents will be indemnified
against liability and against all expenses incurred by them in connection with
any claim, action, suit or proceeding (or settlement thereof) in which they
become involved by virtue of their Trust office, unless their conduct is
determined to constitute willful misfeasance, bad faith, gross negligence or
reckless disregard of
C-2
<PAGE>
their duties, or unless it has been determined that they have not acted in good
faith in the reasonable belief that their actions were in or not opposed to the
best interests of the Trust. The Trust also may advance money for these
expenses, provided that the trustees, officers, employees or agents undertake to
repay the Trust if their conduct is later determined to preclude
indemnification. The Trust has the power to purchase insurance on behalf of its
trustees, officers, employees and agents, whether or not it would be permitted
or required to indemnify them for any such liability under the Trust Instrument
or applicable law, and the Trust has purchased and maintains an insurance policy
covering such persons against certain liabilities incurred in their official
capacities.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISOR
The business of BBOI Worldwide, the investment advisor of the
Portfolio, and Berger Associates, the sole owner of BBOI Worldwide, are
described in the Prospectus in Section 6 and in the Statement of Additional
Information in Section 4 which are included in this Registration Statement.
The business of BIAM, the sub-advisor to the Berger/BIAM International
Portfolio, is also described in Section 6 of the Prospectus and in Section 4 of
the Statement of Additional Information. Information relating to the business
and other connections of the officers and directors of BIAM (current and for the
past two years) is listed in Schedules A and D of BIAM's Form ADV as filed with
the Securities and Exchange Commission (File No. 801-29606, dated June 28,
1996), which information from such schedules is incorporated herein by
reference.
Item 29. PRINCIPAL UNDERWRITER
(a) Investment companies (other than the Registrant) for which the
Registrant's principal underwriter also acts as principal underwriter:
Guinness Flight Investment Funds, Inc.
Jurika & Voyles Mutual Funds
Hotchkis and Wiley Funds
Kayne Anderson Mutual Funds
Masters Concentrated Select Trust
Rainier Investment Management Mutual Funds
RNC Mutual Fund Group
PIC Investment Trust
Professionally Managed Portfolios
- -- Avondale Total Return Fund
- -- Osterweis Fund
- -- Perkins Opportunity Fund
- -- Pro-Conscience Women's Equity Mutual Fund
- -- Trent Equity Fund
- -- Academy Value Fund
- -- Boston Managed Growth Fund
- -- Leonetti Balanced Fund
- -- Lighthouse Growth Fund
- -- U.S. Global Leaders Growth Fund
- -- Harris Bretall Sullivan & Smith Growth Equity Fund
- -- Pzena Focused Value Fund
- -- Titan Financial Services Fund
- -- Matrix Growth Fund
- -- Matrix Emerging Growth Fund
(b) For First Fund Distributors, Inc.:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Name and Principal Positions and Positions and
Business Address Offices with Offices with
Underwriter Registrant
- -------------------------------------------------------------------------------
Robert H. Wadsworth President, None
4455 E. Camelback Treasurer and
Road, Suite 261E Director
Phoenix, AZ 85018
- -------------------------------------------------------------------------------
Eric M. Banhazl Vice President and None
2025 E. Financial Director
Way
Glendora, CA 91741
- -------------------------------------------------------------------------------
Steven J. Paggioli Vice President, None
479 West 22nd Secretary and
Street Director
New York, NY 10011
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's sub-
transfer agent, DST Systems, Inc., P.O. Box 419958, Kansas City,
MO 64141;
(b) Accounting records relating to cash and other money balances;
asset, liability, reserve, capital, income and expense accounts;
portfolio securities; purchases and sales; and brokerage
commissions are maintained by the Registrant's Recordkeeping and
Pricing Agent, Investors Fiduciary Trust Company ("IFTC"),
127 West 10th
C-3
<PAGE>
Street, Kansas City, Missouri 64105. Other records of the
Registrant relating to purchases and sales; the Trust Instrument,
minute books and other trust records; brokerage orders;
performance information and other records are maintained at the
offices of the Registrant at 210 University Boulevard, Suite 900,
Denver, Colorado 80206.
(c) Certain records relating to day-to-day portfolio management of
the Berger/BIAM International Portfolio are kept at Bank of
Ireland Asset Management (U.S.) Limited, 26 Fitzwilliam Street,
Dublin 2, Ireland; or at Bank of Ireland Asset Management (U.S.)
Limited, 2 Greenwich Plaza, Greenwich, Connecticut 06830.
Item 31. MANAGEMENT SERVICES
The Registrant has no management-related service contract which is not
discussed in Parts A and B of this form. See Section 7 of the Prospectus and
Section 5 of the Statement of Additional Information for a discussion of the
Recordkeeping and Pricing Agent Agreement entered into between the Registrant
and IFTC and the Administrative Services Agreements entered into between the
Registrant and BBOI Worldwide, investment advisor to the Registrant.
Item 32. UNDERTAKINGS
(a) Registrant hereby undertakes to file a post-effective amendment,
containing reasonably current financial statements relating to each of the
Berger/BIAM International Fund, the Berger/BIAM International Institutional Fund
and the Berger/BIAM International CORE Fund (which need not be certified) within
four to six months of the later of the effective date of this Registration
Statement or commencement of operations of each such Fund respectively.
(b) The Registrant undertakes to furnish each person to whom a
prospectus is delivered with a copy of Registrant's latest annual report to
shareholders, upon request and without charge.
(c) Registrant undertakes to comply with the following policy with
respect to calling meetings of shareholders for the purpose of voting upon the
removal of any trustee of the Registrant and facilitating shareholder
communications related to such meetings:
1. The trustees will promptly call a meeting of shareholders for the
purpose of voting upon the removal of any trustee of the Registrant when
requested in writing to do so by the record holders of at least 10% of the
outstanding shares of the Registrant.
C-4
<PAGE>
2. Whenever ten or more shareholders of record who have been
shareholders of the Registrant for at least six months, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
1% of the outstanding shares of the Registrant, whichever is less, apply to the
trustees in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request such a meeting, and
deliver to the trustees a form of communication and request which they wish to
transmit, the trustees within 5 business days after receipt of such application
either will (i) give such applicants access to a list of the names and addresses
of all shareholders of record of the Registrant, or (ii) inform such applicants
of the approximate number of shareholders of record and the approximate cost of
mailing the proposed communication and form of request.
3. If the trustees elect to follow the course specified in clause
(ii), above, the trustees, upon the written request of such applicants
accompanied by tender of the material to be mailed and the reasonable expenses
of the mailing, will, with reasonable promptness, mail such material to all
shareholders of record, unless within 5 business days after such tender the
trustees shall mail to such applicants and file with the Securities and Exchange
Commission (the "Commission"), together with a copy of the material requested to
be mailed, a written statement signed by at least a majority of the trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
therein not misleading, or would be in violation of applicable law, and
specifying the basis of such opinion.
4. If the Commission enters an order either refusing to sustain any
of the trustees' objections or declaring that any objections previously
sustained by the Commission have been resolved by the applicants, the trustees
will cause the Registrant to mail copies of such material to all shareholders of
record with reasonable promptness after the entry of such order and the renewal
of such tender.
(d) Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of the Registrant pursuant to the provisions set forth above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liability (other than the payment by the
Registrant of expense incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate
C-5
<PAGE>
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant, Berger/BIAM Worldwide Funds
Trust, has duly caused this amendment to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City and
County of Denver, and State of Colorado, on the 8th day of October, 1996.
BERGER/BIAM WORLDWIDE FUNDS TRUST
(Registrant)
By /s/ Gerard M. Lavin
---------------------------------------
Name: Gerard M. Lavin
----------------------------------
Title: President
---------------------------------
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated for Berger/BIAM Worldwide Funds Trust and on
the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gerard M. Lavin President (Principal October 8, 1996
- --------------------------- Executive Officer)
Gerard M. Lavin and Trustee
C-7
<PAGE>
/s/ Kevin R. Fay Vice President, October 8, 1996
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
/s/ Dennis E. Baldwin* Trustee October 8, 1996
- ---------------------------
Dennis E. Baldwin
/s/ William M.B. Berger* Trustee October 8, 1996
- ---------------------------
William M.B. Berger
/s/ Louis R. Bindner* Trustee October 8, 1996
- ---------------------------
Louis R. Bindner
/s/ Katherine A. Cattanach* Trustee October 8, 1996
- ---------------------------
Katherine A. Cattanach
/s/ Lucy Black Creighton* Trustee October 8, 1996
- ---------------------------
Lucy Black Creighton
/s/ Paul R. Knapp* Trustee October 8, 1996
- ---------------------------
Paul R. Knapp
/s/ Harry T. Lewis, Jr.* Trustee October 8, 1996
- ---------------------------
Harry T. Lewis, Jr.
/s/ Michael Owen* Trustee October 8, 1996
- ---------------------------
Michael Owen
/s/ William Sinclaire* Trustee October 8, 1996
- ---------------------------
William Sinclaire
/s/ Gerard M. Lavin
- ---------------------------
*By: Gerard M. Lavin
Attorney-in-Fact
C-8
<PAGE>
SIGNATURES
Berger/BIAM Worldwide Portfolios Trust has duly caused this amendment
to the Registration Statement on Form N-1A of Berger/BIAM Worldwide Funds Trust
to be signed under the Securities Act of 1933 on its behalf by the undersigned,
thereunto duly authorized, in the City and County of Denver, and State of
Colorado, on the 8th day of October, 1996.
BERGER/BIAM WORLDWIDE PORTFOLIOS TRUST
(Registrant)
By /s/ Gerard M. Lavin
---------------------------------------
Name: Gerard M. Lavin
----------------------------------
Title: President
---------------------------------
This amendment to the Registration Statement of Berger/BIAM Worldwide
Funds Trust has been signed below under the Securities Act of 1933 by the
following persons in the capacities indicated for Berger/BIAM Worldwide
Portfolios Trust and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Gerard M. Lavin President (Principal October 8, 1996
- --------------------------- Executive Officer)
Gerard M. Lavin and Trustee
/s/ Kevin R. Fay Vice President, October 8, 1996
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
C-9
<PAGE>
/s/ Dennis E. Baldwin* Trustee October 8, 1996
- ---------------------------
Dennis E. Baldwin
/s/ William M.B. Berger* Trustee October 8, 1996
- ---------------------------
William M.B. Berger
/s/ Louis R. Bindner* Trustee October 8, 1996
- ---------------------------
Louis R. Bindner
/s/ Katherine A. Cattanach* Trustee October 8, 1996
- ---------------------------
Katherine A. Cattanach
/s/ Lucy Black Creighton* Trustee October 8, 1996
- ---------------------------
Lucy Black Creighton
/s/ Paul R. Knapp* Trustee October 8, 1996
- ---------------------------
Paul R. Knapp
/s/ Harry T. Lewis, Jr.* Trustee October 8, 1996
- ---------------------------
Harry T. Lewis, Jr.
/s/ Michael Owen* Trustee October 8, 1996
- ---------------------------
Michael Owen
/s/ William Sinclaire* Trustee October 8, 1996
- ---------------------------
William Sinclaire
/s/ Gerard M. Lavin
- ---------------------------
*By: Gerard M. Lavin
Attorney-in-Fact
C-10
<PAGE>
EXHIBIT INDEX
N-1A EDGAR
Exhibit Exhibit
No. No. Name of Exhibit
- ------ -------- -----------------
+ Exhibit 1 EX-99.B1 Trust Instrument
+ Exhibit 2 EX-99.B2 Bylaws
Exhibit 3 Not applicable
Exhibit 4 Not applicable
Exhibit 5 Not applicable
+ Exhibit 6 EX-99.B6 Distribution Agreement between Berger/BIAM
Worldwide Funds Trust and First Fund
Distributors, Inc.
Exhibit 7 Not applicable
+ Exhibit 8 EX-99.B8 Custody Agreement between IFTC and
Berger/BIAM Worldwide Funds Trust
* Exhibit 9.1.1 EX-99.B9.1.1 New Account Application
+ Exhibit 9.2.1 EX-99.B9.2.1 Form of Administrative Services Agreement
for Berger/BIAM International Fund
+ Exhibit 9.2.2 EX-99.B9.2.2 Form of Administrative Services Agreement
for Berger/BIAM International
Institutional Fund
+ Exhibit 9.2.3 EX-99.B9.2.3 Form of Administrative Services Agreement
for Berger/BIAM International CORE Fund
+ Exhibit 9.2.4 EX-99.B9.2.4 Form of Sub-Administration Agreement
between BBOI Worldwide LLC and Berger
Associates, Inc.
+ Exhibit 9.3 EX-99.B9.3 Form of Recordkeeping and Pricing Agent
Agreement
+ Exhibit 9.4 EX-99.B9.4 Form of Agency Agreement
* Exhibit 10 EX-99.B10 Opinion and consent of Davis, Graham &
Stubbs LLP
* Exhibit 11 EX-99.B11 Consent of Price Waterhouse LLP
Exhibit 12 Not applicable
* Exhibit 13 EX-99.B13 Investment Letter from Initial Stockholder
* Exhibit 14.1 EX-99.B14.1 Individual Retirement Account Application
and Related Documents
* Exhibit 14.2 EX-99.B14.2 Investment Company Institute Prototype
Money Purchase Pension and Profit Sharing
Plan Basic Document #01 and Related
Documents
* Exhibit 14.3 EX-99.B14.3 403(b)(7) Plan Custodial Account Agreement
and Related Documents
+ Exhibit 15 EX-99.B15 Rule 12b-1 Plan for Berger/BIAM
International Fund
<PAGE>
Exhibit 16 Schedule for Computation of Performance
Data
** Exhibit 17.1 Financial Data Schedule for Berger/BIAM
International Fund
** Exhibit 17.2 Financial Data Schedule for Berger/BIAM
International Institutional Fund
** Exhibit 17.3 Financial Data Schedule for Berger/BIAM
International CORE Fund
Exhibit 18 Not Applicable
- ---------------------------
+ Previously filed with Pre-Effective Amendment No. 1 to Registrant's
Registration Statement on Form N-1A, filed August 19, 1996.
* Filed herewith.
** Not required to be filed until financial statements for Fund are required.
<PAGE>
EXHIBIT 9.1.1
NEW ACCOUNT APPLICATION
THE BERGER FUNDS
[LOGO]
PID # For assistance call: (800) 551-5849
------------------------
STEP 1 REGISTER YOUR ACCOUNT (PLEASE CHOOSE ONE)
PLEASE TYPE OR PRINT CLEARLY.
<TABLE>
<S> <C> <C>
[ ] INDIVIDUAL ACCOUNT
------------------------------------------ --------------------------------------
Your Name: FIRST MIDDLE LAST Your Social Security Number
[ ] JOINT OWNER
------------------------------------------
Joint Owner's Name: FIRST MIDDLE LAST
[ ] GIFT/TRANSFER TO MINOR
------------------------------------------ --------------------------------------
Custodian's Name: FIRST MIDDLE LAST Minor's Social Security Number
(LIST ONE NAME ONLY
FOR EACH LINE.)
------------------------------------------ --------------------------------------
Minor's Name: FIRST MIDDLE LAST under the ___ Uniform Gifts/Transfers
(State) To Minors Act
[ ] TRUST
------------------------------------------ --------------------------------------
Trustee(s)'s Name: Date of Trust
------------------------------------------ --------------------------------------
Name of Trust Agreement Trust's Taxpayer Identification Number
[ ] CORPORATE/OTHER
------------------------------------------ --------------------------------------
Name of Corporation or Other Entity Taxpayer Identification Number
(PLEASE INCLUDE A
CORPORATE RESOLUTION.)
------------------------------------------
Type of Entity
STEP 2 YOUR MAILING ADDRESS
( ) ( )
- ------------------------------------------------------------------ ---------------------------------------
Street Address Apt./Suite* Daytime Telephone Evening Telephone
- ------------------------------------------------------------------ ---------------------------------------
City State Zip Electronic Mail Address
CITIZENSHIP: [ ] US Citizen [ ] Non-Resident Alien ( )
[ ] Resident Alien Country of Tax Residency ---------------------------------------
--------- Fax No.
STEP 3 FUND SELECTION
FUND NAME (FUND CODE) MINIMUM INITIAL INVESTMENT YOUR INITIAL AUTOMATIC INVESTMENT PLAN
INVESTMENT $50 MINIMUM PER BERGER FUND,
THE MINIMUM WITH THE ESTABLISHMENT $100 MINIMUM PER CAT PORTFOLIO
OF AN AUTOMATIC MONTHLY INVESTMENT
PLAN IS $50. CREDIT FOR THE
INTERNATIONAL FUND (MINIMUM-$2,000)
AND THE CASH ACCOUNT TRUST PORTFOLIOS
(MINIMUM-$1,000).
BERGER 100 FUND (43).............. $500 .............................. $ $
------------- ------------
BERGER GROWTH AND INCOME
FUND (44) ....................... $500 .............................. $ $
------------- ------------
BERGER SMALL COMPANY GROWTH
FUND (345) ...................... $500 .............................. $ $
------------- ------------
BERGER NEW GENERATION
FUND (344) ...................... $1,000 ........................... $ $
------------- ------------
BERGER/BIAM INTERNATIONAL FUND
(349) ........................... $2,000 ........................... $ $
------------- ------------
CASH ACCOUNT TRUST (CAT)* (CHECKWRITING IS AVAILABLE - COMPLETE STEP 8)
MONEY MARKET PORTFOLIO (346) ..... $1,000 ........................... $ $
------------- ------------
GOVERNMENT SECURITIES
PORTFOLIO (347) ................ $1,000 ........................... $ $
------------- ------------
TAX-EXEMPT PORTFOLIO (348) ....... $1,000 ........................... $ $
------------- ------------
- -----------------------
FOR YOUR AUTOMATIC INVESTMENT PLAN PLEASE CHECK ONE OR BOTH OF THE
FOLLOWING WITHDRAWAL DATES:
[ ] 5th day of month
[ ] 20th day of month
(Step 6 must be completed)
*CASH ACCOUNT TRUST IS A SEPARATELY MANAGED, UNAFFILIATED
MONEY MARKET MUTUAL FUND. USE OF THE CASH ACCOUNT TRUST
AS AN INVESTMENT DIRECTLY OR BY EXCHANGE FROM YOUR BERGER
FUNDS DOES NOT CONSTITUTE AN OFFERING OR RECOMMENDATION
OF THE CAT PORTFOLIOS BY THE BERGER FUNDS OR THEIR
ADVISORS.
ENCLOSE YOUR CHECK MADE PAYABLE TO: THE BERGER FUNDS
STEP 4 DISTRIBUTION OPTIONS
ALL INCOME AND CAPITAL GAINS DISTRIBUTIONS WILL BE REINVESTED UNLESS
YOU CHECK THE BOX(ES) BELOW:
[ ] Pay all income in cash
[ ] Pay all capital gains in cash
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
STEP 5 TELEPHONE TRANSACTION / ON-LINE COMPUTER ACCESS PRIVILEGES
The privileges below allow you to make telephone/on-line purchases, exchanges
and redemptions, subject to the applicable minimums and maximums that are
disclosed in the prospectus. (STEP 6 MUST BE COMPLETED.)
Telephone Transaction Privileges are available on all accounts unless you
specifically decline them below.
[ ] I DECLINE THE USE OF TELEPHONE TRANSACTION PRIVILEGES.
On-line Computer Access Privileges are available on all accounts unless
you specifically decline them below.
[ ] I DECLINE THE USE OF ON-LINE COMPUTER ACCESS.
All telephone and on-line transactions are recorded and written confirmations
indicating the details of all telephone and on-line transactions will be
promptly sent to the shareholder of record. Prior to placing an order the
shareholder may be required to provide certain identifying information. See
the Prospectus for further information.
STEP 6 BANK INFORMATION
YOU MUST COMPLETE THIS STEP IF YOU SELECTED THE AUTOMATIC INVESTMENT PLAN IN
STEP 3. IF YOU DID NOT CHECK A BOX IN STEP 5 BY COMPLETING THE BANK
INFORMATION BELOW, YOU MAY SETTLE PURCHASE AND REDEMPTION TRANSACTIONS MADE
BY TELEPHONE OR ON-LINE VIA COMPUTER ACCESS BY USING WIRE OR ELECTRONIC FUNDS
TRANSFER.
- ---------------------------------------------------------
Name of Bank Name(s) on Bank Account
- ---------------------------------------------------------
Street Address Bank Account Number
- ---------------------------------------------------------
City State Zip
- ---------------------------------------------------------
Co-signer Signature (if applicable) Date
Your bank account information must be on file in order to utilize the
Automatic Investment Plan, or to settle by wire or electronic funds transfer
any purchase or redemption transactions made by telephone or by on-line
computer access. The account name(s) at left must exactly match at least one
name in Step 1. Any co-signer of your checking or savings account who is not
a joint owner of the funds must authorize these services by signing at left.
Checking Acct. [ ] Savings Acct. [ ]
PLEASE ATTACH A VOIDED CHECK OR SAVINGS DEPOSIT SLIP.
STEP 7 YOUR SIGNATURE
All of the undersigned represent that they have the authority and legal
capacity to purchase mutual fund shares, all are of legal age in their state
and believe each investment is suitable for themselves. All of the
undersigned have received and read the Prospects for the investment selected,
agree to its terms and agree that by signing below (a) their account will
have exchange privileges with other Berger Funds and the portfolios of the
Cash Account Trust ("CAT") and that all information provided in the above
steps will apply to any Fund or CAT portfolio into which their shares may be
exchanged; (b) they hereby ratify any instructions given on this account and
any account into which they exchange related to the above steps and agree
that neither the Funds, CAT portfolios. Berger Associates nor BBOI Worldwide
will be liable for any loss, cost or expense for acting upon such
instructions (by telephone, computer on-line access or writing) believed to
be genuine and in accordance with the procedures described in the Prospectus;
and (c) their responsibility is to read the Prospectus of any Fund or CAT
portfolio into which they exchange.
Under penalties of perjury, I certify:
(1) The number shown on this form is my correct social security or taxpayer
identification number and (2) I am not subject to backup withholding
because: (a) I am exempt from backup withholding, or (b) I have not been
notified by the Internal Revenue Service (IRS) that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject to
backup withholding.
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION
OF THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
[ ] Check this box ONLY if the IRS has notified you that you are subject to
backup withholding.
- ------------------------------------------------------------------------------
Signature of Owner, Trustee or Custodian Date
(EXACTLY THE SAME AS STEP 1)
- ------------------------------------------------------------------------------
Signature of Joint Owner, (IF APPLICABLE) Date
(EXACTLY THE SAME AS STEP 1)
- --------------------------------------------------------------------------------
STEP 8 CHECKWRITING FOR CASH ACCOUNT TRUST (CAT) PORTFOLIO INVESTORS ONLY
If you would like the ability to write checks against your Cash Account Trust
Portfolios, complete this step:
- ---------------------------------- ---------------------------------------
First Middle Last YOUR SIGNATURE
YOUR NAME (EXACTLY THE SAME AS STEP 1)
- ---------------------------------- ---------------------------------------
First Middle Last JOINT OWNER'S SIGNATURE (IF APPLICABLE)
JOINT OWNER'S NAME (EXACTLY THE SAME AS STEP 1)
[ ] CHECK HERE IF ONLY ONE SIGNATURE IS REQUIRED ON CHECKS.
[ ] CHECK HERE IF BOTH SIGNATURES ARE REQUIRED ON CHECKS.
If neither box is checked, all
checks will require both signatures.
INSTITUTIONAL ACCOUNTS
AFFIX SIGNATURE GUARANTEE STAMP
- ---------------------------------------------------------------------------
Signature Guaranteed by
- ---------------------------------------------------------------------------
Authorized Signature
By signing the signature line in Step 8, the signatory(ies) agree(s) to be
subject to the terms and conditions, guidelines and rules, as now in effect
and as amended from time to time, that pertain to the use of redemption
checks of the Fund(s) applicable to their account; therefore, all registered
owners must sign the signature line in Step 8. All checks will require both
signatures unless otherwise indicated on the face of this form. Each
signatory guarantees the genuineness of the other's signature on this form.
SIGNATURE GUARANTEE (CAT ONLY)
Institutional account please provide a certified copy of your corporate
resolution and affix signature guarantees. Signature guarantee must be
provided by a commercial bank, trust company, member of national
securities exchange, or savings and loan association. A notary public is
not an acceptable guarantor.
FOR FASTEST SERVICE POSSIBLE
FOR THE FASTEST SERVICE POSSIBLE, PLEASE MAKE SURE YOU HAVE COMPLETED EACH
OF THESE ITEMS:
A.) Include your Social Security or Tax ID number in Step 1.
B.) Fill in the amount invested in Step 3.
C.) Attach a voided check if you selected the Automatic Investment Plan in
Step 3, or Telephone Transaction Privileges or On-line Computer Access
in Step 5 and you wish to settle purchase or redemption transactions by
wire or electronic funds transfer.
D.) Sign the form in Step 7 exactly the same as in Step 1.
E.) Complete checkwriting Step 8, if applicable.
F.) Enclose your check made payable to: THE BERGER FUNDS.
G.) Read all the terms applicable to the services you desire.
H.) Return this application in the postage paid envelope enclosed or to:
THE BERGER FUNDS
P.O. Box 419958
Kansas City, MO 64141-6958
- --------------------------------------------------------------------------------
<PAGE>
DAVIS, GRAHAM & STUBBS LLP
A Limited Liability Partnership
Attorneys at Law
Suite 4700
370 Seventeenth Street
Denver, Colorado 80202
Telephone 303-892-9400
Facsimile 303-893-1379
October 8, 1996
Berger/BIAM Worldwide Funds Trust
210 University Blvd., Suite 900
Denver, Colorado 80206
Ladies and Gentlemen:
We have acted as counsel to Berger/BIAM Worldwide Funds Trust, a Delaware
business trust (the "Trust"), and are providing this opinion in connection with
the registration by the Trust of shares of beneficial interest, $.01 par value
(the "Shares"), described in the Registration Statement on Form N1-A of the
Trust (1933 Act File No. 333-05677; 1940 Act File No. 811-07669), as initially
filed with the Securities and Exchange Commission on June 11, 1996, and as
amended on or prior to the date hereof (the "Registration Statement").
In such connection, we have examined the Trust's Trust Instrument and
Bylaws, the proceedings of its Trustees relating to the authorization, issuance
and proposed sale of the Shares, and considered such other records and documents
and such factual and legal matters as we deemed appropriate for purposes of this
opinion.
Based on the foregoing, it is our opinion that the Shares have been duly
authorized and, when sold as contemplated in the Registration Statement, will be
validly issued, fully paid and non-assessable Shares of the Trust.
We hereby consent to all references to this firm in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute a consent under Section 7 of the
Securities Act of 1933, and in consenting to the references to our firm in the
Registration Statement, we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under Section 7 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
DAVIS, GRAHAM & STUBBS LLP
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statements of Additional Information
constituting part of this Pre-Effective Amendment No. 2 to the registration
statement on Form N-1A (the "Registration Statement") of our reports dated
October 7, 1996, relating to the statements of assets and liabilities of
Berger/BIAM International Fund, Berger/BIAM International Institutional Fund,
Berger/BIAM International CORE Fund and Berger/BIAM International Portfolio
which appear in such Statements of Additional Information and to the
incorporation by reference of our reports into the Prospectuses which constitute
parts of this Registration Statement. We also consent to the reference to us
under the heading "Additional Information" in such Statements of Additional
Information.
PRICE WATERHOUSE LLP
Denver, Colorado
October 7, 1996
<PAGE>
SUBSCRIPTION AGREEMENT FOR SHARES
OF THE BERGER/BIAM WORLDWIDE FUNDS TRUST
The undersigned hereby subscribes for the purchase of shares of beneficial
interest of each of the Berger/BIAM International Fund, the Berger/BIAM
International Institutional Fund and the Berger/BIAM International CORE Fund,
each a series ("Fund") of Berger/BIAM Worldwide Funds Trust (the "Trust"), at
the subscription price of $10.00 per share (the "Shares"), as follows:
Berger/BIAM International Fund 1,000 shares
Berger/BIAM International Institutional Fund 3,000 shares
Berger/BIAM International CORE Fund 7,000 shares
Submitted herewith to the Trust or its transfer agent is consideration for
the Shares in the aggregate amount of $110,000, consisting of $10,000 for the
Shares of the Berger/BIAM International Fund, $30,000 for the Shares of the
Berger/BIAM International Institutional Fund and $70,000 for the Shares of the
Berger/BIAM International CORE Fund.
The undersigned hereby represents to the Trust that the Shares are being
acquired by the undersigned solely for investment, for the sole account of the
undersigned, and not with a view to distribution within the meaning of the
Securities Act of 1933 (the "Act") and the rules and regulations thereunder.
The undersigned further hereby represents to the Trust, as an inducement for the
Shares to be issued to the undersigned, that the present and anticipated
financial position of the undersigned permits it to purchase the Shares and to
hold them for investment purposes and that the undersigned has no present
intention to redeem or resell such Shares. The undersigned is thoroughly
familiar with the proposed business of the Trust and has made all investigations
which it deems necessary or desirable in connection with this purchase. The
undersigned is headquartered in the State of Colorado. The undersigned has been
advised that the availability of the exemption from registration under the
Securities Act of 1933 relied upon by the Trust in issuing these Shares is
dependent in part upon the truth of the foregoing representations.
Prior to making a commitment to purchase the Shares, the Trust has informed
the undersigned: (i) that the Shares are not registered under the Act and may
not be resold unless they are subsequently so registered or unless an exemption
from such registration is available; (ii) that Rule 144 under the Act is
presently not applicable to a resale of the Shares; (iii) that any certificate
representing the Shares may bear a legend in customary form drawing attention to
the restrictions on its transferability.
IN WITNESS WHEREOF, the undersigned has executed this Subscription
Agreement effective as of the 4th day of October, 1996.
BERGER ASSOCIATES, INC.
By: Kevin R. Fay
------------------------
Name: Kevin R. Fay
Title: Vice President-Finance and
Administration
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EXHIBIT 14.1
IRA ACCOUNT APPLICATION
THE BERGER FUNDS
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Use this application to open an IRA account. For assistance call: (800) 551-5849
STEP 1 REGISTER YOUR ACCOUNT
PLEASE TYPE OR PRINT CLEARLY
NAME
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First Middle Last Your Social Security Number
ADDRESS
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Street Apt/Suite # Date of Birth Month/ Day / Year
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City State Zip Daytime Phone Evening Phone
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CITIZENSHIP / / US CITIZEN / / NON-RESIDENT ALIEN Electronic Mail Address
/ / RESIDENT ALIEN COUNTRY OF TAX RESIDENCY ( )
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Fax No.
STEP 2 BENEFICIARY DESIGNATION
IF THE BENEFICIARY IS A TRUST, PLEASE INDICATE THE TRUST'S NAME AND ADDRESS, THE DATE OF THE TRUST, AND THE TRUSTEE'S NAME. IF
YOU WISH TO DESIGNATE ADDITIONAL BENEFICIARIES, PLEASE ATTACH INSTRUCTIONS. PERCENT OF BENEFIT FOR EACH IRA'S PRIMARY OR CONTINGENT
BENEFICIARIES MUST EACH ADD UP TO 100%.
YOUR PRIMARY BENEFICIARIES
I HEREBY DESIGNATE THE FOLLOWING PERSON(S) AS PRIMARY BENEFICIARY(IES) TO RECEIVE PAYMENT OF THE VALUE OF MY IRA ACCOUNT UPON MY
DEATH:
NAME #1
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First Middle Last Social Security Number
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Relationship % of benefit Date of Birth Month/ Day / Year
NAME #2
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First Middle Last Social Security Number
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Relationship % of benefit Date of Birth Month/ Day / Year
YOUR CONTINGENT BENEFICIARY(IES)
IF NO PRIMARY BENEFICIARY(IES) IS (ARE) LIVING AT THE TIME OF MY DEATH, I HEREBY SPECIFY THAT THE BALANCE BE DISTRIBUTED TO MY
CONTINGENT BENEFICIARY(IES) BELOW:
NAME
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First Middle Last Social Security Number
Address
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Relationship % of benefit Date of Birth Month/ Day / Year
ELECTING A BENEFICIARY OTHER THAN YOUR SPOUSE
This section should be reviewed if either the Trust or the residence of the accountholder is located in a community or martial
property state and the accountholder is married and is designating a beneficiary other than the spouse. It is the accountholder's
responsibility to determine if this section applies. The accountholder may need to consult with legal counsel. Neither the
Custodian nor the Sponsor will be liable for any consequences relating from a failure of the accountholder to provide proper
spousal consent.
I am the spouse of the above-named accountholder. I acknowledge that I have received a full and reasonable disclosure of my
spouse's property and financial obligations. Due to any possible consequences of giving up my community property interest in this
IRA. I have been advised to see a tax professional or legal advisor. I hereby give the account holder any interest I have in the
funds or property deposited in this IRA and consent to the beneficiary designation(s) indicated above. I assume full
responsibility for any adverse consequences that may result. No tax or legal advice was given to me by the Custodian.
SIGNATURE OF SPOUSE
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DATE
SIGNATURE OF WITNESS FOR SPOUSE
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DATE
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STEP 3 TYPE OF IRA
PLEASE CHECK ONE SELECTION ONLY:
/ / REGULAR IRA. Annual IRA contribution up to a maximum of $2,000 (per tax year). For tax year: 19___.
/ / SPOUSAL IRA. A special Spousal IRA can be opened for a spouse earning less than $250. The combined total of the two
contributions can not exceed $2,250, but can be split between the two IRAs as you wish, so long as no more than $2,000 is
contributed to one IRA. For tax year: 19___.
/ / SEP-IRA. Simplified employee pension plan for tax year: 19___.
/ / DIRECTOR TRANSFER OF EXISTING IRA. Authorizes The Berger Funds to transfer your existing IRA from another custodian to The
Berger Funds. You must also complete the IRA transfer forms from pages 12 and 13 of the IRA Disclosure
Statement and return the forms with this application.
/ / ROLLOVER OF EXISTING IRA. IRA to be funded with money withdrawn from an IRA at another custodian and to be reinvested at
The Berger Funds. Please seek tax advice before combining assets that were previously in a qualified plan with regular IRA
investments.
/ / DIRECT ROLLOVER IRA. IRA to be funded with money accumulated in an employer's retirement plan that is eligible for rollover.
Please seek tax advice before combining with a regular IRA. Method of funding:
/ / Enclosed is a check made payable to The Berger Funds.
/ / A check will be sent directly to The Berger Funds by my employer.
STEP 4 FUND SELECTION
FUND NAME (FUND CODE) MINIMUM INITIAL INVESTMENT YOUR INITIAL AUTOMATIC INVESTMENT PLAN
INVESTMENT $50 MINIMUM PER BERGER FUND,
THE MINIMUM WITH THE ESTABLISHMENT $100 MINIMUM PER CAT PORTFOLIO
OF AN AUTOMATIC MONTHLY INVESTMENT
PLAN OF $50 EXCEPT FOR THE INTERNA-
TIONAL FUND (MINIMUM...$2,000) AND THE
CASH ACCOUNT TRUST PORTFOLIOS
(MINIMUM...$1,000)
Berger 100 Fund (43).................... $500 .......................... $ $
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Berger Growth and Income Fund (44)....... $500 .......................... $ $
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Berger Small Company Growth Fund (345)... $500 .......................... $ $
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Berger New Generation Fund (344)......... $1,000 ........................ $ $
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Berger /BIAM International Fund (349).... $2,000 ........................ $ $
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Cash Account Trust (CAT)*
Money Market Portfolio (346)............. $1,000 ........................ $ $
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Government Securities Portfolio (347).... $1,000 ........................ $ $
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FOR YOUR AUTOMATIC INVESTMENT PLAN
PLEASE CHECK ONE OR BOTH OF THE FOLLOWING WITHDRAWAL DATES:
/ / 5TH DAY OF MONTH
/ / 20TH DAY OF MONTH
(STEP 6 MUST BE COMPLETED)
*CASH ACCOUNT TRUST IS A SEPARATELY MANAGED, UNAFFILIATED MONEY MARKET MUTUAL
FUND. USE OF CASH THE ACCOUNT TRUST AS AN INVESTMENT DIRECTLY OR BY EXCHANGE
FROM YOUR BERGER FUNDS DOES NOT CONSTITUTE AN OFFERING OR RECOMMENDATION OF
THE CAT PORTFOLIOS BY THE BERGER FUNDS OR THEIR ADVISORS.
STEP 5 TELEPHONE TRANSACTION/ON-LINE COMPUTER ACCESS PRIVILEGES
The privileges below allow you to make telephone/on-line purchases and
exchanges, subject to the applicable minimum and maximums that are disclosed
in the Prospectus. (STEP 6 MUST BE COMPLETED.)
Telephone Transaction Privileges are available on all accounts unless
you specifically decline them below.
/ / I DECLINE THE USE OF TELEPHONE TRANSACTION PRIVILEGES.
On-line Computer Access Privileges are available on all accounts unless you
specifically decline them below.
/ / I DECLINE THE USE OF ON-LINE COMPUTER ACCESS.
All telephone and on-line transactions are recorded and written confirmations
indicating the details of all telephone and on-line transactions will be
promptly sent to the shareholder of record. Prior to placing an order the
shareholder may be required to provide certain identifying information.
See the Prospectus for further information.
STEP 6 BANK INFORMATION
YOU MUST COMPLETE THIS STEP IF YOU SELECTED THE AUTOMATIC INVESTMENT PLAN IN
STEP 4. IF YOU DID NOT CHECK A BOX IN STEP 5, BY COMPLETING THE BANK
INFORMATION BELOW, YOU MAY SETTLE PURCHASE TRANSACTIONS MADE BY TELEPHONE OR
ON-LINE VIA COMPUTER ACCESS BY USING WIRE OR ELECTRONIC FUNDS TRANSFER.
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Name of Bank
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Street Address
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Name(s) on Bank Account Bank Account Number
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City State Zip
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Co-signer Signature (if applicable) Date
Your bank account information must be on file in order to utilize the
Automatic Investment Plan, or to settle by wire or electronic funds transfer
any purchase transactions made by telephone or by on-line computer access.
The account name(s) at left must exactly match the name in Step 1. Any
co-signer of your checking must authorize these services by signing at left.
As a convenience to me, you are hereby authorized to pay and charge to my
checking or savings account debits drawn on my account as indicated in the
Automatic Investment Plan section of Step (4) (if applicable).
The authority is to remain in effect until revoked by me. Until you actually
receive such notice. I agree you shall be fully protected in honoring any
such debit. I further agree that if any such debit be dishonored, whether with
or without cause and whether intentionally or inadvertently, you shall be
under no liability whatsoever.
Checking Acct. / / Savings Acct. / /
PLEASE ATTACH A VOIDED CHECK OR SAVINGS DEPOSIT SLIP.
STEP 7 SIGNATURE
PLEASE SIGN AT THE END OF THIS SECTION. WE MUST HAVE A SIGNATURE TO OPEN THE
ACCOUNT. BY SIGNING THE APPLICATION, THE UNDERSIGNED:
- - Establishes an Individual Retirement Account pursuant to the Internal
Revenue Code of 1986, as amended, and in accordance with all the terms of the
Form 5305-A Individual Retirement Custodial Account, together with the
Custodial Agreement incorporated therein.
- - Certifies that all contributions to the IRA will meet the requirements of
the Internal Revenue Code governing such contribution.
- - Appoints Investors Fiduciary Trust Company, or its successors, as Custodian
on the account.
- - Agrees to promptly give to the Custodian the instructions necessary to
enable the Custodian to carry out its duties under the Custodial Agreement.
- - States that he/she has received and read the Prospectus for the investment
selected and agrees that this account will be subject to the Custodial
Agreement and IRA Disclosure Statement as ameneed from time to time.
- - States that he/she has the authority and legal capaity to purchase mutual
fund shares, is of legal age in his/her state and believes each investment is
suitable for him/her.
- - Hereby ratifies any instructions given on this account and any account into
which he/she exchanges related to the above items and agrees that neither the
Funds, the CAT portfolios, Berger Associates, BBOI Worldwide, nor Investors
Fiduciary Trust Company will be liable for any loss, cost or expense for
acting upon such instructions (by telephone, computer on-line access or
writing) belived to be genuine and in accordance with the procedures
described in the Prospectus.
- - Acknowledges his/her responsibility to read the Prospectus of any Fund or
CAT portfolio into which he/she exchanges.
- - Understands that the annual IRA maintenance fee of $12 per Fund account
just be paid each year or it will be collected by redeeming sufficient shares
from each Fund account at the end of the year or upon the closing of your
account. The Berger Funds may change the fee schedule from time to time, as
provided in the Custodial Agreement.
- - Understands that if he/she chooses not to designate any beneficiary(ies),
the beneficiary will be his/her estate.
UNDER PENALTIES OF PERJURY, I CERTIFY THAT THE NUMBER SHOWN ON THIS FORM IS
MY CORRECT SOCIAL SECURITY NUMBER.
SIGNATURE OF DEPOSITOR
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Date
RETURN THIS APPLICATION ALONG WITH YOUR CHECK MADE PAYABLE TO THE BERGER
FUNDS IN THE POSTAGE PAID ENVELOPE ENCLOSED OR TO:
Investors Fiduciary Trust Company - c/o Berger Funds - P.O. Box 419958 -
Kansas City, MO 64141-6958
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DISCLOSURE STATEMENT
CUSTODIAL ACCOUNT AGREEMENT
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Thank you for considering the Berger Funds for your retirement account. Your
account is important to us and we welcome the opportunity to assist you in
achieving your investment goals.
Please follow the instructions below carefully.
1. Fill out the front and back of form 5305-A
AND RETAIN THIS FORM FOR YOUR RECORDS. Page 7
In addition, if this is a transfer from another IRA, it will be necessary to
complete the following forms as well:
2. IRA Transfer letter. Page 12
3. Notice of Transfer to Berger Fund IRA. Page 13
After all the appropriate forms have been completed and signed by the
applicant, please forward to Investors Fiduciary Trust Co., c/o Berger Funds,
P.O. Box 419958, Kansas City, MO 64141 in the enclosed postage paid envelope.
If you have any questions regarding these forms or the funds, please do not
hesitate to call us at 1-800-551-5849.
Please read the prospectus carefully before investing.
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INDIVIDUAL RETIREMENT ACCOUNT DISCLOSURE STATEMENT
The following information is provided to you in accordance with the
requirements of the Internal Revenue Service Code (the "Code") and Treasury
regulations and should be reviewed in conjunction with the Individual
Retirement Custodial Account Agreement (the "Custodial Agreement"), the
Application for your IRA (the "Application"), and the prospectus for the
mutual fund(s) selected on the Application, that are allowable investments
for your IRA. Cash Account Trust (CAT) is a separately managed, unaffiliated
money market mutual fund. Use of the Cash Account Trust as an investment
directly or by exchange for your Berger Funds does not constitute an offering
or recommendation of this fund by the Berger Funds or their advisor. The
provisions of the Custodial Agreement, Appli-cation and prospectus govern in
any instance where the Disclosure Statement is incomplete or appears to
conflict. This Disclosure Statement provides a non-technical summary of the
law. Please consult with your tax advisor for more complete information and
refer to IRS Publication 590.
1. IRA STATUTORY REQUIREMENTS
An IRA is a trust or custodial account established for the exclusive benefit
of you and your beneficiaries. Current law requires that your IRA agreement
be in writing and that it meet the following requirements:
A. All contributions must be in cash and, for any taxable year, cannot
exceed 100% of your compensation or $2,000, whichever is less, unless the
contribution is a rollover contribution or an employer contribution to a
simplified employee pension plan ("SEP").
B. The custodian or trustee must be a bank or other institution or person
that is approved by the Internal Revenue Service to administer your IRA
in accordance with current tax laws.
C. None of your IRA assets may be invested in life insurance contracts or
commingled with the assets of other people except in a common trust fund
or common investment fund.
D. Your interest in your IRA account is non-forfeitable.
E. Distribution from your IRA must be in accordance with certain minimum
distribution rules, which are explained in Article 7 below.
2. RIGHT TO REVOKE
You may revoke your IRA at any time within seven days of the time your
Application is signed. To revoke your IRA, mail or deliver a written notice
stating "I hereby elect to revoke my Berger Fund(s) IRA." Sign your name
exactly as it appears on your Application, include your social security
number, and mail the notice to:
Investors Fiduciary Trust Company (IFTC)
c/o Berger Funds
P.O. Box 419958
Kansas City, MO 64141
Your notice will be considered mailed on the date of postmark, or the date of
certification or registration if it is sent by certified or registered mail.
When IFTC receives the proper notice of revocation, you will be entitled
to a refund of your full IRA contribution, without any adjustment for
expenses or market fluctuations. If you have any questions concerning your
right of revocation, please call IFTC during regular business hours at
1-800-551-5849.
3. ELIGIBILITY
You may make regular contributions to an IRA if you receive compensation from
employment, earnings from self-employment, or alimony, and you have not
reached age 70 1/2 by the end of the tax year for which the contribution is
made. In addition, if you are married and file a joint tax return, you may
make contributions to an IRA for your spouse whether or not your spouse
receives compensation. You may make a rollover contribution to an IRA if you
have received an eligible rollover distribution from a qualified retirement
plan or tax sheltered annuity or an eligible distribution from another IRA
and elect rollover treatment within 60 days. You may also make a
trustee-to-trustee transfer from another IRA. Finally, your employer may
contribute to your IRA, and if your employer sponsors a simplified employee
pension ("SEP"), your employer can make contributions to a SEP/IRA on your
behalf.
4. CONTRIBUTIONS
A. REGULAR CONTRIBUTIONS
You may contribute each year up to $2,000 or 100% of your compensation,
whichever is less, to your IRA. If you also establish a spousal IRA for your
spouse, you may contribute up to $2,250 or 100% of your compensation, if
less, which may be split between the two IRAs as you choose, provided that no
more than $2,000 may be contributed to either your IRA or the spousal IRA. If
your spouse has compensation in excess of $250, you and your spouse can make
a larger total contribution if you each contribute to a regular IRA. If your
employer contributes to your IRA, the contribution is treated as compensation
paid to you, whether or not the contribution is deductible, unless the
contribution is made under a SEP (see below). Compensation for these purposes
means wages, salaries, professional fees, or other amounts derived from or
received for personal services actually rendered. It includes
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earned income from self employment and alimony or separate maintenance
payments includable in income. It does not include pension or annuity
payments or deferred compensation.
B. TIME FOR MAKING REGULAR CONTRIBUTIONS
You may make regular contributions to your IRA and/or your spousal IRA
anytime during a year, up to and including the due date for filing your tax
return for the year (without extensions). No contributions may be made to an
IRA for the calendar year in which you reach age 70 1/2 or later years. No
regular contributions to a spousal IRA may be made for years in which your
spouse is age 70 1/2 or older.
C. DEDUCTIBILITY
Regular IRA contributions are fully deductible unless you or your spouse are
active participants in a tax-qualified plan of an employer. If you or your
spouse are active participants in such a plan, then your allowable deduction
for regular IRA contributions is reduced or eliminated if your Adjusted Gross
Income ("AGI") exceeds certain levels. (If you file separately and are
married but live apart from your spouse at all times during the year, you
will be considered to be single when applying the following rules regarding
deduction limitations.) The deductible amount is determined as follows:
1. If you (and your spouse) are not active participants in a tax-qualified
plan, any contribution up to the maximum amount is deductible.
2. If you (or your spouse) are an active participant in a tax-qualified
plan, and
a. your AGI is $25,000 or less ($40,000 for a married couple filing a
joint return and $0 for a married person filing separately), any
contribution up to the maximum amount is deductible.
b. your AGI is $35,000 or more ($50,000 for a married couple filing a
joint return and $0 for a married person filing separately), no IRA
contribution is deductible.
c. your AGI is between $25,000 and $35,000 ($40,000 and $50,000 for a
married couple filling a joint return and $0 to $10,000 for a married
person filing separately), the deductible amount is reduced. In the
case of a regular IRA, the reduction is $0.20 for each $1.00 of AGI
over $25,000 ($40,000 for a married couple filing a joint return and
$10,000 for a married person filing separately). For a spousal IRA,
the reduction is $0.225 for each $1.00 of AGI over $40,000 if filing
jointly. The limit will not be reduced below $200 unless it is
eliminated entirely.
To the extent that the deductibility of IRA contributions is reduced or
eliminated, then nondeductible contributions may be made to your IRA.
Earnings on all IRA contributions, whether or not the contributions
themselves are deductible, are tax-deferred until receipt. You must designate
the amount of nondeductible IRA contributions when filing your tax return for
the year. If you overstate the amount of your nondeductible contributions you
must pay a $100 penalty, unless you can show that such overstatement was due
to reasonable cause. If you fail to report nondeductible IRA contributions
you will be subject to a $50 penalty, unless your failure was due to
reasonable cause.
D. ROLLOVER CONTRIBUTIONS
1. AMOUNTS ELIGIBLE FOR ROLLOVER FROM PLANS AND TAX-SHELTERED
ANNUITIES
You may make a rollover contribution to your IRA of an "eligible rollover
distribution" from an employer tax-qualified plan (an "employer plan") or
tax-sheltered annuity (including a 403(b)(7) account). The administrator of
the employer plan or the payor of a distribution from the tax-sheltered
annuity should be able to tell you what portion of your payment is an
eligible rollover distribution. The following types of payments cannot be
rolled over:
NON-TAXABLE PAYMENTS. In general, only the "taxable portion" of your payment
is an eligible rollover distribution. If you have made "after-tax" employee
contributions to the plan or annuity, these contributions will be non-taxable
when they are paid to you, and they cannot be rolled over. (After-tax
employee contributions generally are contributions you made from your own pay
that were already taxed.)
PAYMENTS SPREAD OVER LONG PERIODS. You cannot roll over a payment if it is
part of a series of equal (or almost equal) payments that are made at least
once a year and that will last for:
- - your lifetime (or your life expectancy), or
- - your lifetime and your beneficiary's lifetime (or life expectancies), or
- - a period of ten years or more.
REQUIRED MINIMUM PAYMENTS. Beginning in the year you reach age 70 1/2, a
certain portion of your payment cannot be rolled (or transferred) over
because it is a "required minimum payment" that must be paid to you.
2. DIRECT ROLLOVER
You can choose a direct rollover of all or any portion of your payment from
an employer plan or a tax-sheltered annuity that is an "eligible rollover
distribution," as described above. In a direct rollover, the eligible
rollover distribution is paid directly from the plan or tax-sheltered annuity
to your IRA. If you choose a direct rollover, you are not taxed on a payment
until you later take it out of the IRA.
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3. ROLLOVER OF PLAN PAYMENTS PAID TO YOU
A payment to you of an eligible rollover distribution from an employer plan
or tax-sheltered annuity is taxed in the year you receive it unless, within
60 days, you roll it over to an IRA (or another plan that accepts rollovers).
If you do not roll it over, special tax rules may apply. If any portion of
the payment to you is an eligible rollover distribution, the payor is
required by law to withhold 20% of that amount. This amount is sent to the
IRS as income tax withholding.
SIXTY-DAY ROLLOVER OPTION. If you have an eligible rollover distribution paid
to you, you can still decide to roll over all or part of it to an IRA (or
another employer plan that accepts rollovers). If you decide to roll over,
you must make the rollover within 60 days after you receive the payment. The
portion of your payment that is rolled over will not be taxed until you take
it out of the IRA (or the employer plan).
You can roll over up to 100% of the eligible rollover distribution,
including an amount equal to the 20% that was withheld. If you choose to roll
over 100%, you must find other money within the 60-day period to contribute
to the IRA or the employer plan to replace the 20% that was withheld. (On the
other hand, if you roll over only the 80% that you received, you will be
taxed on the 20% that was withheld.)
See the Special Tax Notice Regarding Plan Payments, that must be
provided by the plan administrator or payor of your employer plan or
tax-sheltered annuity, for additional information on the rules governing
rollover and taxation of plan distributions, or consult your tax advisor for
more details.
You should maintain a separate IRA account for any rollovers of funds
from an employer plan if you want to preserve your ability to later roll over
these funds and earnings into another employer plan. Similarly, you should
maintain a separate account for any rollover of funds from a tax-sheltered
annuity.
You can make a rollover from a tax-qualified plan of your spouse's
employer if you received all or a part of your spouse's share as a result of
his or her death. A spouse or former spouse who is a recipient of a
distribution made under a qualified domestic relations order may roll over
all or part of the distribution.
Because complex rules apply to distributions and rollovers of payments
from employer plans and tax-sheltered annuities, you should seek competent
tax advice whenever you contemplate receiving a distribution from a qualified
plan or tax-sheltered annuity or an IRA funded by a rollover from a qualified
plan or tax-sheltered annuity.
4. ROLLOVERS FROM OTHER IRAs
You may also make a rollover contribution of amounts held in another IRA.
There are no limits on the amount of rollover contributions made to an IRA
from another IRA, except you may not roll over (or transfer) the required
minimum amount (described in Article 7, D.). However, the distribution from
the first IRA must be rolled over within 60 days of receipt and no more than
one distribution per year from an IRA may be rolled over into another IRA.
5. TAX-DEFERRAL ON IRA ROLLOVER OR TRUSTEE-TO-TRUSTEE TRANSFER
An effective rollover allows you to postpone paying taxes on the amount
distributed from an employer plan, tax-sheltered annuity or IRA until it is
withdrawn from the recipient IRA. You do not report the distribution as
income and you do not take a deduction for the rollover contribution.
Earnings on your rollover IRA are tax-deferred until receipt. (Similarly, a
trustee-to-trustee transfer is not treated as a distribution and the amount
transferred and earnings are tax-deferred until receipt.)
E. SEP CONTRIBUTIONS
If your employer has established a simplified employee pension ("SEP"), your
employer may make contributions to your SEP/IRA. If the SEP contains a salary
reduction arrangement, you may elect to reduce your salary by up to the
lesser of 15% of compensation or $7,000 (indexed annually; for 1993, the
limit is $8,994) and have that amount contributed to your SEP/IRA. The
maximum SEP contribution, including salary reduction amounts and employer
contributions, is the lesser of 15% of eligible compensation or $30,000. SEP
contributions are not included in your taxable income.
5. EXCESS CONTRIBUTIONS
Amounts contributed to an IRA which exceed the maximum allowable contribution
are treated as "excess contributions" and are subject to a nondeductible 6%
penalty tax for each year in which the excess remains in the IRA. Excess
contributions may be corrected and the 6% penalty tax avoided by withdrawal
of the excess and any earnings thereon BEFORE THE DUE DATE (including
extensions) of the tax return for the tax year for which the excess
contribution was made. No deduction may be taken for the excess contributions
and the earnings must be included in taxable income for the year the
contribution was made. The earnings withdrawn may be subject to a 10%
premature distribution tax if you are under age 59 1/2. See Article 7, B.
An excess contribution may be withdrawn AFTER THE DUE DATE of the tax
return (including extensions) with the following consequences:
A. If your total contribution for the tax year in which the excess
contribution was made is
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$2,250 or less (or below the limit of your employer's SEP contribution) the
excess contribution may be withdrawn without being included in income or
being subject to the 10% premature distribution tax. No deduction may be
taken for the excess contribution. Any earnings withdrawn will be included
in income and may be subject to the premature distribution tax.
B. If your total contribution for the tax year in which the excess
contribution was made exceeds $2,250 (or, if higher, the limit of your
employer's SEP contribution) any excess contribution and any earnings on
the excess withdrawn after the due date for tax filing (including
extensions), will be includable in income in the year received and will be
subject to any 10% premature distribution tax that may apply. Additionally,
no deduction may be taken for the excess contribution for the year in which
it is made.
C. Any excess contribution withdrawn after the due date for the tax filing
(including extensions) for the year for which the contribution was made is
subject to the 6% penalty tax on the amount of the excess contribution for
the taxable year in which made and each tax year that it is still in your
IRA at the end of the year.
You may also correct an excess contribution to your IRA by treating the
excess amount as contributed to your IRA in a subsequent year to the extent
that the excess, when aggregated with your IRA contribution (if any) for the
subsequent year, does not exceed the maximum amount for that year. You may be
entitled to a deduction for the amount of the excess contribution that is
applied in the subsequent year.
6. INVESTMENT OF ACCOUNT AND FINANCIAL DISCLOSURE
The assets in your IRA will be invested by IFTC in mutual funds as selected
on the Application, in accordance with your instructions and Article 8,
paragraphs 2 and 10 of the Custodial Agreement.
Growth in the value of your IRA cannot be guaranteed or projected.
However, the income and operating expenses of each allowable investment that
you select for your IRA will affect the value of its shares and, therefore,
the value of your IRA. The prospectus of the mutual fund(s), selected on the
Application, for such shares contains information regarding current income
and expenses of each of these investments. Reasonable fees and other expenses
of maintaining your IRA may be charged to you or your IRA. The current annual
Custodian's fee is set forth in the Application. A new fee may be substituted
from time to time as provided in paragraph 7 of Article 8 of the Custodial
Agreement.
7. DISTRIBUTIONS
A. TAXATION OF DISTRIBUTION AS ORDINARY INCOME
In general, you must include distributions from your IRA in your gross income
for the year in which the distributions are received. There is a 10% additional
income tax assessed against premature distributions to the extent such
distributions are includable in income, as described in paragraph B, below.
You may exclude from your income that portion of a distribution that
constitutes a return of your properly reported nondeductible contributions.
The amount of the distribution excludable from income is the portion that
bears the same ratio to the total distribution that your aggregate
nondeductible contributions (not distributed in prior years) bear to the
balance at the end of the year (calculated after adding back distributions
made during the year) of your IRA. For this purpose, all of your IRAs are
treated as a single IRA, and all distributions from an IRA during a taxable
year are to be treated as one distribution.
In addition, your gross income does not include any distribution from an
IRA that is properly rolled over. Except as provided in D. below, you may
roll over all or any part of property received in a distribution of assets,
within 60 days of receipt, into another IRA or individual retirement annuity,
and maintain the tax-deferred status of such assets. A rollover from one IRA
to another may be made once every twelve months. Also, certain qualifying
distributions which were rolled over into an IRA from employer tax-qualified
plans may be rolled over into another employer tax-qualified plan. (You
should seek competent tax advice regarding these rollovers.)
As explained in Article 5, certain distributions of excess contributions
are not included in income. In addition, IRA contributions for a taxable year
which do not exceed the contribution limits for such year may also be
withdrawn without being included in income or being subject to a 10%
premature distribution tax, as long as such contributions and earnings
thereon are withdrawn prior to the due date (including extensions) of your
federal income tax return for the tax year for which the contribution was
made. The earnings withdrawn must be included in taxable income for the year
in which the contribution was made and may be subject to the 10% premature
distribution tax.
B. TAX ON PREMATURE DISTRIBUTIONS
To the extent they are included in income, distributions from your IRA made
before you reach age 591/2 will be subject to a 10% nondeductible penalty tax
(in addition to being taxable as ordinary income)
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unless the distribution is made on account of your death or disability, or
the distribution is one of a scheduled series of payments over your life
expectancy or the joint life expectancies of you and your beneficiary.
C. TAX ON EXCESS DISTRIBUTIONS
There is a 15% excise tax assessed against annual distributions from
tax-favored retirement plans, including IRAs, which exceed the greater of
$150,000 or $112,500 (indexed annually; for 1993, the threshold amount is
$144,551). To determine whether you have distributions in excess of this
limit, you must aggregate the amounts of all distributions received by you
during the calendar year from all retirement plans, including IRAs. If you
have account balances or accrued benefits equal to at least $562,500 as of
August 1, 1986, you may have a portion of the excess distributions exempted
from the 15% additional tax. Please consult with your tax advisor for more
complete information, including the availability of favorable elections.
D. REQUIRED MINIMUM DISTRIBUTIONS
1. DURING YOUR LIFE
The minimum distribution rules require that for your "70 1/2 year," and each
year thereafter, you must make withdrawals from your IRA accounts that are at
least equal to the "minimum distribution". Your 70 1/2 year is the calendar
year that contains the date six months after your 70th birthday.
Generally, you must withdraw an amount at least equal to the minimum
distribution by December 31 of each year. However, for your 70 1/2 year, you
may wait to withdraw the minimum distribution until April 1 of the following
year. (This means that if you wait to make your withdrawal for the 70 1/2
year until April 1 of the following year, your total withdrawal in that year
must equal the minimum distributions for two years -- a withdrawal by April 1
that is equal to the minimum distribution for the 70 1/2 year and a second
withdrawal by December 31 that is equal to the minimum distribution for that
year. In each year thereafter, you must withdraw the minimum distribution for
the year by December 31.)
The amount of the minimum distribution is usually determined by dividing
the account balance of your IRA, as of December 31 of the prior year, by a
divisor (determined by Internal Revenue Service actuarial tables) that is
based on your life expectancy or the joint life and last survivor expectancy
for you and your beneficiary. See Article 4 of the Custodial Agreement for a
more detailed explanation of how to calculate the minimum distribution. The
distributions must also satisfy the minimum distribution incidental benefit
rule, which generally will require distributions over a period less than the
joint and last survivor expectancy of you and your designated beneficiary
unless your beneficiary is your spouse or is no more than ten years younger
than you. The IRS provides tables for determining the distribution needed to
satisfy incidental benefit requirements.
The minimum distribution required must be calculated separately for each
IRA you own, but the amounts so determined may be totalled and taken from any
one or more of your IRAs.
You will be subject to a 50% excise tax on the amount by which the
distribution you actually received in any year falls short of the minimum
distribution required for the year. You may take your distribution in:
- - a lump sum;
- - equal or substantially equal payments over a specified period no longer
than your life expectancy or the joint life and last survivor expectancy
of you and your designated beneficiary.
Also, as describe in Section 7, A., you may roll over your lump sum distribution
to purchase an individual retirement annuity payable in equal or substantially
equal payments over your life or the joint and last survivor lives of you and
your designated beneficiary. (See Article 4 and Article 8, paragraph 4, of the
Custodial Agreement and IRS Publication 590 for a full description of
permissible distribution methods.)
2. AFTER YOUR DEATH
If you die before you reach age 70 1/2, distribution must be made to your
beneficiary by December 31 of the fifth year following the year of your death
unless, by December 31 of the year following your death, your beneficiary
begins receiving distributions over a period not extending beyond your
beneficiary's life expectancy. When your beneficiary is your spouse, however,
distributions can be postponed until December 31 of the year in which you
would have reached age 70 1/2, at which time your spouse must take them over
a period not extending beyond his or her life expectancy. (See Article 4 of
the Custodial Agreement and IRA Publication 590 for a more detailed
explanation of how to calculate the minimum distribution.)
If you die after your required beginning date, the balance in the
Custodial Account must continue to be paid at least as rapidly as under the
method of payment being used prior to your death.
If your beneficiary is your spouse, your beneficiary can elect to treat
your IRA as his or her own IRA.
The minimum distribution required must be calculated separately for each
IRA, but the amounts so
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determined may be totalled and taken from any one or more IRAs.
A payee is subject to a 50% excise tax on the amount by which a
distribution for the year falls short of the minimum distribution required.
Your beneficiary may take his or her distribution in:
- - a lump sum;
- - equal or substantially equal payments over a specified period no longer
than his or her life expectancy.
Also, as described in Section 7, A., a spousal beneficiary may roll over
a lump sum distribution to purchase an individual retirement annuity payable
in equal or substantially equal payments over his or her life expectancy.
(See Article 4 and Article 8, paragraph 4, of the Custodial Agreement and IRS
Publication 590 for a full description of permissible distribution methods.)
3. FURTHER INFORMATION
This explanation only summarizes the minimum distribution rules. Other rules
and exceptions may apply to you that are not discussed in this summary,
including rules which, in some cases, would prevent you from using certain
options described above. You should consult your personal tax advisor or IRS
Publication 590 for more detailed information.
8. LOSS OF TAX-EXEMPT STATUS OF IRA
If you engage in any of the prohibited transactions listed in Section 4975 of
the Code (such as any sale, exchange, or leasing of any property between you
and your IRA), or if you take a loan from your IRA, your account will be
disqualified and the entire balance of your account will be treated as if it
had been distributed to you as of the first day of the year in which the
prohibited transaction occurred. The fair market value of your IRA will be
included in income in the year the prohibited transaction takes place and, if
you are under age 59 1/2 at the time, you may be subject to the 10% penalty
tax on premature distributions. Should you or your beneficiary pledge all or
any portion of your IRA as security for a loan, the portion so pledged will
be treated as if distributed to you, will be included in your income, and may
be subject to the 10% premature distribution penalty during the year in which
the pledge occurred.
9. OTHER TAX CONSIDERATIONS
A. FEDERAL INCOME TAX WITHHOLDING
Federal income tax will be withheld on amounts distributed from your IRA
unless you elect not to have withholding apply. Generally, tax will be
withheld at a 10% rate. At the time of distribution from your IRA, you will
be notified of your right to elect not to have withholding apply and will be
provided with the appropriate election form. If your IRA distribution is to
be delivered outside of the U.S., you may elect not to have withholding apply
only if you certify to the Custodian that you are not a U.S. citizen residing
overseas or a "tax avoidance expatriate" as described in Section 877 of the
Internal Revenue Code. (The distribution may also be subject to state
withholding laws.)
B. DISTRIBUTION NOT ELIGIBLE FOR LUMP-SUM AVERAGING OR CAPITAL
GAINS TREATMENT
No distribution to you or anyone else from your account can qualify for
capital gains treatment under the Federal income tax laws or for the five or
ten-year averaging available with respect to certain lump sum distributions
from other types of retirement plans. The distribution is taxed to the person
receiving it as ordinary income.
C. GIFT TAX
If you elect during your lifetime to have all or any part of your account
payable to a beneficiary at or after your death, the election will not
subject you to any gift tax liability.
D. REPORTING FOR TAX PURPOSES
You must report deductible IRA contributions and distributions on your tax
Form 1040 or 1040A for the taxable year in which the contributions or
distributions were made. If you made any nondeductible contributions, you
must include the amount of such nondeductible contributions and the aggregate
account balance of all your IRAs as of the end of the calendar year on Form
8606. Additional reporting is required in the event that special taxes or
penalties described herein are due. You must file Form 5329 with the IRS for
each taxable year in which the contribution limits are exceeded, a premature
distribution takes place, less than the required minimum amount is
distributed from your IRA, or excess distributions are made.
10. IRS APPROVAL & INFORMATION
This IRA has not been submitted to the IRS for approval as to form because it
incorporates Form 5305-A issued by the IRS. This Disclosure Statement
provides only a summary of the laws governing IRAs. You should consult your
personal tax advisor or IRS Publication 590, Individual Retirement
Arrangements, for more detailed information. This publication is available
from your local IRS office or by calling 1-800-TAX-FORMS.
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<PAGE>
Form 5305-A INDIVIDUAL RETIREMENT DO NOT File
(Rev. October 1992) CUSTODIAL ACCOUNT with the
Department of the Treasury (Under Section 408(a) of Internal
Internal Revenue Service the Internal Revenue Code) Revenue Service
_______________________________________________________________________________
Name of depositor Date of birth of depositor Identifying number
(see instructions)
_______________________________________________________________________________
Address of depositor
Check if Amendment --> / /
_______________________________________________________________________________
Name of custodian Address or principal place of business of custodian
Investors Fiduciary Kansas City, Missouri
Trust Company
_______________________________________________________________________________
The Depositor whose name appears above is establishing an individual
retirement account under section 408(a) to provide for his or her retirement and
for the support of his or her beneficiaries after death.
The Custodian named above has given the Depositor the disclosure statement
required under Regulations section 1.408-6.
The Depositor assigned the custodial account..........dollars ($ .........)
in cash.
The Depositor and the Custodian make the following agreement:
Article I
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(c) (but only after December 31, 1992),
403(a)(4), 403(b)(8), 408(d)(3), or an employer contribution to a simplified
employee pension plan as described in section 408(k). Rollover contributions
before January 1, 1993, include rollovers described in section 402(a)(5),
402(a)(6), 402(a)(7), 403(A)(4), 403(b)(8), 403(d)(3), or an employer
contribution to a simplified employee pension plan as described in section
408(k).
Article II
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
Article III
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with
other property except in a common trust fund or common investment fund
(within the meaning of section 408(a)(5).
2. No part of the custodial funds may be invested in collectibles
(within the meaning of section 408(m) except as otherwise permitted by
section 408(m)(3) which provides an exception for certain gold and silver
coins and coins issued under the laws of any state.
Article IV
1. Notwithstanding any provision of this agreement to the contrary, the
distribution of the Depositor's interest in the custodial account shall be
made in accordance with the following requirements and shall otherwise comply
with section 408(a)(6) and Proposed Regulations section 1.408-8, including
the incidental death benefit provisions of Proposed Regulations section 1.401
(a)(9)-2, the provisions of which are incorporated by reference.
2. Unless otherwise elected by the time distributions are required to
begin to the Depositor under paragraph 3, or to the surviving spouse under
paragraph 4, other than in the case of a life annuity, life expectancies
shall be recalculated annually. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated.
3. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date. (April 1
following the calendar year end in which the Depositor reaches age 70 1/2). By
that date, the Depositor may elect, in a manner acceptable to the Custodian,
to have the balance in the custodial account distributed in:
(a) A single sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last
survivor lives of the Depositor and his or her designated beneficiary.
(d) Equal or substantially equal annual payments over a specified period
that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified period
that may not be longer than the joint life and last survivor
expectancy of the Depositor and his or designated beneficiary.
4. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after distribution of his or her interest
has begun, distribution must continue to be made in accordance with
paragraph 3.
(b) If the Depositor dies before distribution of his or her interest has
begun, the entire remaining interest will, at the election of the
Depositor or, if the Depositor has not so elected, at the election of
the beneficiary or beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over the
life or life expectancy of the designated beneficiary or
beneficiaries starting by December 31 of the year following the
year of the Depositor's death. If, however, the beneficiary is
the Depositor's surviving spouse, then this distribution is not
required to begin before December 31 of the year in which the
Depositor would have turned age 70 1/2.
(c) Except where distribution in the form of an annuity meeting the
requirements of section 408(b)(3) and its related regulations has
irrevocably commenced, distributions are treated as having begun on
the Depositor's required beginning date, even though payments may
actually have been made before that date.
(d) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse,
no additional cash contributions or rollover contributions may be
accepted in the account.
_______________________________________________________________________________
Form 5305-A (Rev. 10-92)
Cat. No. 1182OG 11/18/92 2,963
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Form 5305-A (Rev. 10-92) Page 2
_______________________________________________________________________________
5. In the case of a distribution over life expectancy in equal or
substantially equal annual payments, to determine the minimum annual payment
for each year, divide the Depositor's entire interest in the Custodial
account as of the close of business on December 31 of the preceding year by
the life expectancy of the Depositor (or the joint life and last survivor
expectancy of the Depositor and the Depositor's designated beneficiary, or
the life expectancy of the designated beneficiary, whichever applies). In the
case of distributions under paragraph 3, determine the initial life
expectancy (or joint life and last survivor expectancy) using the attained
ages of the Depositor and designated beneficiary as of their birthdays in the
year the Depositor reaches age 70 1/2. In the case of a distribution in
accordance with paragraph 4(b)(ii), determine life expectancy using the
attained age of the designated beneficiary as of the beneficiary's birthday
in the year distributions are required to commence.
6. The owner of two or more individual retirement accounts may use the
"alternative method" described in Notice 88-38, 1988-1 C.B. 524, to satisfy
the minimum distribution requirements described above. This method permits an
individual to satisfy these requirements by taking from one individual
retirement account the amount required to satisfy the requirement for another.
Article V
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section
408(i) and Regulations sections 1.408-5 and 1.408-6.
2. The Custodian agrees to submit reports to the Internal Revenue
Service and the Depositor prescribed by the Internal Revenue Service.
Article VI
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling.
Any additional articles that are not consistent with section 408(a) and the
related regulations will be invalid.
Article VII
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the persons whose signatures appear below.
_______________________________________________________________________________
NOTE: THE FOLLOWING SPACE (ARTICLE VIII) MAY BE USED FOR ANY OTHER PROVISIONS
YOU WANT TO ADD. IF YOU DO NOT WANT TO ADD ANY OTHER PROVISIONS, DRAW A LINE
THROUGH THIS SPACE. IF YOU DO ADD PROVISIONS, THEY MUST COMPLY WITH APPLICABLE
REQUIREMENTS OF STATE LAW AND THE INTERNAL REVENUE CODE.
_______________________________________________________________________________
Article VIII
Depositor's signature .................................... Date ..............
Custodian's signature .................................... Date ..............
Witness........................................................................
(Use only if signature of the Depositor or
the Custodian is required to be witnessed)
_______________________________________________________________________________
GENERAL INSTRUCTIONS
(SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE UNLESS OTHERWISE NOTED)
PURPOSE OF FORM
Form 5305-A is a model custodial account agreement that meets the
requirements of section 408(a) and has been automatically approved by the
IRS. An individual retirement account (IRA) is established after the form is
fully executed by both the individual (Depositor) and the Custodian and must
be completed no later than the due date of the individual's income tax return
for the tax year (without regard to extensions). This account must be created
in the United States for the exclusive benefit of the Depositor or his or her
beneficiaries.
Individuals may rely on regulations for the Tax Reform Act of 1986 to
the extent specified in those regulations.
Do not file Form 5305-A with the IRS. Instead, keep it for your records.
For more information on IRAs, including the required disclosure you can
get from your custodian, get Pub. 590, Individual Retirement Arrangements
(IRAs).
DEFINITIONS
CUSTODIAN -- The Custodian must be a bank or savings and loan association, as
defined in section 408(n), or any person who has the approval of the IRS to
act as custodian.
DEPOSITOR -- The Depositor is the person who establishes the custodial
account.
IDENTIFYING NUMBER
The depositor's social security number will serve as the identification
number of his or her IRA. An employer identification number is only required
for each participant-directed IRA. An employer identification number is
required for a common fund created for IRAs.
IRA FOR NONWORKING SPOUSE
FORM 5305 -- A may be used to establish the IRA custodial account for a
non-working spouse.
Contributions to an IRA custodial account for a nonworking spouse must
be made to a separate IRA custodial account established by the nonworking
spouse.
SPECIFIC INSTRUCTIONS
ARTICLE IV -- Distributions made under this article may be made in a single
sum, periodic payment, or a combination of both. The distribution option
should be reviewed in the year the Depositor reaches age 70 1/2 to ensure
that the requirements of section 408(a)(6) have been met.
ARTICLE VIII -- Article VIII and any that follow it may incorporate
additional provisions that are agreed to by the depositor and the custodian
to complete the agreement. They may include, for example, definitions,
investment powers, voting rights, exculpatory provisions, amendment and
termination, removal of the custodian, custodian's fees, state law
requirements, beginning date of distributions, accepting only cash, treatment
of excess contributions, prohibited transactions with the depositor, etc. Use
additional pages if necessary and attach them to this form.
NOTE: FORM 5305A MAY BE REPRODUCED AND REDUCED IN SIZE FOR ADOPTION TO
PASSBOOK PURPOSES.
_______________________________________________________________________________
2,964 11/18/92
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ATTACHMENT TO IRS FORM 5305-A: ARTICLE VIII
1. DEFINITIONS: The following definitions shall apply to terms used in this
Article VIII:
a. "Application" shall mean the IRA Application submitted by the Depositor
to the Custodian.
b. "Code" shall mean the Internal Revenue Code of 1986, as amended,
including any regulations, procedures, rulings, or notices issued
thereunder.
c. "Company" shall mean Berger Associates, Inc.
d. "Custodial Account" shall mean the custodial account established under
this agreement.
2. INVESTMENT OF CONTRIBUTIONS: Contributions shall be invested in shares
of the mutual funds permitted by the Company in accordance with the
Depositor's written instructions in the Application, and with subsequent
written instructions of the Depositor (or, following the death of the
Depositor, his or her beneficiary) in a form acceptable to and filed with the
Custodian. By giving such instructions, the Depositor (or beneficiary, where
applicable) will be deemed to have acknowledged receipt of the then current
prospectus for any shares in which the Depositor (or beneficiary) directs the
Custodian to invest contributions. The Depositor, by making a rollover
contribution, as described in Article I, hereby certifies that the
contribution meets all requirements for rollover contributions. The amount of
each contribution shall be applied to the purchase of such shares at the
price and in the manner in which such shares are then being publicly offered
in accordance with the then current prospectus, and such shares shall be
credited to the Custodial Account. All dividends and capital gain
distributions received on the shares of the fund held in each Custodial
Account shall (unless received in additional shares of such fund) be
reinvested in such shares which shall be credited to such Custodial Account.
If any distribution on shares of the fund may be received at the election of
the shareholder in additional shares or in cash or other property, the
Custodian shall elect to receive such distribution in additional shares. The
Custodian shall not be liable for interest on any cash balance in the
Custodial Account. All shares acquired by the Custodian shall be registered
in the name of the Custodian or its registered nominee.
3. VOTING WITH RESPECT TO SHARES: The Custodian shall not vote any of the
shares of a mutual fund held in the Custodial Account except in accordance
with written instructions of the Depositor, timely received, in a form
acceptable to the Custodian.
4. ALTERNATIVE DISTRIBUTION METHOD: Notwith-standing Article IV, a
Depositor may elect in writing in a form acceptable to and filed with the
Custodian, to have the balance in the Custodial Account distributed only in a
lump sum or in substantially equal payments over a period that does not
exceed the Depositor's life expectancy or the joint and last survivor life
expectancy of the Depositor and his or her designated beneficiary. For this
purpose, life expectancies must be determined by using applicable Internal
Revenue Service tables. Notwithstanding paragraph 2 of Article IV, unless an
election to have life expectancies recalculated annually is made by the time
distributions are required to begin to the Depositor under paragraph 3, or to
the surviving spouse under paragraph 4, of Article IV, life expectancies
shall not be recalculated. Such election shall be irrevocable as to the
Depositor and the surviving spouse and shall apply to all subsequent years.
The life expectancy of a nonspouse beneficiary may not be recalculated. To
receive an annuity distribution, a Depositor may roll over a lump sum
distribution to purchase an individual retirement annuity payable in equal or
substantially equal payments over the Depositor's life expectancy or the
joint and last survivor life expectancy of the Depositor and his or her
designated beneficiary. The distribution option should be reviewed in the
year the Depositor reaches age 70 1/2 to make sure the requirements of Code
Section 408(a)(6) have been met. Consistent with paragraph 6 of Article IV,
the Custodian is not obligated to make any distribution absent a specific
written direction, in a form acceptable to and filed with the Custodian, from
the Depositor or designated beneficiary to do so.
5. AMENDMENT AND TERMINATION: The Depositor may at any time and from time
to time terminate this Agreement in whole or in part by delivering to the
Custodian a signed written notice of such termination, in a form acceptable
to the Custo-dian. The Depositor and the Custodian delegate to the Company
the right to amend this Agree-ment (including retroactive amendments) by
written notice to the Custodian and the Depos-itor. The Depositor shall be
deemed to have
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<PAGE>
consented to any such amendment, provided that (a) no amendment shall cause
or permit any part of the assets of the Custodial Account to be diverted to
purposes other than for the exclusive benefit of the Depositor or his or her
beneficiaries; (b) any amendment which affects the rights, duties or
responsibilities of the Custodian may only be made with Custodian's consent;
and (c) no amendment shall be made except in accordance with any applicable
laws and regulations affecting this Agreement and the Custodial Account.
6. RESIGNATION OR REMOVAL OF CUSTODIAN: The Custodian may resign at any
time upon thirty (30) days notice in writing to the Company. Upon such
resignation, the Company shall appoint a successor custodian under this
Agreement. The Company at any time may remove the Custodian upon 30 days
written notice to that effect in a form acceptable to and filed with the
Custodian. Such notice must include designation of a successor custodian. The
successor custodian shall satisfy the requirements of section 408(h) of the
Code. Upon receipt by the Custodian of written acceptance of such appointment
by the successor custodian, the Custodian shall transfer and pay over to such
successor the assets of and records relating to the Custodial Account. The
Custodian is authorized, however, to reserve such sum of money as it may deem
advisable for payment of all its fees, compensation, costs and expenses, or
for payment of any other liability constituting a charge on or against the
assets of the Custodial Account or on or against the Custodian, and where
necessary may liquidate shares in the Custodial Account for such payments.
Any balance of such reserve remaining after the payment of all such items
shall be paid over to the successor Custodian. The Custodian shall not be
liable for the acts or omissions of any successor custodian.
7. CUSTODIAN'S ANNUAL FEES: The Depositor shall be charged by the Custodian
for its services under this Agreement in such amount as the Custodian shall
establish from time to time. Sufficient shares may be liquidated from the
Custodial Account to pay the fee. The annual fee in effect on the date of
this Agreement is set forth in the Application. A different fee may be
substituted at any time upon written notice to the Depositor. A Depositor who
does not consent to such new fee should terminate this Agreement pursuant to
paragraph 5 of Article VIII within 30 days of the notice of the new fee. If
no such termination is made within 30 days of the notice of the new fee, the
Depositor will be deemed to have consented to the new fee.
8. OTHER FEES AND EXPENSES: Any income or other taxes of any kind
whatsoever that may be levied or assessed upon or with respect to the
Custodial Account or the income thereof, any transfer taxes incurred in
connection with the investment and reinvestment of the assets of the
Custodial Account, all other reasonable administrative expenses incurred by
the Custodian with respect to any such taxes, or with respect to any
controversies concerning the Custodial Account, including, but not limited
to, fees for legal services rendered to the Custodian and related costs, and
such reasonable compensation to the Custodian for acting in that capacity
with respect to any such taxes or controversies, may, in the discretion of
the Custodian, be charged against and paid from the assets of the Custodial
Account. Sufficient shares may be liquidated from the Custodial Account to
pay any such taxes, expenses and compensation.
9. INALIENABILITY OF ASSETS: No interest, right or claim in or to any part
of the Custodial Account, nor any assets held therein or benefits provided
hereunder shall be subject to alienation, assignment, garnishment,
attachment, execution or levy of any kind, and any attempt to cause any such
interest, right, claim, assets or benefits to be so subjected shall not be
recognized, except to the extent as may be required by law.
10. EXCHANGE PRIVILEGE: With respect to any mutual fund shares held in the
Custodial Account, the Depositor (or beneficiary, where applicable) may,
under submission of written or telephone instructions in a form acceptable to
and filed with the Custodian, cause shares of any fund to be exchanged for
shares of any other fund meeting the requirements of this Agreement, upon the
terms and within the limitations imposed by the then current prospectus of
the fund which is acquired in the exchange. By giving such instructions, the
Depositor (or beneficiary) will be deemed to have acknowledged receipt of
such prospectus.
11. DESIGNATION OF BENEFICIARY: The Depositor may designate a beneficiary
or change or revoke the designation of a beneficiary, by written notice in a
form acceptable to and filed with the Custodian, prior to the complete
distribution of the balance in the Custodial Account. If the Depositor has
not by the date of his or her death properly designated a beneficiary in
accordance with the preceding sentence, or if no designated beneficiary
survives the Depositor, the Depositor's
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<PAGE>
beneficiary shall be his or her estate. If a beneficiary dies before
receiving his or her entire interest in the Custodial Account, his or her
remaining interest in the Custodial Account shall be paid to the
beneficiary's estate.
12. RESPONSIBILITY AS TO CONTRIBUTIONS OR DISTRIBUTIONS: The Custodian will
not under any circumstances be responsible for the timing, purpose or
propriety of any contribution or of any distribution made hereunder, nor
shall the Custodian incur any liability of responsibility for any tax imposed
on account of any such contribution or distribution.
13. OTHER LIMITS ON RESPONSIBILITIES OF THE CUSTODIAN: The Custodian shall
not incur any liability or responsibility in taking or omitting to take any
action based on any notice, election, or instruction or any written
instrument believed by the Custodian to be genuine and to have been properly
executed. The Custodian shall be under no duty of inquiry with respect to any
such notice, election, instruction, or written instrument, but in its
discretion may request any tax waivers, proof of signature or other evidence
which it reasonably deems necessary for its protection. The Depositor and the
successors of the Depositor including any executor or administrator of the
Depositor shall, to the extent permitted by law, indemnify the Custodian and
its successors and assigns against any and all claims, actions or liabilities
of the Custodian to the Depositor or the successors or beneficiaries of the
Depositor whatsoever (including without limitation all reasonable expenses
incurred in defending against or settlement of such claims, actions or
liabilities) which may arise in connection with this Agreement or the
Custodial Account, except those due to the Custodian's own bad faith, gross
negligence or willful misconduct. The Custodian shall not be under any duty
to take any action not specified in this Agreement, unless the Depositor
shall furnish it with instructions in proper form and such instructions shall
have been specifically agreed to by the Custodian, or to defend or engage in
any suit with respect hereto unless it shall have first agreed in writing to
do so and shall have been fully indemnified to its satisfaction.
14. NOTICE: All written notices required or permitted to be given by the
Custodian shall be deemed to have been given when sent by mail to the
Depositor at the Depositor's last address of record provided to the
Custodian. All written notices required or permitted to be given to the
Custodian shall be deemed to have been given when received by the Custodian
if mailed to the Custodian in care of Berger Funds, P.O. Box 419958, Kansas
City, MO 64141 or such other address as the Custodian shall provide to the
Depositor from time to time.
15. TIMING OF CONTRIBUTIONS: A contribution is deemed to have been made on
the last day of the preceding taxable year if the contribution is made by the
deadline for filing the Depositor's income tax return (not including
extensions) and if the Depositor designates the contribution as a
contribution for the preceding taxable year in a manner acceptable to the
Custodian. The Custodian will not be liable or responsible for any
consequences of postal delays or delays resulting from an incomplete
Application or a designation made in an unacceptable form. Applications
received by IFTC postmarked after the deadline will be treated as a
contribution for the Depositor's current tax year. Improperly completed
applications will be returned to the sender.
16. GOVERNING LAW: This Agreement and the Custodial Account shall be
construed, administered and enforced according to the laws of the State of
Missouri.
17. WHEN EFFECTIVE: This Agreement shall not become effective until
acceptance of the Application by the Custodian at its principal offices, as
evidenced by a written confirmation to the Depositor.+
11
<PAGE>
IRA TRANSFER OR DIRECT ROLLOVER LETTER
Please complete this form and mail to Investors Fiduciary Trust Co. at the
address shown below. Investors Fiduciary Trust Co. will send this letter
along with their acceptance letter to your present custodian. Please attach a
copy of the current statement from the account you wish to transfer.
Date:
-----------------------------------------------------------------------
To:
-----------------------------------------------------------------------
Name of present custodian
-----------------------------------------------------------------------
Address
-----------------------------------------------------------------------
City, State, Zip
Re:
-----------------------------------------------------------------------
Name of account
-----------------------------------------------------------------------
Social Security Number
-----------------------------------------------------------------------
Account Number
Gentlemen:
I am establishing a retirement account with Investors Fiduciary Trust Co. for
investment into the Berger Funds IRA Account Number (leave blank if establishing
new account):
Please arrange to have:
/ / all of the assets in my account
/ / $ ____________ of the assets in my account
liquidated immediately and the proceeds transferred to the successor custodian
as follows:
Investors Fiduciary Trust Co.
c/o Berger Funds
P.O. Box 419958
Kansas City, MO 64141
(NOTE: If you are over 70 1/2 years old you must take out your required
distribution from your IRA before completing a transfer.)
An Investors Fiduciary Trust Company letter of acceptance is enclosed
herewith.
Sincerely,
- --------------------------------- --------------------------------------
Signature Signature Guarantee
(if required by present custodian)
12
<PAGE>
NOTICE OF TRANSFER OR DIRECT ROLLOVER
TO A BERGER FUND IRA
Please complete this form, (along with the IRA application if establishing a
new account) and the IRA Transfer Letter and mail to: Investors Fiduciary
Trust Co. at the address show below.
Date:
---------------------------------------------------
Investors Fiduciary Trust Co.
c/o Berger Funds
P.O. Box 419958
Kansas City, MO 64141
Gentlemen:
I wish to instruct my present custodian to liquidate $ __________________
from my:
/ / IRA
/ / SEP/IRA
I have completed a Berger Fund IRA application (if establishing a new
account) which is attached along with a completed IRA Transfer Letter. So
that the proceeds may be transferred to you, please forward your acceptance
to my present custodian at the following address:
Name of present custodian:
--------------------------------------
Address of present custodian:
--------------------------------------
City, State, Zip
--------------------------------------
Name of account and account number:
--------------------------------------
--------------------------------------
Sincerely,
- --------------------------------------
Signature
13
<PAGE>
[GRAPHIC OF MOUNTAINS]
SHAREHOLDER INFORMATION
DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
1-800-551-5849
INVESTMENT ADVISER
Berger Associates, Inc.
P.O. Box 5005
Denver, CO 80217
(303) 329-0200
1-800-333-1001
IRA CUSTODIAN
Investors Fiduciary Trust Company
P.O. Box 419958
Kansas City, MO 64141
This brochure may not be distributed to the
public unless preceded or accompanied by the
current prospectus of the Berger Funds.
<PAGE>
INVESTMENT COMPANY INSTITUTE
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
BASIC DOCUMENT #01
<PAGE>
PROTOTYPE
MONEY PURCHASE PENSION AND
PROFIT SHARING PLAN
TABLE OF CONTENTS
Section Page
- ------- ----
ARTICLE 1
GENERAL
1.1 Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE 2
DEFINITIONS
2.1 Account. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.2 Adoption Agreement . . . . . . . . . . . . . . . . . . . . . . . 1
2.3 Affiliated Employers . . . . . . . . . . . . . . . . . . . . . . 1
2.4 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.5 Break in Service . . . . . . . . . . . . . . . . . . . . . . . . 2
2.6 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.7 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.8 Custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.9 Determination Date . . . . . . . . . . . . . . . . . . . . . . . 2
2.10 Early Retirement Date. . . . . . . . . . . . . . . . . . . . . . 3
2.11 Earned Income. . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.12 Effective Date . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.13 Eligibility Computation Period . . . . . . . . . . . . . . . . . 3
2.14 Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.15 Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.16 Employer Contributions . . . . . . . . . . . . . . . . . . . . . 3
2.17 Entry Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.18 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.19 Hour of Service. . . . . . . . . . . . . . . . . . . . . . . . . 4
2.20 Integration Level. . . . . . . . . . . . . . . . . . . . . . . . 6
2.21 Key Employee . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.22 Leased Employee. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.23 Maximum Disparity Rate . . . . . . . . . . . . . . . . . . . . . 7
2.24 Maximum Profit Sharing Disparity Rate. . . . . . . . . . . . . . 8
2.25 Non-Key Employee . . . . . . . . . . . . . . . . . . . . . . . . 8
2.26 Normal Retirement Age. . . . . . . . . . . . . . . . . . . . . . 8
2.27 Owner-Employee . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.28 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.29 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.30 Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . 8
2.31 Plan Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.32 Self-Employed Individual . . . . . . . . . . . . . . . . . . . . 9
2.33 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.34 Sponsor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.35 Taxable Wage Base. . . . . . . . . . . . . . . . . . . . . . . . 9
2.36 Total and Permanent Disability . . . . . . . . . . . . . . . . . 9
2.37 Trust. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.38 Trust Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 9
-i-
<PAGE>
Section Page
- ------- ----
2.39 Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.40 Valuation Date . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.41 Vesting Computation Period . . . . . . . . . . . . . . . . . . . 9
2.42 Year of Service. . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 Eligibility Requirements . . . . . . . . . . . . . . . . . . . . 10
3.2 Participation and Service Upon Reemployment. . . . . . . . . . . 10
3.3 Predecessor Employers. . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE 4
CONTRIBUTIONS
4.1 Employer Contributions . . . . . . . . . . . . . . . . . . . . . 11
4.2 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.3 Nondeductible Voluntary Contributions by Participants. . . . . . 12
4.4 Rollovers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.5 Direct Transfers . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 5
ALLOCATIONS
5.1 Individual Accounts. . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Minimum Allocation . . . . . . . . . . . . . . . . . . . . . . . 14
5.3 Allocation of Employer Contributions and Forfeitures . . . . . . 15
5.4 Coordination of Social Security Integration. . . . . . . . . . . 16
5.5 Withdrawals and Distributions. . . . . . . . . . . . . . . . . . 16
5.6 Determination of Value of Trust Fund and of Net Earnings or
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.7 Allocation of Net Earnings or Losses . . . . . . . . . . . . . . 17
5.8 Responsibilities of the Plan Administrator . . . . . . . . . . . 17
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 Employers Who Do Not Maintain Other Qualified Plans. . . . . . . 18
6.2 Employers Who Maintain Other Qualified Master or Prototype
Defined Contribution Plans . . . . . . . . . . . . . . . . . . . 19
6.3 Employers Who, In Addition to this Plan, Maintain Other
Qualified Plans Which Are Defined Contribution Plans Other than
Master or Prototype Plans. . . . . . . . . . . . . . . . . . . . 20
6.4 Employers Who, In Addition to This Plan, Maintain A Qualified
Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . 20
6.5 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
-ii-
<PAGE>
Section Page
- ------- ----
ARTICLE 7
TRUST FUND
7.1 Receipt of Contributions by Trustee. . . . . . . . . . . . . . . 25
7.2 Investment Responsibility. . . . . . . . . . . . . . . . . . . . 25
7.3 Investment Limitations . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 8
VESTING
8.1 Nondeductible Voluntary Contributions and Earnings . . . . . . . 26
8.2 Rollovers, Transfers and Earnings. . . . . . . . . . . . . . . . 26
8.3 Employer Contributions and Earnings. . . . . . . . . . . . . . . 26
8.4 Amendments to Vesting Schedule . . . . . . . . . . . . . . . . . 26
8.5 Determination of Years of Service. . . . . . . . . . . . . . . . 27
8.6 Forfeiture of Nonvested Amounts. . . . . . . . . . . . . . . . . 28
8.7 Reinstatement of Benefit . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 9
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . 28
9.3 Qualified Preretirement Survivor Annuity . . . . . . . . . . . . 29
9.4 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.5 Notice Requirements. . . . . . . . . . . . . . . . . . . . . . . 31
9.6 Safe Harbor Rules. . . . . . . . . . . . . . . . . . . . . . . . 32
9.7 Transitional Rules . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 Vesting on Distribution Before Break in Service. . . . . . . . . 35
10.2 Restrictions on Immediate Distributions. . . . . . . . . . . . . 36
10.3 Commencement of Benefits . . . . . . . . . . . . . . . . . . . . 37
10.4 Early Retirement with Age and Service Requirement. . . . . . . . 37
10.5 Nontransferability of Annuities. . . . . . . . . . . . . . . . . 38
10.6 Conflicts with Annuity Contracts . . . . . . . . . . . . . . . . 38
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 General Rules. . . . . . . . . . . . . . . . . . . . . . . . . . 38
11.2 Required Beginning Date. . . . . . . . . . . . . . . . . . . . . 38
11.3 Limits on Distribution Periods . . . . . . . . . . . . . . . . . 38
11.4 Determination of Amount to be Distributed Each Year. . . . . . . 38
11.5 Death Distribution Provisions. . . . . . . . . . . . . . . . . . 39
11.6 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . 40
11.7 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
-iii-
<PAGE>
Section Page
- ------- ----
11.8 Transitional Rule. . . . . . . . . . . . . . . . . . . . . . . . 43
11.9 Optional Forms of Benefit. . . . . . . . . . . . . . . . . . . . 44
ARTICLE 12
WITHDRAWALS
12.1 Withdrawal of Nondeductible Voluntary Contributions. . . . . . . 45
12.2 Hardship Withdrawals . . . . . . . . . . . . . . . . . . . . . . 46
12.3 Manner of Making Withdrawals . . . . . . . . . . . . . . . . . . 46
12.4 Limitations on Withdrawals . . . . . . . . . . . . . . . . . . . 46
ARTICLE 13
LOANS
13.1 General Provisions . . . . . . . . . . . . . . . . . . . . . . . 47
13.2 Administration of Loan Program . . . . . . . . . . . . . . . . . 48
13.3 Amount of Loan . . . . . . . . . . . . . . . . . . . . . . . . . 48
13.4 Manner of Making Loans . . . . . . . . . . . . . . . . . . . . . 49
13.5 Terms of Loan. . . . . . . . . . . . . . . . . . . . . . . . . . 49
13.6 Security for Loan. . . . . . . . . . . . . . . . . . . . . . . . 49
13.7 Segregated Investment. . . . . . . . . . . . . . . . . . . . . . 50
13.8 Repayment of Loan. . . . . . . . . . . . . . . . . . . . . . . . 50
13.9 Default on Loan. . . . . . . . . . . . . . . . . . . . . . . . . 50
13.10 Unpaid Amounts . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 14
INSURANCE
14.1 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.2 Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.3 Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
14.4 Payment of Premiums. . . . . . . . . . . . . . . . . . . . . . . 51
14.5 Limitation on Insurance Premiums . . . . . . . . . . . . . . . . 51
14.6 Insurance Company. . . . . . . . . . . . . . . . . . . . . . . . 52
14.7 Distribution of Policies . . . . . . . . . . . . . . . . . . . . 53
14.8 Policy Features. . . . . . . . . . . . . . . . . . . . . . . . . 54
14.9 Changed Conditions . . . . . . . . . . . . . . . . . . . . . . . 54
14.10 Conflicts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
ARTICLE 15
ADMINISTRATION
15.1 Duties and Responsibilities of Fiduciaries; Allocation of
Fiduciary Responsibility . . . . . . . . . . . . . . . . . . . . 54
15.2 Powers and Responsibilities of the Plan Administrator. . . . . . 55
15.3 Allocation of Duties and Responsibilities. . . . . . . . . . . . 56
15.4 Appointment of the Plan Administrator. . . . . . . . . . . . . . 56
15.5 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
15.6 Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 57
15.7 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . 57
-iv-
<PAGE>
Section Page
- ------- ----
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 Sponsor's Power to Amend . . . . . . . . . . . . . . . . . . . . 58
16.2 Amendment by Adopting Employer . . . . . . . . . . . . . . . . . 59
16.3 Vesting Upon Plan Termination. . . . . . . . . . . . . . . . . . 59
16.4 Vesting Upon Complete Discontinuance of Contributions. . . . . . 59
16.5 Maintenance of Benefits Upon Merger. . . . . . . . . . . . . . . 59
16.6 Special Amendments . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE 17
MISCELLANEOUS
17.1 Exclusive Benefit of Participants and Beneficiaries. . . . . . . 60
17.2 Nonguarantee of Employment . . . . . . . . . . . . . . . . . . . 60
17.3 Rights to Trust Assets . . . . . . . . . . . . . . . . . . . . . 60
17.4 Nonalienation of Benefits. . . . . . . . . . . . . . . . . . . . 60
17.5 Aggregation Rules. . . . . . . . . . . . . . . . . . . . . . . . 61
17.6 Failure of Qualification . . . . . . . . . . . . . . . . . . . . 62
17.7 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . 62
-v-
<PAGE>
ARTICLE 1
GENERAL
1.1 PURPOSE. The Employer hereby establishes this Plan to provide
retirement, death and disability benefits for eligible employees and their
Beneficiaries. This Plan is a standardized prototype paired defined
contribution plan and is designed to permit adoption of profit sharing
provisions, money purchase pension provisions, or both. The provisions herein
and the selections made by the Employer by execution of the money purchase or
profit sharing Adoption Agreement or Agreements, shall constitute the Plan. It
is intended that the Plan and Trust qualify under sections 401 and 501 of the
Internal Revenue Code of 1986, as amended and that it comply with the provisions
of the Employee Retirement Income Security Act of 1974, as amended.
1.2 TRUST. The Employer has simultaneously adopted a Trust to receive,
invest, and distribute funds in accordance with the Plan.
ARTICLE 2
DEFINITIONS
2.1 ACCOUNT. The aggregate of the individual bookkeeping subaccounts
established for each Participant, as provided in section 5.1.
2.2 ADOPTION AGREEMENT. The written agreement or agreements of the
Employer and the Trustee by which the Employer establishes this Plan and adopts
the Trust Agreement forming a part hereof, as the same may be amended from time
to time. The Adoption Agreement contains all the options that may be selected
by the Employer. The information set forth in the Adoption Agreement executed
by the Employer shall be deemed to be part of this Plan as if set forth in full
herein.
2.3 AFFILIATED EMPLOYERS. The Employer and any corporation which is a
member of a controlled group of corporations (as defined in section 414(b) of
the Code) which includes the Employer, any trade or business (whether or not
incorporated) which is under common control (as defined in section 414(c) of the
Code) with the Employer, or any service organization (whether or not
incorporate) which is a member of an affiliated service group (as defined in
sections 414(m) and (o) of the Code) which includes the Employer.
2.4 BENEFICIARY. The person or persons (natural or otherwise)
designated by a Participant in accordance with section 11.6 to receive any
undistributed amounts credited to the Participant's Account under the Plan at
the time of the Participant's death.
<PAGE>
2.5 BREAK IN SERVICE. An Eligibility Computation Period or Vesting
Computation Period in which an Employee fails to complete more than five hundred
(500) Hours of Service.
2.6 CODE. The Internal Revenue Code of 1986, as amended from time to
time, or any successor statute.
2.7 COMPENSATION.
(a) Compensation will mean all of each Participant's W-2
earnings.
(b) For any self-employed individual covered under the Plan,
Compensation will mean Earned Income.
(c) Compensation shall include only that Compensation that is
actually paid to the Participant during the Plan Year.
(d) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includable in the gross income of the Employee under sections 125, 402(a)(8),
402(h) or 403(b) of the Code. The effective date of this subsection shall be
elected by the Employer in the Adoption Agreement.
(e) The annual Compensation of each Participant taken into
account under the Plan for any year shall not exceed two hundred thousand
dollars ($200,000), as adjusted by the Secretary at the same time and in the
same manner as under section 415(d) of the Code. In determining the
Compensation of a Participant for purposes of this limitation, the rules of
section 414(q)(6) of the Code shall apply, except in applying such rules, the
term "family" shall include only the Spouse of the Participant and any lineal
descendants of the Participant who have not attained age nineteen (19) before
the close of the year. If, as a result of the application of such rules, the
adjusted two hundred thousand dollar ($200,000) limitation is exceeded, then
(except for purposes of determining the portion of Compensation up to the
Integration Level to the extent this Plan provides for permitted disparity), the
limitation shall be prorated among the affected individuals in proportion to
each such individual's Compensation as determined under this section prior to
the application of this limitation.
(f) The effective date of this subsection shall be the first Plan
Year beginning on or after January 1, 1989.
2.8 CUSTODIAN. The custodian, if any, designated in the Adoption
Agreement.
2.9 DETERMINATION DATE. With respect to any Plan Year subsequent to the
first Plan Year, the last day of the preceding
-2-
<PAGE>
Plan Year. For the first Plan Year of the Plan, the last day of that Plan Year.
2.10 EARLY RETIREMENT DATE. The first day of the month coincident with
or next following the date upon which the Participant satisfies the early
retirement age and service requirements in the Adoption Agreement; provided,
however, such requirements may not be less than age fifty-five (55), nor more
than fifteen (15) Years of Service.
2.11 EARNED INCOME. The net earnings from self-employment in the trade
or business with respect to which the Plan is established, for which personal
services of the individual are a material income-producing factor. Net earnings
will be determined without regard to items not included in gross income and the
deductions allocable to such items. Net earnings are reduced by contributions
to a qualified plan to the extent deductible under section 404 of the Code. Net
earnings shall be determined with regard to the deduction allowed to the
Employer by section 164(f) of the Code for taxable years beginning after
December 31, 1989.
2.12 EFFECTIVE DATE. The first day of the first Plan Year for which the
Plan is effective as specified in the Adoption Agreement.
2.13 ELIGIBILITY COMPUTATION PERIOD. For purposes of determining Years
of Service and Breaks in Service for eligibility to participate, the initial
Eligibility Computation Period shall be the twelve (12) consecutive month period
beginning with the day the Employee first performs an Hour of Service for the
Employer (employment commencement date). The succeeding twelve (12) consecutive
month periods commence with the first anniversary of the Employee's employment
commencement date.
2.14 EMPLOYEE. Any person, including a Self-Employed Individual, who is
employed by the Employer maintaining the Plan or any other employer required to
be aggregated with such Employer under sections 414(b), (b) (m) or (o) of the
Code. The term "Employee" shall also include any Leased Employee deemed to be
an Employee of any Employer described above as provided in sections 414(n) or
(o) of the Code.
2.15 EMPLOYER. The corporation, proprietorship, partnership or other
organization that adopts the Plan by execution of an Adoption Agreement.
2.16 EMPLOYER CONTRIBUTIONS. The contribution of the Employer to the
Plan and Trust as set forth in section 4.1 and the Adoption Agreement.
2.17 ENTRY DATES. The Effective Date shall be the first Entry Date.
Thereafter, the Entry Dates shall be the first day of each Plan Year and the
first day of the seventh month of each Plan Year.
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2.18 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
2.19 HOUR OF SERVICE.
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer. These hours shall be
credited to the Employee only for the computation period or periods in which the
duties are performed; and
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during which no duties
are performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty, or leave of absence. No more
than five hundred one (501) Hours of Service shall be credited under this
paragraph to an Employee on account of any single, continuous period during
which the Employee performs no duties (whether or not such period occurs in a
single computation period). Hours under this paragraph will be calculated and
credited pursuant to section 2530.200b-2 of the Department of Labor regulations
which are incorporated herein by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The same Hours of
Service shall not be credited both under paragraph (a) or paragraph (b), as the
case may be, and under this paragraph (c). These hours shall be credited to the
Employee for the computation period or periods to which the award or agreement
pertains rather than the computation period in which the award, agreement, or
payment is made.
(d) Solely for purposes of determining whether an Employee has a
Break in Service, Hours of Service shall also include an uncompensated
authorized leave of absence not in excess of two (2) years, or military leave
while the Employee's reemployment rights are protected by law or such additional
or other periods as granted by the Employer as military leave (credited on the
basis of forty (40) Hours of Service per each week or eight (8) Hours of Service
per working day), provided the Employee returns to employment at the end of his
leave of absence or within ninety (90) days of the end of his military leave,
whichever is applicable.
(e) Hours of Service will be credited for employment with other
members of an affiliated service group (under section 414(m)), a controlled
group of corporations (under section 414(b)), or a group of trades or businesses
under common control (under section 414(c)) of which the adopting Employer is a
member, and any other entity required to be aggregated with the Employer
pursuant to section 414(o) and the regulations thereunder. Hours of Service
will also be credited for any individual
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considered an Employee for purposes of this Plan under section 414(n) or
section 414(o) and the regulations thereunder.
(f) Solely for purposes of determining whether an Employee has a
Break in Service, Hours of Service shall also include absence from work for
maternity or paternity reasons, if the absence begins on or after the first day
of the first Plan Year beginning after 1984. During this absence, the Employee
shall be credited with the Hours of Service which would have been credited but
for the absence, or, if such hours cannot be determined with eight (8) hours per
day. An absence from work for maternity or paternity reasons means an absence:
(i) by reason of the pregnancy of an Employee;
(ii) by reason of the birth of a child of the Employee;
(iii) by reason of the placement of a child with the
Employee in connection with adoption; or
(iv) for purposes of caring for such a child for a
period immediately following such birth or placement.
These Hours of Service shall be credited in the computation period following the
computation period in which the absence begins, except as necessary to prevent a
Break in Service in the computation period in which the absence begins.
However, no more than five hundred one (501) Hours of Service will be credited
for purposes of any such maternity or paternity absence from work.
(g) The Employer may elect to compute Hours of Service by the use
of one of the service equivalencies in the Adoption Agreement. Only one method
may be selected. If selected, the service equivalency must be applied to all
Employees covered under the Plan.
(h) If the Employer amends the method of crediting service from
the elapsed time method described in section 1.410(a)-7 of the Treasury
Regulations to the Hours of Service computation method by the adoption of this
Plan, or an Employee transfers from a plan under which service is determined on
the basis of elapsed time, the following rules shall apply for purposes of
determining the Employee's service under this Plan up to the time of amendment
or transfer:
(i) the Employee shall receive credit, as of the date
of amendment or transfer, for a number of Years of Service equal to the number
of one (1) year periods of service credited to the Employee as of the date of
the amendment or transfer; and
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(ii) the Employee shall receive credit in the
applicable computation period which includes the date of amendment or transfer,
for a number of Hours of Service determined by applying the weekly service
equivalency specified in paragraph (g) to any fractional part of a year credited
to the Employee under this paragraph (h) as of the date of amendment or
transfer. The use of the weekly service equivalency shall apply to all
Employees who formerly were credited with service under the elapsed time method.
2.20 INTEGRATION LEVEL. The Taxable Wage Base or such lesser amount
elected by the Employer in the Adoption Agreement.
2.21 KEY EMPLOYEE.
(a) Any Employee or former Employee (and the Beneficiaries of
such Employee) who at any time during the determination period was an officer of
the Employer if such individual's annual Compensation exceeds fifty percent
(50%) of the dollar limitation under section 415(b)(1)(A) of the Code; an owner
(or considered an owner under section 318 of the Code) of one of the ten (10)
largest interests in the Employer if such individual's Compensation exceeds one
hundred percent (100%) of the dollar limitation under section 415(c)(1)(A) of
the Code; a Five Percent (5%) Owner of the Employer; or a one percent (1%) owner
of the Employer who has annual Compensation of more than one hundred fifty
thousand dollars ($150,000).
(b) For purposes of this section, annual Compensation means
compensation as defined in section 415(c)(3) of the Code, but including amounts
contributed by the Employer pursuant to a salary reduction agreement which are
excludable from the Employee's gross income under sections 125, 402(a)(8),
402(h) or 403(b) of the Code.
(c) For purposes of this section, determination period is the
Plan Year containing the Determination Date and the four (4) preceding Plan
Years.
2.22 LEASED EMPLOYEE.
(a) Any person (other than an Employee of any of the Affiliated
Employers) who, pursuant to an agreement between any of the Affiliated Employers
and any other person ("leasing organization"), has performed service for any of
the Affiliated Employers (or for any of the Affiliated Employers and related
persons determined in accordance with section 414(n)(6) of the Code) on a
substantially full-time basis for a period of at least one (1) year and such
services are of a type historically performed by employees in the Affiliated
Employer's business field. Contributions or benefits provided a Leased Employee
by the leasing organization which are attributable to services performed for the
Affiliated Employer shall be treated as provided by the Affiliated Employer.
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(b) A Leased Employee shall not be considered an Employee of an
Affiliated Employer if:
(i) such employee is covered by a money purchase
pension plan providing:
(1) a nonintegrated employer contribution rate of
at least ten percent (10%) of compensation (as defined in section 415(c)(3) of
the Code), but including amounts contributed pursuant to a salary reduction
agreement which are excludable from the employee's gross income under
sections 125, 402(a)(8), 402(h) or 403(b) of the Code;
(2) immediate participation; and
(3) full and immediate vesting.
and
(ii) Leased Employees do not constitute more than
twenty percent (20%) of the Affiliated Employer's Non-Highly-Compensated
workforce.
(c) The determination of whether a person is a Leased Employee
will be made pursuant to section 414(n) of the Code.
2.23 MAXIMUM DISPARITY RATE. The lesser of:
(a) five and seven-tenths percent (5.7%);
(b) the applicable percentage determined in accordance with the
table below:
If the Integration Level is
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
$0 X */ 5.7%
X of TWB 80% of TWB 4.3%
80% of TWB Y **/ 5.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is five and seven-tenths percent (5.7%).
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2.24 MAXIMUM PROFIT SHARING DISPARITY RATE. The lesser of:
(a) two and seven-tenths percent (2.7%);
(b) the applicable percentage determined in accordance with the
table below:
If the Integration Level is
The Applicable
More Than But Not More Than Percentage Is:
- --------- ----------------- --------------
$0 X */ 2.7%
X of TWB 80% of TWB 1.3%
80% of TWB Y **/ 2.4%
*/ X = the greater of $10,000 or 20% of the Taxable Wage Base.
**/ Y = any amount more than 80% of the Taxable Wage Base but less than 100% of
the Taxable Wage Base.
"TWB" means the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the applicable
percentage is two and seven-tenths percent (2.7%).
2.25 NON-KEY EMPLOYEE. Any Employee or former Employee who is not a Key
Employee. In addition, any Beneficiary of a Non-Key Employee shall be treated
as a Non-Key Employee.
2.26 NORMAL RETIREMENT AGE. The age selected in the Adoption Agreement,
but not less than age fifty-five (55). If the Employer enforces a mandatory
retirement age, the Normal Retirement Age is the lesser of that mandatory age or
the age specified in the Adoption Agreement.
2.27 OWNER-EMPLOYEE. An individual who is a sole proprietor, or who is a
partner owning more than ten percent (10%) of either the capital or profits
interest of a partnership.
2.28 PARTICIPANT. A person who has met the eligibility requirements of
section 3.1 and whose Account hereunder has been neither completely forfeited
nor completely distributed.
2.29 PLAN. The prototype paired defined contribution profit sharing and
money purchase pension plan provided under this basic plan document. References
to the Plan shall refer to the profit sharing provisions, the money purchase
pension provisions, or both, as the context may require.
2.30 PLAN ADMINISTRATOR. The person, persons or entity appointed by the
Employer pursuant to ARTICLE 15 to manage and administer the Plan.
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2.31 PLAN YEAR. The twelve (12) consecutive month period designated by
the Employer in the Adoption Agreement.
2.32 SELF-EMPLOYED INDIVIDUAL. An individual who has Earned Income for
the taxable year from the trade or business for which the Plan is established,
or an individual who would have had Earned Income for the taxable year but for
the fact that the trade or business had no net profits for the taxable year.
2.33 SHARES. Shares of stock in any regulated investment company
registered under the Investment Company Act of 1940 that are made available for
investment purposes as an investment option under this Plan.
2.34 SPONSOR. The sponsor designated in the Adoption Agreement which has
made this Plan available to the Employer.
2.35 TAXABLE WAGE BASE. The maximum amount of earnings which may be
considered wages for a year under section 3121(a)(1) of the Code in effect as of
the beginning of the Plan Year.
2.36 TOTAL AND PERMANENT DISABILITY. The inability of the Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment, which condition, in the opinion of a
physician chosen by the Plan Administrator, can be expected to result in death
or which has lasted or can be expected to last for a continuous period of not
less than twelve (12) months.
2.37 TRUST. The fund maintained by the Trustee for the investment of
Plan assets in accordance with the terms and conditions of the Trust Agreement.
2.38 TRUST AGREEMENT. The agreement between the Employer and the Trustee
under which the assets of the Plan are held, administered, and managed. The
provisions of the Trust Agreement shall be considered an integral part of this
Plan as if set forth fully herein.
2.39 TRUSTEE. The individual or corporate Trustee or Trustees under the
Trust Agreement as they may be constituted from time to time.
2.40 VALUATION DATE. The last day of each Plan Year and such other dates
as may be determined by the Plan Administrator, as provided in Section 5.6 for
valuing the Trust assets.
2.41 VESTING COMPUTATION PERIOD. The Plan Year.
2.42 YEAR OF SERVICE. An Eligibility Computation Period, Vesting
Computation Period, or Plan Year, whichever is applicable, during which an
Employee has completed at least one thousand (1,000) Hours of Service (whether
or not continuous). The Employer may, in the Adoption Agreement, specify a
fewer number of hours.
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ARTICLE 3
ELIGIBILITY AND YEARS OF SERVICE
3.1 ELIGIBILITY REQUIREMENTS.
(a) Each Employee of the Affiliated Employers shall become a
Participant in the Plan as of the first Entry Date after the date on which the
Employee has satisfied the minimum age and service requirements specified in the
Adoption Agreement.
(b) The Employer may elect in the Adoption Agreement to exclude
from participation:
(i) Employees included in a unit of employees covered
by a collective bargaining agreement between the Employer and Employee
representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee representatives" does not
include any organization more than half of whose members are Employees who are
owners, officers, or executives of the Employer; and
(ii) nonresident aliens who receive no earned income
from the Employer which constitutes income from sources within the United
States.
3.2 PARTICIPATION AND SERVICE UPON REEMPLOYMENT. Upon the reemployment
of any Employee, the following rules shall determine his eligibility to
participate in the Plan and his credit for prior service.
(a) PARTICIPATION. If the reemployed Employee was a Participate
in the Plan during his prior period of employment, he shall be eligible upon
reemployment to resume participation in the Plan. If the reemployed Employee
was not a Participant in the Plan, he shall be considered a new Employee and
required to meet the requirements of section 3.1 in order to be eligible to
participate in the Plan, subject to the reinstatement of credit for prior
service under paragraph (b) below.
(b) CREDIT FOR PRIOR SERVICE. In the case of any Employee who is
reemployed before or after incurring a Break in Service, any Hour of Service and
Year of Service credited to the Employee at the end of his prior period of
employment shall be reinstated as of the date of his reemployment.
3.3 PREDECESSOR EMPLOYERS. If specified in the Adoption Agreement,
Years of Service with a predecessor employer will be treated as service for the
Employer for eligibility purposes; provided, however, if the Employer maintains
the plan of a predecessor employer, Years of Service with such employer will be
treated as service with the Employer without regard to any election.
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ARTICLE 4
CONTRIBUTIONS
4.1 EMPLOYER CONTRIBUTIONS.
(a) MONEY PURCHASE PENSION CONTRIBUTIONS. For each Plan Year,
the Employer shall contribute to the Trust an amount equal to such uniform
percentage of Compensation of each eligible Participant as may be determined by
the Employer in accordance with the money purchase pension contribution formula
specified in the Adoption Agreement. Subject to the limitations of section 5.4,
the money purchase pension contribution formula may be integrated with Social
Security, as set forth in the Adoption Agreement.
(b) PROFIT SHARING CONTRIBUTION. For each Plan Year, the
Employer shall contribute to the Trust an amount as may be determined by the
Employer in accordance with the profit sharing formula set forth in the Adoption
Agreement.
(c) ELIGIBLE PARTICIPANTS. Subject to the Minimum Allocation
rules of section 5.2 and the exclusions specified in this section, each
Participant shall be eligible to share in the Employer Contribution. An
Employer may elect in the Adoption Agreement that Participants who terminate
employment during the Plan Year with not more than five hundred (500) Hours of
Service and who are not Employees as of the last day of the Plan Year (other
than Participants who die, retire or become totally and Permanently Disabled
during the Plan Year) shall not be eligible to share in the Employer
Contribution. An Employer may further elect in the Adoption Agreement to
allocate a contribution on behalf of a Participant who completes fewer than five
hundred (500) Hours of Service and is otherwise ineligible to share in the
Employer Contribution. If the Employer fails to specify in the Adoption
Agreement the number of Hours of Service required to share in the Employer
Contribution, the number shall be five hundred (500) Hours of Service.
(d) CONTRIBUTION LIMITATION. In no event shall any Employer
Contribution exceed the maximum amount deductible from the Employer's income
under section 404 of the Code, or the maximum limitations under section 415 of
the Code provided in ARTICLE 6.
4.2 PAYMENT. All Employer Contributions to the Trust for any Plan Year
shall be made either in one lump-sum or in installments in U.S. currency, by
check, or in Shares within the time prescribed by law, including extensions
granted by the Internal Revenue Service, for filing the Employer's federal
income tax return for the taxable year with or within which such Plan Year ends.
All Employer Contributions to the Trust for a money purchase pension plan for
any Plan Year shall be made within the time prescribed by regulations under
section 412(c)(10) of the Code.
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4.3 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS.
(a) This Plan will not accept nondeductible Employee
contributions for Plan Years beginning after the Plan Year in which this Plan is
adopted by the Employer. Employee contributions made with respect to Plan years
beginning after December 31, 1986 will be limited so as to meet the
nondiscrimination test of section 401(m).
(b) A separate account shall be maintained by the Trustee for the
nondeductible Employee contributions of each Participant.
(c) Employee contributions and earnings thereon shall be fully
vested and nonforfeitable at all times.
(d) The provisions of this section shall apply to Employee
contributions made prior to the first Plan Year after the Plan Year in which the
Employer adopts this Plan.
4.4 ROLLOVERS.
(a) Subject to the approval of the Plan Administrator, a
participant who has participated in any other qualified plan described in
section 401(a) of the Code or in a qualified annuity plan described in
section 403(a) of the Code shall be permitted to make a rollover contribution in
the form of cash to the Trustee of an amount received by the Participant that is
attributable to participation in such other plan (reduced by any nondeductible
voluntary contributions he made to the Plan), provided that the rollover
contribution complies with all requirements of sections 402(a)(5) or 403(a)(4)
of the Code, whichever is applicable.
(b) Before approving such a Participant rollover, the Plan
Administrator may request from the Participant or the Employer any documents
which the Plan Administrator, in its discretion, deems necessary for such
rollover.
(c) Any rollover contribution to the Trust shall be credited to
the Participant's rollover subaccount established under section 5.1 and
separately accounted for.
4.5 DIRECT TRANSFERS.
(a) The Plan shall accept a transfer of assets directly from
another plan qualified under sections 401(a) or 403(a) of the Code only in the
Plan Administrator, in its sole discretion, agrees to accept such a transfer.
In determining whether to accept such a transfer the Plan Administrator shall
consider the administrative inconvenience engendered by such a transfer and any
risks to the continued qualification of the Plan under section 401(a) of the
Code. Acceptance of any such transfer
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shall not preclude the Plan Administrator from refusing any subsequent such
transfers.
(b) Any transfer of assets accepted under this section shall be
credited to the Participant's direct transfer subaccount and shall be separately
accounted for at all times and shall remain subject to the provisions of the
transferor plan (as it existed at the time of such transfer) to the extent
required by section 411(d)(6) of the Code (including, but not limited to, any
rights to Qualified Joint and Survivor Annuities and qualified preretirement
survivor annuities) as if such provisions were part of the Plan. In all other
respects, however, such transferred assets will be subject to the provisions of
the Plan.
(c) Assets accepted under this section shall be fully vested and
nonforfeitable.
(d) Before approving such a direct transfer, the Plan
Administrator may request from the Participant or the Employer (or the prior
employer) any documents the Plan Administrator, in its discretion, deems
necessary for such direct transfer.
ARTICLE 5
ALLOCATIONS
5.1 INDIVIDUAL ACCOUNTS. The Plan Administrator shall establish and
maintain an Account in the name of each Participant. The Account shall contain
the following subaccounts:
(a) A money purchase pension contribution subaccount to which
shall be credited each such Participant's share of (i) Employer Contributions
under section 4.1(a); (ii) the net earnings or et losses on the investment of
the assets of the Trust; (iii), distributions; and (iv) dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's subaccount;
(b) A profit sharing contribution subaccount to which shall be
credited each such Participant's share of (i) Employer Contributions under
section 4.1(b); (ii) forfeitures; (iii) the net earnings or net losses on the
investment of the assets of the trust; (iv) distributions; and (v) dividends,
capital gain distributions and other earnings received on any Shares credited to
the Participant's subaccount;
(c) A nondeductible voluntary contribution subaccount to which
shall be credited (i) nondeductible voluntary contributions by the Participant
under section 4.3; (ii) the net earnings or net losses on the investment of the
assets of the Trust; (iii) distributions; and (iv) dividends, capital gain
distributions and other earnings received on any Shares credited to the
Participant's subaccount;
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(d) A direct transfer subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.5(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount;
(e) A rollover subaccount to which shall be credited
(i) contributions to the Trust accepted under section 4.4(a); (ii) the net
earnings or net losses on the investment of the assets of the Trust;
(iii) distributions; and (iv) dividends, capital gain distributions and other
earnings received on any Shares credited to the Participant's subaccount.
5.2 MINIMUM ALLOCATION.
(a) Except as otherwise provided in this section, the Employer
Contributions and forfeitures allocated on behalf of any Participant who is not
a Key Employee shall not be less than the lesser of three percent (3%) of such
Participant's Compensation or in the case where the Employer has no defined
benefit plan which designates this Plan to satisfy section 401 of the Code, the
largest percentage of Employer Contributions and forfeitures, as a percentage of
the first two hundred thousand dollars ($200,000) of the Key Employee's
Compensation; allocated on behalf of any Key Employee for that year. The
minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
Plan provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the year because of
(i) the Participant's failure to complete one thousand (1,000) Hours of Service
or any equivalent provided in the Plan); or (ii) the Participant's failure to
make mandatory Employee contributions to the Plan; or (ii) Compensation less
than a stated amount. For purposes of this subsection, all defined contribution
plans required to be included in an aggregation group under section
416(g)(2)(A)(i) shall be treated as a single plan.
(b) For purposes of computing the minimum allocation,
Compensation shall mean Compensation as defined in section 6.5(b) of the Plan.
(c) The provision in subsection (a) above shall not apply to any
Participant who was not employed by the Employer on the last day of the Plan
Year.
(d) The provision in subsection (a) above shall not apply to any
Participant to the extent the Participant is covered under any other plan or
plans of the Employer and the Employer has provided in the Adoption Agreement
that the minimum allocation or benefit requirement applicable to top-heavy plans
will be met in the other plan or plans.
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(e) The minimum allocation required (to the extent required to be
nonforfeitable under section 416(b)) may not be forfeited under section
411(a)(3)(B) or 411(a)(3)(D).
5.3 ALLOCATION OF EMPLOYER CONTRIBUTIONS AND FORFEITURES.
(a) All money purchase pension contributions for a given Plan
Year shall be allocated to the Account of the Participant for whom such
contribution was made. Any forfeiture from a Participant's money purchase
pension contribution subaccount arising under the Plan for a given Plan Year
shall be applied as specified in the Adoption Agreement, either: (i) to reduce
the Employer Contribution in that year, or if an excess of the Employer
Contribution for such Plan Year, the excess amounts shall be used to reduce the
Employer Contribution in the next succeeding Plan Year or Years or (ii) to be
added to the Employer Contributions and allocated accordingly.
(b) All profit sharing contributions and forfeitures from a
Participant's profit sharing contribution subaccount will be allocated to the
Account of each Participant in the ratio that such Participant's Compensation
bears to the Compensation of all Participants. However, if the profit sharing
contribution formula selected in the Adoption Agreement is integrated with
Social Security, profit sharing contributions for the Plan Year plus any
forfeitures will be allocated to Participants' Accounts as follows:
(i) STEP ONE. Contributions and forfeitures will be
allocated to each Participant's Account in the ratio that each Participant's
total Compensation bears to all Participants' total Compensation, but not in
excess of three percent (3%) of each Participant's Compensation. (Step One is
not applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(ii) STEP TWO. Any contributions and forfeitures remaining
after the allocation in Step One (if any) will be allocated to each
Participant's Account in the ratio that each Participant's Compensation for the
Plan Year in excess of the Integration Level bears to the excess Compensation of
all Participants, but not in excess of three percent (3%). (Step Two is not
applicable if the Employer enters into the money purchase pension Adoption
Agreement).
(iii) STEP THREE. Any contributions and forfeitures
remaining after the allocation in Step Two (if any) will be allocated to each
Participant's Account in the ratio that the sum of each Participant's total
Compensation and Compensation in excess of the Integration Level bears to the
sum of all Participants' total Compensation and Compensation in excess of the
Integration Level, but not in excess of whichever of the following is
applicable:
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(1) if the Employer has not adopted the money
purchase pension Adoption Agreement, then the Maximum Profit Sharing Disparity
Rate; or
(2) If the Employer has adopted the money purchase
pension Adoption Agreement, then the lesser of:
(a) the percentage of each Participant's
Compensation for the Plan Year up to the Integration Level determined by
dividing the allocation by such Compensation (the base contribution percentage);
or
(b) the Maximum Disparity Rate.
(iv) STEP FOUR. Any remaining contributions or forfeitures
will be allocated to each Participant's Account in the ratio that each
Participant's total Compensation for the Plan Year bears to all Participants'
total Compensation for that year.
(c) Notwithstanding anything in (a) or (b) above to the contrary,
forfeiture arising under a Participant's money purchase pension contribution
subaccount will only be used to reduce the contributions of the Participant's
Employer who adopted this Plan, and forfeitures arising under a Participant's
profit sharing contribution subaccount will be reallocated only for the benefit
of Employees of the Participant's Employer who adopted this Plan.
5.4 COORDINATION OF SOCIAL SECURITY INTEGRATION. If the Employer
maintains plans involving integration with Social Security other than this Plan,
and if any Participant is eligible to participate in more than one of such
plans, all such plans will be considered to be integrated if the extent of the
integration of all such plans does not exceed one hundred percent (100%). For
purposes of the preceding sentence, the extent of integration of a plan is the
ration (expressed as a percentage) which the actual benefits, benefit rate,
offset rate, or Employer Contribution rate under the plan bears to the
integration limitation application to such plan. If the Employer enters into
both the money purchase pension Adoption Agreement and the profit sharing
Adoption Agreement under this Plan, integration with Social Security may only be
selected in one Adoption Agreement.
5.5 WITHDRAWALS AND DISTRIBUTIONS. Any distribution to a Participant or
his Beneficiary, any amount transferred from a Participant's Account directly to
the Trustee of any other qualified plan described in section 401(a) of the Code
or to a qualified annuity plan described in section 403(a) of the Code, or any
withdrawal by a Participant shall be charged to the appropriate subaccount(s) of
the Participant as of the date of the distribution or the withdrawal.
5.6 DETERMINATION OF VALUE OF TRUST FUND AND OF NET EARNINGS OR LOSSES.
As of each Valuation Date the Trustee shall
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determine for the period then ended the sum of the net earnings or losses of the
Trust (excluding with respect to Shares and other assets specifically allocated
to a specific Participant's subaccount, (i) dividends and capital gain
distributions from Shares, (ii) receipts or income attributable to insurance
policies, (iii) income gains and/r losses attributable to a Participant's loans
made pursuant to ARTICLE 13 or to any other assets) which shall reflect accrued
but unpaid interest, dividends, gains, or losses realized from the sale,
exchange or collection of assets, other income received, appreciation in the
fair market value of assets, depreciation in the fair market value of assets,
administration expenses, and taxes and other expenses paid. Gains or losses
realized and adjustments for appreciation or depreciation in fair market value
shall be computed with respect to the difference between such value as of the
preceding Valuation Date or date or purchase, whichever is applicable, and the
value as of the date of disposition or the current Valuation Date, whichever is
applicable.
5.7 ALLOCATION OF NET EARNINGS OR LOSSES.
(a) As of each Valuation Date the net earnings or losses of the
Trust (excluding with respect to Shares and other assets specifically allocated
to a specific Participant's subaccount, (i) dividends and capital gain
distributions from Shares, (ii) dividends or credits attributable to insurance
policies, (iii) income gains and/or losses attributable to a Participant's loans
made pursuant to ARTICLE 13 or to any other assets, all of which shall be
allocated to such Participant's subaccount) for the valuation period then ending
shall be allocated to the Accounts of all Participants (or Beneficiaries) having
credits in the fund both on such date and at the beginning of such valuation
period. Such allocation shall be made by the application of a fraction, the
numerator of which is the value of the Account of a specific Participant (or
Beneficiary) as of the immediately preceding Valuation Date, reduced by any
distributions therefrom since such preceding Valuation Date, and the denominator
of which is the total value of all such Accounts as of the preceding Valuation
Date, reduced by any distributions therefrom since such preceding Valuation
Date.
(b) To the extent that Shares and other assets are specifically
allocated to a specific Participant's subaccount: (i) dividends and capital
gain distributions from Shares; (ii) dividends or credits attributable to
insurance policies; and (iii) income gains and/or losses attributable to a
Participant's loans made pursuant to ARTICLE 13 or to any other assets, all
shall be allocated to such Participant's subaccount.
5.8 RESPONSIBILITIES OF THE PLAN ADMINISTRATOR. The Plan Administrator
shall maintain accurate records with respect to the contributions made by or on
behalf of Participants under the Plan, and shall furnish the Trustee with
written instructions directing the Trustee to allocate all Plan contributions to
the
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Trust among the separate Accounts of Participants in accordance with section 5.1
above. In making any such allocation, the Trustee shall be fully entitled to
rely on the instructions furnished by the Plan Administrator, and shall be under
no duty to make any inquiry or investigation with respect thereto.
ARTICLE 6
LIMITATIONS ON ALLOCATIONS
6.1 EMPLOYERS WHO DO NOT MAINTAIN OTHER QUALIFIED PLANS.
(a) If the Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit fund, as defined in
section 419(e) of the Code, maintained by the Employer, or an individual medical
account, as defined in section 415(1)(2) of the Code, maintained by the
Employer, which provides an Annual Addition as defined in section 6.5(a), the
amount of Annual Additions that may be credited to the Participant's Account for
any Limitation Year will not exceed the lesser of the Maximum Permissible Amount
or any other limitation contained in this Plan. If the Employer Contribution
that would otherwise be contributed or allocated to the Participant's Account
would cause the Annual Additions for the Limitation Year to exceed the Maximum
Permissible Amount, the amount contributed or allocated will be reduced so that
the Annual Additions for the Limitation Year will equal the Maximum Permissible
Amount.
(b) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated.
(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
(d) If, pursuant to subsection (c) or as a result of the
allocation of forfeitures, there is an Excess Amount the excess will be disposed
of as follows:
(i) Any nondeductible voluntary Employee contributions, to
the extent they would reduce the Excess Amount, will be returned to the
Participant;
(ii) If after the application of paragraph (i) an Excess
Amount still exists, and the Participant is covered by the Plan at the end of
the Limitation Year, the Excess Amount in the Participant's Account will be used
to reduce Employer Contributions (including any allocation of forfeitures) for
such
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Participant in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(iii) If after the application of paragraph (i) an Excess
Amount still exists, and the Participant is not covered by the Plan at the end
of the Limitation Year, the Excess Amount will be held unallocated in a suspense
account. The suspense account will be applied to reduce future Employer
Contributions (including allocation of any forfeitures) for all remaining
Participants in the next Limitation Year, and each succeeding Limitation Year if
necessary;
(iv) If a suspense account is in existence at any time
during the Limitation Year pursuant to this section, it will not participate in
the allocation of the Trust's investment gains and losses. If a suspense
account is in existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and reallocated to
Participants' Accounts before any Employer or any Employee contributions may be
made to the Plan for the Limitation Year. Excess amounts may not be distributed
to Participants or former Participants.
6.2 EMPLOYERS WHO MAINTAIN OTHER QUALIFIED MASTER OR PROTOTYPE DEFINED
CONTRIBUTION PLANS.
(a) This section applies if, in addition to this Plan, the
Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as defined
in section 419(e) of the Code maintained by the Employer or an individual
medical account, as defined in section 415(l)(2) of the Code, maintained by the
Employer which provides an Annual Addition as defined in section 6.5(a), during
any Limitation Year. The Annual Additions that may be credited to a
Participant's Account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to a Participant's Account under the other plans and welfare benefit funds for
the same Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare benefit funds
maintained by the Employer are less than the Maximum Permissible Amount and the
Employer Contribution that would otherwise be contributed or allocated will be
reduced so that the Annual Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or allocated to
the Participant's Account under this Plan for the Limitation Year.
(b) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in section 6.1(b).
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(c) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
(d) If, pursuant to section 6.2(c), or as a result of the
allocation of forfeitures, a Participant's Annual Additions under this Plan and
such other plans would result in an Excess Amount for a Limitation Year, the
Excess Amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additional attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
(e) If an Excess Amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the Excess Amount attributed to this Plan will be the product of:
(i) the total Excess Amount allocated as of such date, times
(ii) the ratio of (1) the Annual Additions allocated to the
Participant for the Limitation Year as of such date under this Plan to (2) the
total Annual Additions allocated to the Participant for the Limitation Year as
of such date under this and all the other qualified master or prototype defined
contribution plans.
(f) Any Excess Amount attributed to this Plan will be disposed of
in the manner described in section 6.1(d).
6.3 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN OTHER QUALIFIED
PLANS WHICH ARE DEFINED CONTRIBUTION PLANS OTHER THAN MASTER OR PROTOTYPE PLANS.
If the Participant is covered under another qualified defined contribution plan
maintained by the Employer which is not a Master or Prototype Plan, Annual
Additions which may be credited to the Participant's Account under this Plan for
any Limitation Year will be limited in accordance with section 6.2 as though the
other plan were a Master or Prototype Plan unless the Employer provides other
limitations in the Adoption Agreement.
6.4 EMPLOYERS WHO, IN ADDITION TO THIS PLAN, MAINTAIN A QUALIFIED
DEFINED BENEFIT PLAN. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan covering any Participant in this Plan, the sum of
the Participant's Defined Benefit Fraction and Defined Contribution Fraction
will not exceed 1.0 in any Limitation Year. The Annual Additions which may be
credited to the Participant's Account under this Plan for any Limitation Year
will be limited in accordance with the Adoption Agreement.
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6.5 DEFINITIONS. Unless otherwise expressly provided herein, for
purposes of this ARTICLE ONLY, the following definitions and rules of
interpretation shall apply:
(a) ANNUAL ADDITIONS. The sum of the following amounts credited
to a Participant's Account for the Limitation Year:
(i) Employer Contributions;
(ii) Employee Contributions;
(iii) forfeitures; and
(iv) amounts allocated after March 31, 1984 to an individual
medical account, as defined in section 415(1)(2) of the Code, which is part of a
pension or annuity plan maintained by the Employer, are treated as amounts
derived from contributions paid or accrued after December 31, 1985, in taxable
years ending after such date, which are attributable to post-retirement medical
benefits allocated to the separate account of a key employee, as defined in
section 419A(d)(3) of the Code, under a welfare benefit fund, as defined in
section 419(e) of the Code, maintained by the Employer, are treated as Annual
Additions to a defined contribution plan.
For this purpose, any Excess Amount applied under sections 6.1(d) or 6.2(f) in
the Limitation Year to reduce Employer Contributions will be considered Annual
Additions for such Limitation Year.
(b) COMPENSATION. A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(i) Employer contributions to a plan of deferred
compensation which are not includable in the Employee's gross income for the
taxable year in which contributed, or Employer Contributions under a simplified
employee pension plan to the extent such contributions are excluded from the
Employee's gross income, or any distributions from a plan of deferred
compensation;
(ii) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(iii) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
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(iv) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in section 403(b) of the
Code (whether or not the amounts are actually excludable from the gross income
of the Employee).
For purposes of applying the limitations of this ARTICLE, Compensation for
a Limitation Year is the Compensation actually paid or includable in gross
income during such year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
defined contribution plan who is Totally and Permanently Disabled (as defined in
section 22(e)(3) of the Code) is the Compensation such Participant would have
received for the Limitation Year if the Participant had been paid at the rate of
Compensation paid immediately before becoming permanently and totally disabled;
such imputed Compensation for the disabled Participant may be taken into account
only if the Participant is not a Highly-Compensated Employee (as defined in
section 414(q) of the Code), and contributions made on behalf of such
Participant are nonforfeitable when made.
(c) DEFINED BENEFIT FRACTION. A fraction, the numerator of which
is the sum of the Participant's Projected Annual Benefits under all the defined
benefit plans (whether or not terminated) maintained by the Employer, and the
denominator of which is the lesser of one hundred percent (100%) of the dollar
limitation determined for the Limitation Year under sections 415(b) and (d) of
the Code or one hundred forty percent (140%) of highest average compensation,
including any adjustment under section 415(b) of the Code.
Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after December 31, 1986, in one
or more defined benefit plans maintained by the Employer which were in existence
on May 6, 1986, the denominator of this fraction will not be less than one
hundred twenty-five percent (125%) of the sum of the annual benefits under such
plans which the Participant had accrued as of the close of the last Limitation
Year beginning before January 1, 1987, disregarding any changed in the terms and
conditions of the Plan after May 5, 1986. The preceding sentence applies only
if the defined benefit plans individually and in the aggregate satisfied the
requirements of section 415 of the Code for all Limitation Years beginning
before January 1, 1987.
(d) DEFINED CONTRIBUTION DOLLAR LIMITATION. Thirty thousand
dollars ($30,000) or, if greater, one-fourth (1/4) of the defined benefit dollar
limitation set forth in section 415(b)(1) of the Code as in effect for the
Limitation Year.
(e) DEFINED CONTRIBUTION FRACTION. A fraction, the numerator of
which is the sum of the Annual Additions to the
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Participant's Account under all the defined contribution plans (whether or not
terminated) maintained by the Employer for the current and all prior Limitation
Years (including the Annual Additions attributable to the Participant's
nondeductible voluntary contributions to all defined benefit plans, whether or
not terminated, maintained by the Employer, and the Annual Additions
attributable to all welfare benefit funds, as defined in section 419(e) of the
Code and individual medical accounts, as defined in section 415(1)(2) of the
Code, maintained by the Employer), and the denominator of which is the sum of
the maximum aggregate amounts for the current and all prior Limitation Years of
service with the Employer (regardless of whether a defined contribution plan was
maintained by the Employer). The maximum aggregate amount in any Limitation
Year is the lesser of one hundred percent (100%) of the dollar limitation in
effect under section 415(c)(1)(A) of the Code or thirty-five percent (35%) of
the Participant's Compensation for such year.
If the Participant was a Participant as of the end of the first day
of the first Limitation Year beginning after December 31, 1986, in one or more
defined contribution plans maintained by the Employer which were in existence on
May 6, 1986, the numerator of this fraction will be adjusted if the sum of this
fraction and the Defined Benefit Fraction would otherwise exceed 1.0 under the
terms of this Plan. Under the adjustment, an amount equal to the product of
(1) the excess of the sum of the fractions over 1.0 times (2) the denominator of
this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using the section 415 limitation applicable to the first
Limitation Year beginning on or after January 1, 1987. The Annual Addition
shall not be recomputed to treat all Employee contributions as Annual Additions.
(f) For purposes of this ARTICLE, Employer shall mean the
employer that adopts this Plan, and all members of a controlled group of
corporations (as defined in section 414(b) of the Code as modified by
section 415(h) of the Code), all commonly controlled trades or businesses (as
defined in section 414(c) of the Code as modified by section 415(h) of the
Code), or affiliated service groups (as defined in section 414(m) of the Code)
of which the adopting Employer is a part and any other entity required to be
aggregated with the Employer pursuant to regulations under section 414(o) of the
Code.
(g) EXCESS AMOUNT. The excess of the Participant's Annual
Addition for the Limitation Year over the Maximum Permissible Amount.
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(h) HIGHEST AVERAGE COMPENSATION. The average compensation for
the three consecutive Plan Years that produce the highest average.
(i) LIMITATION YEAR. A Plan Year, or the twelve (12) consecutive
month period elected by the Employer in the Adoption Agreement. All qualified
plans maintained by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different twelve (12) consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year in which
the amendment is mae.
(j) MASTER OR PROTOTYPE PLAN. A plan the form of which is the
subject of a favorable opinion letter from the Internal Revenue Service.
(k) MAXIMUM PERMISSIBLE AMOUNT. The maximum Annual Addition that
may be contributed or allocated to a Participant's Account under the Plan for
any Limitation Year shall not exceed the lesser of:
(a) the Defined Contribution Dollar Limitation; or
(b) twenty-five percent (25%) of the Participant's
Compensation for the Limitation Year.
The Compensation limitation referred to in subsection (b) shall not apply
to any contribution for medical benefits (within the meaning of section 401(h)
or section 419A(f)(2) of the Code) which is otherwise treated as an Annual
Addition under section 415(l)(1) or section 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different twelve (12) consecutive month period, the Maximum
Permissible Amount will not exceed the Defined Contribution Dollar Limitation
multiplied by the following fraction:
NUMBER OF MONTHS IN THE SHORT LIMITATION YEAR
12
(l) PROJECTED ANNUAL BENEFIT. The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or Qualified Joint and
Survivor Annuity) to which the Participant would be entitled under the terms of
the Plan assuming:
(i) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
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(ii) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
ARTICLE 7
TRUST FUND
7.1 RECEIPT OF CONTRIBUTIONS BY TRUSTEE. All contributions to the Trust
that are received by the Trustee, together with any earnings thereon, shall be
held, managed and administered by the Trustee named in the Adoption Agreement in
accordance with the terms and conditions of the Trust Agreement and the Plan.
The Trustee may use a Custodian designated by the Sponsor to perform
recordkeeping and custodial functions. The Trustee shall be subject to the
proper directions of the Employer or the Plan Administrator made in accordance
with the terms of the Plan and ERISA.
7.2 INVESTMENT RESPONSIBILITY.
(a) If the Employer elects in the Adoption Agreement to exercise
investment authority and responsibility, the selection of the investments in
which assets of the Trust are invested shall be the responsibility of the Plan
Administrator and each Participant will have a ratable interest in all assets of
the Trust.
(b) If the Adoption Agreement so provides and the Employer elects
to permit each Participant or Beneficiary to select the investments in his
Account, no person, including the Trustee and the Plan Administrator, shall be
liable for any loss or for any breach of fiduciary duty which results from such
Participant's or Beneficiary's exercise of control.
(c) If the Adoption Agreement so provides and the Employer elects
to permit each Participant or Beneficiary to select the investments in his
Account, the Employer or the Plan Administrator must complete a schedule of
Participant designations.
(d) If Participants and Beneficiaries are permitted to select the
investment in their Accounts, all investment related expenses, including
administrative fees charged by brokerage houses, will be charged against the
Accounts of the Participants.
(e) The Plan Administrator may at any time change the selection
of investments in which the assets of the Trust are invested, or subject to such
reasonable restrictions as may be imposed by the Sponsor for administrative
convenience, may submit an amended schedule of Participant designations. Such
amended documents may provide for a variance in the percentages of contributions
to any particular investment or a request that Shares in the Trust be reinvested
in whole or in part in other Shares.
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7.3 INVESTMENT LIMITATIONS. The Sponsor may impose reasonable
investment limitations on the Employer and the Plan Administrator relating to
the type of permissible investments in the Trust or the minimum percentage of
Trust assets to be invested in Shares.
ARTICLE 8
VESTING
8.1 NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS AND EARNINGS. The
Participant's nondeductible voluntary contribution subaccount shall be fool
vested and nonforfeitable at all times and no forfeitures will occur as a result
of an Employee's withdrawal of nondeductible voluntary contributions.
8.2 ROLLOVERS, TRANSFERS AND EARNINGS. The Participant's rollover
subaccount and direct transfer subaccount shall be fully vested and
nonforfeitable at all times.
8.3 EMPLOYER CONTRIBUTIONS AND EARNINGS. Notwithstanding the vesting
schedule elected by the Employer in the Adoption Agreement, the Participant's
money purchase pension contribution subaccount and profit sharing contribution
subaccount shall be fully vested and nonforfeitable upon the Participant's
death, disability, attainment of Normal Retirement Age, or, if the Adoption
Agreement provides for an Early Retirement Date, attainment of the required age
and completion of the required service. In the absence of any of the preceding
events, the Participant's money purchase contribution subaccount and his profit
sharing contribution subaccount shall vest in accordance with a minimum vesting
schedule specified in the Adoption Agreement. The schedule must be at least as
favorable to Participants as either schedule (a) or (b) below.
(a) Graduated vesting according to the following schedule:
YEARS OF SERVICE VESTED PERCENTAGE
---------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
(b) Full one hundred percent (100%) vesting after three (3) Years
of Service.
8.4 AMENDMENTS TO VESTING SCHEDULE.
(a) If the Plan's vesting schedule is amended, or the Plan is
amended in any way that directly or indirectly affects
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the computation of the Participant's nonforfeitable percentage or if the Plan is
deemed amended by an automatic change to or from a top-heavy vesting schedule,
each Participant with at least three (3) Years of Service with the Employer may
elect, within a reasonable period after the adoption of the amendment or change,
to have the nonforfeitable percentage computed under the Plan without regard to
such amendment or change. For any Participants who do not have at least one (1)
Hour of Service in any Plan Year beginning after December 31, 1988, the
preceding sentence shall be applied by substituting "five (5) Years of Service"
for "three (3) Years of Service" where such language appears.
(b) The period during which the election may be made shall
commence with the date the amendment is adopted or deemed to be made and shall
end on the latest of:
(i) sixty (60) days after the amendment is adopted;
(ii) sixty (60) days after the amendment becomes effective;
or
(iii) sixty (60) days after the Participant is issued
written notice of the amendment by the Employer or Plan Administrator.
(c) No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's Account balance may be
reduced to the extent permitted under section 412(c)(8) of the Code. For
purposes of this paragraph, a Plan amendment which has the effect of decreasing
a Participant's Account balance or eliminating an optional form of benefit, with
respect to benefits attributable to service before the amendment shall be
treated as reducing an accrued benefit. Furthermore, if the vesting schedule of
a Plan is amended, in the case of an Employee who is a Participant a of the
later of the date such amendment is adopted or the date it becomes effective,
the nonforfeitable percentage (determined as of such date) of such Employee's
right to his Employer-derived accrued benefit will not be less than his
percentage computed under the Plan without regard to such amendment.
8.5 DETERMINATION OF YEARS OF SERVICE. For purposes of determining the
vested and nonforfeitable percentage of the Participant's Employer Contribution
subaccounts, all of the Participant's Years of Service with the Employer or an
Affiliated Employer shall be taken into account. If specified in the Adoption
Agreement, Years of Service with a predecessor employer will be treated as
service for the Employer; provided, however, if the Employer maintain the plan
of a predecessor employer, Years of Service with such predecessor employer will
be treated as service with the Employer without regard to any election.
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8.6 FORFEITURE OF NONVESTED AMOUNTS.
(a) For Plan Years beginning before 1985, any portion of a
Participant's Account that is not vested shall be forfeited by him as of the
last day of the Plan Year in which a Break in Service occurs. For Plan Years
beginning after 1984, any portion of a Participant's Account that is not vested
shall be forfeited by him as of the last day of the Plan Year in which his fifth
consecutive Break in Service occurs. Any amount thus forfeited shall be
considered part of a Participant's Account in computing his vested interest.
The remaining portion of the Participant's Account will be nonforfeitable.
(b) If a distribution is made at a time when a Participant has a
vested right to less than one hundred percent (100%) of the value of the
Participant's Account attributable to Employer Contributions and forfeitures, as
determined in accordance with the provisions of section 8.3, and the nonvested
portion of the Participant's Account has not yet been forfeited in accordance
with paragraph (a) above:
(i) a separate remainder subaccount shall be established for
the Participant's interest in the Plan as of the time of the distribution, and
(ii) at any relevant time the Participant's vested portion
of the separate remainder subaccount shall be equal to an amount ("X")
determined by the following formula:
X = P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the vested percentage at the
relevant time; AB is the Account balance at the relevant time; D is the amount
of the distribution; and R is the ratio of the Account balance at the relevant
time to the Account balance after distribution.
8.7 REINSTATEMENT OF BENEFIT. If a benefit is forfeited because a
Participant or Beneficiary cannot be found, such benefit will be reinstated if a
claim is made by the Participant or Beneficiary.
ARTICLE
JOINT AND SURVIVOR ANNUITY REQUIREMENTS
9.1 GENERAL. The provisions of this ARTICLE shall apply to any
Participant who is credited with at least one (1) Hour of Service with the
Employer on or after August 23, 1984, and such other Participants as provided in
section 9.7.
9.2 QUALIFIED JOINT AND SURVIVOR ANNUITY. Unless an optional form of
benefit is selected pursuant to a Qualified Election within the ninety (90) day
period ending on the Annuity
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Starting Date, a married Participant's Vested Account Balance will be paid in
the form of a Qualified Joint and Survivor Annuity and an unmarried
Participant's Vested Account Balance will be paid in the form of a life annuity.
The Participant may elect to have such annuity distributed upon attainment of
the Earliest Retirement Age under the Plan.
9.3 QUALIFIED PRERETIREMENT SURVIVOR ANNUITY. Unless an optional form
of benefit has been selected within the Election Period pursuant to a Qualified
Election, if a Participant dies before the Annuity Starting Date, then the
Participant's Vested Account Balance shall be applied toward the purchase of an
annuity for the life of the Surviving Spouse. The Surviving Spouse may elect to
have such annuity distributed within a reasonable period after the Participant's
death.
9.4 DEFINITIONS.
(a) ELECTION PERIOD.
(i) The period which begins on the first day of the Plan
Year in which the Participant attains age thirty-five (35) and ends on the date
of the Participant's death. If a Participant separates from service prior to
the first day of the Plan Year in which age thirty-five (35) is attained, with
respect to the Account balance as of the date of separation, the Election Period
shall begin on the date of separation.
(ii) A Participant who has not yet attained age thirty-five
(35) as of the end of any current Plan Year may make a special Qualified
Election to waive the qualified preretirement survivor annuity for the period
beginning on the date of such election and ending on the first day of the Plan
Year in which the Participant will attain age thirty-five (35). Such election
shall not be valid unless the Participant receives a written explanation of the
qualified preretirement survivor annuity in such terms as are comparable to the
explanation required under section 9.5. Qualified preretirement survivor
annuity coverage will be automatically reinstated as of the first day of the
Plan Year in which the Participant attains age thirty-five (35). Any new waiver
on or after such date shall be subject to the full requirements of this ARTICLE.
(b) EARLIEST RETIREMENT AGE. The earliest date on which, under
the Plan, the Participant could elect to receive retirement benefits.
(c) QUALIFIED ELECTION.
(i) A waiver of a Qualified Joint and Survivor Annuity or a
qualified preretirement survivor annuity. Any waiver of a Qualified Joint and
Survivor Annuity or a qualified preretirement survivor annuity shall not be
effective unless:
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(1) the Participant's Spouse consents in writing to
the election;
(2) the election designates a specific Beneficiary,
including any class of Beneficiaries or any contingent Beneficiaries, which may
not be changed without spousal consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent);
(3) the Spouse's consent acknowledges the effect of
the election; and
(4) the Spouse's consent is witnessed by a Plan
representative or notary public. Additionally, a Participant's waiver of the
Qualified Joint and Survivor Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits designations by the participant without
any further spousal consent). If it is established to the satisfaction of a
Plan representative that there is no Spouse or that the Spouse cannot be
located, a waiver will be deemed a Qualified Election.
(ii) Any consent by a Spouse obtained under this provision
(or establishment that the consent of Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time before the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the Participant has received notice as provided in
section 9.5.
(d) QUALIFIED JOINT AND SURVIVOR ANNUITY. An immediate annuity
for the life of the Participant with a survivor annuity for the life of the
Spouse which equals fifty percent (50%) of the amount of the annuity which is
payable during the joint lives of the Participant and the Spouse and which is
the amount of benefit which can be purchased with the Participant's Vested
Account Balance.
(e) SPOUSE (SURVIVING SPOUSE). The Spouse or Surviving Spouse of
the Participant, provided that a former spouse will be treated as the Spouse or
Surviving Spouse and a current Spouse will not be treated as the Spouse or
Surviving Spouse to the extent provided under a qualified domestic relations
order as described in section 414(p) of the Code.
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(f) ANNUITY STARTING DATE. The first day of the first period for
which an amount is paid as an annuity or any other form.
(g) VESTED ACCOUNT BALANCE. The aggregate value of the
Participant's Vested Account Balances derived from Employer and Employee
contributions (including rollovers and direct transfers), whether vested before
or upon death, including the proceeds of insurance contracts if any, on the
Participant's life. The provisions of this ARTICLE shall apply to a Participant
who is vested in amounts attributable to Employer Contributions, Employee
contributions (or both) at the time of death or distribution.
9.5 NOTICE REQUIREMENTS.
(a) In the case of a Qualified Joint and Survivor Annuity, the
Plan Administrator shall no less than thirty (30) days and no more than ninety
(90) days prior to the Annuity Starting Date, provide each Participant a written
explanation of:
(i) the terms and conditions of a Qualified Joint and
Survivor Annuity;
(ii) the Participant's right to make and the effect of an
election to waive the Qualified Joint and Survivor Annuity form of benefit;
(iii) the rights of a Participant's Spouse; and
(iv) the right to make, and the effect of, a revocation of a
previous election to waive the Qualified Joint and Survivor Annuity.,
(b) In the case of a qualified preretirement survivor annuity as
described in section 9.3, the Plan Administrator shall provide each Participant
within the applicable period for such Participant a written explanation of the
qualified preretirement survivor annuity in such terms and in such manner as
would be comparable to the explanation provided for meeting the requirements of
subsection (a) applicable to a Qualified Joint and Survivor Annuity.
(c) The applicable period for a Participant is whichever of the
following periods ends last:
(i) the period beginning with the first day of the Plan Year
in which the Participant attains age thirty-two (32) and ending with the close
of the Plan Year preceding the Plan Year in which the Participant attains age
thirty-five (35);
(ii) a reasonable period ending after the individual becomes
a Participant;
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(iii) a reasonable period ending after subsection (e) ceases
to apply to the Participant;
(iv) a reasonable period ending after the ARTICLE first
applies to the Participant. Notwithstanding the foregoing, notice must be
provided within a reasonable period ending after separation from service in the
case of a Participant who separates from service before attaining age thirty-
five (35).
For purposes of applying subsection (c), a reasonable period
ending after the enumerated events described above in subsections (ii), (iii)
and (iv) is the end of the two-year period beginning one (1) year prior to the
date the applicable event occurs, and ending one (1) year after that date. In
the case of a Participant who separates from service before the Plan Year in
which age thirty-five (35) is attained, notice shall be provided within the two
(2) year period beginning one (1) year prior to separation and ending one (1)
year after separation. If such a participant thereafter returns to employment
with the Employer, the applicable period for such Participant shall be
redetermined.
(e) Notwithstanding the other requirements of this section, the
respective notices prescribed by this section need not be given to a Participant
if:
(i) the Plan "fully subsidizes" the cost of a Qualified
Joint and Survivor Annuity or qualified preretirement survivor annuity; and
(ii) the Plan does not allow the Participant to waive the
Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity
and does not allow a married Participant to designate a nonspouse Beneficiary.
For purposes of this subsection, a plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another benefit.
9.6 SAFE HARBOR RULES.
(a) This section shall apply to a Participant in a profit sharing
plan, and to any distribution, made on or after the first day of the first Plan
Year beginning after December 31, 1988, from or under a separate account
attributable solely to accumulated deductible Employee contributions, as defined
in section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in
a money purchase plan (including a target benefit plan) if the following
conditions are satisfied:
(i) the Participant does not or cannot elect payments in the
form of a life annuity; and
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(ii) on the death of a Participant, the Participant's Vested
Account Balance will be paid to the Participant's Surviving Spouse, but if there
is no Surviving Spouse, or if the Surviving Spouse has consented in a manner
conforming to a Qualified Election, then to the Participant's Designated
Beneficiary.
(b) The Surviving Spouse may elect to have distribution of the
Vested Account Balance commence within that ninety (90) day period following the
date of the Participant's death. The Account balance shall be adjusted for
gains or losses occurring after the Participant's death in accordance with the
provisions of the Plan governing the adjustment of Account balances for other
types of distributions.
(c) This section shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to the survivor
annuity requirements of sections 401(a)(11) and 417 of the Code. If this
section is operative, then the provisions of this ARTICLE, other than
section 9.7, shall be operative.
(d) The Participant may waive the spousal death benefit descried
in this section at any time provided that no such waiver shall be effective
unless it satisfies the conditions of section 9.4(c) (other than the
notification requirement referred to therein) that would apply to the
Participant's waver of the qualified preretirement survivor annuity.
(e) For purposes of this section, Vested Account Balance shall
mean, in the case of a money purchase pension plan or a target benefit plan, the
Participant's separate Account balance attributable solely to accumulated
deductible Employee contributions within the meaning of section 72(o)(5)(B) of
the Code. In the case of a profit sharing plan, Vested Account Balance shall
have the same meaning as provided in section 9.4(g).
9.7 TRANSITIONAL RULES.
(a) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
sections of this ARTICLE must be given the opportunity to elect to have the
prior sections of this ARTICLE apply if such Participant is credited with at
least one (1) Hour of Service under this Plan or a predecessor plan in a Plan
Year beginning on or after January 1, 1976, and such Participant had at least
ten (10) years of vesting service when he or she separated from service.
(b) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one (1) Hour of Service under this Plan or
a predecessor plan on or after
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September 2, 1974, and who is not otherwise credited with any service in a Plan
Year beginning on or after January 1, 1976, must be given the opportunity to
have his or her benefits paid in accordance with subsection (d).
(c) The respective opportunities to elect (as described in
subsections (a) and (b) above) must be afforded to the appropriate Participants
during the period commencing on August 23, 1984, and ending on the date benefits
would otherwise commence to said Participants.
(d) Any Participant who has elected pursuant to subsection (b)
and any Participant who has elected pursuant to subsection (a) or who meets the
requirements of subsection (a) except that such Participant does not have at
least ten (10) years of vesting service when he or she separates from service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable in the form of a life
annuity:
(i) AUTOMATIC JOINT AND SURVIVOR ANNUITY. If benefits in
the form of a life annuity become payable to a married Participant who:
(1) begins to receive payments under the Plan on or
after Normal Retirement Age; or
(2) dies on or after Normal Retirement Age while
still working for the Employer; or
(3) begins to receive payments on or after the
qualified early retirement age; or
(4) separates from service on or after attaining
Normal Retirement Age (or the qualified early retirement age) and after
satisfying the eligibility requirements of the payment of benefits under the
Plan and thereafter dies before beginning to receive such benefits;
then such benefits will be received under this Plan in the form of a Qualified
Joint and Survivor Annuity, unless the Participant has elected otherwise during
the Election Period. The Election Period must begin at least six (6) months
before the Participant attains qualified early retirement age and end not more
than ninety (90) days before the commencement of benefits. Any election
hereunder will be in writing and may be changed by the Participant at any time.
(ii) ELECTION OF EARLY SURVIVOR ANNUITY. A Participant who
is employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been
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made to the Spouse under the Qualified Joint and Survivor Annuity if the
Participant had retired on the day before his or her death. Any election under
this provision will be in writing and may be changed by the Participant at any
time. The Election Period begins on the later of (1) the 90th day before the
Participant attains the qualified early retirement age; or (2) the date on which
participation begins and end on the date the Participant terminates employment.
(e) The following terms shall have the meanings specified herein:
(i) QUALIFIED EARLY RETIREMENT AGE. The latest of:
(1) the earliest date, under the Plan, on which the
Participant may elect to receive retirement benefits;
(2) the first day of the 120th month beginning
before the Participant reaches Normal Retirement Age; or
(3) the date the Participant begins participation.
(ii) QUALIFIED JOINT AND SURVIVOR ANNUITY. An annuity for
the life of the Participant with a survivor annuity for the life of the Spouse
as described in section 9.4(d).
ARTICLE 10
DISTRIBUTION PROVISIONS
10.1 VESTING ON DISTRIBUTION BEFORE BREAK IN SERVICE.
(a) If an Employee terminates service, and the value of the
Employee's Vested Account Balance derived from Employer and Employee
contributions is not greater than three thousand five hundred dollars ($3,500),
the Employee will receive a distribution of the value of the entire vested
portion of such Account balance and the nonvested portion will be treated as a
forfeiture. For purposes of this section, if the value of an Employee's Vested
Account Balance is zero, the Employee shall be deemed to have received a
distribution of such Vested Account Balance. A Participant's Vested Account
Balance shall not include accumulated deductible Employee contributions within
the meaning of section 72(o)(5)(B) of the Code for Plan Years beginning prior to
January 1, 1989.
(b) If an Employee terminates service and elects, in accordance
with this ARTICLE, to receive the value of his Vested Account Balance, the
nonvested portion will be treated as a forfeiture. If the Employee elects to
have distributed less than the entire vested portion of the Account balance
derived from Employer Contributions, the part of the nonvested portion that will
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be treated as a forfeiture is the total nonvested portion multiplied by a
fraction, the numerator of which is the amount of the distribution attributable
to Employer Contributions and the denominator of which is the total value of the
vested Employer derived Account balance.
(c) If an Employee receives a distribution pursuant to this
section and the Employee resumes employment covered under this Plan, the
Employee's Employer-derived Account balance will be restored to the amount on
the date of distribution if the Employee repays to the Plan the full amount of
the distribution attributable to Employer contributions before the earlier of
five (5) years after the first date on which the Participant is subsequently
reemployed by the Employer, or the date the Participant incurs five (5)
consecutive one (1) year Breaks in Service following the date of the
distribution. If an Employee is deemed to receive a distribution pursuant to
this section, and the Employee resumes employment covered under this Plan before
the date the Participant incurs five (5) consecutive one (1) year Breaks in
Service, upon the reemployment of such Employee, the Employer-derived Account
balance of the Employee will be restored to the amount on the date of such
deemed distribution.
10.2 RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS.
(a) If the value of a Participant's Vested Account Balance
derived from Employer and Employee contributions exceeds (or at the time of any
prior distribution exceeded) three thousand five hundred dollars ($3,500) and
the Account balance is immediately distributable, the Participant and the
Participant's Spouse (or where either the Participant or the Spouse has died,
the survivor) must consent to any distribution of such account balance. The
consent of the Participant and the Participant's spouse shall be obtained in
writing within the ninety (90) day period ending on the Annuity Starting Date.
The Annuity Starting Date is the first day of the first period for which an
amount is paid as an annuity or any other form. The Plan Administrator shall
notify the Participant and the Participant's Spouse of the right to defer any
distribution until the Participant's Account balance is no longer immediately
distributable. Such notification shall include a general description of the
material features, and an explanation of the relative values of, the options
forms of benefit available under the Plan in a manner that would satisfy the
notice requirements of section 417(a)(3), and shall be provided no less than
thirty (30) days and no more than ninety (90) days prior to the Annuity Starting
Date.
(b) Notwithstanding the provisions of subsection (a), only the
Participant need consent to the commencement of a distribution in the form of a
Qualified Joint and Survivor Annuity while the Account balance is immediately
distributable. (Furthermore, if payment in the form of a Qualified Joint and
Survivor Annuity is not required with respect to the Participant pursuant to
section 9.6 of the Plan, only the
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Participant need consent to the distribution of an Account balance that is
immediately distributable). Neither the consent of the Participant nor the
Participant's Spouse shall be required to the extent that a distribution is
required to satisfy section 401(a)(9) or section 415 of the Code. In addition,
upon termination of this Plan if the Plan does not offer an annuity option
(purchased from a commercial provider), the Participant's Account balance may,
without the Participant's consent, be distributed to the Participant or
transferred to another defined contribution plan (other than an employee stock
ownership plan as defined in section 4975(e)(7) of the Code) within the same
controlled group.
(c) An Account balance is immediately distributable if any part
of the Account balance could be distributed to the Participant (or Surviving
Spouse) before the Participant attains (or would have attained if not deceased)
the later of Normal Retirement Age or age sixty-two (62).
(d) For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the first day of the
first Plan Year beginning after December 31, 1988, the Participant's Vested
Account Balance shall not include amounts attributable to accumulated deductible
Employee contributions within the meaning of section 72(o)(5)(B) of the Code.
10.3 COMMENCEMENT OF BENEFITS.
(a) Unless the Participant elects otherwise, distribution of
benefits will begin no later than the 60th day after the latest of the close of
the Plan Year in which:
(i) the Participant attains age sixty-five (65) (or Normal
Retirement Age, if earlier);
(ii) the 10th anniversary of the year in which the
Participant commenced participation in the Plan occurs; or
(iii) the Participant terminates service with the Employer.
(b) Notwithstanding the foregoing, the failure of a Participant
and Spouse to consent to a distribution while a benefit is immediately
distributable, within the meaning of section 10.2 of the Plan, shall be deemed
to be an election to defer commencement of payment of any benefit sufficient to
satisfy this section.
10.4 EARLY RETIREMENT WITH AGE AND SERVICE REQUIREMENT. If a Participant
separates from service before satisfying the age requirement for early
retirement, but has satisfied the service requirement, the Participant will be
entitled to elect an early retirement benefit upon satisfaction of such age
requirements.
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10.5 NONTRANSFERABILITY OF ANNUITIES. Any annuity contract distributed
herefrom must be nontransferable.
10.6 CONFLICTS WITH ANNUITY CONTRACTS. The terms of any annuity contract
purchased and distributed by the Plan to a Participant or Spouse shall comply
with the requirement of this Plan.
ARTICLE 11
TIMING AND MODES OF DISTRIBUTION
11.1 GENERAL RULES.
(a) Subject to ARTICLE 9, the requirements of this ARTICLE shall
apply to any distribution of a Participant's interest and will take precedence
over any inconsistent provisions of this Plan. Unless otherwise specified, the
provisions of this ARTICLE apply to calendar years beginning after December 31,
1984.
(b) All distributions required under this ARTICLE shall be
determined and made in accordance with the income tax regulations under section
401(a)(9) of the Code, including the minimum distribution incidental benefit
requirement of section 1.401(a)(9)-2 of the proposed regulations.
11.2 REQUIRED BEGINNING DATE. The entire interest of a Participant must
be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.
11.3 LIMITS ON DISTRIBUTION PERIODS. As of the first Distribution
Calendar Year, distributions, if not made in a single-sum, may only be made over
one of the following periods (or a combination thereof):
(a) the life of the Participant;
(b) the life of the Participant and a Designated Beneficiary;
(c) a period certain not extending beyond the Life Expectancy of
the Participant; or
(d) a period certain not extending beyond the joint and last
survivor expectancy f the Participant and a Designated Beneficiary.
11.4 DETERMINATION OF AMOUNT TO BE DISTRIBUTED EACH YEAR.
(a) INDIVIDUAL ACCOUNT.
(i) If a Participant's Benefit is to be distributed over
(1) a period not extending beyond the Life Expectancy of the Participant or the
joint life and last survivor
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expectancy of the Participant and the Participant's Designated Beneficiary or
(2) a period not extending beyond the Life Expectancy of the Designated
Beneficiary, the amount required to be distributed for each calendar year,
beginning with distributions for the first Distribution Calendar Year, must at
least equal the quotient obtained by dividing the Participant's Benefit by the
Applicable Life Expectancy.
(ii) For calendar years beginning before January 1, 1989, if
the Participant's Spouse is not the Designated Beneficiary, the method of
distribution selected must assure that at least fifty percent (50%) of the
present value of the amount available for distribution is paid within the Life
Expectancy of the Participant.
(iii) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with distributions for the
first Distribution Calendar Year shall not be less than the quotient obtained by
dividing the Participant's Benefit by the lesser of (1) the Applicable Life
Expectancy or (2) if the Participant's Spouse is not the Designated Beneficiary,
the applicable divisor determined from the table set forth in Q&A-4 of section
1.401(a)(9)-2 of the proposed regulations. Distributions after the death of the
Participant shall be distributed using the Applicable Life Expectancy in
subsection (a)(i) above as the relevant divisor without regard to proposed
regulations section 1.401(a)(9)-2.
(iv) The minimum distribution required for the Participant's
first Distribution Calendar Year must be made on or before the Participant's
Required Beginning Date. The minimum distribution for the Distribution Calendar
Year in which the Employee's Required Beginning Date occurs, must be made on or
before December 31 of that Distribution Calendar Year.
(b) OTHER FORMS. If the Participant's Benefit is distributed in
the form of an annuity purchased from an insurance company, distributions
thereunder shall be made in accordance with the requirements of section
401(a)(9) of the Code and the proposed regulations thereunder.
11.5 DEATH DISTRIBUTION PROVISIONS.
(a) DISTRIBUTION BEGINNING BEFORE DEATH. If the Participant dies
after distribution of his or her interest has begun, the remaining portion of
such interest will continue to be distributed at least as rapidly as under the
method of distribution being used prior to the Participant's death.
(b) DISTRIBUTION BEGINNING AFTER DEATH. If the Participant dies
before distribution of his or her interest begins, distribution of the
Participant's entire interest shall be completed by December 31 of the calendar
year containing the fifth anniversary of the Participant's death except to the
extent that an
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election is made to receive distributions in accordance with (i) or (ii) below:
(i) if any portion of the Participant's interest is payable
to a Designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the Life Expectancy o the Designated Beneficiary
commencing on ore before December 31 of the calendar year immediately following
the calendar year in which the Participant died;
(ii) if the Designated Beneficiary is the Participant's
Surviving Spouse, the date distributions are required to begin in accordance
with (i) above shall not be earlier than the later of (1) december 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age seventy and one-half (70 1/2).
(c) If the Participant has not made an election pursuant to this
section by the time of his or her death, the Participant's Designated
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this section; or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no Designated Beneficiary, or if the Designated Beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(d) For purposes of subsection (b) above, if the Surviving Spouse
dies after the Participant, but before payments to such Spouse begin, the
provisions of subsection (b), with the exception of paragraph (ii) therein,
shall be applied as if the Surviving Spouse were the Participant.
(e) For purposes of this section, any amount paid to a child of
the Participant will be treated as if it had been paid to the Surviving Spouse
if the amount becomes payable to the Surviving Spouse when the child reaches the
age of majority.
(f) For the purpose of this section, distribution of a
Participant's interest is considered to begin on the Participant's Required
Beginning Date (or, if subsection (d) above is applicable, the date distribution
is required to begin to the Surviving Spouse pursuant to subsection (b) above).
If distribution in the form of an annuity described in section 11.4(b) above
irrevocably commences to the Participant before the Required Beginning Date, the
date distribution is considered to begin is the date distribution actually
commences.
11.6 DESIGNATION OF BENEFICIARY. Subject to the rules of ARTICLE 9, a
Participant (or former Participant) may designate from
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time to time any person or persons (who may be designated contingently or
successively and may be an entity other than a natural person) as his
Beneficiary who will be entitled to receive any undistributed amounts credited
to the Participant's separate Account under the Plan at the time of the
Participant's death. Any such Beneficiary designation by a Participant shall be
made in writing in the manner prescribed by the Plan Administrator, and shall be
effective only when filed with the Plan Administrator during the Participant's
lifetime. A Participant may change or revoke his Beneficiary designation at any
time in the manner prescribed by the Plan Administrator. If any portion of the
Participant's Account is invested in insurance pursuant to ARTICLE 14, the
Beneficiary of the benefits under the insurance policy shall be the person or
persons designated under the policy. If the Designated Beneficiary (or each of
the Designated Beneficiaries) predeceases the Participant, the Participant's
Beneficiary designation shall be ineffective. If n Beneficiary designation is
in effect at the time of the Participant's death, his Beneficiary shall be his
estate.
11.7 DEFINITIONS.
(a) APPLICABLE LIFE EXPECTANCY. The Life Expectancy (or joint
and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the Participant's (or Designated
Beneficiary's) birthday in the applicable calendar yea reduced by one (1) for
each calendar year which has elapsed since the date Life Expectancy was first
calculated. If Life Expectancy is being recalculated, the Applicable Life
Expectancy shall be the Life Expectancy as so recalculated. The applicable
calendar year shall be the first Distribution Calendar Year, and if Life
Expectancy is being recalculated such succeeding calendar year. If annuity
payments commence in accordance with section 11.4(b) before the Required
Beginning Date, the applicable calendar year is the year such payments commence.
If distribution is in the form of an immediate annuity purchased after the
Participant's death with the Participant's remaining interest, the applicable
calendar year is the year of purchase.
(b) DESIGNATED BENEFICIARY. The individual who is designated as
the Beneficiary under the Plan in accordance with section 401(a)(9) and the
proposed regulations thereunder.
(c) DISTRIBUTION CALENDAR YEAR. A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first Distribution Calendar Year is the calendar year
immediately preceding the calendar year which contains the Participant's
Required Beginning Date. For distributions beginning after the Participant's
death, the first Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to section 11.5 above.
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(d) LIFE EXPECTANCY.
(i) Life Expectancy and joint and last survivor expectancy
are computed by use of the expected return multiples in Tables V and VI of
section 1.72-9 of the income tax regulations.
(ii) Unless otherwise elected by the Participant (or Spouse,
in the case of distributions described in section 11.5(b)(ii) above) by the time
distributions are required to begin, life expectancies shall be recalculated
annually. Such election shall be irrevocable as to the Participant (or Spouse)
and shall apply to all subsequent years. The Life Expectancy of a non-Spouse
Beneficiary may not be recalculated.
(e) PARTICIPANT'S BENEFIT.
(i) The Account balance as of the last valuation date in the
calendar year immediately preceding the Distribution Calendar Year (valuation
calendar year) increased by the amount of any contributions or forfeitures
allocated to the Account balance as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date.
(ii) For purposes of subsection (i) above, if any portion of
the minimum distribution for the first Distribution Calendar Year is made in the
second Distribution Calendar Year on or before the Required Beginning Date, the
amount of the minimum distribution made in the second Distribution Calendar Year
shall be treated as if it had been made in the immediately preceding
Distribution Calendar Year.
(f) REQUIRED BEGINNING DATE.
(i) GENERAL RULE. The Required Beginning Date of a
Participant is the first day of April of the calendar year following the
calendar year in which the Participant attains age seventy and one-half
(70 1/2).
(ii) TRANSITIONAL RULES. The Required Beginning Date of a
Participant who attains age seventy and one-half (70 1/2) before January 1,
1988, shall be determined in accordance with (1) or (2) below:
(1) NON-FIVE-PERCENT OWNERS. The Required Beginning
Date of a Participant who is not a Five Percent (5%) Owner is the first day of
April of the calendar year following the calendar year in which the later of
retirement or attainment of age seventy and one-half (70 1/2) occurs.
(2) FIVE PERCENT OWNERS. The Required Beginning
Date of a Participant who is a Five Percent (5%) Owner
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during any year beginning after December 31, 1979, is the first day of April
following the later of:
(A) the calendar year in which the Participant
attains age seventy and one-half (70 1/2); or
(B) the earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes a Five Percent
(5%) Owner, or the calendar year in which the Participant retires.
The Required Beginning Date of a Participant who is not a Five Percent (5%)
Owner who attains age seventy and one-half (70 1/2) during 1988 and who has not
retired as of January 1, 1989, is April 1, 1990.
(iii) FIVE PERCENT OWNER. A Participant is treated as a
Five Percent (5%) Owner for purposes of this section if such Participant is a
Five Percent (5%) Owner as defined in section 416(i) of the Code (determined in
accordance with section 416 but without regard to whether the Plan is top-heavy)
at any time during the Plan Year ending with or within the calendar year in
which such owner attains age sixty-six and one-half (66 1/2) or any subsequent
year.
(iv) Once distributions have begun to a Five Percent (5%)
Owner under this section, they must continue to be distributed, even if the
Participant ceases to be a Five Percent (5%) Owner in a subsequent year.
11.8 TRANSITIONAL RULE.
(a) Notwithstanding the other requirements of this ARTICLE and
subject to the requirements of ARTICLE 9, distribution on behalf of any
Employee, including a Five Percent (5%) Owner, may be made in accordance with
all of the following requirements (regardless of when such distribution
commences):
(i) The distribution by the Trust is one which would not
have disqualified such trust under section 401(a)(9) of the Internal Revenue
Code as in effect prior to amendment by the Deficit Reduction Act of 1984.
(ii) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the Trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(iii) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(iv) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
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(v) The method of distribution designated by the Employee or
the Beneficiary specifies the time at which distributions will be made, and in
the case of any distribution upon the Employee's death, the Beneficiaries of the
Employee listed in order of priority.
(b) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(c) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in subsections (a)(i) and (a)(v).
(d) If a designation is revoked, any subsequent distribution must
satisfy the requirements of section 401(a)(9) of the Code and the proposed
regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the Trust must distribute by the end of the
calendar year following the calendar year in which the revocation occurs the
total amount not yet distributed which would have been required to have been
distributed to satisfy section 401(a)(9) of the Code and the regulations
thereunder but for the section 242(b)(2) election. For calendar years beginning
after December 31, 1988, such distributions must meet the minimum distribution
incidental benefit requirements in section 1.401(a)(9)-2 of the proposed
regulations. Any changes in the designation will be considered to be a
revocation of the designation. However, the mere substitution or addition of
another beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designatio, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in Q&A J-2
and Q&A J-3 apply.
11.9 OPTIONAL FORMS OF BENEFIT.
(a) Except to the extent benefits are required to be paid in the
form of an automatic joint and survivor annuity under ARTICLE 9, any amount
which a Participant shall be entitled to receive under the Plan shall be
distributed in one or a combination of the following ways:
(i) in a lump-sum payment of cash, the amount of which shall
be determined by redeeming all Shares credited to
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the Participant's account under the Plan as of the date of distribution;
(ii) in a lump-sum payment including a distribution in kid
of all Shares credited to the Participant's Account under the Plan as of the
date of distribution;
(iii) in substantially equal monthly, quarterly, or annual
installment payments of cash, or the distribution of Shares in kind, over a
period certain not to exceed the Life Expectancy of the Participant or the joint
and last survivor Life Expectancy of the Participant and his Beneficiary,
determined in each case as of the earlier of: (1) the end of the Plan Year in
which occurs the event entitling the Participant to a distribution of benefits,
or (2) the date such installments commence;
(iv) if permitted by the Sponsor, in monthly, quarterly, or
annual installment payments of cash, or the distribution of Shares in kind, so
that the amount distributed in each Plan Year equals the quotient obtained by
dividing the Participant's Account at the beginning of that Plan Year by the
joint and last survivor Life Expectancy of the Participant and the Beneficiary
for that Plan Year. The Life Expectancy will be computed using the
recomputation method described in section 11.7(d). Unless the Spouse of the
retired Participant is the Beneficiary, the actuarial present value of all
expected payments to the retired Participant must be more than fifty percent
(50%) of the actuarial present value of payments to the retired Participant and
the Beneficiary; or
(v) by application of the Participant's vested Account to
the purchase of a nontransferable immediate or deferred annuity contract, on an
individual or group basis. Unless the Spouse of the retired Participant is the
Beneficiary, the actuarial present value of all expected payments to the retired
Participant must be more than fifty percent (50%) of the actuarial present value
of payments to the retired Participant and the Beneficiary.
(b) If the Participant fails to select a method of distribution,
except as may be required by ARTICLE 9, all amounts which he is entitled to
receive under the Plan shall be distributed to him in a lump-sum payment.
ARTICLE 12
WITHDRAWALS
12.1 WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY CONTRIBUTIONS. Subject to the
Qualified Election requirements of ARTICLE 9 and section 12.3, any Participant
who has made nondeductible voluntary contributions may, upon thirty (30) days
notice in writing filed with the Plan Administrator, have paid to him all or any
portion of
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the fair market value of his nondeductible voluntary contribution subaccount.
12.2 HARDSHIP WITHDRAWALS. If the Adoption Agreement so provides and the
Employer elects, this section applies only to the profit sharing contribution
subaccount and only if the profit sharing allocation formula selected in the
Adoption Agreement is not integrated with Social Security.
(a) DEMONSTRATION OF NEED. Subject to the Qualified Election
requirements of ARTICLE 9 and section 12.3, if a Participant establishes an
immediate and heavy financial need for funds because of a hardship resulting
from the purchase or renovation of a primary residence, the education of the
Participant or a member of his immediate family (including special education),
the medical or personal expenses of the Participant or a member of his immediate
family, or other demonstrable emergency as determined by the Plan Administrator
on a uniform and nondiscriminatory basis, the Participant shall be permitted,
subject to the limitations of subsection (b) below, to make a hardship
withdrawal of an amount credited to his profit sharing contribution subaccount
under the Plan.
(b) AMOUNT OF HARDSHIP WITHDRAWAL. The amount of any hardship
withdrawal by a Participant under subsection (a) above shall not exceed the
amount required to meet the immediate financial need created by the hardship and
not reasonably available from other resources of the Participant.
(c) PRIOR WITHDRAWAL OF NONDEDUCTIBLE VOLUNTARY PARTICIPANT
CONTRIBUTIONS. A Participant shall not be permitted to make a hardship
withdrawal under subsection (a) above unless he has already withdrawn, in
accordance with section 12.1, any amount credited to his nondeductible voluntary
contributions subaccount.
12.3 MANNER OF MAKING WITHDRAWALS. Any withdrawal by a Participant under
the Plan shall be made only after the Participant files a written request with
the Plan Administrator specifying the nature of the withdrawal (and the reasons
therefor, if a hardship withdrawal), and the amount of funds requested to be
withdrawn. Upon approving any withdrawal, the Plan Administrator shall furnish
the Trustee with written instructions directing the Trustee to make the
withdrawal in a lump-sum payment of cash to the Participant. In making any
withdrawal payment, the Trustee shall be fully entitled to rely on the
instructions furnished by the Plan Administrator, and shall be under no duty to
make any inquiry or investigation with respect thereto. Unless section 9.6 is
applicable, if the Participant is married, his Spouse must consent to the
withdrawal pursuant to a Qualified Election (as defined in section 9.4(c))
within the ninety (90) day period ending on the date of the withdrawal.
12.4 LIMITATIONS ON WITHDRAWALS. The Plan Administrator may prescribe
uniform and nondiscriminatory rules and procedures
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limiting the number of times a Participant may make a withdrawal under the Plan
during any Plan Year, and the minimum amount a Participant may withdraw on any
single occasion.
ARTICLE 13
LOANS
13.1 GENERAL PROVISIONS.
(a) If the Adoption Agreement so provides and the Employer so
elects, loans shall be made available to any Participant or Beneficiary who is a
party-in-interest (as defined in section 3(14) of ERISA) on a reasonably
equivalent basis. A Participant or Beneficiary who is not a party-in-interest
(as defined in section 3(14) of ERISA) shall not be eligible to receive a loan
under this ARTICLE.
(b) Loans shall not be made available to Highly-Compensated
Employees (as defined in section 414(q) of the Code) in an amount greater than
the amount made available to other Employees.
(c) Loans must be adequately secured and bear a reasonable
interest rate.
(d) No Participant loan shall exceed the present value of the
Participant's Vested Account Balance.
(e) Unless section 9.6 is applicable, a Participant must obtain
the consent of his or her Spouse, if any, to use of the Account balance as
security for the loan. Spousal consent shall be obtained no earlier than the
beginning of the ninety (90) day period that ends on the date on which the loan
is to be so secured. The consent must be in writing, must acknowledge the
effect of the loan, and must be witnessed by a Plan representative or notary
public. Such consent shall thereafter be binding with respect to the consenting
Spouse or any subsequent Spouse with respect to that loan. A new consent shall
be required if the Account balance is used for renegotiation, extension, renewal
or other revision of the loan.
(f) In the event of default, foreclosure on the note and
attachment of security will not occur until a distributable event occurs under
the Plan.
(g) Loans will not be made to any shareholder-employee or Owner-
Employee. For purposes of this requirement, a shareholder-employee means an
Employee or officer of an electing small business (subchapter S) corporation who
owns (or is considered as owning within the meaning of section 318(a)(1) of the
Code), on any day during the taxable year of such corporation, more than five
percent (5%) of the outstanding stock of the corporation.
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(h) If a valid spousal consent has been obtained in accordance
with subsection (e), then, notwithstanding any other provision of this Plan, the
portion of the Participant's Vested Account Balance used as a security interest
held by the Plan by reason of a loan outstanding to the Participant shall be
taken into account for purposes of determining the amount of the Account balance
payable at the time of death or distribution, but only if the reduction is used
as repayment of the loan. If less than one hundred percent (100%) of the
Participant's Vested Account Balance (determined without regard to the preceding
sentence) is payable to the Surviving Spouse, then the Account balance shall be
adjusted by first reducing the Vested Account Balance by the amount of the
security used as repayment of the loan, and then determining the benefit payable
to the Surviving Spouse.
13.2 ADMINISTRATION OF LOAN PROGRAM.
(a) The Plan's loan program will be administered by the Plan
Administrator.
(b) Loan requests shall be made on a form prescribed by the Plan
Administrator and shall comply with section 13.4.
(c) Loan requests that comply with all the requirements of this
ARTICLE shall be approved by the Plan Administrator.
(d) The rate of interest to be charged on loans shall be
determined under section 13.5.
(e) the only collateral that may be used as security for a loan,
and the limitations and requirements applicable, are determined under
section 13.6.
(f) The rules regarding defaults are set forth in section 13.9.
13.3 AMOUNT OF LOAN. Loans to any Participant or Beneficiary will not be
made to the extent that such loan, when added to the outstanding balance of all
other loans to the Participant or Beneficiary, would exceed the lesser of:
(a) fifty thousand dollars ($50,000) reduced by the excess (if
any) of the highest outstanding balance of loans during the one (1) year period
ending on the day before the loan is made, over the outstanding balance of loans
from the Plan on the date the loan is made; or
(b) one-half (1/2) the present value of the nonforfeitable
accrued benefit of the Participant.
(c) For the purpose of the above limitation, all loans from all
plans of the Employer and other members of a group
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of employers described in sections 414(b), 414(c) and 414(m) of the Code are
aggregated.
13.4 MANNER OF MAKING LOANS. A request by a Participant for a loan shall
be made in writing to the Plan Administrator and shall specify the amount of the
loan, and the subaccount(s) or Shares of the Participant from which the loan
should be made. The terms and conditions on which the Plan Administrator shall
approve loans under the Plan shall be applied on a uniform and nondiscriminatory
basis with respect to all Participants. If a Participant's request for a loan
is approved by the Plan Administrator, the Plan Administrator shall furnish the
Trustee with written instructions directing the Trustee to make the loan in a
lump-sum payment of cash to the Participant. In making any loan payment under
this ARTICLE, the Trustee shall be fully entitled to rely on the instructions
furnished by the Plan Administrator and shall be under no duty to make any
inquiry or investigation with respect thereto.
13.5 TERMS OF LOAN. Loans shall be made on such terms and subject to
such limitations as the Plan Administrator may prescribe. Furthermore, any loan
shall, by its terms, require that repayment (principal and interest) be
amortized in level payments, not less frequently than quarterly, over a period
not extending beyond five (5) years from the date of the loan, unless such loan
is used to acquire a dwelling unit which, within a reasonable time (determined
at the time the loan is made) will be used as the principal residence of the
Participant. The rate of interest to be charged shall be determined by the Plan
Administrator in accordance with the rates quoted by representative financial
institutions in the local area for similar loans.
13.6 SECURITY FOR LOAN. Any loan to a Participant under the Plan shall
be secured by the pledge of all the Participant's right, title, and interest in
the Trust. Such pledge shall be evidenced by the execution of a promissory note
by the Participant which shall provide that, in the event of any default by the
Participant on a loan repayment, the Plan Administrator shall be authorized (to
the extent permitted by law) to deduct the amount of the loan outstanding and
any unpaid interest due thereon from the Participant's wages or salary to be
thereafter paid by the Employer, and to take any and all other actions necessary
and appropriate to enforce collection of the unpaid loan. As assignment or
pledge of any portion of the Participant's interest in the Plan and a loan,
pledge, or assignment with respect to any insurance contract purchased under the
Plan, will be treated as a loan under this section. In the event the value of
the Participant's vested Account at any time is less than one hundred twenty-
five percent (125%) of the outstanding loan balance, the Plan Administrator
shall request additional collateral of sufficient value to adequately secure the
repayment of the loan. Failure to provide such additional collateral upon a
request of the Plan Administrator shall constitute an event of default.
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13.7 SEGREGATED INVESTMENT. Loans shall be considered a Participant
directed investment and, for the limited purposes of allocating earnings and
losses pursuant to ARTICLE 5, shall not be considered a part of the common fund
under the Trust.
13.8 REPAYMENT OF LOAN. The Plan Administrator shall have the sole
responsibility for ensuring that a Participant timely makes all loan repayments,
and for notifying the Trustee in the event of any default by the Participant on
the loan. Each loan repayment shall be paid to the Trustee and shall be
accompanied by written instructions from the Plan Administrator that identify
the Participant on whose behalf the loan repayment is being made.
13.9 DEFAULT ON LOAN.
(a) In the event of a termination of the Participant's employment
with the Affiliated Employers or a default by a Participant on a loan repayment,
all remaining payments on the loan shall be immediately due and payable. The
Employer shall, upon the direction of the Plan Administrator, to the extent
permitted by law, deduct the total amount of the loan outstanding and any unpaid
interest due thereon form the wages or salaries payable to the Participant by
the Employer in accordance with the Participant's promissory note. In addition,
the Plan Administrator shall take any and all other actions necessary and
appropriate to enforce collection of the unpaid loan. However, attachment of
the Participant's Account pledged as security will not occur until a
distributable event occurs under the Plan.
(b) For purposes of this section, the term "default" shall mean
failure, by a period of at least ten (10) days, to make any loan payment
(whether principal or interest or both) that is due and payable. neither the
Plan Administrator nor any other fiduciary is required to give any written or
oral notice of default.
13.10 UNPAID AMOUNTS. Upon the occurrence of a Participant's retirement
or death, or upon a Participant's fifth consecutive Break in Service or earlier
distribution, the unpaid balance of any loan, including any unpaid interest,
shall be deducted from any payment or distribution from the Trust to which such
Participant or his Beneficiary may be entitled. If after charging the
Participant's Account with the unpaid balance of the loan, including any unpaid
interest, there still remains an unpaid balance of any such loan and interest,
then the remaining unpaid balance of such loan and interest shall be charged
against any property pledged as security with respect to such loan.
ARTICLE 14
INSURANCE
14.1 INSURANCE. If the Adoption Agreement so provides and the Employer
elects to allocate or permit Participants to
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allocate a portion of their Accounts to purchase life insurance, the ensuing
subsections of this ARTICLE shall apply.
14.2 POLICIES. The Plan Administrator shall instruct the Trustee to
procure one or more life insurance policies on the Participant's life, the terms
of which shall conform to the requirements of the Plan and the Code. The
policies and the companies which write them shall be subject to the approval of
the Plan Administrator and the Trustee. The Trustee shall procure and hold such
policies in its name or the name of the nominee. The Trustee shall be the sole
owner of all contracts purchased hereunder, and it shall be so designated in
each policy and application therefor.
14.3 BENEFICIARY. The Participant shall have the right to name the
Beneficiary and to choose the benefit option under the policy for the
Beneficiary. The Trustee shall designate the Beneficiary of all such policies
in accordance with the written directions of the Plan Administrator and the
policy terms. Such designations may be outlined in the original application as
forwarded to the issuing company. However, the Plan Administrator shall have
available and shall furnish the Participant with the necessary forms for any
Beneficiary designation or change of Beneficiary and it will keep a copy of all
executed designations as part of its records. Upon a Participant's death, the
Plan Administrator will promptly furnish the Trustee a copy of the last
designation and shall authorize the Trustee to complete such forms as the
insurance company may require in order to effect the benefit option.
14.4 PAYMENT OF PREMIUMS. Subject to the provisions of sections 7.3 and
14.5, premium payments to the insurer may be made only by the Trustee with
respect to any insurance policy purchased on behalf of a Participant and shall
constitute first an investment of a portion f the funds of the Participant's
Employer Contribution subaccounts up to the maximum amount of such subaccounts
permitted to be applied toward such premium payments, as provided in
section 14.5. If a Participant's subaccounts lack sufficient assets to pay
premiums on a life insurance policy due on his behalf, the Trustee, at the
direction of the Plan Administrator, acting upon the request of the Participant,
shall borrow under the policy loan provisions, if any, the amount necessary to
pay such premiums, using the cash value of the insurance as security, or the
Trustee may liquidate assets held in the Participant's Account, in the same
order, of sufficient value to pay such premiums. Any loans shall be repaid by
the application of earnings, contributions, or forfeitures to the Account of the
Participant insured by such policy. In the absence of the Plan Administrator's
direction to borrow or to liquidate assets to pay premiums, the life insurance
policy shall be put on a paid-up basis or, if it has no cash value, cancelled.
14.5 LIMITATION ON INSURANCE PREMIUMS. The Trustee shall not pay, nor
shall anyone on behalf of the Trustee pay, any life
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insurance premium for any Participant out of the Participant's Employer
Contribution subaccounts unless the amount of such payment, plus all premiums
previously so paid on behalf of the Participant, is less than fifty percent
(50%) of the Employer Contributions and forfeitures allocated to the
Participant's Employer Contribution subaccounts as determined on the date such
premium is paid with respect to reserve life insurance policies and shall be
less than twenty-five percent (25%) thereof with respect to nonreserve (term)
policies, or, if both reserve life and term insurance are purchased on the life
of any Participant, the sum of the term insurance premium plus one-half (1/2) of
the reserve life premiums may not exceed twenty-five percent (25%) of the
Employer Contributions made on behalf of such Participant. For purposes of
these incidental insurance provisions, reserve life insurance contracts are
contracts with both nondecreasing death benefits and nonincreasing premiums.
Dividends received on life insurance policies shall be considered a reduction of
premiums paid in such computations.
If payment of premiums on a Participant's life insurance policy is
prohibited because of the limitation, the Trustee, as directed by the Plan
Administrator, shall permit the Participant to maintain that part of the
coverage made available by the prohibited premiums, either by payment of the
amount of the prohibited premium by the Participant from sources other than the
Trust or by distributing the policy to the extent of the Participant's vested
interest to the Participant and eliminating it from the Trust.
Nothing contained in the foregoing provisions of section 14.4 and this
section shall be deemed to authorize the payment of any premium or premiums for
any Participant which would result in a failure to maintain any mandatory
investment in Shares required by the Sponsor in the Account or subaccounts of
any such Participant.
14.6 INSURANCE COMPANY. No insurance company which may issue any
policies for the purposes of this Plan shall be required to take or permit any
action contrary to the provisions of said policies, nor shall such insurance
company be deemed to be a part to, or responsible for the validity of, this Plan
for any purpose. No such insurance company shall be required to look into the
terms of this Plan or question any action of the Trustee hereunder, nor be
responsible to see that any action of the Trustee is authorized by the terms of
this Plan. Any such issuing insurance company shall be fully discharged from
any and all liability for any amount paid to the Trustee or paid in accordance
with the direction of the Trustee, as the case may be, or for any change made or
action taken by such insurance company upon such direction and no such insurance
company shall be obliged to see to the distribution or further application of
any monies paid by it. The certificate of the Trustee signed by one of its
trust officers, assistant secretary, or other authorized representative thereof,
may be received by any insurance company as conclusive evidence of any of the
matters mentioned in this Plan and any insurance company shall be fully
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protected in taking or permitting any action on the faith thereof and shall
incur no liability or responsibility for so doing.
14.7 DISTRIBUTION OF POLICIES. Upon a Participant's death, the Trustee,
upon direction of the Plan Administrator, shall procure the payment of the
proceeds of any policy held by the Participant in accordance with its terms and
this Plan. The Trustee shall be required to pay over all the proceeds of any
policy to the Participant's Designated Beneficiary in accordance with the
distribution provisions of this Plan. A Participant's Spouse will be the
Designated Beneficiary unless a Qualified Election has been made in accordance
with section 9.4(c) of the Plan. Under no circumstances shall the Trust retain
any part of the proceeds. Subject to the joint and survivor annuity
requirements of ARTICLE 9, the policies shall be converted or distributed upon
commencement of benefits in accordance with the provisions of this section.
Upon a Participant's retirement at or after his Normal Retirement Age, unless
there is a single sum distribution in which case any policy shall be
distributed, any such policy shall be converted to a paid-up contract and
delivered to the Participant but the Plan Administrator may, with the
Participant's consent, direct that a portion or all of such cash value of the
policy be converted to provide retirement income as permitted within the terms
of the policy and this Plan. Upon a Participant's retirement due to Total and
Permanent Disability, any such policy shall be held for his account and assigned
or delivered to the Participant in addition to any other benefits provided by
this Plan. Upon a Participant's termination of employment for reasons other
than death, Total and Permanent Disability, or retirement as stated above, to
the extent of life insurance purchased by Employer Contributions, he shall be
entitled to a vested interest in any policy held for his account as his interest
is vested in the remainder of his Employer Contribution subaccounts (exclusive
of any such policy). Whenever the Participant is entitled to one hundred percent
(100%) vesting, then such policy shall be assigned and delivered to the
Participant in accordance with its terms and the terms of the Plan. Whenever
the Participant is entitled to vesting of less than one hundred percent (100%),
then the Participant shall be entitled to a vested interest of the cash
surrender value of any such policy equal to his percent of vested interest in
his Employer Contribution subaccounts, exclusive of the policy, and one of the
following distribution procedures shall apply:
(a) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account is less than the amount of his
vested termination benefit exclusive of the policies, then, such policy shall be
assigned to the Participant and the remainder of the Participant's vested
interest in the Participant's Employer Contribution subaccounts shall be reduced
by the cash surrender value of the nonvested portion of all policies, after
which it shall be paid or distributed to the Participant in accordance with the
terms of the Plan; or
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(b) If the nonvested portion of the cash surrender value of all
policies held for the Participant's Account exceeds the Participant's vested
interest in the Employer Contribution subaccount exclusive of such policies, the
Participant shall be given the opportunity to purchase such policies by paying
to the Trustee the amount of such excess within thirty (30) days after notice to
him of the amount to be paid. Upon receipt of such payment said policy shall be
assigned and delivered to the Participant to the full satisfaction of all
termination benefits under this Plan. Any such policy not so purchased shall be
surrendered by the Trustee for its cash value and the proceeds thereof deposited
in the Trust for reallocation pursuant to ARTICLE 5.
It is the intention hereof that the total termination benefit of a
Participant whose interest is not fully vested shall be equal to the sum of the
vested percentage of his Employer Contribution subaccounts exclusive of all such
policies and the same percentage of the cash value of all such policies held for
his Account. To the extent possible under the foregoing provisions, such total
termination benefits shall be satisfied by the transfer and delivery to the
Participant of one or more such policies with the balance, if any, to be paid in
cash or in kind.
14.8 POLICY FEATURES. The Trustee shall arrange, where possible, that
all policies purchased for the benefit of a Participant shall have the same
dividend option which shall be on the premium reduction plan, and as nearly as
may be possible all policies issued under the Plan shall have the same
anniversary date. To the extent any dividends or credits earned on insurance
policies are not applied toward the next premiums due, they shall be allocated
to the Participant's Employer Contribution subaccount in the same manner as a
Participant's directed investment.
14.9 CHANGED CONDITIONS. From time to time because of changed
conditions, the Trustee, acting at the direction of the Plan Administrator upon
the election of the Participant concerned, shall obtain an additional contract
or policy or make such change in the contracts or policies maintained by the
Trustee on the life of the Participant as may be required by such changed
conditions, within the limits permitted by the insurance company which issued or
is requested to issue a contract and the limits established by this Plan.
14.10 CONFLICTS. In the event of any conflict between the terms of the
Plan and the provisions of any contract issued hereunder, the terms of the Plan
shall control.
ARTICLE 15
ADMINISTRATION
15.1 DUTIES AND RESPONSIBILITIES OF FIDUCIARIES; ALLOCATION OF FIDUCIARY
RESPONSIBILITY. A fiduciary of the Plan
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shall have only those specific powers, duties, responsibilities and obligations
as are explicitly given him under the Plan and Trust Agreement. In general, the
Employer shall have the sole responsibility for making contributions to the Plan
required under ARTICLE 4; appointing the Trustee and the Plan Administrator; and
determining the funds available for investment under the Plan. The Plan
Administrator shall have the sole responsibility for the administration of the
Plan, as more fully described in section 15.2. It is intended that each
fiduciary shall be responsible only for the proper exercise of his own powers,
duties, responsibilities, and obligations under the Plan and Trust Agreement,
and shall not be responsible for any act or failure to act of another fiduciary.
A fiduciary may serve in more than one fiduciary capacity with respect to the
Plan.
15.2 POWERS AND RESPONSIBILITIES OF THE PLAN ADMINISTRATOR.
(a) ADMINISTRATION OF THE PLAN. The Plan Administrator shall
have all powers necessary to administer the Plan, including the power to
construe and interpret the Plan documents; to decide all questions relating to
an individual's eligibility to participate in the Plan; to determine the amount,
manner, and timing of any distribution of benefits or withdrawal under the Plan;
to approve and ensure the repayment of any loan to a Participant under the Plan;
to resolve any claim for benefits in accordance with section 15.7; and to
appoint or employ advisors, including legal counsel; to render advice with
respect to any of the Plan Administrator's responsibilities under the Plan. Any
construction, interpretation, or application of the Plan by the Plan
Administrator shall be final, conclusive, and binding. All actions by the Plan
Administrator shall be taken pursuant to uniform standards applied to all
persons similarly situated. The Plan Administrator shall have no power to add
to, subtract from, or modify any of the terms of the Plan, or to waive or fail
to apply any requirements of eligibility for a benefit under the Plan.
(b) RECORDS AND REPORTS. The Plan Administrator shall be
responsible for maintaining sufficient records to reflect the Eligibility
Computation Periods in which an Employee is credited with one or more Years of
Service for purposes of determining his eligibility to participate in the Plan,
and the Compensation of each Participant for purposes of determining the amount
of contributions that may be made by or on behalf of the Participant under the
Plan. The Plan Administrator shall be responsible for submitting all required
reports and notifications relating to the Plan to Participants or their
Beneficiaries, the Internal Revenue Service and the Department of Labor.
(c) FURNISHING TRUSTEE WITH INSTRUCTIONS. The Plan Administrator
shall be responsible for furnishing the Trustee with written instructions
regarding all contributions to the Trust, all distributions to Participants in
accordance with ARTICLE 10, all withdrawals by Participants in accordance with
ARTICLE 12, all
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loans to Participants in accordance with ARTICLE 13 and all purchases of life
insurance in accordance with ARTICLE 14. In addition, the Plan Administrator
shall be responsible for furnishing the Trustee with any further information
respecting the Plan which the Trustee may request for the performance of its
duties or for the purpose of making any returns to the Internal Revenue Service
or Department of Labor as may be required of the Trustee.
(d) RULES AND DECISIONS. The Plan Administrator may adopt such
rules as it deems necessary, desirable, or appropriate in the administration of
the Plan. All rules and decisions of the Plan Administrator shall be applied
uniformly and consistently to all Participants in similar circumstances. When
making a determination or calculation, the Plan Administrator shall be entitled
to rely upon information furnished by a Participant or Beneficiary, the
Employer, the legal counsel of the Employer, or the Trustee.
(e) APPLICATION AND FORMS FOR BENEFITS. The Plan Administrator
may require a Participant or Beneficiary to complete and file with it an
application for a benefit, and to furnish all pertinent information requested by
it. The Plan Administrator may rely upon all such information so furnished to
it, including the Participant's or Beneficiary's current mailing address.
(f) FACILITY OF PAYMENT. Whenever, in the Plan Administrator's
opinion, a person entitled to receive a payment of a benefit or installment
thereof is under a legal disability or is incapacitated in any way so as to be
unable to manage his financial affairs, as determined by a court of competent
jurisdiction, it may direct the Trustee to make payments to such person or to
the legal representative or to a relative or friend of such person for that
person's benefit, or it may direct the Trustee to apply the payment for the
benefit of such person in such manner as it considers advisable.
15.3 ALLOCATION OF DUTIES AND RESPONSIBILITIES. The Plan Administrator
may, by written instrument, allocate among its members or employees any of its
duties and responsibilities not already allocated under the Plan or may
designate persons other than members or employees to carry out any of the Plan
Administrator's duties and responsibilities under the Plan. Any such duties or
responsibilities thus allocated must be described in the written instrument. If
a person other than an Employee of the Employer is so designated, such person
must acknowledge in writing his acceptance of the duties and responsibilities
allocated to him.
15.4 APPOINTMENT OF THE PLAN ADMINISTRATOR. The Employer shall designate
in the Adoption Agreement the Plan Administrator who shall administer the
Employer's Plan. Such Plan Administrator may consist of an individual, a
committee of two or more individuals, whether or not, in either such case, the
individual or any of such individuals are Employees of the Employer, a
consulting
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firm or other independent agent, the Trustee (with its consent), or the Employer
itself. The Plan Administrator shall be charged with the full power and the
responsibility for administering the Plan in all its details. If no Plan
Administrator has been appointed by the Employer, or if the person designated as
Plan Administrator by the Employer is not serving as such for any reason, the
Employer shall be deemed to be the Plan Administrator of the Plan. The Plan
Administrator may be removed by the Employer, or may resign by giving notice in
writing to the Employer, and in the event of the removal, resignation, or death,
or other termination of service by the Plan Administrator, the Employer shall,
as soon as practicable, appoint a successor Plan Administrator, such successor
thereafter to have all of the rights, privileges, duties, and obligations of the
predecessor Plan Administrator.
15.5 EXPENSES. The Employer shall pay all expenses authorized and
incurred by the Plan Administrator in the administration of the Plan except to
the extent such expenses are paid from the Trust.
15.6 LIABILITIES. The Plan Administrator and each person to whom duties
and responsibilities have been allocated pursuant to section 15.3 may be
indemnified and held harmless by the Employer with respect to any alleged breach
of responsibilities performed or to be performed hereunder. The Employer and
each Affiliated Employer shall indemnify and hold harmless the Sponsor against
all claims, liabilities, fines, and penalties, and all expenses reasonably
incurred by or imposed upon him (including, but not limited to, reasonable
attorney's fees) which arise as a result of actions or failure to act in
connection with the operation and administration of the Plan.
15.7 CLAIMS PROCEDURE.
(a) FILING A CLAIM. Any Participant or Beneficiary under the
Plan may file a written claim for a Plan benefit with the Plan Administrator or
with a person named by the Plan Administrator to receive claims under the Plan.
(b) NOTICE OF DENIAL OF CLAIM. In the event of a denial or
limitation of any benefit or payment due to or requested by any Participant or
Beneficiary under the Plan ("claimant"), claimant shall be given a written
notification containing specific reasons for the denial or limitation of his
benefit. The written notification shall contain specific reference to the
pertinent Plan provisions on which the denial or limitation of his benefit is
based. In addition, it shall contain a description of any other material or
information necessary for the claimant to perfect a claim, and an explanation of
why such material or information is necessary. The notification shall further
provide appropriate information as to the steps to be taken if the claimant
wishes to submit his claim for review. This written notification shall be given
to a claimant within ninety (90) days after receipt of his claim for a review.
This written notification shall be given to a
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claimant within ninety (90) days after receipt of his claim by the Plan
Administrator unless special circumstances require an extension of time for
processing the claim. If such an extension of time for processing is required,
written notice of the extension shall be furnished to the claimant prior to the
termination of said ninety (90) day period, and such notice shall indicate the
special circumstances which make the postponement appropriate.
(c) RIGHT OF REVIEW. In the event of a denial or limitation of
his benefit, the claimant or his duly authorized representative shall be
permitted to review pertinent documents and to submit to the Plan Administrator
issues and comments in writing. In addition, the claimant or his duly
authorized representative may make a written request for a full and fair review
of his claim and its denial by the Plan Administrator; provided, however, that
such written request must be received by the Plan Administrator (or its delegate
to receive such requests) within sixty (60) days after receipt by the claimant
of written notification of the denial or limitation of the claim. The sixty
(60) day requirement may be waived by the Plan Administrator in appropriate
cases.
(d) DECISION ON REVIEW. A decision shall be rendered by the Plan
Administrator within sixty (60) days after the receipt of the request for
review, provided that where special circumstances require an extension of time
for processing the decision, it may be postponed on written notice to the
claimant (prior to the expiration of the initial sixty (60) day period) for an
additional sixty (60) days, but in no event shall the decision be rendered more
than one hundred twenty (120) days after the receipt of such request for review.
Any decision by the Plan Administrator shall be furnished to the claimant in
writing and shall set forth the specific reasons for the decision and the
specific Plan provisions on which the decision is based.
(e) COURT ACTION. No Participant or Beneficiary shall have the
right to seek judicial review of a denial of benefits, or to bring any action in
any court to enforce a claim for benefits prior to filing a claim for benefits
or exhausting his rights to review under this section.
ARTICLE 16
AMENDMENT, TERMINATION AND MERGER
16.1 SPONSOR'S POWER TO AMEND. The Sponsor may amend any part of the
Plan. For purposes of Sponsor's amendments, the mass submitter shall be
recognized as the agent of the Sponsor. If the Sponsor does not adopt the
amendments made by the mass submitted, it will no longer be identical to or a
minor modifier of the mass submitter plan.
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16.2 AMENDMENT BY ADOPTING EMPLOYER.
(a) The Employer may:
(i) change the choice of options in the Adoption Agreement;
(ii) add overriding language in the Adoption Agreement when
such language is necessary to satisfy section 415 or section 416 of the Code
because of the required aggregation of multiple plans; and
(iii) add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to be treated as individually designed.
(b) An Employer that amends the Plan for any other reason,
including a waiver of the minimum funding requirement under section 412(d) of
the Code, will no longer participate in this prototype plan and will be
considered to have an individually designed plan.
16.3 VESTING UPON PLAN TERMINATION. In the event of the termination or
partial termination of the Plan, the Account balance of each affected
Participant will be nonforfeitable.
16.4 VESTING UPON COMPLETE DISCONTINUANCE OF CONTRIBUTIONS. In the event
of a complete discontinuance of contributions under the Plan, the Account
balance of each affected Participant will be nonforfeitable.
16.5 MAINTENANCE OF BENEFITS UPON MERGER. In the event of a merger or
consolidation with, or transfer of assets to any other plan, each Participant
will receive a benefit immediately after such merger, consolidation or transfer
(if the Plan then terminated) which is at least equal to the benefit the
Participant was entitled to immediately before such merger, consolidation or
transfer (if the Plan had been terminated).
16.6 SPECIAL AMENDMENTS. The Employer may from time to time make any
amendment to the Plan that may be necessary to satisfy section 415 or 416 of the
Code. Any such amendment will be adopted by the Employer by completing
overriding Plan language in the Adoption Agreement. In the event of such an
amendment, the Employer must obtain a separate determination letter from the
Internal Revenue Service to continue reliance on the Plan's qualified status.
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ARTICLE 17
MISCELLANEOUS
17.1 EXCLUSIVE BENEFIT OF PARTICIPANTS AND BENEFICIARIES.
(a) All assets of the Trust shall be retained for the exclusive
benefit of Participants and their Beneficiaries, and shall be used only to pay
benefits to such persons or to pay the fees and expenses of the Trust. The
assets of the Trust shall not revert to the benefit of the Employer, except as
otherwise specifically provided in section 17.1(b).
(b) To the extent permitted or required by ERISA and the Code,
contributions to the Trust under this Plan are subject to the following
conditions:
(i) If a contribution or any part thereof is made to the
Trust by the Employer under a mistake of fact, such contribution or part thereof
shall be returned to the Employer within one (1) year after the date the
contribution is made.
(ii) In the event the Plan is determined not to meet the
initial qualification requirements of section 401 of the Code, contributions
made in respect of any period for which such requirements are not met shall be
returned to the Employer within one (1) year after the Plan is determined not to
meet such requirements, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the Secretary
of the Treasury may prescribe.
(iii) Contributions to the Trust are specifically
conditioned on their deductibility under the Code and, to the extent a deduction
is disallowed for any such contribution, such amount shall be returned to the
Employer within one (1) year after the date of the disallowance of the
deduction.
17.2 NONGUARANTEE OF EMPLOYMENT. Nothing contained in this Plan shall be
construed as a contract of employment between the Employer and any Employee, or
as a right of any Employee to be continued in the employment of the Employer, or
as a limitation of the right of the Employer to discharge any of its Employees,
with or without cause.
17.3 RIGHTS TO TRUST ASSETS. No Employee, Participant, or Beneficiary
shall have any right to, or interest in, any assets of the Trust upon
termination of employment or otherwise, except as provided under the Plan. All
payments of benefits under the Plan shall be made solely out of the assets of
the Trust.
17.4 NONALIENATION OF BENEFITS. No benefit or interest available
hereunder will be subject to assignment or alienation, either voluntarily or
involuntarily. The preceding sentence shall also apply to the creation,
assignment, or recognition of a right
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to any benefit payable with respect to a Participant pursuant to a domestic
relations order, unless such order is determined to be a qualified domestic
relations order, as defined in section 414(p) of the Code, or any domestic
relations order entered before January 1 1985.
17.5 AGGREGATION RULES.
(a) Except as provided in ARTICLE 6, all Employees of the
Employer or any Affiliated Employer will be treated as employed by a single
employer.
(b) If this Plan provides contributions or benefits for one or
more Owner-Employees who control both the business for which this Plan is
established and one or more other trades or businesses, this Plan and the plan
established for other trades or businesses must, when looked at as a single
plan, satisfy sections 401(a) and (d)of the Code for the Employees of this and
all other trades or business.
(c) If the Plan provides contributions or benefits for one or
more Owner-Employees who control one or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies sections 401(a) and (d) of the Code and which provides contributions
and benefits not less favorable than provided for Owner-Employees under this
Plan.
(d) If an individual is covered as an Owner-Employee under the
plans of two or more trades or businesses which are not controlled and the
individual controls a trade or business, then the contributions or benefits of
the employees under the plan of the trades or businesses which are controlled
must be as favorable as those provided for him under the most favorable plan of
the trade or business which is not controlled.
(e) For purposes of paragraphs (b), (c) and (d), and Owner-
Employee, or two or more Owner-Employees, will be considered to control a trade
or business if the Owner-Employee, or two or more Owner-Employees together:
(i) own the entire interest in an unincorporated trade or
business; or
(ii) in the case of a partnership, own more than fifty
percent (50%) of either the capital interest or the profits interest in the
partnership.
For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning an interest in a partnership which is
owned, directly or indirectly, by a partnership which such Owner-Employee, or
such two or more Owner-Employees, are considered to control within the meaning
of the preceding sentence.
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17.6 FAILURE OF QUALIFICATION. If the Employer's plan fails to attain or
retain qualification, such plan will no longer participate in this master/
prototype plan and will be considered an individually designed plan.
17.7 APPLICABLE LAW. Except to the extent otherwise required by ERISA,
as amended, this Plan shall be construed and enforced in accordance with the
laws of the state in which the Employer's principal place of business is
located, as specified in the Adoption Agreement.
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INVESTMENT COMPANY INSTITUTE
PROTOTYPE DEFINED CONTRIBUTION TRUST
Revised February 1990
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE I ACCOUNTS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Establishing Accounts. . . . . . . . . . . . . . . . . 1
1.2 Charges Against Accounts . . . . . . . . . . . . . . . 1
1.3 Prospectus to be Provided. . . . . . . . . . . . . . . 1
ARTICLE II RECEIPT OF CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 2
ARTICLE III INVESTMENT POWERS OF THE TRUSTEE. . . . . . . . . . . . . . 2
3.1 Investment of Account Assets . . . . . . . . . . . . . 2
3.2 Directed Investments . . . . . . . . . . . . . . . . . 3
3.3 General Investment Powers. . . . . . . . . . . . . . . 4
3.4 Investment in Combined Funds . . . . . . . . . . . . . 4
3.5 Other Powers of the Trustee. . . . . . . . . . . . . . 4
3.6 General Powers . . . . . . . . . . . . . . . . . . . . 5
3.7 Valuation of Trust . . . . . . . . . . . . . . . . . . 5
3.8 Bonding. . . . . . . . . . . . . . . . . . . . . . . . 5
3.9 Duties Not Assigned. . . . . . . . . . . . . . . . . . 6
ARTICLE IV DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT. . . . . . . . . 6
ARTICLE V REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR . . . . . 6
ARTICLE VI TRUSTEE'S FEES AND EXPENSES OF THE TRUST. . . . . . . . . . 7
ARTICLE VII DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR . . . . . 7
7.1 Information and Data to be Furnished the Trustee . . . 7
7.2 Limitation of Duties . . . . . . . . . . . . . . . . . 7
ARTICLE VIII LIABILITY OF THE TRUST. . . . . . . . . . . . . . . . . . . 7
8.1 Trustee's Liability. . . . . . . . . . . . . . . . . . 7
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Page
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ARTICLE IX DELEGATION OF POWERS. . . . . . . . . . . . . . . . . . . . 9
9.1 Delegation by the Trustee. . . . . . . . . . . . . . . 9
9.2 Delegation with Employer Approval. . . . . . . . . . . 9
ARTICLE X AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XI RESIGNATION OR REMOVAL OF TRUSTEE . . . . . . . . . . . . . 10
ARTICLE XII TERMINATION OF THE TRUST. . . . . . . . . . . . . . . . . . 10
12.1 Term of the Trust. . . . . . . . . . . . . . . . . . . 10
12.2 Termination by the Trustee . . . . . . . . . . . . . . 10
ARTICLE XIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 11
13.1 No Diversion of Assets . . . . . . . . . . . . . . . . 11
13.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . 11
13.3 Multiple Trustees. . . . . . . . . . . . . . . . . . . 11
13.4 Conflict With Plan . . . . . . . . . . . . . . . . . . 11
13.5 Applicable Law . . . . . . . . . . . . . . . . . . . . 11
13.6 Returned Contributions . . . . . . . . . . . . . . . . 11
13.7 General Undertaking. . . . . . . . . . . . . . . . . . 11
13.8 Invalidity of Certain Provisions . . . . . . . . . . . 12
13.9 Counterpart Originals. . . . . . . . . . . . . . . . . 12
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TRUST AGREEMENT
The Employer has established a Plan for the benefit of Participants therein
pursuant to section 401 of the Internal Revenue Code of 1986. As part of the
Plan, the Employer has requested such person or persons (individual, corporate,
or other entity), as may be designated in the Adoption Agreement, to serve as
Trustee pursuant to the Trust established for the investment of contributions
under the Plan upon the terms and conditions set forth in this Trust Agreement.
Unless the context of this Trust Agreement clearly indicates otherwise, the
terms defined in ARTICLE 2 of the Plan entered into by the Employer, of which
this Trust Agreement forms a part, shall, when used herein, have the same
meaning as in the Plan.
ARTICLE I
ACCOUNTS
1.1 ESTABLISHING ACCOUNTS. The Trustee shall open and maintain a Trust
account for the Plan and, as part thereof, Participants' Accounts for such
individuals as the Plan Administrator shall, from time to time, give written
notice to the Trustee as being Participants in the Plan. The Trustee shall also
open and maintain such other subaccounts as may be appropriate or desirable to
aid in the administration of the Plan. Separate subaccounts shall be maintained
for each Participant and shall be credited with the contributions made by the
Employer and with forfeitures allocated to each such Participant pursuant to the
Plan (and all earnings thereon). If nondeductible voluntary contributions by
Participants are permitted by the Plan, the Trustee shall open and maintain as a
part of the Trust a separate subaccount for each Participant who makes such
nondeductible voluntary contributions, each such subaccount to be credited with
the Participant's voluntary contributions (and all earnings attributable to such
contributions). If trustee transfers or rollover contributions from another
qualified plan are received, the Trustee shall open and maintain a separate
rollover subaccount for each Participant, each such subaccount to be credited
with the Participant's trustee transfers or rollover contributions (and all
earnings attributable to such contributions).
1.2 CHARGES AGAINST ACCOUNTS. Upon receipt of written instructions from
the Administrator, the Trustee shall charge the appropriate subaccount of the
Participant for any withdrawals or distributions made under the Plan and any
forfeiture, which may be required under the Plan, of unvested interests
attributable to Employer Contributions. The Plan Administrator will give
written instructions to the Trustee specifying the manner in which Employer
Contributions and any forfeiture of the nonvested portion of Accounts, as
allocated by the Plan Administrator in accordance with the provisions of the
Plan, are to be credited to the various Accounts maintained for Participants.
1.3 PROSPECTUS TO BE PROVIDED. The Plan Administrator shall ensure that a
Participant who makes a nondeductible voluntary contribution has previously
received or receives a copy of the then current prospectus relating to the
Shares. Delivery of such a
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nondeductible voluntary contribution, pursuant to the provisions of the Plan by
the Plan Administrator to the Trustee shall entitle the Trustee to assume that
the Participant has received such a prospectus.
ARTICLE II
RECEIPT OF CONTRIBUTIONS
The trustee shall accept and hold in the Trust contributions made by the
Employer and Participants under the Plan. The Administrator shall give written
instructions to the Trustee specifying the Participants' Accounts to which
contributions are to be credited, the amount of each such credit which is
attributable to Employer Contributions, and the amount, if any, which is
attributable to the Participant's nondeductible voluntary contributions. If
written instructions are not received by the Trustee, or if such instructions
are received but are deemed by the Trustee to be unclear, upon notice to the
Employer, the Trustee may elect to hold all or part of any such contribution in
cash, without liability for rising security prices or distributions made,
pending receipt by it from the Plan Administrator of written instructions or
other clarification, or the Trustee may return the contribution to the Employer.
If any contributions or earnings are less than any minimum which the then
current prospectus for the Shares requires, the Trustee may hold the specified
portion of contributions or earnings in cash, without interest, until such time
as the proper amount has been contributed or earned so that the investment in
the Shares required under the Plan may be made. All payments to the Trust shall
be remitted in U.S. currency or other property to the Trustee at the address
specified by it. Any payments not in U.S. currency may, in the sole discretion
of the Trustee, be refused.
ARTICLE III
INVESTMENT POWERS OF THE TRUSTEE
3.1 INVESTMENT OF ACCOUNT ASSETS. The Trustee shall invest the amount of
each contribution made hereunder and all earnings on the Trust in full and
fractional Shares in accordance with the current prospectus for such Shares, in
such amounts and proportions as shall from time to time be designated by the
Plan Administrator on forms provided by the Sponsor, and shall credit such
Shares to the Accounts of each Participant on whose behalf or by whom the
contributions are made and any forfeitures are allocated. All dividends and
capital gain distributions received on the Shares held by the Trustee in each
Account, shall, if received in cash, be reinvested in such Shares in accordance
with the current prospectus for such Shares and shall in any event be credited
to such Account. If any distribution on Shares may be received at the election
of the shareholder in additional Shares, the Trustee shall so elect. The
Trustee shall deliver, or cause to be executed and delivered, to the Plan
Administrator, all notices, prospectuses, financial statements, proxies, and
proxy soliciting materials relating to Shares held hereunder. The Trustee shall
not vote any of the Shares held hereunder, except in accordance with the written
instructions of the Plan Administrator. If no such written instructions are
received, such Shares shall not be voted. The obligations of the Trustee
hereunder may be delegated by it as provided in sections 9.1 and 9.2.
2
<PAGE>
The Trustee shall sell Shares and purchase Shares to accomplish any change
in investments desired by the Employer as indicated on any amended Adoption
Agreement or other instructions in accordance with the terms of the Plan.
Notwithstanding the above, if periodic payments are being made to a
Participant pursuant to ARTICLE IV hereof, any dividends received on Share held
in such Participant's Account, which dividends are invested at an offering price
which includes a sales charge, need not be invested in additional Shares but may
be held for distribution to the Participant in periodic payments. In such
instances, the Trustee may make any election necessary to receive any such
dividends in cash.
3.2 DIRECTED INVESTMENTS. When so instructed by the Plan Administrator,
the Trustee shall invest all or any portion of the individual Account of any
Participant in accordance with the direction of the Employer or such Participant
in lieu of participation in the general assets of the Trust. Such directed
investment shall be accounted for separately for each Participant. Except as
otherwise provided herein, the Trustee shall not have any discretion, and is
specifically prohibited from exercising any control or discretion, with respect
to such directed investments. Each Participant who directs the investment of
his Account shall be solely and absolutely responsible for the investment or
reinvestment of all directed investment assets held on his behalf in trust, and,
except as otherwise provided herein, the Trustee shall not question any such
direction, review any securities or other such assets, or make suggestions with
respect to the investment, retention or disposition of any such assets; provided
that:
(a) If any contributions are transmitted to or otherwise received or
held as directed investment assets without investment directions from the
Participant, the Trustee may retain such amounts in a noninterest-bearing
savings account in a federally insured institution for the benefit of the
Participant.
(b) The Trustee may establish such reasonable rules and regulations,
applied on a uniform basis to all Participants, with respect to the requirements
for, and the form and manner of, effectuating any transaction with respect to
directed investment assets including, without limitation, minimum amounts, rules
applicable to conversion of directed investments into general assets of the
trust, and appropriate adjustments (based on fair market values) to Accounts to
reflect any such conversion, as the Trustee shall determine to be consistent
with the purposes of the Plan. Any such rules and regulations shall be binding
upon all persons interested in the Trust.
(c) The Trustee may establish a procedure for the periodic review of
directed investment assets to determine, in light of the facts and circumstances
reasonably known to it, whether any actual or proposed investment of such assets
constitutes or would constitute a prohibited transaction as that term is defined
in sections 406-408 of ERISA and the corresponding provisions of the Code. If
the Trustee determines that any investment constitutes or would constitute a
prohibited transaction, the Trustee shall promptly communicate this
determination to the Plan Administrator, and shall recommend that the investment
be prevented or disposed of, as the case may be, and may recommend any other
action authorized or required by law, to prevent or remedy the transaction.
3
<PAGE>
(d) In accordance with and pursuant to uniform and nondiscriminatory
rules established under and in accordance with the Plan, the Trustee may deny
the Plan Administrator's application to allow a directed investment proposed by
a Participant.
(e) Notwithstanding anything herein to the contrary, in no event
shall the Trustee engage in any transaction that would be prohibited under
ERISA.
3.3 GENERAL INVESTMENT POWERS. Subject to any investment limitations or
minimum requirements for investments in Shares imposed by the Sponsor, and
subject to investment instructions given by the Employer, the Trustee shall be
authorized and empowered to invest and reinvest all or any part of the Trust in
any property, real or personal or mixed, including, but not being limited to,
capital or common stock (whether voting or nonvoting or whether or not currently
paying a dividend), preferred or preference stock (whether voting or nonvoting
or whether or not currently paying a dividend), Shares of regulated investment
companies, convertible securities, corporate and governmental obligations,
leaseholders, ground rents, mortgages, and other interests in realty, trust, and
participation certificates, oil, mineral or gas properties, royalty interests or
rights, including equipment pertaining thereto, notes and other evidences of
indebtedness or ownership, secured or unsecured, contracts, chases in action,
and warrants, and other instruments entitling the owner thereof to subscribe to
or purchase any of the aforesaid. Subject to any investment limitations or
requirements imposed by the Sponsor relating to the type of permissible
investments in the Trust or the minimum percentage of Trust assets to be
invested in Shares, and subject to the provisions of ARTICLE VIII hereof, in
making and retaining such investments and reinvestments pursuant hereto, the
Trustee shall not be bound as to the character of any investments by any
statute, rule of court, or custom governing the investment of Trust funds.
3.4 INVESTMENT IN COMBINED FUNDS. If the Trustee is a banking
institution, subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Employer, it may, subject to the election of the
Sponsor or the Employer, cause funds of this Trust to be invested in its
commingled funds for qualified employee benefit plan trusts and such commingled
funds are hereby adopted and mae a part of the Plan of which this Trust is a
part, and any funds of this Trust invested in any such commingled funds shall be
subject to all the provisions thereof, as the same may be amended from time to
time.
3.5 OTHER POWERS OF THE TRUSTEE. The Trustee is authorized and empowered
with respect to the Trust:
(a) Subject to any investment limitations or minimum requirements for
investment in Shares imposed by the Sponsor, and subject to investment
instructions given by the Employer, to sell, exchange, convey, transfer, or
otherwise dispose of, either at public or private sale, any property, real or
personal or mixed, at any time held by it, for such consideration and on such
terms and conditions as to credit or otherwise as the Trustee may deem best.
4
<PAGE>
(b) Subject to the provisions of section 3.1, to vote in person or by
proxy any stocks, bonds or other securities held by it; to exercise any options
appurtenant to any stocks, bonds, or other securities, or to exercise any rights
to subscribe for additional stocks, bonds, or other securities, and to make any
and all necessary payments therefor, to join in, or to dissent from, and to
oppose, the reorganizations, consolidation, liquidation, sale, or merger of
corporations, or properties in which it may be interested as Trustee, upon such
terms and conditions as it may deem wise.
(c) To make, execute, acknowledge, and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted.
(d) To register any investment held in the Trust in the name of the
Trust or in the name of a nominee, and to hold any investment in bearer form,
but the books and records of the Trustee shall at all times show that all such
investments are part of the Trust.
(e) To employ suitable agents and counsel (who may also be agents
and/or counsel for the Employer or the Sponsor) and to pay their reasonable
expenses and compensation.
(f) To borrow or raise monies for the purpose of the Trust from any
source and, for any sum so borrowed to issue its promissory note as Trustee and
to secure the repayment thereof by pledging all or any part of the Trust fund,
but nothing herein contained shall obligate the Trustee to render itself liable
individually for the amount of any such borrowing; and no person loaning money
to the Trustee shall be bound to see to the application of money loaned or to
inquire into the validity or propriety of any such borrowing.
Each and all of the foregoing powers may be exercised without a court order
or approval. No one dealing with the Trustee need inquire concerning the
validity or propriety of anything that is done or need see to the application of
any money paid or property transferred to or upon the order of the Trustee.
3.6 GENERAL POWERS. The Trustee shall have all of the powers necessary or
desirable to do all acts, take all such proceedings, and exercise all such
rights and privileges, whether or not expressly authorized herein, which it may
deem necessary or proper for the administration and protection of the property
of the Trust and to accomplish any action provided for in the Plan.
3.7 VALUATION OF TRUST. The Trustee, as of the Valuation Date, and at
such other time or times as it determines, shall determine the net worth of the
assets of the Trust. In determining such net worth, the assets of the Trust
shall be evaluated at their fair market value and all expenses shall be
deducted. The Trustee may adopt such methods of valuation as it deems
advisable.
3.8 BONDING. Except to the extent otherwise required by law, the Trustee
shall not be required to obtain any bonds in connection with its duties
hereunder. The cost of any
5
<PAGE>
bond obtained may be charged as an expense of the trust, but if not so charged,
shall be paid by the Employer.
3.9 DUTIES NOT ASSIGNED. The duties of the Trustee with respect to the
Plan are limited to those assumed by the Trustee by the terms of this Trust.
The trustee shall not be deemed, by virtue hereof, to be the administrator or
sponsor of the Plan, and shall not be responsible for filing reports, returns or
disclosures with any government agency except as may otherwise be required by
its duties as Trustee under applicable law
ARTICLE IV
DISTRIBUTIONS FROM A PARTICIPANT'S ACCOUNT
Distributions from the Trust shall be made by the Trustee in accordance
with proper written directions of the Plan Administrator in accordance with the
provisions of section 15.2 of the Plan, and the Plan Administrator shall have
the sole responsibility for determining that the directions given conform to
provisions of the Plan and applicable law, including (without limitation)
responsibility for calculating the vested interests of the Participant, for
calculating the amounts payable to a Participant pursuant to ARTICLE 11 of the
Plan, and for determining the proper person to whom benefits are payable under
the Plan. Except to the extent otherwise provided in the Plan, the interest of
Participants and Beneficiaries in the Trust and in the net earnings and profits
thereof may not be assigned or used by a Participant or Beneficiary as
collateral for a loan and shall not be subject to garnishment, attachment, levy
or execution of any kind for the debts or defaults of the Trustee or of any
person, natural or legal, having interest in the Trust.
ARTICLE V
REPORTS OF THE TRUSTEE AND THE PLAN ADMINISTRATOR
The Trustee shall keep accurate and detailed records of all receipts,
investments, disbursements, and other transactions required to be performed
hereunder with respect to the Trust. The Trustee shall file with the Plan
Administrator a written report or reports reflecting the receipts,
disbursements, and other transactions effected by it with respect to the Trust
during such Plan Year and the assets and liabilities of the Trust at the close
of the Plan Year. Such report or reports shall be open to inspection by any
Participant for a period of one hundred eighty (180) days immediately following
the date on which it is filed with the Plan Administrator. Except as otherwise
prescribed by ERISA, upon the expiration of such one hundred eighty (180) day
period, the Trustee shall be forever released and discharged from all liability
and accountability to anyone with respect to its acts, transactions, duties,
obligations, or responsibilities as shown in or reflected by such report, except
with respect to any such acts or transactions as to which the Plan Administrator
shall have filed written objections with the Trustee within such one hundred
eighty (180) days period, and except for willful misconduct or lack of good
faith on the part of the Trustee.
6
<PAGE>
ARTICLE VI
TRUSTEE'S FEES AND EXPENSES OF THE TRUST
The Trustee's fees for performing its duties hereunder shall be such
reasonable amounts as shall be respectively established by it from time to time.
The Trustee shall furnish the Employer with its current schedule of fees and
shall give written notice to the Employer whenever its fees are changed or
revised. Such fees, any taxes of any kind whatsoever which may be levied or
assessed upon or in respect of the Trust, to the extent incurred by the Trustee
and any and all expenses incurred by the Trustee in the performance of its
duties, including fees for legal services rendered to the Trustee, shall, unless
paid by the Employer, be paid from the Trust in the manner provided in the Plan.
Unless paid by the Employer, all fees of the Trustee and taxes and other
expenses charged to a Participant's Account may be collected by the Trustee from
the amount of any contribution to be credited or distribution to be charged to
such Account or may be paid by redeeming or selling assets credited to such
Account.
ARTICLE VII
DUTIES OF THE EMPLOYER AND THE PLAN ADMINISTRATOR
7.1 INFORMATION AND DATA TO BE FURNISHED THE TRUSTEE. In addition to
making the contributions called for in ARTICLE II hereof, the Employer, through
the Plan Administrator, agrees to furnish the Trustee with such information and
data relative to the Plan as is necessary for the proper administration of the
Trust established hereunder.
7.2 LIMITATION OF DUTIES. Neither the Employer nor any of its officers,
directors, or partners, nor the Plan Administrator shall have any duties or
obligations with respect to this Trust Agreement, except those expressly set
forth herein and in the Plan.
ARTICLE VIII
LIABILITY OF THE TRUST
8.1 TRUSTEE'S LIABILITY.
(a) The Employer shall indemnify and save the Trustee (including its
affiliates, representatives and agents) harmless from and against any liability,
cost or other expense, including, but not limited to, the payment of attorneys'
fees that the Trustee may incur in connection with this Trust Agreement or the
Plan unless such liability, cost or other expense (whether direct or indirect)
arises from the Trustee's own willful misconduct or gross negligence. The
Employer recognizes that a burden of litigation may be imposed upon the Trustee
as a result of some act or transaction for which it has no responsibility or
over which it has no control under this Trust Agreement. Therefore, the
Employer agrees to indemnify and hold harmless and, if requested, defend the
Trustee (including its affiliates, representatives and agents) from any expenses
(including counsel fees, liabilities, claims,
7
<PAGE>
damages, actions, suits or other charges) incurred by the Trustee in prosecuting
or defending against any such litigation.
(b) The Trustee shall not be liable for, and the Employer will
indemnify and hold harmless the Trustee (including its affiliates,
representatives and agents) from and against all liability or expense (including
counsel fees) because of (i) any investment action taken or omitted by the
Trustee in accordance with any direction of the Employer or a Participant, or
investment inaction in the absence of directions from the Employer or a
Participant or (ii) any investment action taken by the Trustee pursuant to an
order to purchase or sell securities placed by the Employer or a Participant
directly with a broker, dealer or issuer. It is understood that although, when
the Trustee is subject to the direction of the Employer or a Participant the
Trustee will perform certain ministerial duties with respect to the portion of
the Fund subject to such direction (the "Directed Fund"), such duties do not
involve the exercise of any discretionary authority or other authority to manage
any control assets of the Directed Fund and will be performed in the normal
course of business by officers and employees of the Trustee or its affiliates,
representatives or agents who may be unfamiliar with investment management. It
is agreed that the Trustee is not undertaking any duty or obligation, express or
implied, to review, and will not be deemed to have any knowledge of or
responsibility with respect to, any transaction involving the investment of the
Directed Fund as a result of the performance of its ministerial duties.
Therefore, in the event that "knowledge" of the Trustee shall be a prerequisite
to imposing a duty upon or determining liability of the Trustee under the Plan
or this Trust or any law or regulation regulating the conduct of the Trustee
with respect to the Directed Fund, as a result of any act or omission of the
Employer or any Participant, or as a result of any transaction engaged in by any
of them, then the receipt and processing of investment orders and other
documents relating to Plan assets by an officer or other employee of the Trustee
or its affiliates, representatives or agents engaged in the performance of
purely ministerial functions shall not constitutes "knowledge" of the Trustee.
(c) Notwithstanding the foregoing provisions of this Trust Agreement,
the Trustee shall discharge its duties hereunder with the care, skill, prudence
and diligence under the circumstances then prevailing that a prudent man acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. Any investments selected by
the Trustee without specific direction from the Employer shall be selected to
diversify the investments of the Trust fund so as to minimize the risk of large
losses, unless in the circumstances it is clearly prudent not to do so. The
Trustee shall perform its duties in accordance with this Trust Agreement insofar
as this Trust Agreement is consistent with the provisions of ERISA. To the
extent not prohibited by ERISA, the Trustee shall not be responsible in any way
for any action or omission of the Employer or the Plan Administrator with
respect to the performance of their duties and obligations set forth in the
Plan. To the extent not prohibited by ERISA, the Trustee shall not be
responsible for any action or omission of any of its agents, or with respect to
reliance upon advice of its counsel (whether or not such counsel is also counsel
to the Employer or to the Plan Administrator), provided that such agents or
counsel were prudently chosen by the Trustee and that the Trustee relied in good
faith upon the action of such agent or the advice of such counsel. The Trustee
shall be indemnified and held harmless by the Employer against liability or
losses occurring by reason of any act or omission of the Trustee under this
8
<PAGE>
Trust Agreement, unless such act or omission is due to its own willful
nonfeasance, malfeasance, or misfeasance or other breach of duty under ERISA, to
the extent that such indemnification does not violate ERISA or any other federal
or state laws.
ARTICLE IX
DELEGATION OF POWERS
9.1 DELEGATION BY THE TRUSTEE. With respect to Shares held by the Plan,
the Trustee hereby delegates to the custodian or other agent designated by the
Sponsor the functions designated in (a) through (d) hereunder, other than the
investment, management or control of the Trust assets. With respect to assets
other than Shares, the Trustee may delegate in writing pursuant to a procedure
permitted and established by the Sponsor, to a person (individual, corporate, or
other entity) designated by the Sponsor as an agent or custodian, any of the
powers or functions of the Trustee hereunder other than the investment,
management or control of the Trust assets, including (without limitation)
(a) custodianship of all or any part of the assets of the Trust;
(b) maintaining and accounting for the Trust and for Participants and
other Accounts as a part thereof;
(c) distribution of benefits as directed by the Plan Administrator;
and
(d) preparation of the annual report on the status of the Trust.
The agent or custodian so appointed may act as agent for the Trustee,
without investment responsibility, for fees to be mutually agreed upon by the
Employer and the agent or custodian and paid in the same manner as Trustee's
fees. The Trustee shall not be responsible for any act or omission of the agent
or custodian arising from any such delegation, except to the extent provided in
section 8.1.
9.2 DELEGATION WITH EMPLOYER APPROVAL. The Trustee (whether or not a bank
or trust company) and the Employer may, by mutual agreement, arrange for the
delegation by the Trustee to the Plan Administrator or any agent of the Employer
of any powers or functions of the Trustee hereunder other than the investment
and custody of the Trust assets. The Trustee shall not be responsible for any
act or omission of such person or persons arising from any such delegation,
except to the extent provided in ARTICLE VIII.
ARTICLE X
AMENDMENT
As provided in section 16.1 of the Plan, and subject to the limitations set
forth therein, the prototype Adoption Agreement, Plan and Trust Agreement may be
amended at any time, in whole or in part, by the Sponsor. The Trustee hereby
delegates authority to the Sponsor, and to any successor Sponsor, to so amend
the prototype Adoption Agreement, Plan
9
<PAGE>
and Trust Agreement and the Trustee hereby agrees that it shall be deemed to
have consented to any amendment so made which does not increase the duties of
the Trustee without its consent.
ARTICLE XI
RESIGNATION OR REMOVAL OF TRUSTEE
The Trustee may resign at any time upon thirty (30) days notice in writing
to the Employer, and may be removed by the Sponsor or Employer at any time upon
thirty (30) days notice in writing to the Trustee. Upon such resignation or
removal, the Sponsor or Employer shall appoint a successor Trustee or Trustees.
Upon receipt by the Trustee of written acceptance of such appointment by the
successor Trustee, the Trustee shall transfer and pay over to such successor the
assets of the Trust and all records pertaining thereto, provided that any
successor Trustee shall agree not to dispose of any such records without the
Trustee's consent. The successor Trustee shall be entitled to rely on all
accounts, records, and other documents received by it from the Trustee, and
shall not incur any liability whatsoever for such reliance. The Trustee is
authorized, however, to reserve such sum of money or property as it may deem
advisable for payment of all its fees, compensation, costs, and expenses, or for
payment of any other liabilities constituting a charge on or against the assets
of the Trust or on or against the Trustee, with any balance of such reserve
remaining after the payment of all such items to be paid over to the successor
Trustee. Upon the assignment, transfer, and payment over of the assets of the
Trust, and obtaining a receipt thereof from the successor Trustee, the Trustee
shall be released and discharged from any and all claims, demands, duties, and
obligations arising out of the Trust and its management thereof, excepting only
claims based upon the Trustee's willful misconduct or lack of good faith. The
successor Trustee shall hold the assets paid over to it under terms similar to
those of this Trust Agreement under a trust that will qualify under section 401
of the Code. If within thirty (30) days after the Trustee's resignation or
removal, the Employer or Sponsor has not appointed a successor Trustee which has
accepted such appointment, the Trustee shall, unless it elects to terminate the
Trust pursuant to ARTICLE XII, appoint such successor itself.
ARTICLE XII
TERMINATION OF THE TRUST
12.1 TERM OF THE TRUST. This Trust shall continue as to the Employer so
long as the Plan is in full force and effect. If the Plan ceases to be in full
force and effect, this Trust shall thereupon terminate unless expressly extended
by the Employer.
12.2 TERMINATION BY THE TRUSTEE. The Trustee may elect to terminate the
Trust if within thirty (30) days after its resignation or removal pursuant to
ARTICLE XI the Employer or Sponsor has not appointed a successor Trustee which
has accepted such appointment. Termination of the Trust shall be effected by
distributing all assets thereof to the Participants or other persons entitled
thereto pursuant to the directions of the Plan Administrator (or, in the absence
of such direction, as determined by the Trustee) as provided in section 16.3 of
the Plan, subject to the Trustee's right to reserve funds as
10
<PAGE>
provided in ARTICLE XI hereof. Upon the completion of such distribution, the
Trustee shall be relieved from all further liability with respect to all amounts
so paid, other than any liability arising out of the Trustee's willful
misconduct.
ARTICLE XIII
MISCELLANEOUS
13.1 NO DIVERSION OF ASSETS. At no time shall it be possible for any part
of the assets of the Trust to be used for or diverted to purposes other than for
the exclusive benefit of Participants and their Beneficiaries or revert to the
Employer, except as specifically provided in the Plan or this Trust Agreement.
13.2 NOTICES. Any notice from the Trustee to the Employer or from the
Employer to the Trustee provided for in the Plan and Trust shall be effective if
sent by first class mail to their respective last address of record.
13.3 MULTIPLE TRUSTEES. In the event that there shall be two (2) or more
Trustees serving hereunder, any action taken or decision made by any such
Trustee may be taken or made by a majority of them with the same effect as if
all had joined therein, if there be more than two (2), or unanimously if there
be two (2).
13.4 CONFLICT WITH PLAN. In the event of any conflict between the
provisions of the Plan and those of this Trust Agreement, the Plan shall
prevail.
13.5 APPLICABLE LAW. Except to the extent otherwise required by ERISA, as
amended, this Trust Agreement shall be construed in accordance with the laws of
the state where the Trustee has its principal place of business.
13.6 RETURNED CONTRIBUTIONS.
(a) A contribution made by the Employer by a mistake of fact shall,
if the Administrator so directs, be returned to the Employer within one (1) year
after its payment. The Administrator shall, in its sole discretion, determine
whether the contribution was made by mistake of fact based upon such evidence as
it deems appropriate.
(b) A contribution made by the Employer that is conditioned on
deductibility under section 404 of the Code shall, to the extent such deduction
is disallowed, be returned to the Employer within one (1) year after the
disallowance, if the Administrator so directs.
13.7 GENERAL UNDERTAKING. All parties to this Trust and all persons
claiming any interest whatsoever hereunder agree to perform any and all acts and
execute any and all documents and papers which may be necessary or desirable for
the carrying out of the Trust or any of its provisions.
11
<PAGE>
13.8 INVALIDITY OF CERTAIN PROVISIONS. If any provision of this Trust
shall be held invalid or unenforceable, such invalidity or unenforceability
shall not affect any other provisions hereof and the Trust shall be construed
and enforced as if such provisions had not been included.
13.9 COUNTERPART ORIGINALS. This Trust may be executed in one or more
counterpart originals.
IN WITNESS WHEREOF, the Employer and the Trustee(s) have signed this Trust
effective as of the date specified in the Adoption Agreement.
Attest:
-----------------------------------
[NAME OF EMPLOYER]
By:
- ----------------------------------- --------------------------------
Secretary President
TRUSTEE(S)
-----------------------------------
-----------------------------------
-----------------------------------
-----------------------------------
12
<PAGE>
STATE OF )
------------
) ss.
COUNTY OF )
-------------
I, , a notary public in
--------------------------------------------------
and for the jurisdiction above named, do hereby certify that
-------------------
- --------------------------------------------------------------------------------
did personally appear before me and do acknowledge that they executed the
foregoing Trust as their free act and deed.
Subscribed and sworn to before me this day of , 19___.
------- ----------------
My commission expires:
----------------------------------------
------------------------------
Notary Public
13
<PAGE>
INSTRUCTIONS FOR STARTING YOUR
BERGER FUNDS SPONSORED
PROFIT SHARING AND/OR MONEY PURCHASE PENSION PLAN
Included in this package you will find everything you will need to sign up for
the Berger Funds sponsored Profit Sharing Plan and/or Money Purchase Pension
Plan Retirement Program. In addition to this package you should carefully read
the prospectus of the Funds that you are interested in.
INSTRUCTIONS
1. Complete the enclosed adoption agreement for the Plan(s) you wish to adopt.
NOTE: The employer should consult with a tax advisor or attorney in the
completion of these forms. We cannot assist you in the respective terms or
conditions required to be completed in the adoption agreement.
2. Complete the enclosed share purchase application including selection of the
desired investment option. The owner of the account should be listed in
the Trust section as follows:
Investor's Fiduciary Trust Co., TTEE FBO (Your Company's
Name), Profit Sharing Plan, DTD xx/xx/xx
or
Investor's Fiduciary Trust Co., TTEE FBO (Your Company's
Name), Money Purchase Pension Plan, DTD xx/xx/xx
You must open a separate account for each plan.
3. If you are completing this for an individually owned business without any
employees, complete and return the Beneficiary Designation attached to the
Adoption Agreement. If the Adoption Agreement is being completed for a
multi-employee business the employer may desire to use this Beneficiary
Designation for all of its employees.
4. The Plan Administrator (the Employer), should contact their tax advisor or
attorney to obtain an appropriate summary plan description which should be
filed with the Department of Labor.
5. The employer should also contact their tax advisor or attorney in regards
to filing annual reports with the Internal Revenue Service on one of the
Form 5500 series of returns.
6. If you desire to transfer assets from another plan to this plan, please
complete the Transfer Request Form attached to these instructions.
7. When all of the documents are complete, please return with a check made
payable to The Berger Funds, to:
Investor's Fiduciary Trust Co.
<PAGE>
c/o The Berger Funds
P.O. Box 419958
Kansas City, MO 64141
8. If you prefer not to have the Trustee's fee deducted from your account,
enclose a check made payable to Investor's Fiduciary Trust Company, in an
amount equal to $12.00 for each investment selected for the Plan. A
separate check for each Plan is required.
<PAGE>
MONEY PURCHASE PENSION PLAN
TRANSFER LETTER
If you are transferring the proceeds of an existing Money Purchase Pension
Plan to the Berger Funds Money Purchase Pension Plan, please complete this form
and return it to the address listed below, with a copy of your most recent
account statement.
Your name
----------------------------------------------------------------------
Your address
-------------------------------------------------------------------
City, State, Zip
---------------------------------------------------------------
Social Security or
Tax Identification No.
-------------------------------------------------------
TRANSFER PRESENT ACCOUNT FROM:
Account Number
-----------------------------------------------------------------
Name of Resigning Trustee
------------------------------------------------------
Address of Resigning Trustee
---------------------------------------------------
City, State, Zip
---------------------------------------------------------------
Gentlemen:
I am establishing a Money Purchase Pension Plan with Investors Fiduciary
Trust Co., for investment into the Berger Funds account number ________________
_________________________________________________. (Leave blank
for new account)
Please arrange to have:
____ All of the assets in my account
____ $_____________________ of the assets in my account,
<PAGE>
liquidated immediately and the proceeds transferred to the successor Trustee as
follows:
Investors Fiduciary Trust Co.
C/O Berger Funds
P.O. Box 419958
Kansas City, MO 64141
An Investors Fiduciary Trust Co. letter of acceptance is enclosed herewith.
Sincerely,
- ----------------------------- ----------------------------------------
Signature Signature Guarantee
(if required by present Trustee)
<PAGE>
MONEY PURCHASE PENSION ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#002 SPONSORED BY
BERGER FUNDS
ADOPTION AGREEMENT #002
This is the Adoption Agreement for paired defined contribution plan #002 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension defined contribution plan. This adoption agreement may be
adopted either singly or in combination with paired defined contribution plan
#001, a prototype profit sharing plan.
NOTE: Before executing this Adoption Agreement, the Employer should
consult with a tax advisor or attorney. Failure to properly complete
this Adoption Agreement may result in Plan disqualification.
********************************************************************************
The Employer hereby establishes a money purchase pension plan and a trust upon
the respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have acceptance of such
appointment. The Plan, the Trust Agreement, and the Custody Agreement, if
applicable, shall be supplemented and modified by the terms and conditions
contained in this Adoption Agreement and shall be effective on the Effective
Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
********************************************************************************
I. SPONSOR DATA
A. BERGER FUNDS
----------------------------------------------------------------------
Name of Sponsor (or authorized representative)
B. 210 UNIVERSITY BLVD., SUITE 900
----------------------------------------------------------------------
Address
DENVER, CO 80206
----------------------------------------------------------------------
C. (303) 329-0200
----------------------------------------------------------------------
Telephone Number
********************************************************************************
<PAGE>
II. EMPLOYER DATA
A.
-------------------------------------------------------------------
Name of Employer and Employer Identification Number
B.
-------------------------------------------------------------------
-------------------------------------------------------------------
Address
C.
-------------------------------------------------------------------
Telephone Number
D.
-------------------------------------------------------------------
Employer's Taxable Year End
E.
-------------------------------------------------------------------
Plan Year End
F. This Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be
taxed under Sub-chapter S
G.
-------------------------------------------------------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
-------------------------------------------------------------------
Effective Date of Amendment (should be first day of a Plan Year)
-------------------------------------------------------------------
Name of Prior Plan
-------------------------------------------------------------------
Effective Date of Prior Plan
I.
-------------------------------------------------------------------
Limitation Year, if different from E., above
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2) (Plan section
3.1):
1. YEARS OF SERVICE. The Employee must complete
(check one box):
[ ] One Year of Service
[ ] ____ Years of Service. (You can require less than or
more than one Year of Service, but not more than two (2).
If you select
2
<PAGE>
more than one Year of Service,
the Employee must be 100%
vested once he becomes eligible, and you
must select vesting schedule B in
section IX of this Adoption Agreement.
If the Year of Service is or includes a
fractional year, an Employee will not be
required to complete any specified
number of Hours of Service (section IV,
A of this Adoption Agreement) to receive
credit for such fractional year.
2. AGE. The Employee must attain age 18 (not
greater than age 21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[ ] UNION EMPLOYEES. Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer
and Employee representatives (as defined in section 3.1 (b) (i)
of the Plan), if retirement benefits were the subject of good
faith bargaining.
[ ] NONRESIDENT ALIENS. Employees who are non-resident aliens and
who receive no earned income from the Employer which constitutes
income from sources within the United States.
For purposes of this section III, the term "employee" includes
all employees of this Employer or any employer aggregated with
this Employer under sections 414(b), (c), (m) or (o) of the Code
and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414(n) or
(o) of the Code.
********************************************************************************
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state
the number here: ______ (Plan section 2.42).
B. The plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method) (Plan section 2.19):
1. [ ] On the basis of actual hours for which an Employee is paid
or entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited
with ten (10) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1)
Hour of Service during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19
of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
3
<PAGE>
4. [ ] On the basis of semimonthly payroll periods. An Employee
will be credited with ninety-five (95) Hours of Service if
under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under
section 2.19 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2) (Plan sections
3.3 and 8.5):
1. [ ] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
---------------------------------------------------------
---------------------------------------------------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
********************************************************************************
V. COMPENSATION
A. Compensation (choose 1 or 2) (Plan section 2.7):
1. [ ] Shall include
- or -
4
<PAGE>
2. [ ] Shall not include
Employer Contributions made pursuant to a salary reduction
agreement which are not includable in the gross income of the
Employee under sections 125, 402(a)(8), 402(h) or 403(b) of the
Code.
B. The effective date of the election in A. above shall be ______________
(but not earlier than the first day of the first Plan Year beginning
after 1986).
********************************************************************************
VI. CONTRIBUTIONS
A. Formulas (choose 1 or 2) (Plan section 4.1 (1)):
1. [ ] Plan not integrated with Social Security
The Employer will contribute ____% of compensation for each
Participant (not less than 3% if the profit sharing Adoption
Agreement is also adopted and, in any event, not more than
25%).
2. [ ] Integrated Plan -- The Employer will contribute an amount
equal to ____% (base contribution percentage, not less than
3) of each Participant's Compensation (as defined in section
2.7 of the Plan) for the Plan Year, up to the Integration
Level plus ____% (not less than 3% and not to exceed the
base contribution percentage by more than the lesser of: (1)
the base contribution percentage, or (2) the Maximum
Disparity Rate of such Participant's Compensation in excess
of the Integration Level.
a. [ ] TAXABLE WAGE BASE. (The maximum amount considered as
wages for such year under section 3121(a)(1) of the
Internal Revenue Code (the Social Security taxable wage
base) as of the beginning of the Plan Year).
- or -
b. [ ] $_______________ (a dollar amount not to exceed the
Taxable Wage Base).
- or -
c. [ ] ____% of the Taxable Wage Base (not to exceed 100%).
NOTE: If you maintain any other plan in addition to
this Plan, only one plan may be integrated with Social
Security.
B. Forfeitures for a given Plan Year (choose 1 or 2) (Plan section
5.3(a)):
1. [ ] Shall be applied to reduce the Employer Contribution in that
year, or if in excess of the Employer Contribution for such
Plan year, the excess amounts shall be used to reduce the
Employer Contribution in the next succeeding Plan Year or
Years.
5
<PAGE>
- or -
2. [ ] Shall be added to the Employer Contribution and allocated
accordingly.
C. Contribution Eligibility (Plan section 4.1(c)):
The Plan provides that all Participants will share in Employer
Contributions for the Plan Year, except the following (if elected):
[ ] Participants who terminate employment during the Plan Year with
not more than 500 Hours of Service and who are not Employees as
of the last day of the Plan Year (other than Participants who
die, retire or become Totally and Permanently Disabled).
If a fewer number of hours than 500 is desired, state the number here:
_______.
********************************************************************************
VII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2) (Plan section 2.26):
1. [ ] The date a Participant reaches age ____ (not more than 65 or
less than 55). If no age is indicated, normal retirement
age shall be 65.
- or -
2. [ ] The later of age ____ (not more than 65) or the ____ (not
more than 5th) anniversary of the day the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
B. Early Retirement (choose 1 or 2) (Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age ____ (not less than 55) and
completes ____ years of service (not more than 15).
- or -
2. [ ] Early Retirement will not be permitted under the Plan.
********************************************************************************
6
<PAGE>
VIII. VESTING
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (choose A, B, C or D) (Plan section
8.3):
A. [ ] Years of
Service Vested Percentage
-------- -----------------
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
B. [ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen
for eligibility in section III.A.1 of this Adoption Agreement,
vesting schedule B must be chosen).
C. [ ] 100% vesting after ____ years of service (not to exceed three).
- or -
D. [ ] Years of
Service Vested Percentage
-------- -----------------
1 year ____%
2 years ____% (not less than 20)
3 years ____% (not less than 40)
4 years ____% (not less than 60)
5 years ____% (not less than 80)
6 years ____% (not less than 100)
********************************************************************************
IX. INVESTMENT OF ASSETS
Zero percent of the trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such other
investments as may be acceptable within the discretion of the Trustee. The
Sponsor may impose additional limitations relating to the type of
permissible investments in the Trust (Plan section 7.3).
********************************************************************************
7
<PAGE>
X. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator.
********************************************************************************
XI. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided by
section 5.2 of the Plan shall receive a minimum contribution under this
Plan equal to 3% of Compensation, or if lesser, the largest percentage of
Compensation allocated on behalf of any Key Employee or the Plan Year under
this Plan and paired defined contribution plan #001.
NOTE: If the Participant also participates in paired defined contribution
plan #001 (the profit sharing plan), the required minimum contribution must
be made under this plan, even if the integrated plan combination formula is
selected.
********************************************************************************
XII. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #001) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS
SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT
FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AN INDIVIDUAL MEDICAL
ACCOUNT, AS DEFINED IN SECTION 415 (1)(2) OF THE CODE, UNDER WHICH AMOUNTS
ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS
PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan (choose either 1 or 2) (Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the other
plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which the plans
will limit total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts, in a
manner that precludes Employer discretion).
B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer attach an explanation of the
method under which the plan involved will satisfy the 1.0 limitation
in a manner that precludes Employer discretion.
********************************************************************************
XIII. ADMINISTRATION
The Plan Administrator of the Plan will be the Employer.
8
<PAGE>
XIV. THE TRUSTEE
A. The Employer hereby appoints the Sponsor's designated trustee(s) to
serve as the Trustee(s):
Name: INVESTORS FIDUCIARY TRUST COMPANY
------------------------------------------------------------
Address: C/O BERGER FUNDS, P. O. BOX 419958
------------------------------------------------------------
KANSAS CITY, MO 64141
------------------------------------------------------------
Dated:
--------------------- ----------------------------------------
(Signature of) Trustee
********************************************************************************
XV. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant
making contributions and each new Participant, a copy of the then current
prospectus of such investment companies. The Employer further represents
that upon approval by the Trustee, this Adoption Agreement shall be
effective as of the Effective Date. The right to reject this Adoption
Agreement for any reason is reserved.
2
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including a welfare benefit fund, as defined in section 419(e)
of the Code, which provides post-retirement medical benefits allocated
to separate accounts for Key Employees, as defined in section
419A(d)(3) of the Code, or an individual medical account as defined in
section 415(1)(2) of the Code, in addition to this Plan (other than
paired plan #001), may not rely on the opinion letter issued by the
National Office of the Internal Revenue Service as evidence that this
Plan is qualified under section 401 of the Internal Revenue Code. If
the Employer who adopts or maintains multiple plans wishes to obtain
reliance that the plans are qualified, application for a determination
letter should be made to the appropriate Key District Director of
Internal Revenue.
This Adoption Agreement consists of 10 pages.
9
<PAGE>
IN WITNESS WHEREOF, The Employer has caused this Adoption Agreement to be
executed by its duly authorized officers this ____ day of _______________.
----------------------------------
(Name of Employer)
By:
----------------------------------
(Name & Title)
Date:
------------------------------
10
<PAGE>
PROFIT SHARING ADOPTION AGREEMENT
FOR PROTOTYPE PAIRED DEFINED CONTRIBUTION PLAN
#001 SPONSORED BY
BERGER FUNDS
ADOPTION AGREEMENT #001
This is the Adoption Agreement for paired defined contribution plan #001 of
basic plan document #01, which is a combined prototype profit sharing/money
purchase pension plan. This Adoption Agreement may be adopted either singly or
in combination with paired defined contribution plan #002, a prototype money
purchase pension plan..
NOTE: Before executing this adoption Agreement, the Employer should
consult with a tax advisor or attorney. Failure to properly complete this
Adoption Agreement may result in Plan disqualification.
********************************************************************************
The Employer hereby establishes a profit sharing plan and a trust upon the
respective terms and conditions contained in the prototype paired defined
contribution plan (the "Plan") and the Trust Agreement annexed hereto and
appoints as Trustee of such trust the person(s) who have executed this Adoption
Agreement evidencing their acceptance of such appointment. The Plan, the Trust
Agreement, and the Custody Agreement, if applicable, shall be supplemented and
modified by the terms and conditions contained in this Adoption Agreement and
shall be effective on the Effective Date.
The Sponsor will inform the Employer of any amendments made to the Plan or the
discontinuance or abandonment of the Plan.
********************************************************************************
I. SPONSOR DATA
A. BERGER FUNDS
-----------------------------------------------------------
Name of Sponsor (or authorized representative)
B. 210 UNIVERSITY BLVD., SUITE 900
-----------------------------------------------------------
Address
DENVER, CO 80206
-----------------------------------------------------------
C. (303) 329-0200
-----------------------------------------------------------
Telephone Number
********************************************************************************
1
<PAGE>
II. EMPLOYER DATA
A.
-----------------------------------------------------------
Name of Employer and Employer Identification Number
B.
-----------------------------------------------------------
Address
-----------------------------------------------------------
C.
-----------------------------------------------------------
Telephone Number
D.
-----------------------------------------------------------
Employer's Taxable Year End
E.
-----------------------------------------------------------
Plan Year End
F. The Employer is: [ ] A corporate entity
[ ] A noncorporate entity
[ ] A corporation electing to be taxed under
Sub-Chapter S
G.
-----------------------------------------------------------
Effective Date (should be first day of a Plan Year)
H. If this is an amendment of an existing plan, complete the following:
-----------------------------------------------------------
Effective Date of Amendment (should be first day of a Plan Year)
-----------------------------------------------------------
Name of Prior Plan
-----------------------------------------------------------
Effective Date of Prior Plan
I. N/A
-----------------------------------------------------------
Limitation Year, if different from E., above
********************************************************************************
III. ELIGIBILITY
A. Employees shall be eligible to participate in the Plan upon completion
of the eligibility requirements (complete 1 and 2) (Plan section 3.1):
1. YEARS OF SERVICE. The Employee must complete (check one box):
[ ] One Year of Service
[ ] ____ Years of Service. (You can require less than or more
than one Year of Service, but not more than two (2). If you
select more than one Year of Service, the
2
<PAGE>
Employee must to 100% vested once he becomes eligible, and
you must select vesting schedule B in section X of this
Adoption Agreement. If the Year of Service is or includes
a fractional year, an Employee will not be required to
complete any specified number of Hours of Service (section
IV, A of this Adoption Agreement) to receive credit for such
fractional year.
2. AGE. The Employee must attain age ____ (not greater than age
21).
B. The following Employees will not be eligible to participate in the
Plan (Plan section 3.1):
[ ] UNION EMPLOYEES. Employees included in a unit of employees
covered by a collective bargaining agreement between the Employer
and Employee representatives (as defined in section 3.1(b)(i) of
the Plan), if retirement benefits were the subject of good faith
bargaining.
[ ] NON-RESIDENT ALIENS. Employees who are non-resident aliens and
who receive no earned income from the Employer which constitutes
income from sources within the United States.
For purposes of this section III, the term "Employee" includes
all employees of this Employer or any employer aggregated with
this Employer under sections 414(b), (c) or (m) or (o) of the
Code and individuals who are Leased Employees required to be
considered Employees of any such employer under section 414(n) or
(o) of the Code.
********************************************************************************
IV. CREDITED SERVICE
A. The Plan provides that a Year of Service requires at least 1,000 hours
during any Plan Year. If a lower number of hours is desired, state
the number here: _____________ (Plan section 2.42).
B. The Plan permits Hours of Service to be determined by the use of
service equivalencies under one of the methods selected below (choose
one method) (Plan section 2.19):
1. [ ] On the basis of actual hours for which an Employee is paid
or entitled to payment.
2. [ ] On the basis of days worked. An Employee will be credited
with ten (10) Hours of Service if under section 2.19 of the
Plan such Employee would be credited with at least one (1)
Hour of Service during the day.
3. [ ] On the basis of weeks worked. An Employee will be credited
with forty-five (45) Hours of Service if under section 2.19
of the Plan such Employee would be credited with at least
one (1) Hour of Service during the week.
3
<PAGE>
4. [ ] On the basis of semimonthly payroll periods. An Employee
will be credited with ninety-five (95) Hours of Service if
under section 2.19 of the Plan such Employee would be
credited with at least one (1) Hour of Service during the
semimonthly payroll period.
- or -
5. [ ] On the basis of months worked. An Employee will be credited
with one hundred ninety (190) Hours of Service if under
section 2.19 of the Plan such Employee would be credited
with at least one (1) Hour of Service during the month.
C. Service with a predecessor employer (choose 1 or 2) (Plan section 3.3
and 8.5):
1. [ ] No credit will be given for service with a predecessor
employer.
- or -
2. [ ] Credit will be given for service with the following
predecessor employer(s):
-------------------------------------------------
-------------------------------------------------
NOTE: The Plan provides that if this is a continuation of a
predecessor plan, service under the predecessor plan must be
counted.
********************************************************************************
V. COMPENSATION
A. Compensation (choose 1 or 2) (Plan section 2.7):
1. [ ] Shall include
- or -
[ ] Shall not include
Employer Contributions made pursuant to a salary reduction
agreement which are not includable in the gross income of
the Employee under sections 125, 402(a)(8), 402(h) or 403(b)
of the Code.
B. The effective date of the election in A. above shall be ____________
(but not earlier than the first day of the first Plan Year
beginning after 1986).
********************************************************************************
VI. CONTRIBUTIONS
A. Profit sharing plan formulas (choose 1 or 2) (Plan section 4.1(b)):
1. [ ] Discretionary pursuant to Employer resolution. If no
resolution is adopted, then
4
<PAGE>
______% of Participants' compensation.
- or -
2. [ ] ______% of Participants' Compensation, plus discretionary
amount, if any, by Employer resolution.
NOTE: Each of these formulas is subject to maximum
limitations on contributions as provided in the Plan and the
Internal Revenue Code. In no event may the Employer
Contribution exceed 15% of the aggregate compensation of all
Participants for the year, plus up to 10% credit carryover
in certain circumstances. Additional limitations are
included in the Plan where the Employer also has another
qualified retirement plan. An individual Participant's
limit on contributions and forfeitures, per year is
generally the lesser of 25% of compensation or $30,000.
********************************************************************************
VII. ALLOCATION OF EMPLOYER CONTRIBUTIONS
A. Formula -- Choose 1 or 2 (Plan section 5.3(b)).
NOTE: If you provide for hardship withdrawals you must use Formula 1.
1. [ ] Non-integrated Plan -- Employer contributions shall be
allocated to the accounts of all eligible Participants
prorated upon compensation.
- or -
2. [ ] Integrated Plan -- Employer contributions and forfeitures
shall be integrated with Social Security and allocated in
accordance with the provisions of Plan section 5.3(b). The
Plan's Integration Level shall be (choose (a), (b) or (c)):
(a) [ ] TAXABLE WAGE BASE. (The maximum amount considered
as wages for such year under section 3121(a)(1) of
the Internal Revenue Code (the Social Security
taxable wage base) as of the beginning of the Plan
Year).
- or -
(b) [ ] $___________ (a dollar amount not to exceed the
Taxable Wage Base).
- or -
(c) [ ] _____% of the Taxable Wage Base (not to exceed
100%).
NOTE: If you maintain any other plan in addition
to this Plan, only one plan may be integrated with
Social Security.
B. Contribution eligibility (choose 1 or 2) (Plan section 4.1(c)):
1. [ ] The Plan provides that a Participant will share in Employer
Contributions for the Plan Year only if he (i) retires,
dies, or becomes totally and permanently disabled,
5
<PAGE>
or (ii) completes 500 Hours of Service and is employed on
the last day in such year. If a lesser number of hours is
desired, state the number here: __________.
- or -
2. [ ] A Participant will share in Employer Contributions for the
Plan Year in which he terminates employment prior to the end
of such year if he completes 500 Hours of Service in such
year. If a lesser number of hours is desired, state the
number here: _____________.
********************************************************************************
VIII. DISTRIBUTIONS
A. Normal Retirement Age is (choose 1 or 2) (Plan section 2.26):
1. [ ] The date a Participant reaches age ______ (not more than 65
or less than 55). If no age is indicated, normal retirement
ages shall be 65.
- or -
2. [ ] The later of age ______ (not more than 65) or the _________
(not more than 5th) anniversary of the day the Participant
commenced participation in the Plan. The participation
commencement date is the first day of the first Plan Year in
which the Participant commenced participation in the Plan.
B. Early Retirement (choose 1 or 2) (Plan section 2.10):
1. [ ] Early Retirement Date is the first day of the month
coincident with or next following the date upon which a
Participant reaches age ______ (not less than 55) and
completes ______ years of service (not more than 15).
- or -
2. [ ] Early Retirement will not be permitted under the Plan.
********************************************************************************
IX. OPTIONAL FEATURES
A. Hardship withdrawals (choose 1 or 2) (Plan section 12.2):
1. [ ] The Plan permits hardship withdrawals.
- or -
2. [ ] The Plan does not permit hardship withdrawals.
NOTE: The Plan may not provide hardship withdrawals if
integration with Social Security is elected in section VII.A.2.
X. VESTING
6
<PAGE>
Employer Contributions will become vested if the Participant terminates
employment for any reasons other than retirement, death, or disability
pursuant to the following schedule (choose A, B, C or D) (Plan section
8.3):
A. [ ] YEARS OF
SERVICE VESTED PERCENTAGE
--------- -----------------
1 year 0%
2 years 20%
3 years 40%
4 years 60%
5 years 80%
6 or more years 100%
B. [ ] 100% vesting immediately after satisfaction of the eligibility
requirements.
NOTE: If a service requirement greater than one year is chosen
for eligibility in section III.A.1. of this Adoption Agreement,
vesting schedule B must be chosen.
C. [ ] 100% vesting after ______ years of service (not to exceed three).
- or -
D. [ ] YEARS OF
SERVICE VESTED PERCENTAGE
-------- -----------------
1 year ___%
2 years ___% (not less than 20)
3 years ___% (not less than 40)
4 years ___% (not less than 60)
5 years ___% (not less than 80)
6 years ___% (not less than 100)
********************************************************************************
XI. INVESTMENT OF ASSETS
Zero percent of the trust assets must be invested in Shares or other
investments offered by the Sponsor with the remainder in such other
investments as may be acceptable within the discretion of the Trustee. The
Sponsor may impose additional limitations relating to the type of
permissible investments in the Trust (Plan section 7.3).
********************************************************************************
XII. INVESTMENT AUTHORITY
Contributions to the Plan shall be invested by the Trustee in accordance
with instructions of the Employer or Plan Administrator. The Employer or
Plan Administrator shall make all investment selections.
********************************************************************************
XIII. TOP-HEAVY PROVISIONS
Participants who are eligible to receive the minimum allocation provided by
section 5.2 of the Plan shall receive a minimum allocation of contributions
and forfeitures under this Plan equal to 3% of Compensation, or if lesser,
7
<PAGE>
the largest percentage of Compensation allocated on behalf of any Key
Employee for the Plan Year.
NOTE: If the Participant also participates in paired defined contribution
plan #002 (the money purchase pension plan), the required minimum
allocation must be made under paired defined contribution plan #002 (the
money purchase pension plan).
********************************************************************************
XIV. ALLOCATION LIMITATIONS
COMPLETE THIS SECTION ONLY IF YOU MAINTAIN OR EVER MAINTAINED ANOTHER
QUALIFIED PLAN (OTHER THAN PAIRED PLAN #002) IN WHICH ANY PARTICIPANT IN
THIS PLAN IS (OR WAS) A PARTICIPANT OR COULD BECOME A PARTICIPANT. THIS
SECTION MUST ALSO BE COMPLETED IF THE EMPLOYER MAINTAINS A WELFARE BENEFIT
FUND, AS DEFINED IN SECTION 419(e) OF THE CODE, OR AND INDIVIDUAL MEDICAL
ACCOUNT, AS DEFINED IN SECTION 415(1)(2) OF THE CODE, UNDER WHICH AMOUNTS
ARE TREATED AS ANNUAL ADDITIONS WITH RESPECT TO ANY PARTICIPANT IN THIS
PLAN.
A. If the Participant is covered under another qualified defined
contribution plan maintained by the Employer, other than a master or
prototype plan (choose either 1 or 2) (Plan section 6.3):
1. [ ] The provisions of section 6.2 will apply as if the other
plan were a master or prototype plan.
- or -
2. [ ] (On an attachment, provide the method under which the plans
will limit total annual additions to the maximum permissible
amount, and will properly reduce any excess amounts, in a
manner that precludes Employer discretion).
B. If the Participant is or has ever been a participant in a defined
benefit plan maintained by the Employer attach an explanation of the
method under which the plan involved will satisfy the 1.0 limitation
in a manner that precludes Employer discretion.
********************************************************************************
XV. ADMINISTRATION
A. The Plan Administrator of the Plan will be the employer:
********************************************************************************
XVI. THE TRUSTEE
A. The Employer hereby appoints the Sponsor's designated trustee(s) to
serve as Trustee(s):
Name: Investors Fiduciary Trust Company
-----------------------------------------------------------
Address: c/o Berger Funds, P.O. Box 419958
--------------------------------------------------------
Kansas City, Missouri 64141
-----------------------------------------------------------------
8
<PAGE>
Dated:
-------------- ------------------------------------
(Signature of) Trustee
********************************************************************************
XVII. EMPLOYER SIGNATURE
The Employer acknowledges receipt of the current prospectus of the
investment companies designated by the Employer for its initial investments
under the Plan and represents that it has delivered a copy thereof to each
Participant in the Plan, and that it will deliver to each Participant
making contributions and each new Participant, a copy of the then current
prospectus of such investment companies. The Employer further represents
that upon approval by the Trustee, this Adoption Agreement shall be
effective as of the Effective Date. The right to reject this Adoption
Agreement for any reason is reserved.
This Adoption Agreement must be used only in conjunction with basic plan
document #01.
NOTE: An Employer who has ever maintained or who later adopts any
plan (including, after December 31, 1985, a welfare benefit fund, as
defined in section 419(e) of the Code, which provides post-retirement
medical benefits allocated to separate accounts for Key Employees, as
defined in section 419(d)(3) of the Code, or an individual medical
account, as defined in section 415(1)(2) of the Code), in addition to
this Plan (other than paired defined contribution plan #002), may not
rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under
section 401 of the Internal Revenue Code. If the Employer who adopts
or maintains multiple plans wishes to obtain reliance that the plans
are qualified, application for a determination letter should be made
to the appropriate Key District Director of Internal Revenue.
This Adoption Agreement consists of 10 pages.
IN WITNESS WHEREOF, the Employer has caused this Adoption Agreement to be
executed by its duly authorized officers this _____ day of ___________________.
--------------------------------------
(Name of Employer)
By:
-------------------------------------
(Name & Title)
Date:
-----------------
9
<PAGE>
The following space is provided for amendments necessary to satisfy section 412
of the Code in the event of a waiver of the minimum funding requirements.
10
<PAGE>
PROFIT SHARING PLAN
TRANSFER LETTER
If you are transferring the proceeds of an existing Profit Sharing Plan to
the Berger Funds Profit Sharing Plan, please complete this form and return it to
the address listed below, with a copy of your most recent account statement.
Your name
-----------------------------------------------------------------
Your address
--------------------------------------------------------------
City, State, Zip
----------------------------------------------------------
Social Security or
Tax Identification No.
--------------------------------------------------
TRANSFER PRESENT ACCOUNT FROM:
Account Number
------------------------------------------------------------
Name of Resigning Trustee
-------------------------------------------------
Address of Resigning Trustee
----------------------------------------------
City, State, Zip
----------------------------------------------------------
Gentlemen:
I am establishing a Profit Sharing Plan with Investors Fiduciary Trust Co.,
for investment into the Berger Funds account number ________________________
.
Please arrange to have: (Leave blank for new account)
_____ All of the assets in my account
_____ $___________________ of the assets in my account,
<PAGE>
liquidated immediately and the proceeds transferred to the successor Trustee as
follows:
Investors Fiduciary Trust Co.
C/O Berger Funds
P.O. Box 419958
Kansas City, MO 64141
An Investors Fiduciary Trust Co. letter of acceptance is enclosed herewith.
Sincerely,
- ----------------------------------- ------------------------------------
Signature Signature Guarantee
(if required by present Trustee)
<PAGE>
EXHIBIT 14.3
BERGER FUNDS
403(b) (7) PLAN
CUSTODIAL ACCOUNT AGREEMENT
The Participant and his Employer, both as listed in the Application,
hereby establish a Custodial Account in accordance with section 403(b) (7)
of the Internal Revenue Code of 1986, as amended (the "Code"). The
Participant is the employee of the Employer named on the Application. The
Participant and his Employer hereby request Investors Fiduciary Trust Company
(the "Custodian") to establish a Custodial Account for the investment of
contributions from the Employer on behalf of the Participant in shares of one
or more Berger Funds as specified in the Application (the "Shares"). This
Agreement will take effect as to the Participant upon receipt of the
Application by Investors Fiduciary Trust Company. Its appointment to serve
as Custodian under this Agreement will be confirmed by receipt of a
confirmation statement by the Participant.
I. CUSTODIAL ACCOUNT
1. ESTABLISHMENT OF ACCOUNT. Upon acceptance of a completed Application,
the Custodian will open and maintain a Custodial Account for the
benefit of the Participant (the "Account"). The Account shall be
maintained pursuant to the terms of this Custodial Account Agreement
(the "Agreement"). The Participant will promptly notify the Custodian
in writing of any change in address.
2. CONTRIBUTIONS.
(a) GENERAL. The Custodian will accept and hold in the Account
contributions made on behalf of the Participant. All contributions
must be made in cash and must be no less than $50.00. The Employer
may make contributions to the Account pursuant to a salary reduction
agreement or agreement to forego an increase in salary with the
Participant, or from such other sources as specified in this Article I.
Contributions may be made in intervals determined by the Employer but
will not be made more frequently than once every two weeks.
(b) TRANSFERS FROM AN EXISTING 403(b) ARRANGEMENT. The Custodian
will accept contributions resulting from transfers from an existing
403(b) Annuity or Custodial Account which resulted from contributions
on behalf of the Participant by an employer described in Section
403(b)(1)(A) of the Code. Once transferred to the Participant's
Account, such contributions will be invested, distributed or otherwise
dealt with as a part of such Account. To the extent permitted by law,
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partial transfers from 403(b) accounts will be permitted.
(c) ROLLOVERS FROM INDIVIDUAL RETIREMENT ACCOUNTS. The Custodian
will accept and hold in the Account rollovers from an Individual
Retirement Account(s) as described in Section 408 of the Code, which
Individual Retirement Account(s) resulted solely from rollover(s) from
existing 403(b) arrangement(s) as described in Section 403(b)(8).
Contributions must be identified to the Custodian as rollover
contributions.
(d) PARTICIPANT CONTRIBUTIONS. The total salary reductions
contributions for any taxable year of the Participant (when added to
all other salary reductions made on behalf of the Participant to
another plan described in Code Section 401(k), 408(k)(6), or 403(b)
and when added to other contributions made on behalf of the
Participant under any other plan described in Code Section 457 or
501(c)(18) will not exceed $9,500. Such salary reductions, when added
to any Employer Contributions, will not exceed the limits of Section
(E) below.
Certain qualified employees of certain qualified organizations
may elect to use a "catch-up" under Code Section 402(g) (8)(A) to
increase the $9,500 amount by whichever the following is the least:
(i) $3,000.
(ii) $15,000 minus any prior contributions using this catch-up.
(iii) $5,000 times the number of years of service with
the Employer minus all prior salary reductions to
all 403(b), SEP or 401(k) plans of the Employer.
For purposes of the catch-up, the term "qualified employee" means
any employee who has completed 15 years of service with the qualified
organization.
The term "qualified organization" means any educational
organization, hospital, home health service agency, health and welfare
service agency, church or convention or association of churches.
(e) EMPLOYER CONTRIBUTIONS. The Employer may make additional non-
elective contributions on behalf of the Participant to the extent that
such non-elective contributions, when combined with salary reductions
as described in Section (d), do not exceed the lesser of (i) the
Participant's Exclusion Allowance or (ii) Code Section 415
limitations. The Participant's Exclusion Allowance is generally the
amount obtained by multiplying 20% of the Participant's includable
compensation, as defined in Code Section 403(b)(3), from the Employer
by the number of years of service with the Employer and subtracting
all amounts previously contributed by the Employer and excluded from
the Participant's income for Federal income tax purposes in prior
years, all in accordance with Code Section 403(b)(2). The Code
Section 415 limitation is generally the lesser
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of $30,000 or 25% of the Participant's includable compensation. An
employee of an educational organization, a hospital, a home health
service agency, a health and welfare service agency, or a church,
convention or association of churches may irrevocably elect under
Code Section 415 (c)(4)(D) to use an alternative limitation for their
taxable year. Provided that only one of the following may be elected
and that the provisions of (i) may be elected only once by a
Participant, the alternative limitation in a tax year may be:
(i) For the year in which the Participant separates from
service of the Employer an amount not exceeding the
lesser of $30,000 or 20% of Participant's includable
compensation multiplied by his last 10 years of service
with the Employer to the date of separation reduced by
Employer contributions under Code Section 403(b) during
these years of service.
(ii) In any year of service, the lesser of:
- 20% of gross compensation plus $4,000
- the Exclusion Allowance under 403(b)(2)
- $15,000.
(iii) In any year, the lesser of 20% of gross
compensation of $30,000 reduced by all other
employer contributions for retirement benefits.
Amounts transferred or rolled over pursuant to this Section 2
will not be taken into account in determining the contribution
limitations hereunder.
The Participant will at all times be responsible for determining
the Exclusion Allowance and limitations on contributions under Code
Section 415 or Code Section 402(g). The Custodian, the Sponsor and
the Employer shall have no obligation to verify the Participant's
Calculations. The Employer shall be solely responsible for assuring
compliance at all times with the nondiscrimination requirements of
Code Section 403(b)(12), and the Custodian shall not be responsible in
any way for such compliance.
If any amount is contributed in excess of the limitations, the
Participant may notify the Custodian in writing of the amount of the
excess and request a refund of the excess and the earnings
attributable thereto. Notwithstanding any contrary provisions of
Article II, the Custodian will return such excess and earnings to the
Participant at their direction. Failure to direct the Custodian to
return the excess and earnings attributable thereto may subject the
excess and earnings to penalty taxes pursuant to Code Section 4973.
3. INVESTMENT IN FUND SHARES. Each contribution to the Account will be
invested in such Shares as will be designated by the Participant. Shares
will be purchased at the
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applicable net asset value and will be credited to the Participant's
Account. All capital gains distributions and dividends received on
Shares will (unless received in additional Shares) be reinvested in such
Shares in accordance with the Funds' current prospectus. If any dividends
or capital gains distributions are paid, at the election of the
shareholder, in additional Shares, or in cash, or in property, the
Custodian will elect to receive them in additional Shares.
4. VESTING. The interest of the Participant in the Account will be
fully vested and nonforfeitable at all times.
5. REGISTRATION OF SHARES. All Shares acquired by the Custodian will be
registered in the name of the Custodian as such or in the name of its
nominee.
II. DISTRIBUTIONS
1. COMMENCEMENT OF DISTRIBUTIONS. At the written request of the
Participant in such form as the Custodian will require, the Shares
credited to the Participant's Account will be distributed in accordance
with this Article II upon the occurrence of one of the following events:
(a) the Participant's separation from service with the Employer, (b) the
Participant's reaching age 59-1/2, (c) the Participant's incurring a
disability, or (d) the Participant's death; provided, however, that no
distribution may be made that might disqualify the Account under Code
Section 403(b)(7), or under any other provision of the Code. Distribution
of the Participant's Account will begin no later that April 1 of the
calendar year following the calendar year in which the Participant reaches
age 70-1/2. In the case of a Participant who reached age 70-1/2 prior to
January 1, 1988, distribution will begin no later than April 1 of the
calendar year following the calendar year in which the Participant
retires. Distributions will in any event be in accordance with the
minimum distribution and incidental benefit rules of Code
section 401 (a)(9) and applicable regulations.
2. METHOD OF DISTRIBUTION. Distributions to the Participant will be
paid in cash, in Shares, or in both cash and Shares, in any one or more
of the following methods in accordance with the written instructions of
the Participant filed with the Custodian:
(a) In a lump sum;
(b) In substantially equal, periodic installments payable over a
fixed period of more than one year but not longer than the
greater of the life expectancy of the Participant or the joint
and survivor life expectancy of the Participant and his or her
Beneficiary; or
(c) By any combination of a lump sum or installment payments.
If payment of a Participant's distribution is made under
paragraph (b) above, the amount distributed in any given year must be
an amount at least equal to the quotient obtained by dividing the
Participant's total Account value at the beginning of that year by his or
her life expectancy, or the joint and survivor life expectancy of the
Participant
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and the Participant's Beneficiary, whichever is applicable, hereinafter
referred to in this subsection as the applicable life expectancy. The
determination of the life expectancies will be made at the time the
Participant is entitled to his or her initial distribution and will be
computed by the use of the expected return multiples in Tables V and VI
of section 1.72-9 of the Income Tax Regulations. The determination of
the life expectancies of a Participant and his or her spouse will be
redetermined on each Anniversary Date of the initial distribution unless
the Participant irrevocably elects otherwise prior to his or her Required
Beginning Date. The amount to be distributed each year, beginning with
distributions for the first distribution calendar year, must not be less
than the quotient obtained by dividing the value of the Participant's
Account by the lesser of (i) the applicable life expectancy or (ii) if
the Participant's Spouse is not the Beneficiary, the applicable divisor
determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of
the proposed regulations. Distributions after the death of the
Participant must be distributed using the applicable life expectancy
above as the relevant divisor without regard to proposed regulations
section 1.401(a)(9)-2. The minimum distribution required for the
Participant's first distribution calendar year must be made on or before
the Participant's Required Beginning Date. The minimum distribution
for other calendar years, including the minimum distribution for the
distribution calendar year in which the Employee's Required Beginning
Date occurs, must be made on or before December 31 of that distribution
calendar year. If a Participant dies after his or her Required Beginning
Date, the remaining portion of his or her interest will be distributed at
least as rapidly as under the method of distribution in effect prior to
his or her death.
Distributions will begin after the Participant notifies the Custodian
of his entitlement to distributions pursuant to Section 1 above; provided,
however, that, subject to the rules of Section 1 concerning the required
beginning date for distributions, prior to the commencement of
distributions the Participant may make an irrevocable election to have the
distribution beginning date deferred to a fixed future date;
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"Required Beginning Date" means the first day of April of the
calendar year following the calendar year in which the Participant
attains age 70-1/2; provided, however, that if a Participant attained age
70-1/2 before January 1, 1988, his or her Required Beginning Date will be
April 1, of the calendar year following the calendar year in which occurs
the later of his or her retirement or attainment of age 70-1/2.
In the event that the Custodian receives written notice from the
Participant that an excess contribution (as defined in Code Section 4973)
has been made, the Custodian will distribute, as soon as possible
thereafter, an amount in cash, in Shares or in both cash and Shares, as
the Participant elects, equal to the excess contribution (with earnings
received thereon to the date of distribution) less any reasonable
administrative charges attributable thereto.
3. DISABILITY. If the participant becomes disabled the amount credited
to the Participant's Account may, upon appropriate request, be distributed
to him upon proof of such disability. In accordance with Code section
72(m)(7), a Participant will be considered to be disabled if he is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result
in death or to be of long-continued and indefinite duration. The
Participant will not be considered to be disabled unless and until he
furnishes satisfactory proof of the existence of such disability in such
form as the Custodian may require.
4. DISTRIBUTIONS PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDERS. In the
case of an Account that is part of an "employee pension benefit plan" (as
defined in ERISA), nothing in this Agreement Shall prohibit distribution
to any person in accordance with the terms of a "qualified domestic
relations order" as defined in Section 206(d) of ERISA.
5. DEATH OF PARTICIPANT. If the Participant dies before his or her
Required Beginning Date, the Beneficiary may elect to have the balance of
the Participant's Account distributed as follows:
(a) In a lump sum;
(b) In substantially equal periodic installments payable a fixed
period ending by December 31 of the calendar year containing the
fifth anniversary of the Participant's death; or
(c) In substantially equal periodic installments payable over a
period not extending beyond the life expectancy of the
Beneficiary; provided, however, either that the distribution
commences on or before December 31 of the calendar year
immediately following the calendar year in which the Participant
died or, if the Beneficiary is the Participant's Spouse, that the
distribution commences no later than December 31 of the calendar
year in which the Participant would have attained age 70-1/2.
If the Participant has not made an election pursuant to this section
by the time of
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his or her death, the Participant's Beneficiary must elect the method of
distribution no later than the earlier of (i) December 31 of the calendar
year in which distribution would be required to begin under this Section,
or (ii) December 31 of the calendar year which contains the anniversary
of the date of death of the Participant. If the Participant has no
Beneficiary, or if the Beneficiary does not elect a method of
distribution, distribution of the Participant's entire interest must be
completed by December 31 of the calendar year containing the fifth
anniversary of the Participant's death. If the Participant's spouse dies
after the Participant, but before payments to such spouse begin, the
provisions of this section shall be applied as if the surviving spouse
were the Participant. If payment of a Participant's distribution is to be
made under paragraph (c) above, the amount distributed in any given year
must be determined pursuant to paragraph b of Section 2 above. Any
amount paid to any minor child of a Participant will be treated as if it
were paid to such Participant's spouse, provided the amount is payable to
such Participant's spouse upon the child's reaching the age of majority
(or such other event as may be specified in regulations promulgated by
the Secretary of the Treasury).
"BENEFICIARY" means:
(i) The Participant's spouse; or
(ii) The person, persons or trust designated by the Participant
as beneficiary, provided that if the Participant is married
at the time the designation is executed, or marries at any
time thereafter, such designation will not be effective
unless the Participant's spouse consents in writing to such
designation, such consent acknowledges the effect of the
designation and such consent is witnessed by a notary
public; provided further that such consent will bind only
the spouse who executes it, and not any other spouse of the
participant; or
(iii) if the Employee has no spouse and no effective
beneficiary designation, the Participant's estate. The
Custodian must be furnished with any and all
certificates, tax waivers and other documents requested
by it in its discretion before it will be required to
make any distribution in the event of the Participant's
death, or the death of the Participant's Beneficiary.
6. TRANSFERS AND ROLLOVERS FROM THE ACCOUNT. To the extent permitted by
law, the Participant may transfer any or all of the assets of the Account
directly to another 403(b)(7) custodial account or to a 403(b) annuity
plan. The Custodian shall have no responsibility to the Participant after
any such transfer.
7. DIRECT ROLLOVERS. This Section applies to distributions made on or
after January 1, 1993. Notwithstanding any provision of this Agreement to
the contrary that would otherwise limit a distributee's election under this
section, a distributee may elect, at the time and in the manner prescribed
by the Custodian and fund transfer agent, to have any portion of an
eligible rollover distribution paid directly to an eligible retirement plan
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specified by the distributee in a direct rollover.
For the purpose of this section, the following definitions apply:
(a) Eligible rollover distribution: An eligible rollover is any
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not
include: any distribution that is one of a series of substantially
equal periodic payments (not less frequently that annually) made for
the life (or life expectancy) of the distributee or the joint lives
(or joint life expectancies) of the distributee and the distributee's
designated beneficiary, or for a specified period of ten years or
more; any distribution to the extent such distribution is required
under section 401(a)(9) of the Code; and the portion of any
distribution that is not includable in gross income (determined
without regard to the exclusion for net unrealized appreciation with
respect to employer securities). An eligible rollover distribution
also does not include any other amounts that may be excluded under
regulations, procedures, notices, or rulings interpreting the term
eligible rollover distribution under sections 401(1) (31), roe, or
403(b) of the Code.
(b) Eligible retirement plan: An eligible retirement plan is an
individual retirement account described in section 408(a) of the Code,
an individual retirement annuity described in section 408(1) of the
Code, an individual retirement annuity described in section 408(b) of
the Code, or another 403(b) annuity, that accepts the distributee's
eligible rollover distribution. However, in the case of an eligible
rollover distribution to the surviving spouse, an eligible retirement
plan is an individual retirement account or individual retirement
annuity.
(c) Distributee: A distributee includes an employee or former
employee. In addition, the employee's or former employee's surviving
spouse and the employee's or former employee's spouse or former spouse
who is the alternate payee under a qualified domestic relations order,
as defined in section 414(p) of the Code, are distributees with regard
to the interest of the spouse or former spouse.
(d) Direct rollover: A direct rollover is a payment by the plan to
the eligible retirement plan specified by the distributee.
III. RECORDS AND REPORTS
1. ACCOUNTING BY CUSTODIAN. The Custodian will keep accurate and
detailed records of all receipts, investments, disbursements and other
transactions for the Account. As soon as practicable after any
contribution made hereunder or any reinvestment of dividends or capital
gains distributions, the Custodian will send to the participant or
Beneficiary a written confirmation containing information with respect to
the investment
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of such contribution, or such reinvestment of dividends or capital
gains distributions, and the current status of the Account. A similar
confirmation will be sent to the participant or Beneficiary upon
each distribution of benefits.
2. REPORTS OF THE CUSTODIAN. The Custodian will keep such records, make
such identifications and file with the Internal Revenue Service such
reports, returns and other information concerning the Account as may be
required of the Custodian under the Code, or under regulations issued
under the Code or under the Employee Retirement Income Security Act of
1974, as amended.
IV. CUSTODIAN'S FEES; OTHER MATTERS
1. FEES OF CUSTODIAN. In consideration of its services, the Custodian
will receive an annual maintenance fee of $12 per Account. If the fee is
not paid separately by the Participant, the Custodian is entitled to
liquidate shares in the Account to pay the fee.
Any income taxes or other taxes of any kind whatsoever that may be
levied or assessed upon or in respect of the Account will be paid from the
assets of the Account. Any transfer taxes incurred in connection with the
investment of the assets of the Account, and all other administrative
expenses incurred by the Custodian in the performance of its duties,
including fees for legal services rendered to the custodian, will
similarly be paid from the assets of the Account.
2. CONTRIBUTIONS AND WITHDRAWALS NOT RESPONSIBILITY OF CUSTODIAN. The
Custodian will not be responsible for the purpose or propriety of any
contribution or of any distribution or withdrawal made hereunder or for
any other action taken pursuant to the Participant's request. The
Participant, his Beneficiary, if any, and the executor or administrator
of each of them, if appropriate, will at all times fully indemnify and
hold harmless the Custodian, its successors and assigns, and all claims,
actions, or liabilities arising from investments or distributions made or
actions taken at the direction of such person(s) and from any and all
other liability whatsoever (including without limitation all reasonable
expenses incurred in defending against or settlement of such claims,
actions or liabilities) which may arise in connection with this Agreement
or the account, except liability arising from the gross negligence or
willful misconduct of the Custodian. The Custodian will be under no duty
to take any action with respect to the Account other than as set forth
herein unless the Participant or the Employer furnishes the Custodian
with proper instructions to which the Custodian has specifically agreed
in writing. The Custodian may conclusively rely upon and will be
protected in acting upon any written order, notice, request, consent,
certificate or other instrument or paper believed by it to be genuine and
which appears to have been executed properly and, if it acts in good
faith, in taking or omitting to take any other action.
3. RESIGNATION AND REMOVAL OF CUSTODIAN. The Custodian may resign at
any time upon 30 days' notice in writing to Berger Associates, Inc., the
Sponsor of the funds issuing the Shares (the "Sponsor") and Participant
and may be removed by the Sponsor or Participant at any time upon 30 days'
notice in writing to the Custodian. Upon any such resignation or removal,
the Sponsor will appoint a successor custodian qualified
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under Code Section 401(f)(2). After written acceptance by the successor
custodian so appointed, the Custodian will transfer all assets of and
records pertaining to the Account to the successor custodian. The
Custodian is authorized, however, to reserve such sum of money or
property as it may reasonably deem advisable for the payment of its fees,
compensation, costs and expenses, or for payment of any other liabilities
constituting a charge on or against the assets of the Account or upon or
against the Custodian, with any balance to be paid over to the successor
custodian within a reasonable time after its resignation or removal.
The Custodian will have a lien on the assets of the Participant's Account
to the extent of any such charges. The successor custodian will hold all
assets and records delivered to it in accordance with the terms hereof.
The Custodian shall not be liable for the acts or omissions of any
successor custodian upon the transfer of assets of the account to a
successor custodian, the resigning or removed custodian shall be relieved
of all further liability with respect to this agreement, the account and
the assets thereof.
V. PROXIES AND VOTING OF SHARES
The Custodian will mail to the Participant all notices, prospectuses,
financial statements, proxies and proxy solicitation material relating to the
Shares held in the Account. Proxies will be voted by the Custodian in
accordance with the Participant's written instructions.
VI. AMENDMENT OR TERMINATION
1. AMENDMENT.
(a) BY EMPLOYER. This Agreement and the various documents
incorporated herein may be modified or amended by the Employer by
delivering to the Participant and to the Custodian a written copy of
such modification or amendment signed by the Employer, subject to the
approval of the Custodian.
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(b) BY PARTICIPANT. The Participant may amend this Agreement by
making any of the following changes:
(1) No more than once in each taxable year of the Participant,
and subject to other applicable provisions of this Agreement, the
Participant may change the Agreement between the Employer and the
Participant as to the adjustment of the Participant's salary by
submitting to the Employer and the Custodian a revised
Application; or
(2) The Participant may change his Beneficiary at any time by
submitting to the Custodian a revised designation of beneficiary,
provided that the designation by a Participant of any person,
persons or trust other than his spouse as Beneficiary will not be
effective unless it is in accordance with Article II, Section 4,
subsection (b).
(c) BY SPONSOR. The Employer, the Participant, and the Custodian,
hereby delegate authority to the Sponsor to modify or amend this
Agreement and the various documents incorporated herein, and the
Employer, the Participant, and the Custodian will be deemed to have
consented to any such modification or amendment. The Sponsor will
provide copies of any such modification or amendment to the Employer,
the Participant and the Custodian.
(d) LIMITATIONS. Notwithstanding the powers granted in subsections
(a), (b) and (c) above, no amendment may be made that would:
(i) Cause or permit any part of the assets in the Account to be
diverted to purposes other than for the exclusive benefit of the
Participant and his Beneficiaries, or cause or permit any portion
of such assets to revert to or become the property of the
Employer,
(ii) Increase the responsibilities of the Custodian without its
written consent, or
(iii) Retroactively deprive any Participant or Beneficiary of
any benefits to which he was entitled under the Agreement by
reason of contributions made by the Employer, unless such
modification or amendment is necessary to conform the Agreement
to, or satisfy the conditions of any law, governmental regulation
or ruling, or to permit the Agreement and Account to meet the
requirements of Code Section 403(b) or any similar statute
modification or amendment must be pursuant to an opinion of
counsel that it is necessary or advisable to conform the
Agreement to the requirements of law.
2. TERMINATION.
(a) TERMINATION OF CONTRIBUTIONS. With respect to compensation not
yet earned by a Participant this Agreement may be terminated by the
Participant by
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giving written notice to the Employer. Copies of such notice
will be sent forthwith to the Custodian. Unless otherwise
mutually agreed upon by the Employer and the Participant, any such
termination will take effect as of the last day of the month next
following the month in which such written notice is given, the
Participant's compensation will be increased by the amount by which it
otherwise would be reduced pursuant to the Application, or other
written agreement between the Employer and the Participant as to the
adjustment of the Participant's compensation, and the obligations
under this Agreement of the Employer with respect to future pay
periods will cease.
(b) TERMINATION UPON RESIGNATION OR REMOVAL. The Custodian may elect
to terminate the Account following its resignation or removal under
Section 3 of Article IV hereof it the sponsor has not appointed a
successor custodian within 60 days of such resignation or removal, or
arranged for the transfer of the assets held in the Account to another
custodial account. In the event of any such termination, the amounts
in the Account at the date of termination will be distributed to the
Participant (or Beneficiaries) in cash, in Shares or in both cash and
Shares, in one or more of the ways provided in Section 2 of Article II
hereof, in accordance with the written directions of the Participant
or Beneficiary or, in the absence of such direction, as a lump sum in
Shares. Upon completion of such distribution, the Custodian will be
released from all further liability with respect to all amounts so
paid, to the extent permitted by applicable law.
(c) TERMINATION ON DISTRIBUTION. This Agreement will terminate as to
a Participant when all the assets held in the Account established for
him have been distributed. Upon completion of such distribution, the
Custodian will be released from all further liability with respect to
all amounts so distributed, to the extent permitted by applicable law.
(d) TERMINATION ON DISQUALIFICATION. This Agreement will terminate
as to a Participant if, after notification by the Internal Revenue
Service that the Participant's Account does not qualify under Code
Section 403(b)(7), the Sponsor fails to or is unable to make the
amendments necessary so to qualify the Account. On such termination
of this Agreement, all assets in an Account will be distributed in
Shares by the Custodian to the Participant or, in the event of his
death, to his Beneficiary. Upon completion of such distribution, the
Custodian will be released from all further liability with respect to
all amounts so paid, to the extend permitted by applicable law.
VII. MISCELLANEOUS PROVISIONS
1. EXCLUSIVE BENEFIT. No part of the assets of the Account may at any
time be used for or diverted to purposes other than for the exclusive
benefit of the Employee or his Beneficiaries except as specifically
provided herein.
2. NON-ALIENATION. The benefits, rights, privileges, payments, proceeds,
claims or other interests of the Participant or his Beneficiaries hereunder
are not transferable nor
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subject to commutation, anticipation or encumbrance by such Participant
or his Beneficiary, nor subject to alienation, assignment, garnishment,
attachment, execution, or levy of any kind, except pursuant to a
"qualified domestic relations order," as such term is defined in Code
Section 414(p), as amended, or by the Custodian for its fees and
expenses, and no attempt to cause such assets to be so subjected will be
recognized by the Custodian.
3. SEVERABILITY. If any provision of this Agreement is held invalid or
illegal for any reason, this Agreement will be construed and enforced as
if such provision had never been included in this Agreement, and such
determination will not affect any remaining provision of this agreement.
4. NOTICES. All notices provided for herein, as well as any other
notices which might be sent, will be deemed effective if mailed by first
class mail to the last address appearing in the Custodian's records.
5. GOVERNING LAW. This Agreement is accepted by the Custodian in and
will be construed, administered, and enforced in accordance with the laws
of the State of Missouri.
6. GRAMMAR. One gender will be deemed to denote the other, the singular
denote the plural and the plural denote the singular where the context so
permits.
7. ERISA. If this Agreement is determined to constitute part of an
"employee benefit plan" established or maintained by the Employer subject
to Title I of the Employee Retirement Income Security Act of 1974, as
amended (ERISA), then the Employer will be responsible for assuring such
employee benefit plan complies at all times with the applicable
requirements of ERISA.
This Account is established with the intent that it will conform with
the requirements of Section 403(b) of the Code. Accordingly, all terms and
provisions contained herein will be interpreted, wherever possible, so as to
be in compliance with the requirements under that Section. This Agreement is
not a prototype plan, master plan, or other document approved by the Internal
Revenue Service. Procedures for such approval have not yet been established.
13
<PAGE>
403(b)(7) INDIVIDUAL APPLICATION BERGER FUNDS
- -----------------------------------------------------------------------------
TO: INVESTORS FIDUCIARY TRUST COMPANY, PO Box 419958, Kansas City, MO 64141
- -----------------------------------------------------------------------------
NAME OF PARTICIPANT DATE OF BIRTH SOC. SEC. NO./TAX ID NO.
- -----------------------------------------------------------------------------
ADDRESS ZIP
- -----------------------------------------------------------------------------
NAME OF EMPLOYER/PLAN SPONSOR TELEPHONE NUMBER
- -----------------------------------------------------------------------------
ADDRESS OF EMPLOYER ZIP
Employer/Plan Sponsor is ______ Public School ______ 501(c)(3) Organization
This application is for
(a) Periodic Contributions __________________
(b) Transfer from 403(b) Custodial Account or Annuity _________________
1. PARTICIPANT'S INVESTMENT INSTRUCTIONS
The amount of each contribution to the Custodial Account shall be invested in
the following Fund(s) ($50 minimum) in the following amounts:
Berger One Hundred Fund Employee $_________ Employer $_________
Berger Growth and Income Fund $_________ $_________
Berger Small Company Growth Fund $_________ $_________
Berger New Generation Fund $_________ $_________
<PAGE>
NOTE: If you prefer not to have the Custodial fee deducted from your Custodial
Account, make a $12 check per account payable to Investors Fiduciary Trust
Company and mail with your application.
YOUR EMPLOYER WILL SEND THE 403(b) CONTRIBUTIONS MADE ON YOUR BEHALF TO
INVESTORS FIDUCIARY TRUST COMPANY.
<PAGE>
2. DESIGNATION OF BENEFICIARY
PRIMARY BENEFICIARY: SECONDARY BENEFICIARY:
- -------------------- ----------------------
- ----------------------------------- ------------------------------------
(Relationship) (Relationship)
- ----------------------------------- ------------------------------------
(Name) (Name)
- ----------------------------------- ------------------------------------
(Address) (Address)
- ----------------------------------- ------------------------------------
(City/State/Zip Code) (City/State/Zip Code)
- ----------------------------------- ------------------------------------
(Social Security Number/ (Social Security Number/
Date of Birth) Date of Birth)
SPOUSAL CONSENT TO ELECTIONS
I hereby consent to the above elections made by my spouse regarding the
beneficiary from the above referenced Plan. I understand that my giving this
Consent means that if I am not appointed as sole Primary Beneficiary, I will not
be entitled to receive survivor benefits if my spouse (i) dies prior to
receiving the full amount of his or her benefits from such Plan and (ii) is
survived by his Beneficiary (other than me) named above. I further understand
that my Consent to the above elections is irrevocable. However, this Consent
shall be null and void, and shall have no effect, if my spouse revokes or
changes any of the elections made above.
Dated this _____________ day of ____________, 19____.
------------------------------------
(Signature of Participant's Spouse)
STATE OF _______________________)
ss:
COUNTY OF ______________________)
<PAGE>
On this _____ day of _______________, nineteen hundred and _______,
before me came ____________________________________________, to me known to
be the individual who executed the foregoing Consent, and acknowledged that he
(she) executed the same. My commission expires ________________, 19____.
------------------------------------
(Signature of Notary Public)
3. SIGNATURE
I hereby:
(i) appoint Investors Fiduciary Trust company or its successors as
Custodian of my 403(b)(7) account;
(ii) acknowledge receipt and acceptance of the Custodial Agreement;
(iii) acknowledge receipt of a current prospectus of the Funds;
(iv) consent to the custodian's fee as specified in the Custodial
Agreement;
(v) agree to promptly give instructions to the Custodian necessary to
enable the Custodian to carry out its duties under the Custodial
Agreement;
(vi) agree that whatever information is required to be filed with the
Internal Revenue Service will be filed by me unless the Custodian is
required to file such information;
(vii) acknowledge that I have complete responsibility for computing the
annual exclusion allowance; and
(viii) designate the beneficiaries named in paragraph 2 above.
- ---------------------------------------------------------------------------
SIGNATURE DATE
This Section to be Completed by Custodian Only.
<PAGE>
Appointment as Custodian accepted:
INVESTORS FIDUCIARY TRUST COMPANY
By
----------------------------------
Authorized Signature Date
You will not receive an executed copy of this Application. Please make a copy
for your records. The receipt of your purchase confirmation statement will
verify that your 403(b)(7) Custodial Account has been accepted by the Custodian.
403(b) TRANSFER/EXCHANGE REQUEST FORM
TO:
----------------------------------------------------------------------
Current Custodian or Insurance Company Date
------------------------------------------------------
------------------------------------------------------
RE:
------------------------------------------------------
Participant
------------------------------------------------------
Contract/Account Number(s)
------------------------------------------------------
------------------------------------------------------
Gentlemen:
I wish to effect a tax-free transfer exchange of (check one):
________ the entire amount or,
________ $__________ of the above referenced 403(b) Custodial Account
or Annuity
<PAGE>
to a Berger Fund Custodial Account.
Since it is my intention that this transfer/exchange not constitute actual or
constructive receipt by me for income tax purposes, I request and authorize you
to transfer the value of that portion of my 403(b) Tax Sheltered Annuity or
403(b)(7) Custodian Account indicated above and make your check payable and send
to:
Investors Fiduciary Trust Company (Custodian)
c/o Berger Funds
PO Box 419958
Kansas City, MO 64141
Please reference my name and social security number and the Berger Funds with
your check.
- -----------------------------------
Signature
This 403(b) Transfer/Exchange Request Form should be mailed with your original
application to Investors Fiduciary Trust Co. Investors Fiduciary Trust Company
will submit this Form and a Letter of Acceptance to your current Custodian or
Insurance Company to authorize the direct transfer of the value of that portion
of your current 403(b) Account/Contract indicated above.
<PAGE>
403(b)(7) SALARY REDUCTION AGREEMENT
Agreement is made this _______ day of ________________, 199____, by and
between _____________________ (Participant) and ________________________
(Employer). Each hereby agrees that beginning ________________, 199____*
compensation for each pay period shall be reduced by $_________ or _____%.
The Employer shall contribute the amount of such reduction to the
Participant's 403(b)(7) Custodial Account with Investors Fiduciary Trust
Company. In no event shall the annual contributions on behalf of Participant
exceed the lesser of Participant's "Exclusion Allowance" permitted under
Section 403(b) of the Code or maximum "Annual Addition" under the limitations
contained in Section 415 of the Code. Participant is responsible for
determining that the salary reduction in this Paragraph does not exceed such
Exclusion Allowance or maximum Annual Addition. Employer will provide
Participant, upon request, any available information from Employer's records
which is necessary to enable Participant to make such determinations.
Employer will forward the amount of such reduction for the purchase of shares in
the Berger Funds to:
Investors Fiduciary Trust Company, Custodian
c/o Berger Funds
PO Box 419958
Kansas City, MO 64141
This Agreement is legally binding and irrevocable with respect to all amounts
earned by the Participant while this Agreement is in effect; provided, however,
that Participant or Employer may, by 30 days written notice to the other,
terminate the Agreement with respect to amounts not yet earned at the time of
termination.
Participant will not be permitted to enter into more than one salary reduction
agreement with Employer during a calendar year. A modification of the amount of
salary reduction of this Agreement constitutes a new agreement. However, the
mere continuation of this Agreement from a calendar year to a new calendar year
does not constitute an amendment or modification of this Agreement, or the
makeing of a new agreement in such latter taxable year.
This Agreement is subject to the provisions of the Berger One Hundred Fund,
Inc., Berger Growth and Incone Fund, Inc., Berger Small Company Growth Fund,
Inc., and Berger New Generation Fund, Inc., Custodial Account Agreement which
is hereby incorporated by reference.
Contributions made with respect to this Agreement shall be invested in shares of
the Berger One Hundred Fund, Inc., the Berger Growth and Income Fund, Inc., the
Berger Small Company Growth Fund, Inc., or the Berger New Generation Fund, Inc.
as designated by Participant.
- ---------------------------------------------------------------------------
Participant's Signature
<PAGE>
- ---------------------------------------------------------------------------
Authorized Signature for Employer
- ---------------------------------------------------------------------------
Name and Title
* The date selected must be after the date on which this Agreement is signed;
the Agreement shall be effective only with respect to amounts earned after such
date.
<PAGE>
INSTRUCTIONS FOR STARTING YOUR BERGER
FUNDS 403(b)(7) RETIREMENT PROGRAM
Included in this brochure you will find everything you need to sign up
for the Berger Funds 403(b)(7) Retirement Program. In addition to this
brochure you should carefully read the prospectus of the Funds. Instructions
for enrolling in the Berger Funds 403(b)(7) Retirement Program are listed
below:
ASSET TRANSFERS
1. Complete the enclosed 403(b)(7) Individual Application including selection
of desired investment option and beneficiary designation and return to:
Investors Fiduciary Trust Company
c/o Berger funds
PO Box 419958
Kansas City, MO 64141
2. Complete and sign 403(b) Transfer/Exchange Request Form and return to
Berger Funds at the above address.
SALARY REDUCTION ACCOUNTS
1.* Complete the enclosed 403(b)(7) Exclusion Allowance worksheet to determine
your Maximum Allowable Contribution.
2. Complete the 403(b)(7) Individual Application including selection of
desired investment option and beneficiary designation and return to Berger
Funds at the above address.
3. Complete the 403(b)(7) Salary Reduction Agreement and give to your
employer. (Your employer may have their own form which is to be used for
this purpose.)
1
<PAGE>
* Please consult with your employer and/or tax advisor regarding this
worksheet. The Berger Funds cannot assist you with this form.
2
<PAGE>
403(b) EXCLUSION ALLOWANCE WORKSHEET
Name----------------------------------------------- Date-------------
Maximum Exclusion Allowance (MEA)
1. Gross Annual Salary* $------------------
2. Full and fractional years of service $------------------
3. Prior contributions, excludable from taxation,
by employer to all retirement Plans.** $------------------
4. Line 2 times .2 plus 1 ------------------
5. Line 1 times line 2 times .20 $------------------
6. Line 5 minus line 3 $------------------
7. MEA: Line 6 divided by line 4 $------------------
Normal Limit (Lesser of MEA or Section 415 limit)
8. The lesser of:
a. Line 1 times .20,
b. Line 7, or
c. $30,000 $------------------
Special "Catch-Up" Options: For employees of
educational organizations, church organizations,
hospitals, home health service agencies or health
and welfare service agencies only. (Irrevocable.
Once Option B or C is used only that Option or the
basic formula can be used in subsequent years.)
9. A. "Year of separation limitation"
The lesser of:
a. Line 7, or
b. $30,000, or
c. The greater of:
1. the MEA (Line 7) using the most
recent 10 year period ending on
the date of separation, or
2. Line 1 times .20 $-------------------
3
<PAGE>
* Gross annual salary is taxable income from the employer prior to elective
and non-elective 403(b) contributions. It is assumed that the current
calendar year is also the "Most recent period that may be counted as a
year of service" under IRS regulations.
** Prior contributions include contribitions (elective and non-elective) to
all plans of the employer ie., defined benefit, defined contribution, SEP,
401(k), 403(b), and 457 plan contributions during any years except current
year counted toward years of service.
10. B. "Year of Service Limitation"
The lesser of:
a. Line 1 times .20) plus 3,200
b. Line 7, or
c. $15,000 $------------------
11. C. "Overall Limitation"***
the lesser of:
a. Line 1 times .20, or
b. $30,000
12. Total 403(b) exclusion allowance alternatives,
elective plus non-elective 403(b) contributions.
Normal Limit -- Line 8 $------------------
Option A -- Line 9 $------------------
Option B -- Line 10 $------------------
Option C -- Line 11 $------------------
Elective Deferral Limit: For employees who have 15 years
of service or more and are employed by an educational
organization, church organization, hospital, home health
service agency or health and welfare service organization only.
13. Non-elective 403(b) contributions for current year. $-------------------
14. The lesser of:
a. $3000
b. $15,000 minus prior contributions using this catch-up.
c. $5,000 times line 2 minus prior elective contributions
to all 403(b), SEP, or 401(k) plans of the employer.
If years of service with current employer less
than 15, enter zero $-------------------
15. The elective deferral limit is $9,500 plus line 14
minus current year elective deferrals to all 401(k)s
or SEPs of ALL employers. $-------------------
4
<PAGE>
16. Maximum elective deferral
The lesser of:
a. Total 403(b) exclusion allowance alternative
(choose one from Line 12) minus Line 13, 04
b. Line 15. This is the amount you may elect to
contribute for this Taxable year. $-------------------
*** When using this option, all contributions to qualified plans of the
employer must be aggregated. If you are a participant in a defined benefit
pension plan, do not select this option in Line 16(a) below without
consulting your tax advisor.
5
