PROSPECTUS
The One Hundred Fund, Inc., doing business as Berger One
Hundred Fund, Inc. ("Berger 100 Fund"), Berger One Hundred and One
Fund, Inc., doing business as Berger Growth and Income Fund, Inc.
("Berger Growth and Income Fund") and Berger Small Company Growth Fund
(together, the "Funds") are "no-load" mutual funds. This Prospectus
describes each of these Funds which have many features in common but
have different investment objectives and different investment
emphases.
BERGER 100 FUND[R]
The investment objective of the Berger 100 Fund is long-term
capital appreciation. The Berger 100 Fund seeks to achieve this
objective by investing primarily in common stocks of established
companies which the Fund's advisor believes offer favorable growth
prospects. Current income is not an investment objective of the
Berger 100 Fund, and any income produced will be a by-product of the
effort to achieve the Fund's objective.
BERGER GROWTH AND INCOME FUND
The primary investment objective of the Berger Growth and
Income Fund is capital appreciation. A secondary objective is to
provide a moderate level of current income. The Berger Growth and
Income Fund seeks to achieve these objectives by investing primarily
in common stocks and other securities, such as convertible securities
or preferred stocks, which the Fund's advisor believes offer favorable
growth prospects and may also provide current income.
BERGER SMALL COMPANY GROWTH FUND[R]
The investment objective of the Berger Small Company Growth
Fund is capital appreciation. The Berger Small Company Growth Fund
seeks to achieve this objective by investing primarily in equity
securities (including common and preferred stocks, convertible debt
securities and other securities having equity features) of small
growth companies with market capitalization of less than $1 billion at
the time of initial purchase.
This Prospectus sets forth concise information about each of
the Funds that a prospective investor should consider before
investing. Investors are advised to retain this Prospectus for future
reference. Additional information about the Funds has been filed with
the Securities and Exchange Commission. A copy of the Statement of
Additional Information, which is incorporated in its entirety by
reference, is available upon request without charge by writing to the
Funds at P. O. Box 5005, Denver, CO 80217, or by calling
1-800-333-1001.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH STATE.
The date of this Prospectus and the Statement of Additional
Information referred to above is JANUARY 26, 1996.
<PAGE>
Table of Contents
Section Page
- ------- ----
1. Fee Tables . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Condensed Financial Information. . . . . . . . . . . . . . . . 2
3. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Investment Objectives and Policies and Risk Factors. . . . . . 6
5. Portfolio Turnover . . . . . . . . . . . . . . . . . . . . . . 12
6. Management and Investment Advice . . . . . . . . . . . . . . . 13
7. Expenses of the Funds. . . . . . . . . . . . . . . . . . . . . 14
8. Policies of the Funds to Promote Sales of Fund Shares. . . . . 15
9. How to Purchase Shares in the Funds. . . . . . . . . . . . . . 16
10. How the Net Asset Value Is Determined . . . . . . . . . . . . 18
11. Open Account System and Share Certificates. . . . . . . . . . 18
12. How to Redeem or Sell Fund Shares . . . . . . . . . . . . . . 19
13. Exchange Privilege and Systematic Withdrawal Plan . . . . . . 21
14. Tax-Sheltered Retirement Plans. . . . . . . . . . . . . . . . 23
15. Income Dividends, Capital Gains Distributions and Tax
Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . 23
16. Additional Information. . . . . . . . . . . . . . . . . . . . 24
17. Performance . . . . . . . . . . . . . . . . . . . . . . . . . 26
<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES (APPLICABLE TO ALL THREE BERGER
FUNDS)
Maximum Sales Load Imposed on Purchases 0%
Maximum Sales Load Imposed on Reinvested Dividends 0%
Deferred Sales Load 0%
Redemption Fees 0%
Exchange Fee 0%
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Management Fee 12b-1 Fee Other Total
Expenses* Operating
Expenses
Berger 100 Fund .75% .25% .47% 1.47%
Berger Growth and .75% .25% .62% 1.62%
Income Fund
Berger Small .90% .25% .74% 1.89%
Company Growth Fund
* Other Expenses primarily include transfer agency fees,
shareholder report expenses, registration fees and custodian
fees.
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 5 Years 10 Years
Berger 100 Fund $15 $46 $80 $176
Berger Growth and $16 $51 $88 $191
Income Fund
Berger Small $19 $59 $102 $221
Company Growth Fund
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
-1-<PAGE>
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 fees paid by the Funds, over time
long-term shareholders in the Funds 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. The
management fees are higher than those paid by most other mutual funds.
The purpose of the preceding tables is to assist the
investor in understanding the various costs and expenses that an
investor in any of the Funds will bear directly or indirectly. For
the Berger 100 Fund and the Berger Growth and Income Fund, the
management fees, 12b-1 fees and expense reimbursement arrangements set
forth in the table above came into effect with shareholder approval on
October 14, 1994, and the expense information in the tables for those
Funds has been restated to reflect what the Funds' expenses would have
been had those fees and arrangements been in effect during the entire
fiscal year ended September 30, 1995. See the Financial Highlights
tables below for actual historical financial information.
The Funds' investment advisor, Berger Associates, Inc.
("Berger Associates"), has agreed to reimburse each Fund by the
amount, if any, that the Fund's normal operating expenses in any
fiscal year, including the management fee but excluding the 12b-1 fee,
brokerage commissions, interest, taxes and extraordinary expenses,
exceed the most restrictive expense limitation imposed by any
applicable state. The Funds believe that the most restrictive
limitation currently applicable to the Funds is 2-1/2% of the first
$30,000,000 of average daily net assets, plus 2% of the next
$70,000,000, plus 1-1/2% of the balance of the average daily net
assets of the Fund for that fiscal year. The Funds' expenses are
described in greater detail under "Management and Investment Advice",
"Expenses of the Funds", and "Policies of the Funds to Promote Sales
of Fund Shares".
2. CONDENSED FINANCIAL INFORMATION
On the following pages are tables setting forth certain
financial highlights of each Fund. The information provided for the
year ended September 30, 1995, has been audited by Price Waterhouse
LLP, whose report thereon is incorporated by reference from the Funds'
1995 Annual Reports into the Statement of Additional Information. The
information provided in the tables for fiscal years ending
September 30, 1994, and before was audited by other independent
accountants. The most recent Annual Reports for the Funds, including
additional performance information, may be obtained upon request and
without charge by calling the Funds at 1-800-333-1001.
-2-<PAGE>
<TABLE>
<CAPTION>
BERGER ONE HUNDRED FUND, INC.
FINANCIAL HIGHLIGHTS
Years Ended September 30,
-----------------------------------------------------------------------------------------------
1995<F2> 1994<F2> 1993<F2> 1992<F2> 1991<F2> 1990 1989 1988 1987 1986
-------- -------- -------- -------- -------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period<F1>. . . . . . . . . . . . . $15.96 $16.54 $11.73 $11.13 $ 6.67 $ 8.93 $ 6.14 $ 8.21 $ 6.72 $ 5.01
------ ------ ------ ------ ------ ------ ----- ------ ------ ------
Income From Investment
Operations:
Net Investment Income or
(Loss)<F1>. . . . . . . . . . . . (.04) (.12) (.14) (.09) (.10) (.02) (.05) (.01) (.03) (.04)
Net Realized and Unrealized
Gains or (Losses) on
Securities<F1>. . . . . . . . . 2.97 (.46) 4.95 .86 5.15 (1.34) 2.92 (.48) 1.91 1.75
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From Investment Operations<F1> 2.93 (.58) 4.81 .77 5.05 (1.36) 2.87 (.49) 1.88 1.71
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)<F1> . . . . . . . . . . .00 .00 .00 .00 .00 .00 .00 .00 .00 .00
Distributions (from capital
gains)<F1>. . . . . . . . . . . .00 .00 .00 (.17) (.59) (.90) (.08) (1.58) (.39) .00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions<F1> . . . . . . .00 .00 .00 (.17) (.59) (.90) (.08) (1.58) (.39) .00
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net Asset Value, End of Period<F1>. $18.89 $15.96 $16.54 $11.73 $11.13 $ 6.67 $ 8.93 $ 6.14 $ 8.21 $ 6.72
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total Return. . . . . . . . . . . . 18.36%<F3> (3.51)%<F3> 41.01%<F3> 6.97% 83.02% (16.84)% 47.31% (4.78)% 29.36% 34.15%
====== ====== ====== ====== ====== ====== ===== ====== ====== ======
Ratios/Supplemental Data:
Net Assets, End of Period (in
thousands). . . . . . . . . . . $2,205,679 $2,228,743 $1,407,849 $384,089 $76,847 $12,941 $14,008 $10,601 $11,694 $10,552
Ratio of Expenses to Average Net
Assets. . . . . . . . . . . . . . 1.48%<F3><F4> 1.70%<F3> 1.69%<F3> 1.89% 2.24% 2.13% 1.62% 1.72% 1.61% 1.71%
Ratio of Net Income or (Loss) to
Average Net Assets. . . . . . . . (.28)%<F3><F4> (.74)%<F3> (1.00)%<F3> (.75)% (1.06)% (.71)% (.54)% (.57)% (.27)% (.47)%
Portfolio Turnover Rate . . . . . . 114% 64% 74% 51% 78% 145% 83% 166% 106% 122%
<FN>
<F1> Per share amounts for periods 1986 through 1989 have been adjusted to reflect the 3 for 1 split which was
effective December 15, 1989.
<F2> Per share calculations for the period were based on average shares outstanding.
<F3> Ratios are net of a voluntary waiver made under the Fund's former 12b-1 Plan, which reduced 12b-1 payments from
1.0% to .75% during the period February 1, 1993, to October 13, 1994. Effective October 14, 1994, a new 12b-1
Plan was adopted with shareholder approval that reduces payments under the Plan to .25% per year. Had the voluntary
waiver not been made, the Ratio of Expenses to Average Net Assets would have been 1.49% in 1995, 1.95% in 1994
and 1.88% in 1993. Absent the waiver, the Ratio of Net Income or (Loss) to Average Net Assets would have been
(.29)% in 1995, (.99)% in 1994 and (1.19)% in 1993. The Total Return would have remained 18.36% in 1995, and
would have been (3.63)% in 1994 and 40.84% in 1993.
<F4> Ratio reflects total expenses, including fees paid indirectly with brokerage commissions and fees offset by earnings credits,
for 1995 only.
</TABLE>
-3-<PAGE>
<TABLE>
<CAPTION>
BERGER GROWTH AND INCOME FUND, INC.
FINANCIAL HIGHLIGHTS
Years Ended September 30,
--------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of Period<F1>. . . . . $11.48 $11.27 $ 8.96 $ 9.20 $ 5.88 $ 7.08 $ 6.46 $ 8.61 $ 8.93 $ 7.15
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income From Investment
Operations:
Net Investment
Income or (Loss)<F1> . . . . . .16 .12 .08 .13 .18 .17 .32 .23 .33 .29
Net Realized and
Unrealized Gains or
(Losses) on
Securities<F1> . . . . . . . . 1.43 .21 2.29 .54 3.25 (1.23) .74 (1.40) 1.15 1.93
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total From Investment
Operations<F1> . . . . . . . . . 1.59 .33 2.37 .67 3.43 (1.06) 1.06 (1.17) 1.48 2.22
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net
investment income)<F1> . . . . (.18) (.12) (.06) (.17) (.11) (.14) (.44) (.30) (.30) (.29)
Distributions (from
capital gains)<F1> . . . . . . .00 .00 .00 (.74) .00 .00 .00 (.68) (1.50) (.15)
------ ------ ------ ------ ----- ------ ------ ------ ------ ------
Total Distributions<F1>. . . . . (.18) (.12) (.06) (.91) (.11) (.14) (.44) (.98) (1.80) (.44)
------ ------ ------ ------ ----- ------ ------ ------ ------ ------
Net Asset Value, End of
Period<F1> . . . . . . . . . . $12.89 $11.48 $11.27 $ 8.96 $9.20 $ 5.88 $ 7.08 $ 6.46 $ 8.61 $ 8.93
====== ====== ====== ===== ====== ====== ====== ====== ====== ======
Total Return . . . . . . . . . . 14.05%<F2> 2.91%<F2> 26.48%<F2> 7.96% 58.76% (15.18)% 17.33% (12.72)% 19.89% 31.91%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Ratios/Supplemental Data:
Net Assets, End of Period
(in thousands) . . . . . . . . $354,396 $391,570 $112,932 $32,942 $4,081 $4,166 $1,845 $2,161 $2,798 $2,709
Ratio of Expenses to
Average Net Assets. . . . . . 1.63%<F2><F3> 1.81%<F2> 2.10%<F2> 2.56% 2.66% 2.48% 2.00% 2.00% 1.79% 1.96%
Ratio of Net Income or
(Loss) to Average
Net Assets. . . . . . . . . . 1.33%<F2><F3> 1.19%<F2> 1.05%<F2> 1.05% 1.99% 1.74% 5.09% 3.48% 4.04% 3.65%
Portfolio Turnover Rate . . . . 85% 23% 62% 42% 143% 139% 132% 159% 241% 187%
<FN>
<F1> Per share amounts for periods 1986 through 1989 have been adjusted to reflect the 2 for 1 split which was
effective December 15, 1989.
<F2> Ratios are net of a voluntary waiver made under the Fund's former 12b-1 Plan, which reduced 12b-1 payments from 1.0%
to .75% during the period February 1, 1993, to October 13, 1994. Effective October 14, 1994, a new 12b-1 Plan
was adopted with shareholder approval that reduces payments under the Plan to .25% per year. Had the voluntary waiver
not been made, the Ratio of Expenses to Average Net Assets would have been 1.64% in 1995, 2.06% in 1994 and 2.29% in
1993. Absent the waiver, the Ratio of Net Income or (Loss) to Average Net Assets would have been 1.32% in 1995, .94%
in 1994 and .86% in 1993. The Total Return would have remained 14.05% in 1995, and would have been 2.73% in 1994 and
26.34% in 1993.
<F3> Ratio reflects total expenses, including fees offset by earnings credits, for 1995 only.
</TABLE>
-4-<PAGE>
<TABLE>
<CAPTION>
BERGER SMALL COMPANY GROWTH FUND
FINANCIAL HIGHLIGHTS
Years Ended September 30,
-------------------------
1995 1994<F1>
------ --------
<S> <C> <C>
Net Asset Value, Beginning of Period . . . . . . . . . . . . $2.74 $2.50
----- -----
Income From Investment Operations:
Net Investment Income or (Loss). . . . . . . . . . . . . . (.02) .00
Net Realized and Unrealized Gains or (Losses) on
Securities . . . . . . . . . . . . . . . . . . . . . . . .89 .24
----- -----
Total From Investment Operations . . . . . . . . . . . . . . .87 .24
----- -----
Less Distributions:
Dividends (from net investment income) . . . . . . . . . . .00<F2> .00
Distributions (from capital gains) . . . . . . . . . . . . .00 .00
----- -----
Total Distributions. . . . . . . . . . . . . . . . . . . . . .00 .00
----- -----
Net Asset Value, End of Period . . . . . . . . . . . . . . . $3.61 $2.74
===== =====
Total Return . . . . . . . . . . . . . . . . . . . . . . . . 31.90% 9.60%
====== =====
Ratios/Supplemental Data:
Net Assets, End of Period (in thousands) . . . . . . . . . . $522,667 $211,852
Ratio of Expenses to Average Net Assets. . . . . . . . . . . 1.89%<F3> 2.05%<F4>
Ratio of Net Income or (Loss) to Average Net Assets. . . . . (.74)%<F3> .32%<F4>
Portfolio Turnover Rate. . . . . . . . . . . . . . . . . . . 109% 108%
<FN>
<F1> Covers period from December 30, 1993 (date operations commenced) through September 30, 1994.
<F2> Dividend from net investment income less than $.01 per share.
<F3> Ratio reflects total expenses, including fees offset by earnings credits, for 1995 only.
<F4> Annualized.
</TABLE>
-5-<PAGE>
3. INTRODUCTION
The Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Small Company Growth Fund are all mutual funds or, to use
the technical name, open-end, diversified, management investment
companies. The Funds are "no-load" funds, meaning that a buyer pays
no commissions or sales load when buying shares of the Funds, although
each Fund pays certain costs of distributing its shares. See
"Policies of the Funds to Promote Sales of Fund Shares".
This Prospectus describes the securities offered by each of
the Funds. The Berger 100 Fund and the Berger Growth and Income Fund
are separate corporations, and the Berger Small Company Growth Fund is
a series of the Berger Investment Portfolio Trust, a separately
organized Delaware business trust. Each of the Funds is offering
only its own shares. Because the Funds have the same investment
advisor, officers and directors or trustees and have similar
investment restrictions and investment privileges, the Funds believe
you will find this combined Prospectus useful and informative in
understanding the important features of the Funds and their
similarities and differences. Although each Fund is offering only its
own shares and is not participating in the sale of the shares of the
other Funds, it is possible that a Fund might become liable for any
misstatement, inaccuracy or incomplete disclosure in the Prospectus
concerning the other Funds.
4. INVESTMENT OBJECTIVES AND POLICIES AND RISK FACTORS
The Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Small Company Growth Fund are separate Funds, each with its
own portfolio of securities selected to achieve its particular
investment objective. Since the shares of the Funds primarily
represent an investment in common stocks, investors should understand
that the net asset value of each Fund will reflect changes in the
market value of the securities held in that Fund's portfolio, and the
value of a Fund share will therefore go up and down.
BERGER 100 FUND[R]. The investment objective of the
Berger 100 Fund is long-term capital appreciation. Current income is
not an investment objective of the Berger 100 Fund, and any income
produced will be a by-product of the effort to achieve the Fund's
objective.
In selecting its portfolio securities, the Berger 100 Fund
places primary emphasis on established companies which it believes to
have favorable growth prospects, regardless of the company's size.
Common stocks usually constitute all or most of the Fund's investment
portfolio, but the Fund remains free to invest in securities other
than common stocks, and may do so when deemed appropriate by the
investment advisor to achieve the objective of the Fund. The Fund
may, from time to time, take substantial positions in securities
convertible into common stocks, and it may also purchase government
securities, preferred stocks and other senior securities if its
advisor believes these are likely to be the best suited at that time
to achieve the Fund's objective. The Fund's policy of investing in
securities believed to have a potential for capital growth means that
a Fund share may be subject to greater fluctuations in value than if
the Fund invested in other securities.
-6-<PAGE>
BERGER GROWTH AND INCOME FUND. The primary investment
objective of the Berger Growth and Income Fund is capital
appreciation. A secondary objective is to provide a moderate level of
current income. However, neither capital appreciation nor a fixed or
moderate rate of current income can be assured, and in periods of low
interest rates and yields on securities, the income available for
distribution to the Fund shareholders will likely be substantially
reduced or eliminated.
In selecting its portfolio securities, the Berger Growth and
Income Fund places primary emphasis on securities which it believes
offer favorable growth prospects and may also provide current income.
Common stocks of companies with mid-sized to large market
capitalizations usually constitute the majority of the Fund's
investment portfolio. Market capitalization is defined as total
current market value of a company's outstanding common stock. The
Fund also invests in senior securities such as convertible securities,
preferred stocks, government securities and corporate bonds, as seems
appropriate from time to time. Attention is given to the anticipated
reliability of income as well as to its indicated current level.
BERGER SMALL COMPANY GROWTH FUND[R]. The investment
objective of the Berger Small Company Growth Fund is capital
appreciation. The Fund seeks to achieve its investment objective by
investing its assets principally in a diversified group of equity
securities of small growth companies with market capitalization of
less than $1 billion at the time of initial purchase. Market
capitalization is defined as total current market value of a company's
outstanding common stock. Under normal circumstances, the Berger
Small Company Growth Fund will invest at least 65% of its assets in
equity securities of such companies, consisting of common and
preferred stock and other securities having equity features such as
convertible bonds, warrants and rights (subject to certain
restrictions). The balance of the Fund may be invested in equity
securities of companies with market capitalization in excess of $1
billion, government securities, short-term investments or other
securities as described on the following pages. Because income is not
an objective of the Berger Small Company Growth Fund, any income
produced will be a by-product of the effort to achieve the Fund's
objective of capital appreciation.
In selecting its portfolio securities, the Berger Small
Company Growth Fund places primary emphasis on companies which it
believes have favorable growth prospects. The Fund seeks to identify
small growth companies that either occupy a dominant position in an
emerging industry or a growing market share in larger fragmented
industries. While these companies may present above average risk,
management believes they may have the potential to achieve long-term
earnings growth rates substantially in excess of the growth of
earnings of other companies.
Investments in small growth companies may involve greater
risks and volatility than more traditional equity investments due to
some of these companies potentially having limited product lines,
reduced market liquidity for the trading of their shares and less
depth in management than more established companies. For this reason,
the Berger Small Company Growth Fund is not intended as a complete
investment vehicle but rather as an investment for persons who are in
a financial position to assume above average risk and share price
volatility over time. Realizing the full potential of small growth
companies frequently takes time. As a
-7-<PAGE>
result, the Berger Small Company Growth Fund should be considered as a
long-term investment vehicle.
* * *
In general, investment decisions for the Funds are based on
an approach which seeks out successful companies because they are
believed to be more apt to become profitable investments. To evaluate
a prospective investment, the investment advisor analyzes information
from various sources, including industry economic trends, earnings
expectations and fundamental securities valuation factors to identify
companies which in management's opinion are more likely to have
predictable, above average earnings growth, regardless of the
company's geographic location. The advisor also takes into account a
company's management and its innovations in products and services in
evaluating its prospects for continued or future earnings growth.
The investment objective of the Berger 100 Fund, the primary
investment objective of the Berger Growth and Income Fund and the
investment objective of the Berger Small Company Growth Fund are
considered fundamental, meaning that they cannot be changed without a
shareholders' vote. The secondary investment objective of the Berger
Growth and Income Fund is not considered fundamental, and therefore
may be changed in the future by action of the directors without
shareholder vote. However, the Berger Growth and Income Fund will not
change its secondary investment objective without giving its
shareholders such notice as may be required by law. If the Berger
Growth and Income Fund changes its secondary investment objective,
shareholders should consider whether the Fund remains an appropriate
investment in light of their then current financial position and
needs. There can be no assurance that any of the Funds' investment
objectives will be realized.
Any of the Funds may increase their investment in government
securities and other short-term interest-bearing securities without
limit when the advisor believes market conditions warrant a temporary
defensive position, during which period it may be more difficult for a
Fund to achieve its investment objective. Following is additional
information about some of the other specific types of securities in
which the Funds may invest.
FOREIGN SECURITIES. Each Fund may invest in both domestic
and foreign securities. Investments in foreign securities involve
some risks that are different from the risks of investing in
securities of U.S. issuers, such as the risk of fluctuations in the
value of the currencies in which they are denominated, the risk of
adverse political and economic developments and, with respect to
certain countries, the possibility of expropriation, confiscatory
taxation or limitations on the removal of funds or other assets of the
Funds. Securities of some foreign companies, particularly those of
developing countries, are less liquid and more volatile than
securities of comparable domestic companies. A developing country
generally is considered to be in the initial stages of its
industrialization cycle. Investing in the securities of developing
countries may involve exposure to economic structures that are less
diverse and mature, and to political systems that can be expected to
have less stability than developed countries. There also may be less
publicly available information about foreign issuers than domestic
issuers, and foreign issuers generally are not subject to the uniform
accounting, auditing and financial
-8-<PAGE>
reporting standards and practices applicable to domestic issuers.
Delays may be encountered in settling certain foreign securities
transactions and the Funds will incur costs in converting foreign
currencies into U.S. dollars. The Funds will consider the political
and economic conditions in a country, the prospect for changes in the
value of its currency and the liquidity of an investment in that
country's securities markets in selecting investments in foreign
securities.
CONVERTIBLE SECURITIES. Each Fund may purchase securities
which are convertible into common stock when management of the Funds
believes they offer the potential for a higher total return than
nonconvertible securities. While fixed income securities generally
have a priority claim on a corporation's assets over that of common
stock, some of the convertible securities which the Funds may hold are
high-yield/high-risk securities that are subject to special risks,
including the risk of default in interest or principal payments which
could result in a loss of income to the Funds or a decline in the
market value of the securities. Convertible securities often display
a degree of market price volatility that is comparable to common
stocks. The credit risk associated with convertible securities
generally is reflected by their being rated below investment grade by
organizations such as Moody's Investors Service, Inc., and Standard &
Poor's Corporation. The Funds have no pre-established minimum quality
standards for convertible securities and may invest in convertible
securities of any quality, including lower rated or unrated
securities. However, under normal circumstances, none of the Funds
will invest in any security in default at the time of purchase or in
any nonconvertible debt securities rated below investment grade, and
each Fund will invest less than 20% of the market value of its assets
at the time of purchase in convertible securities rated below
investment grade. For a further discussion of debt security ratings,
see Appendix A to the Statement of Additional Information.
ZEROS/STRIPS. The Berger 100 Fund and the Berger Growth and
Income Fund may each invest in zero coupon bonds or in "strips". Zero
coupon bonds do not make regular interest payments; rather, they are
sold at a discount from face value. Principal and accreted discount
(representing interest accrued but not paid) are paid at maturity.
"Strips" are debt securities that are stripped of their interest
coupon after the securities are issued, but otherwise are comparable
to zero coupon bonds. The market values of "strips" and zero coupon
bonds generally fluctuate in response to changes in interest rates to
a greater degree than do interest-paying securities of comparable term
and quality. None of the Funds will invest in mortgage-backed or
other asset-backed securities.
REPURCHASE AGREEMENTS. Each Fund is authorized to invest in
repurchase agreements. A repurchase agreement is a means of investing
cash for a short period. In a repurchase agreement, a seller
(typically a U.S. commercial bank or recognized U.S. securities
dealer) sells securities to the Fund and agrees to repurchase the
securities at the Fund's cost plus interest within a specified period
(normally one day). In these transactions, the securities purchased
by the Fund will have a total value equal to, or in excess of, the
value of the repurchase agreement, and will be held by the Fund's
custodian bank until repurchased. These transactions must be fully
collateralized at all times by debt securities (generally a security
issued or guaranteed by the U.S. Government or an agency thereof, a
banker's acceptance or a certificate of deposit), but involve some
credit risk to the Fund if the other party defaults on its obligation
and the Fund is delayed or prevented from liquidating the collateral.
Repurchase
-9-<PAGE>
agreements maturing in more than seven days will be considered
illiquid for purposes of the restriction on each Fund's investment in
illiquid and restricted securities.
LENDING PORTFOLIO SECURITIES. The Berger Small Company
Growth Fund may lend its portfolio securities to qualified
institutional investors such as brokers, dealers or other financial
organizations. This practice permits the Fund to earn income, which,
in turn, can be invested in additional securities to pursue the Fund's
investment objective. Loans of securities by the Fund will be
collateralized by cash, letters of credit, or securities issued or
guaranteed by the U.S. Government or its agencies. The collateral
will equal at least 100% of the current market value of the loaned
securities, marked-to-market on a daily basis. The Fund bears a risk
of loss in the event that the other party to a securities lending
transaction defaults on its obligations and the Fund is delayed in or
prevented from exercising its rights to dispose of the collateral,
including the risk of a possible decline in the value of the
collateral securities during the period in which the Fund seeks to
assert these rights, the risk of incurring expenses associated with
asserting these rights and the risk of losing all or a part of the
income from the transaction. The Fund will not lend any security if,
as a result of such loan, the aggregate value of securities then on
loan would exceed 33-1/3% of the market value of the Fund's total
assets.
FINANCIAL FUTURES, FORWARDS AND OPTIONS. Each Fund is
authorized to make limited investments in certain types of futures,
forwards and options, but only for the purpose of hedging, that is,
protecting against the risk of market movements that may adversely
affect the value of a Fund's securities or the price of securities
that a Fund is considering purchasing. Although a hedging transaction
may, for example, partially protect a Fund from a decline in the value
of a particular security or its portfolio generally, the cost of the
transaction will reduce the potential return on the security or the
portfolio. Following is a summary of the futures, forwards and
options in which the Funds may invest, provided that no more than 5%
of a Fund's net assets at the time of purchase may be invested in
initial margins for financial futures transactions and premiums for
options.
Financial futures and forwards are contracts on financial
instruments (such as securities, securities indices and foreign
currencies) that obligate the holder to take or make future delivery
of a specified quantity of the underlying financial instrument.
Futures are generally exchange traded and settled with cash, while
forwards are privately negotiated and contemplate actual delivery of
the underlying financial instrument (usually a foreign currency). An
option gives the holder the right, but not the obligation, to purchase
or sell something (such as a security) at a specified price at any
time until the expiration date. An option on a securities index is
similar, except that upon exercise, settlement is made in cash rather
than in specific securities. Each Fund may only write call options
(that is, issue options that obligate the Fund to deliver if the
option is exercised by the holder) that are "covered" and only up to
25% of a Fund's total assets. A call option is considered "covered"
if a Fund already owns the security on which the option is written or,
in the case of an option written on a securities index, if a Fund owns
a portfolio of securities believed likely to substantially replicate
movement of the index.
Investments in futures and forwards by a Fund involve the
potential for a loss that may exceed the amount of initial margin the
Fund would be permitted to invest in the contracts
-10-<PAGE>
under its investment limitations, or in the case of a call option
written by a Fund, may exceed the premium received for the option.
However, each Fund will be permitted to make such investments for
hedging purposes only, and only if the aggregate amount of its
obligations under these investments does not exceed the total market
value of the assets the Fund is attempting to hedge, such as a portion
or all of its exposure to equity securities or its holding in a
specific foreign currency. To ensure that each Fund will be able to
meet its obligations under its futures and forward contracts and its
obligations under options written by that Fund, each Fund will be
required to place high-grade liquid assets in a segregated account
with its custodian bank or to set aside portfolio securities to
"cover" its position in these investments. Assets segregated or set
aside generally may not be disposed of so long as the Fund maintains
the positions requiring segregation or cover, which could diminish the
Fund's return due to the opportunity losses of foregoing other
potential investments with such assets.
The principal risks of the Funds investing in futures
transactions, forward contracts and options are: (a) losses resulting
from market movements not anticipated by the Funds; (b) possible
imperfect correlation between movements in the prices of futures,
forwards and options and movements in the prices of the securities or
currencies hedged or used to cover such positions; (c) lack of
assurance that a liquid secondary market will exist for any particular
futures, forwards or options at any particular time, and possible
exchange-imposed price fluctuation limits, either of which may make it
difficult or impossible to close a position when so desired; (d) the
need for additional information and skills beyond those required for
the management of a portfolio of traditional securities; and
(e) possible need to defer closing out certain futures or options
contracts in order to continue to qualify for beneficial tax treatment
afforded "regulated investment companies" under the Internal Revenue
Code of 1986, as amended. In addition, when a Fund enters into an
over-the-counter contract with a counterparty, the Fund will assume
counterparty credit risk, that is, the risk that the counterparty will
fail to perform its obligations, in which case the Fund could be worse
off than if the contract had not been entered into. Additional detail
concerning the Funds' investment in futures, forwards and options and
the risks of such investments can be found in the Statement of
Additional Information.
ILLIQUID SECURITIES. Each Fund is authorized to invest in
securities which are illiquid because they are subject to restrictions
on their resale ("restricted securities") or because, based upon their
nature or the market for such securities, they are not readily
marketable. However, none of the Funds may purchase any security, the
purchase of which would cause the Fund to invest more than 15% of its
net assets, measured at the time of purchase, in illiquid securities.
Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. Certain
restricted securities, such as Rule 144A securities, may be treated as
liquid under this restriction if a determination is made that such
securities are readily marketable. Investments in illiquid securities
involve certain risks to the extent that a Fund may be unable to
dispose of such a security at the time desired or at a reasonable
price or, in some cases, may be unable to dispose of it at all. In
addition, in order to resell a restricted security, a Fund might have
to incur the potentially substantial expense and delay associated with
effecting registration.
-11-<PAGE>
INVESTMENT RESTRICTIONS
In addition to its investment objective, each Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, neither the Berger 100 Fund nor the Berger Growth and Income
Fund may purchase securities of any issuer (except U.S. Government
securities) if, immediately after and as a result of such purchase,
the value of such Fund's holdings in the securities of that issuer
exceeds 5% of the value of its total assets or it owns more than 10%
of the outstanding voting securities or of any class of securities of
such issuer. The Berger Small Company Growth Fund is similarly
restricted with respect to 75% of its total assets.
Further, neither the Berger 100 Fund nor the Berger Growth
and Income Fund may borrow in excess of 5% of its assets or pledge
assets taken at market value to an extent greater than 10% of its
total assets taken at cost (and no borrowing may be undertaken except
from banks as a temporary measure for extraordinary or emergency
purposes), subject to certain exclusions, and neither may make loans
(except that each Fund may enter into repurchase agreements in
accordance with the Fund's investment policies). The Berger Small
Company Growth Fund may not borrow money, except borrowing undertaken
from banks for temporary or emergency purposes in amounts not to
exceed 25% of the market value of its assets (including the amount
borrowed) and may not make loans (except that the Fund may enter into
repurchase agreements and may lend portfolio securities in accordance
with the Fund's investment policies). None of the Funds may invest in
any one industry more than 25% of the value of its assets at the time
of investment, nor invest in commodities, except, only for the purpose
of hedging, in certain futures, forwards and options as specified in
greater detail above and in the Statement of Additional Information.
Also, none of the Funds currently intends to make short
sales of securities, except short sales of securities which the Fund
owns or has the right to acquire at no additional cost (i.e., short
sales "against the box"), and does not intend to purchase or sell
securities on a when-issued or delayed delivery basis if as a result,
more than 5% of its assets are invested in such securities, although
these restrictions may be changed without shareholder approval. For
more detail about the Funds' investment restrictions, see the
Statement of Additional Information.
5. PORTFOLIO TURNOVER
In pursuit of each Fund's investment objective, management
continuously reviews its investments and makes portfolio changes
whenever changes in the market, industry trends or the outlook for the
growth of any portfolio security indicate to management that the
objective could be better achieved by investment in another security,
regardless of portfolio turnover. In addition, portfolio turnover may
increase as a result of large amounts of purchases and redemptions of
shares of a Fund due to economic, market or other factors that are not
within the control of management. The annual portfolio turnover rates
of the Funds may at times exceed 100%. An annual turnover rate of
100% or more would be higher than that of most other funds. Increased
portfolio turnover would necessarily result in correspondingly higher
brokerage costs for the Funds and may result in the acceleration of
net taxable gains. The portfolio turnover rates are shown in the
tables in Section 2 beginning on page 2.
-12-<PAGE>
6. MANAGEMENT AND INVESTMENT ADVICE
The directors or trustees of each Fund are responsible for
major decisions relating to that Fund's policies and objectives. They
also oversee the operation of each Fund by its officers and review the
investment performance of the Funds on a regular basis.
The investment advisor to each of the Funds is Berger
Associates, 210 University Boulevard, Suite 900, Denver, CO 80206.
Berger Associates furnishes continuous advice and recommendations to
each Fund regarding securities to be purchased and sold by the Fund.
Berger Associates, therefore, formulates a continuing program for
management of the assets of each Fund consistent with the investment
objectives and policies established by the directors or trustees of
each Fund. Berger Associates also provides office space for each Fund
and pays the salaries, fees and expenses of all Fund officers and
directors or trustees of the Funds who are interested persons of
Berger Associates. Berger Associates serves as investment advisor to
mutual funds, pension and profit-sharing plans, and institutional and
private investors.
Rodney L. Linafelter, Vice President and Chief Investment
Officer of Berger Associates, is the portfolio manager for the Berger
100 Fund and the Berger Growth and Income Fund and as such is
responsible for the investments of both of these Funds, including the
day-to-day investment decisions for the Funds. Mr. Linafelter is also
the President and a director of the Berger 100 Fund and the Berger
Growth and Income Fund and President and a trustee of Berger
Investment Portfolio Trust, of which the Berger Small Company Growth
Fund is a series. As Chief Investment Officer of Berger Associates,
Mr. Linafelter has management responsibilities with respect to all
investment activities of the Funds.
Mr. Linafelter joined Berger Associates in January 1990,
where he has served as a portfolio manager for the Berger 100 Fund and
the Berger Growth and Income Fund, as well as for retirement plans and
institutional and private investors. From April 1986 to December
1989, Mr. Linafelter was employed as a Financial Consultant
(registered representative) with Merrill Lynch, Pierce, Fenner &
Smith, Inc., providing investment advice to institutions and
individuals.
William R. Keithler is the President and portfolio manager
of the Berger Small Company Growth Fund and is primarily responsible
for the investments of the Fund, including the day-to-day investment
decisions for the Fund. Mr. Keithler is also the President and
portfolio manager of the Berger New Generation Fund, another series of
the Berger Investment Portfolio Trust. Mr. Keithler joined Berger
Associates as Vice President-Investment Management in December 1993.
Previously, he was employed by INVESCO Trust Company, Denver,
Colorado, as Senior Vice President (January 1993 to December 1993),
Vice President (January 1991 to January 1993) and Portfolio Manager
(January 1988 to January 1991). During his seven years with INVESCO,
Mr. Keithler was portfolio manager of several mutual funds, most
recently INVESCO Dynamics Fund and INVESCO Emerging Growth Fund. From
1982 to 1986, Mr. Keithler was Vice President and portfolio manager
with First Trust St. Paul, in St. Paul, Minnesota.
-13-<PAGE>
William M.B. Berger is a director (Chairman of the Board) of
Berger Associates, and a director of the Berger 100 Fund and the
Berger Growth and Income Fund and a trustee of the Berger Investment
Portfolio Trust. Although he is no longer involved in making
investment decisions for the Funds, he was founder of Berger
Associates and its President from 1973 until 1994, and he was a
principal shareholder and executive officer of predecessor investment
advisory firms which served as investment advisors to mutual funds and
other investors from 1960. From 1950 to 1960, he was an investment
officer in the trust department of The Colorado National Bank of
Denver in charge of common stock investments.
Under their Investment Advisory Agreements, the Berger 100
Fund and the Berger Growth and Income Fund each have agreed to
compensate Berger Associates for its investment advisory services to
the Fund by the payment of a fee at the annual rate of .75 of 1%
(0.75%) of the average daily net assets of the Fund. Under the
Investment Advisory Agreement for the Berger Small Company Growth
Fund, Berger Associates is compensated for its investment advisory
services to that Fund by the payment of a fee at the annual rate of .9
of 1% (0.90%) of the average daily net assets of the Fund.
Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 80% of the outstanding shares of Berger Associates.
KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation services and financial asset management.
KCSI also owns approximately 41% of the outstanding shares of DST
Systems, Inc. ("DST"), a publicly traded information and transaction
processing company which acts as the Funds' sub-transfer agent.
7. EXPENSES OF THE FUNDS
Each of the Funds has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent to calculate
the daily net asset value of such Fund and to perform certain
accounting and recordkeeping functions required by the Fund. In
addition, IFTC also serves as the Funds' custodian, transfer agent and
dividend disbursing agent. IFTC has engaged DST as sub-agent to
provide transfer agency and dividend disbursing services for the
Funds. As noted above, approximately 41% of the outstanding shares of
DST are owned by KCSI.
For custodian, recordkeeping and pricing services, each Fund
pays fees to IFTC based on a percentage of its assets, subject to
certain minimums. Each Fund also pays a monthly fee based primarily
on the number of accounts maintained on behalf of the Fund for
transfer agency and dividend disbursing services, which fees are paid
by the Funds to IFTC and in turn passed through to DST as sub-agent.
In addition, the Funds reimburse IFTC and DST for certain out-of-
pocket expenses.
The Funds and Berger Associates have entered into
arrangements with certain organizations (broker-dealers, recordkeepers
and administrators) to provide subtransfer agency, recordkeeping,
shareholder communications, subaccounting and/or other services to
investors purchasing shares of the Funds through investment programs
or pension plans established or serviced by those organizations. The
Funds and/or Berger Associates may pay fees to these
-14-<PAGE>
organizations for their services. Any such fees paid by a Fund will
be for services that otherwise would be provided or paid for by the
Fund if all the investors who own Fund shares through the organization
were registered record holders of shares in the Fund.
The directors or trustees of each of the Funds have
authorized Berger Associates to place portfolio transactions on an
agency basis through DST Securities, Inc., a wholly-owned broker-
dealer subsidiary of DST ("DSTS"). When transactions for a Fund are
effected through DSTS, the portion of the commissions received by it
is credited against, and thereby reduces, certain operating expenses
that the Fund would otherwise be obligated to pay. No portion of the
commissions is retained by DSTS.
In addition, under a separate Administrative Services
Agreement with each Fund, Berger Associates performs certain
administrative and recordkeeping services not otherwise performed by
IFTC, including the preparation of financial statements and reports to
be filed with regulatory authorities. Each Fund pays Berger
Associates a fee at the annual rate of one one-hundredth of one
percent (0.01%) of its average daily net assets for such services.
The Funds also incur other expenses, including accounting,
administrative and legal expenses. Berger Associates has agreed to
waive its advisory fee to the extent that a Fund's normal operating
expenses in any fiscal year, including the management fee, but
excluding the 12b-1 fee, brokerage commissions, interest, taxes and
extraordinary expenses, exceed the most restrictive expense limitation
imposed by any applicable state. The Funds believe that the most
restrictive limitation applicable to each Fund is 2-1/2% of the first
$30,000,000 of average daily net assets, plus 2% of the next
$70,000,000, plus 1-1/2% of the balance of the average daily net
assets of that Fund for that fiscal year.
8. POLICIES OF THE FUNDS TO PROMOTE SALES OF FUND SHARES
Each Fund has adopted a 12b-1 plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, which permits
that Fund to pay certain costs for the distribution of its own shares.
Each Plan provides for the payment to Berger Associates of a 12b-1 fee
of .25 of 1% (0.25%) per annum of that 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, but are
not limited to, 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 a Fund) paid to securities dealers,
financial institutions and other organizations which render
distribution and administrative services in connection with the
distribution of the Funds' shares; 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 Funds;
costs involved in preparing, printing and distributing sales
literature for the Funds; costs involved in obtaining whatever
information, analyses and reports with respect to market and
promotional activities on behalf of the Funds that Berger Associates
deems
-15-<PAGE>
advisable; and such other costs as may from time to time be agreed
upon by the Funds. Such payments are to be made by each 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 a 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 the Funds may engage in activities which jointly promote the
sale of the shares of all Funds or other Berger Funds, which costs are
not readily identifiable as related to any one fund. In such cases,
Berger Associates allocates the cost of the activity among the funds
involved on the basis of their respective net assets.
The current 12b-1 Plans will continue in effect until the
end of April 1996, and from year to year thereafter if approved at
least annually by each Fund's directors or trustees and those
directors or trustees who are not interested persons of the Fund and
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. None of the Plans may be amended to increase
materially the amount to be spent on distribution of shares of the
Fund without shareholder approval.
The directors or trustees of each Fund have authorized
Berger Associates 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 portfolio transactions for the Fund. In placing
portfolio business with such broker-dealers, Berger Associates will
seek the best execution of each transaction, and all such brokerage
placement must be consistent with the Rules of Fair Practice of the
NASD.
9. HOW TO PURCHASE SHARES IN THE FUNDS
(i) Minimum Initial Investment -- $500.00. To purchase
-------------------------------------
shares in any of the Funds, simply complete the application form
enclosed with this Prospectus. Then mail it with a check payable to
"Berger Funds" to the Funds in care of DST Systems, Inc., the Funds'
sub-transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
The price at which the purchase will be effected is based on the next
calculation of net asset value after the order is received by DST
Systems, Inc. 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.
-16-<PAGE>
Alternatively, investors may establish an Automatic
Investment Plan (see (iii) below), in which case the $500 minimum
initial investment will be waived, subject to initial and subsequent
monthly investment minimums of $50.
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
fee for their services, may require different minimum initial and
subsequent investments than the Funds and may impose other charges or
restrictions different from those applicable to shareholders who
invest in the Funds 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 Funds will, at their discretion, accept orders
transmitted by broker-dealers although not accompanied by payment for
the shares being purchased. Payment must be received from the broker-
dealer within three business days after acceptance of the order.
(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 Berger Funds, 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 each Fund in which you are investing 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 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) Investment by Telephone. The Funds will, at their
-----------------------
discretion, accept purchase orders from existing shareholders by
telephone, although not accompanied by payment for the shares being
purchased. To receive the net asset value for a specific day, a
telephone 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 Funds' 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, a 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 purchase orders may not exceed four times the value
of an account on the date the order is placed (shares previously
purchased by telephone are included in computing such value only if
payment has been received). See "How to Redeem or Sell Fund Shares -
Redemptions by Telephone" for procedures for telephone transactions.
-17-<PAGE>
(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. Please call 1-800-551-5849 for current wire or
electronic funds transfer instructions. The Funds 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 Funds reserve the right in their 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 a Fund. The Funds
also reserve 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 a Fund until accepted in writing.
10. HOW THE NET ASSET VALUE IS DETERMINED
The price of each Fund's shares is based on the net asset
value of that Fund, which is determined at the close of the regular
trading session of the New York Stock Exchange (normally 4:00 p.m.,
New York time) each day that the Exchange is open.
The per share net asset value of each Fund is determined by
dividing the total value of its securities and other assets, less
liabilities, by the total number of shares outstanding. In
determining net asset value, securities are valued at market value or,
if market quotations are not readily available, at their fair value
determined in good faith pursuant to consistently applied procedures
established by the directors or trustees. Money market instruments
maturing within 60 days are valued at amortized cost, which
approximates market value.
Since none of the Funds imposes any front end sales load or
redemption fee, both the purchase price and the redemption price of a
Fund share are the same and will be equal to the next calculated net
asset value of a share of that Fund.
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.
-18-<PAGE>
12. HOW TO REDEEM OR SELL FUND SHARES
(i) Share Redemptions by Mail. Each 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
by the Fund's transfer agent of all required documents. Shareholders
may redeem all or part of their shares in the Funds by sending a
written request to the Berger Funds, 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 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 Funds also reserve 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 Funds 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 Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141, or call DST at 1-800-551-5849.
(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 Berger Funds, 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 Funds. 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 telephone redemption request must be
received before the close of the New York Stock Exchange on that day.
As discussed above, the signature of a redeeming shareholder must be
signature guaranteed, and therefore shares may not be redeemed by
telephone, 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.
-19-<PAGE>
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 Funds and their transfer agent
may require the shareholder placing the order 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 Funds nor their transfer agent or
investment 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
Funds, and/or their 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 Funds may terminate or
modify the procedures concerning the telephone redemption and wire
transfer services at any time, although shareholders of the Funds will
be given at least 60 days' prior notice of any termination or material
modification. Berger Associates 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 Funds be made by wire or electronic funds transfer.
Shareholders may elect to use these services on the account
application or by providing the Funds 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 Funds 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 Funds. 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 "Section 12.
Exchange Privilege and Systematic Withdrawal Plan" for more
information concerning the Cash Account Trust portfolios.
-20-<PAGE>
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 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) Redemptions by the Fund. As a means of reducing its
-----------------------
expenses, the Berger Growth and Income Fund and the Berger Small
Company Growth Fund are authorized to redeem involuntarily all shares
held in accounts with a value of less than $500 (or for accounts
opened prior to January 26, 1996, less than $250) that are not
actively participating in a monthly Automatic Investment Plan. 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 or subscribe to a monthly Automatic Investment
Plan. If neither of these conditions is 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 DST Systems, Inc., at
---------
1-800-551-5849, or writing DST at P. O. Box 419958, Kansas City, MO
64141, any shareholder may exchange, without charge, any or all of his
shares in any of the Funds for shares of any of the other Funds
described in this Prospectus, 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 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 any of the
Funds 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 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 Fund or CAT Portfolio
being purchased. You may make up to four exchanges out of each Fund
during the calendar year. This limit helps keep each Fund's net asset
base stable and reduces the Fund's administrative
-21-<PAGE>
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 may be difficult.
See "How to Redeem or Sell Fund Shares - Redemptions by Telephone" for
procedures for telephone transactions.
Redemptions of shares in connection with exchanges into or
out of the Funds 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 or call must be received before that
day's close of the New York Stock Exchange. A day or more delay may
be experienced prior to the investment of the redemption proceeds into
a CAT Portfolio. 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 Federal income tax purposes.
All exchanges out of the Funds into a CAT Portfolio are
subject to the minimum and subsequent investment requirements of the
CAT Portfolio into which shares are being exchanged. Exchanges will
be accepted only if the registration of the two accounts is identical.
Neither the Funds nor the CAT Portfolios, or 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 "How to Redeem or Sell 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 Berger Funds, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141.
(ii) Systematic Withdrawal Plan. A shareholder who owns
--------------------------
shares of any of the Funds 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
Berger Funds, 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 Funds offer several tax-qualified retirement plans for
adoption by individuals and employers. Participants in these plans
can accumulate shares of the Funds on a tax-deferred basis.
The Funds offer 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
-22-<PAGE>
year. When these plans are adopted by self-employed persons, they are
commonly referred to as Keogh or HR 10 plans.
The Funds also offer 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 Federal 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 Funds also offer 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 Funds, c/o Berger
Associates, Inc., P.O. Box 5005, Denver, CO 80217, or call 1-800-
333-1001.
15. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The policies of the Funds on payments of dividends and
capital gains distributions are described below.
BERGER 100 FUND[R] AND BERGER SMALL COMPANY GROWTH FUND[R].
The Berger 100 Fund and the Berger Small Company Growth Fund each
intends to declare dividends representing the Fund's net investment
income annually, normally in December. It is also the present policy
of each of these Funds to distribute annually all of its net realized
capital gains.
BERGER GROWTH AND INCOME FUND. The Berger Growth and Income
Fund intends to declare dividends representing net investment income
four times annually, generally in the months of March, June, September
and December. It is also the present policy of the Fund to distribute
annually all of its net realized capital gains.
Each of the Funds is treated as a separate entity for tax
purposes and has elected and intends to maintain its qualification to
be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. If they so qualify and
meet certain minimum distribution requirements, the Funds will not be
liable for Federal income tax on the amount of their earnings that are
distributed. If a Fund distributes annually less than 98% of its
income and gain, it will be subject to a nondeductible excise tax
equal to 4% of the shortfall.
All dividends or capital gains distributions paid by a Fund
will be automatically reinvested in shares of that Fund at the net
asset value on the ex-dividend date unless an investor
-23-<PAGE>
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 Berger Funds at 1-800-551-5849 or by written request to the Berger
Funds, 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.
Each 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 a 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 a 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 sale or
exchange of a 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 a 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 not
subject to Federal income tax, the shareholder will not generally be
taxed on amounts distributed by a Fund.
Dividends and interest received by the Funds on foreign
securities may give rise to withholding and other taxes imposed by
foreign countries. It is expected that foreign taxes paid by the
Funds will be treated as expenses of the Funds. Tax conventions
between certain countries and the United States may reduce or
eliminate such taxes.
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).
The foregoing is only a brief summary of the Federal income
tax considerations affecting the Funds and their shareholders.
Accordingly, potential investors should consult their tax advisors
with specific reference to their own tax situation.
16. ADDITIONAL INFORMATION
The Berger 100 Fund and Berger Growth and Income Fund are
separate corporations which were incorporated under the laws of the
State of Maryland on March 10, 1966, as "The One Hundred Fund, Inc."
and "The One Hundred and One Fund, Inc.", respectively. The names
"Berger One Hundred Fund[R]" and "Berger 100 Fund[R]" were adopted by
the Berger 100 Fund as service marks and trade names in November 1989.
In 1990, the shareholders of the Berger Growth and Income Fund
approved changing its formal corporate
-24-<PAGE>
name to "Berger One Hundred and One Fund, Inc." and the Fund began
doing business under the trade name "Berger Growth and Income Fund,
Inc." in January 1996.
Each of the Berger 100 Fund and the Berger Growth and Income
Fund has only one class of securities, its Capital Stock, with a par
value of one cent per share, of which 200,000,000 shares are
authorized for issue by the Berger 100 Fund and 100,000,000 shares are
authorized for issue by the Berger Growth and Income Fund. Shares of
the Funds are fully paid and nonassessable when issued. All shares
issued by a Fund participate equally in dividends and other
distributions by the Fund, and in the residual assets of the Fund in
the event of its liquidation.
The Berger Small Company Growth Fund is a separate series or
portfolio established under the Berger Investment Portfolio Trust, a
Delaware business trust organized on August 23, 1993. The name
"Berger Small Company Growth Fund[R]" was registered as a service mark
in September 1995. The Trust is authorized to issue an unlimited
number of shares of beneficial interest in series or portfolios.
Currently, the series comprising Berger Small Company Growth Fund is
the only portfolio established under the Trust with shares
outstanding, although the Berger New Generation Fund series was
established in December 1995 and others may be added in the future.
Shares of the Fund are fully paid and nonassessable 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 100 Fund and the Berger Growth
and Income Fund vote separately on matters relating to those
respective Funds. Shareholders of the Berger Small Company Growth
Fund generally vote separately on matters relating to that Fund,
although they will vote together 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 each Fund has one vote. Shares of each Fund have
noncumulative voting rights, which means that the holders of more than
50% of the shares voting for the election of directors or trustees can
elect 100% of the directors or 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 directors or trustees will not be
able to elect any person or persons as directors or trustees. None of
the Funds is required to hold annual shareholder meetings unless
required by the Investment Company Act of 1940 or other applicable law
or unless called by the directors or trustees.
If shareholders owning at least 10% of the outstanding
shares of the Berger 100 Fund, the Berger Growth and Income Fund or
the Berger Investment Portfolio Trust so request, a special
shareholders' meeting will be held for the purpose of considering the
removal of a director of a Fund or a trustee of the Trust, as the case
may be. Special meetings will be held for other purposes if the
holders of at least 25% of the outstanding shares of a Fund or the
Trust so request. Subject to certain limitations, the Funds will
facilitate appropriate communications by shareholders desiring to call
a special meeting for the purpose of considering the removal of a
director or a trustee.
-25-<PAGE>
The Funds' transfer agent and dividend disbursing agent is
Investors Fiduciary Trust Company ("IFTC"), 127 West 10th Street,
Kansas City, MO 64105. IFTC has engaged DST Systems, Inc., as sub-
agent to provide transfer agency and dividend disbursing services for
the Funds. Accordingly, the address and telephone number for DST
Systems, Inc., set forth in this Prospectus should be used for
correspondence with the Funds' transfer agent.
17. PERFORMANCE
From time to time in advertisements, the Funds may discuss
their performance ratings as published by recognized mutual fund
statistical services, such as Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., or Morningstar, Inc., or by
publications of general interest such as The Wall Street Journal,
-----------------------
Investor's Business Daily, Barron's, Financial World or Kiplinger's
- ------------------------- -------- --------------- -----------
Personal Finance Magazine. In addition, the Funds may compare their
- -------------------------
performance to that of recognized broad-based securities market
indices, including the Standard & Poor's 500 Stock Index, the Dow
Jones Industrial Average, the Russell 2000 Stock Index, the Standard &
Poor's 600 Small Cap Index or the NASDAQ Composite Index, or more
narrowly-based indices which reflect the market sectors in which that
Fund invests.
The total return of each Fund is calculated for any
specified period of time by assuming the purchase of shares of the
Fund at the net asset value at the beginning of the period. Each
dividend or other distribution paid by the Fund is assumed to have
been reinvested at the net asset value on the reinvestment date. The
total number of shares then owned as a result of this process is
valued at the net asset value at the end of the period. The
percentage increase is determined by subtracting the initial value of
the investment from the ending value and dividing the remainder by the
initial value.
Each Fund's total return reflects the Fund's performance
over a stated period of time. An average annual total return reflects
the hypothetical annually compounded return that would have produced
the same total return if the Fund's performance had been constant over
the entire period. Total return figures are based on the overall
change in value of a hypothetical investment in each Fund. Because
average annual total returns for more than one year tend to smooth out
variations in a Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
Any performance figures for the Funds are based upon
historical results and do not assure future performance. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Shareholders with questions should write to the Berger
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217,
or call 1-303-329-0200 or 1-800-333-1001.
-26-<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
BERGER ONE HUNDRED FUND, INC.
BERGER GROWTH AND INCOME FUND
BERGER SMALL COMPANY GROWTH FUND
SHAREHOLDER SERVICES:
1-800-551-5849
This Statement of Additional Information about The One
Hundred Fund, Inc., doing business as Berger One Hundred Fund, Inc.
("Berger 100 Fund"), Berger One Hundred and One Fund, Inc., doing
business as Berger Growth and Income Fund, Inc. ("Berger Growth and
Income Fund") and Berger Small Company Growth Fund (all of such funds
together being sometimes referred to as the "Funds") is not a
prospectus. It should be read in conjunction with the Prospectus
describing the Funds, dated January 26, 1996, which may be obtained
by writing the Funds at P.O. Box 5005, Denver, Colorado 80217, or
calling 1-800-333-1001.
The Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Small Company Growth Fund are no-load mutual funds. This
Statement of Additional Information describes each of these Funds
which have many features in common, but have different investment
objectives and different investment emphases.
BERGER 100 FUND[R]
- ------------------
The Berger 100 Fund's investment objective is long-term capital
appreciation. The Berger 100 Fund seeks to achieve this objective by
investing primarily in common stocks of established companies which
the Fund believes offer favorable growth prospects. Current income is
not an investment objective of the Berger 100 Fund, and any income
produced will be a by-product of the efforts to achieve the Fund's
objective.
BERGER GROWTH AND INCOME FUND
- -----------------------------
The primary investment objective of the Berger Growth and Income Fund
is capital appreciation. A secondary objective is to provide a
moderate level of current income. The Fund seeks to achieve these
objectives by investing primarily in common stocks and other
securities, such as convertible securities or preferred stocks, which
the Fund believes offer favorable growth prospects and may also
provide current income.
BERGER SMALL COMPANY GROWTH FUND[R]
- -----------------------------------
The investment objective of the Berger Small Company Growth
Fund is capital appreciation. The Fund seeks to achieve this
objective by investing primarily in equity securities (including
common and preferred stocks, convertible debt securities and other
securities having equity features) of small growth companies with
market capitalization of less than $1 billion at the time of initial
purchase.
January 26, 1996<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
Table of Contents in Prospectus
----------------- -------------------
Introduction Section 2
1. Portfolio Policies of the Funds Section 3, 4, 5
2. Investment Restrictions Section 4
3. Management of the Funds Section 6
4. Investment Advisor Section 6
5. Expenses of the Funds Section 7, 8
6. Brokerage Policy Section 8
7. How to Purchase Shares in Section 9
the Funds
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
-i-<PAGE>
INTRODUCTION
------------
The Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Small Company Growth Fund are mutual funds, or open-end,
diversified, management investment companies. The Berger 100 Fund's
investment objective is long-term capital appreciation. The primary
investment objective of the Berger Growth and Income Fund is capital
appreciation, and its secondary objective is to provide a moderate
level of current income. The Berger Small Company Growth Fund's
investment objective is capital appreciation.
1. Portfolio Policies of the Funds
-------------------------------
The Prospectus discusses the investment objective of each of
the Funds and the policies to be employed to achieve that objective.
This section contains supplemental information concerning the types of
securities and other instruments in which the Funds may invest, the
investment policies and portfolio strategies that the Funds may
utilize and certain risks attendant to those investments, policies and
strategies.
ILLIQUID AND RESTRICTED SECURITIES. Each of the Funds is
authorized to invest in securities which are illiquid because they are
subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities,
they are not readily marketable. However, none of the Funds will
purchase any such security, the purchase of which would cause the Fund
to invest more than 15% of its net assets, measured at the time of
purchase, in illiquid securities. Repurchase agreements maturing in
more than seven days will be considered as illiquid for purposes of
this restriction. Pursuant to authority delegated from the directors
or trustees, the Funds' advisor will determine whether securities
issued in offerings made pursuant to SEC Rule 144A under the
Securities Act of 1933 should be treated as illiquid investments
considering, among other things, the following factors: (1) the
frequency of trades and quotes for the security; (2) the number of
dealers wanting to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature 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).
Investments in illiquid securities involve certain risks to the extent
that the Fund may be unable to dispose of such a security at the time
desired or at a reasonable price or, in some cases, may be unable to
dispose of it at all. In addition, in order to resell a restricted
security, a Fund might have to incur the potentially substantial
expense and delay associated with effecting registration.
REPURCHASE AGREEMENTS. As discussed in the Prospectus, each
Fund may invest in repurchase agreements with various financial
organizations, including commercial banks, registered broker-dealers
and registered government securities dealers. A
-1-<PAGE>
repurchase agreement is an agreement under which a Fund acquires a
debt security (generally a security issued or guaranteed by the U.S.
government or an agency thereof, a banker's acceptance or a
certificate of deposit) from a commercial bank, broker or dealer,
subject to resale to the seller at an agreed upon price and date
(normally, the next business day). A repurchase agreement may be
considered a loan collateralized by securities. The resale price
reflects an agreed upon interest rate effective for the period the
instrument is held by a Fund and is unrelated to the interest rate on
the underlying instrument. In these transactions, the securities
acquired by a Fund (including accrued interest earned thereon) must
have a total value equal to or in excess of the value of the
repurchase agreement and are held by the Fund's custodian bank until
repurchased. In addition, the directors or trustees will establish
guidelines and standards for review by the investment advisor of the
creditworthiness of any bank, broker or dealer party to a repurchase
agreement with a Fund. None of the Funds will enter into a repurchase
agreement maturing in more than seven days if as a result more than
15% of the Fund's total assets would be invested in such repurchase
agreements and other illiquid securities.
The use of repurchase agreements involves certain risks.
For example, if the other party to the agreement defaults on its
obligation to repurchase the underlying security at a time when the
value of the security has declined, a Fund may incur a loss upon
disposition of the security. If the other party to the agreement
becomes insolvent and subject to liquidation or reorganization under
the Bankruptcy Code or other laws, a court may determine that the
underlying security is collateral for a loan by a Fund not within the
control of the Fund and therefore the realization by the Fund on such
collateral may automatically be stayed. Finally, it is possible that
a Fund may not be able to substantiate its interest in the underlying
security and may be deemed an unsecured creditor of the other party to
the agreement. While management of the Funds acknowledges these
risks, it is expected that they can be controlled through careful
monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERED SECURITIES. Each Fund may
purchase and sell securities on a when-issued or delayed delivery
basis. However, none of the Funds currently intends to purchase or
sell securities on a when-issued or delayed delivery basis, if as a
result more than 5% of its total assets taken at market value at the
time of purchase would be invested in such securities. When-issued or
delayed delivery transactions arise when securities (normally, equity
obligations of issuers eligible for investment by a Fund) are
purchased or sold by the Fund with payment and delivery taking place
in the future in order to secure what is considered to be an
advantageous price or yield. However, the yield on a comparable
security available when delivery takes place may vary from the yield
on the security at the time that the when-issued or delayed delivery
transaction was entered into. Any failure to consummate a when-issued
or delayed delivery transaction may result in a Fund missing the
opportunity of obtaining a price
-2-<PAGE>
or yield considered to be advantageous. When-issued and delayed
delivery transactions may generally be expected to settle within one
month from the date the transactions are entered into, but in no event
later than 90 days. However, no payment or delivery is made by a Fund
until it receives delivery or payment from the other party to the
transaction.
When a Fund purchases securities on a when-issued basis, it
will maintain in a segregated account with its custodian cash, U.S.
government securities or other high-grade debt obligations readily
convertible into cash having an aggregate value equal to the amount of
such purchase commitments, until payment is made. If necessary,
additional assets will be placed in the account daily so that the
value of the account will equal or exceed the amount of the Fund's
purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, the
Berger Small Company Growth Fund may lend its securities to qualified
institutional investors who need to borrow securities in order to
complete certain transactions, such as covering short sales, avoiding
failures to deliver securities, or completing arbitrage operations.
By lending its securities, the Berger Small Company Growth Fund will
be attempting to generate income through the receipt of interest on
the loan which, in turn, can be invested in additional securities to
pursue the Fund's investment objective. Any gain or loss in the
market price of the securities loaned that might occur during the term
of the loan would be for the account of the Fund. The Fund may lend
its portfolio securities to qualified brokers, dealers, banks or other
financial institutions, so long as the terms, the structure and the
aggregate amount of such loans are not inconsistent with the
Investment Company Act of 1940, or the Rules and Regulations or
interpretations of the Securities and Exchange Commission (the
"Commission") thereunder, which currently require that (a) the
borrower pledge and maintain with the Fund collateral consisting of
cash, an irrevocable letter of credit or securities issued or
guaranteed by the United States government having a value at all times
not less than 100% of the value of the securities loaned, (b) the
borrower add to such collateral whenever the price of the securities
loaned rises (i.e., the borrower "marks to the market" on a daily
basis), (c) the loan be made subject to termination by the Fund at any
time and (d) the Fund receive reasonable interest on the loan, which
interest may include the Fund's investing cash collateral in interest
bearing short-term investments, and (e) the Fund receive all dividends
and distributions on the loaned securities and any increase in the
market value of the loaned securities.
The Berger Small Company Growth Fund bears a risk of loss in
the event that the other party to a securities lending transaction
defaults on its obligations and the Fund is delayed in or prevented
from exercising its rights to dispose of the collateral, including the
risk of a possible decline in the value of the collateral securities
during the period in which the Fund seeks to assert these rights, the
risk of incurring expenses
-3-<PAGE>
associated with asserting these rights and the risk of losing all or a
part of the income from the transaction. The Fund will not lend its
portfolio securities if, as a result, the aggregate value of such
loans would exceed 33-1/3% of the value of the Fund's total assets.
Loan arrangements made by the Fund will comply with all other
applicable regulatory requirements, including the rules of the New
York Stock Exchange, which rules presently require the borrower, after
notice, to redeliver the securities within the normal settlement time
of three business days. All relevant facts and circumstances,
including creditworthiness of the broker, dealer or institution, will
be considered in making decisions with respect to the lending of
securities, subject to review by the Fund's trustees.
SHORT SALES. Each Fund currently only intends to engage in
short sales if, at the time of the short sale, the Fund owns or has
the right to acquire an equivalent kind and amount of the security
being sold short at no additional cost (i.e., short sales "against the
box").
In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those
securities until delivery occurs. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf
of the seller. While the short position is maintained, the seller
collateralizes its obligation to deliver the securities sold short in
an amount equal to the proceeds of the short sale plus an additional
margin amount established by the Board of Governors of the Federal
Reserve. If a Fund engages in a short sale, the collateral account
will be maintained by the Fund's custodian. While the short sale is
open, the Fund will maintain in a segregated custodial account an
amount of securities convertible into or exchangeable for such
equivalent securities at no additional cost. These securities would
constitute the Fund's long position.
A Fund may make a short sale, as described above, when it
wants to sell the security it owns at a current attractive price, but
also wishes to defer recognition of gain or loss for federal income
tax purposes and for purposes of satisfying certain tests applicable
to regulated investment companies under the Internal Revenue Code. In
such a case, any future losses in the Fund's long position should be
reduced by a gain in the short position. The extent to which such
gains or losses are reduced would depend upon the amount of the
security sold short relative to the amount the Fund owns. There will
be certain additional transaction costs associated with short sales,
but the Fund will endeavor to offset these costs with income from the
investment of the cash proceeds of short sales.
FINANCIAL FUTURES, FORWARDS AND OPTIONS. As described in
the Prospectus, each Fund is authorized to make limited investment in
certain types of futures, forwards and options, but only for the
purpose of hedging, that is, protecting against market risk due to
-4-<PAGE>
market movements that may adversely affect the value of a Fund's
securities or the price of securities that a Fund is considering
purchasing. The utilization of futures, forwards and options is also
subject to policies and procedures which may be established by the
directors or trustees from time to time. A hedging transaction may
partially protect a Fund from a decline in the value of a particular
security or its portfolio generally, although the cost of the
transaction will reduce the potential return on the security or the
portfolio. Following is additional information concerning the
futures, forwards and options in which the Funds may invest, provided
that no more than 5% of the Fund's net assets at the time of purchase
may be invested in initial margins for financial futures transactions
and premiums for options. In addition, a Fund may only write call
options that are covered and only up to 25% of the Fund's total
assets. The following information should be read in conjunction with
the information concerning the Funds' investment in futures, forwards
and options and the risks of such investments contained in the
Prospectus.
Futures Contracts. Financial futures contracts are
-----------------
contracts on financial instruments (such as securities and foreign
currencies) and securities indices that obligate the long or short
holder, if the contract is held to its specified delivery date, to
take or make delivery of a specified quantity of the underlying
financial instrument, or the cash value of a securities index.
Although futures contracts by their terms call for the delivery or
acquisition of the underlying instruments or a cash payment based on
the value of the underlying instruments, in most cases the contractual
obligation is offset before the delivery date by buying (in the case
of an obligation to sell) or selling (in the case of an obligation to
buy) an identical futures contract. Such a transaction cancels the
original obligation to make or take delivery of the instruments.
Each Fund may enter into contracts for the purchase or sale
for future delivery of financial instruments, such as securities and
foreign currencies, or contracts based on financial indices including
indices of U.S. Government securities, foreign government securities
or equity securities. U.S. futures contracts are traded on exchanges
which have been designated "contract markets" by the Commodity Futures
Trading Commission ("CFTC") and must be executed through a futures
commission merchant (an "FCM"), or brokerage firm, which is a member
of the relevant contract market. Through their clearing corporations,
the exchanges guarantee performance of the contracts as between the
clearing members of the exchange.
Both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when a futures contract is entered
into. Initial margin deposits are equal to a percentage of the
contract's value, as set by the exchange on which the contract is
traded, and may be maintained in cash or certain high-grade liquid
assets. If the value of either party's position declines, that party
will be required to make additional "variation
-5-<PAGE>
margin" payments to the other party to settle the change in value on a
daily basis. Initial and variation margin payments are similar to
good faith deposits or performance bonds or party-to-party payments
resulting from daily changes in the value of the contract, unlike
margin extended by a securities broker, and would be returned or
credited to the Funds upon termination of the futures contract,
assuming all contractual obligations have been satisfied. Unlike
margin extended by a securities broker, initial and variation margin
payments do not constitute purchasing securities on margin for
purposes of each Fund's investment limitations. The Funds will incur
brokerage fees when they buy or sell futures contracts.
In the event of the bankruptcy of the FCM that holds margin
on behalf of a Fund, the Fund may be entitled to return of margin owed
to the Fund only in proportion to the amount received by the FCM's
other customers. Each Fund will attempt to minimize the risk by
careful monitoring of the creditworthiness of the FCMs with which the
Fund does business and by depositing margin payments in a segregated
account with the Fund's custodian for the benefit of the FCM when
practical or otherwise required by law.
Each Fund intends to comply with guidelines of eligibility
for exclusion from the definition of the term "commodity pool
operator" with the CFTC and the National Futures Association, which
regulate trading in the futures markets. Accordingly, the Fund will
not enter into any futures contract or option on a futures contract
if, as a result, the aggregate initial margin and premiums required to
establish such positions would exceed 5% of the Fund's net assets.
Although each Fund would hold cash and liquid assets in a
segregated account with a value sufficient to cover the Fund's open
futures obligations, the segregated assets would be available to the
Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days.
However, because the Fund's cash that may otherwise be invested would
be held uninvested or invested in high-grade liquid assets so long as
the futures position remains open, the Fund's return could be
diminished due to the opportunity losses of foregoing other potential
investments.
The acquisition or sale of a futures contract may occur, for
example, when a Fund is considering purchasing or holds equity
securities and seeks to protect itself from fluctuations in prices
without buying or selling those securities. For example, if prices
were expected to decrease, the Fund might sell equity index futures
contracts, thereby hoping to offset a potential decline in the value
of equity securities in the portfolio by a corresponding increase in
the value of the futures contract position held by the Fund and
thereby preventing the Fund's net asset value from declining as much
as it otherwise would have. A Fund also could protect against
potential price declines by selling portfolio securities and investing
in money market instruments. However, the
-6-<PAGE>
use of futures contracts as an investment technique allows the Funds
to maintain a defensive position without having to sell portfolio
securities.
Similarly, when prices of equity securities are expected to
increase, futures contracts may be bought to attempt to hedge against
the possibility of having to buy equity securities at higher prices.
This technique is sometimes known as an anticipatory hedge. Since the
fluctuations in the value of futures contracts should be similar to
those of equity securities, a Fund could take advantage of the
potential rise in the value of equity securities without buying them
until the market has stabilized. At that time, the futures contracts
could be liquidated and the Fund could buy equity securities on the
cash market.
To the extent a Fund enters into futures contracts for this
purpose, the assets in the segregated asset account maintained to
cover the Fund's obligations with respect to the futures contracts
will consist of high-grade liquid assets from its portfolio in an
amount equal to the difference between the amount of the Fund's
obligation under the contract and the aggregate value of the initial
and variation margin payments made by the Fund with respect to the
futures contracts.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures market
are subject to initial margin and variation margin requirements.
Rather than meeting additional variation margin requirements,
investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between
the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants
decide to make or take delivery, liquidity in the futures market could
be reduced and prices in the futures market distorted. Third, from
the point of view of speculators, the margin deposit requirements in
the futures market are less than margin requirements in the securities
market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the
possibility of the foregoing distortions, a correct forecast of
general price trends by the Funds still may not result in a successful
use of futures.
Futures contracts entail risks. Although each Fund believes
that use of such contracts will benefit the Fund, if the Fund's
investment judgment is incorrect, the Fund's overall performance could
be worse than if the Fund had not entered into futures contracts. For
example, if the Fund has hedged against the effects of a possible
decrease in prices of securities held in the Fund's portfolio and
prices increase instead, the Fund will lose part or all of the benefit
of the increased value of these securities because of offsetting
losses in the Fund's futures
-7-<PAGE>
positions. In addition, if the Fund has insufficient cash, it may
have to sell securities from its portfolio to meet daily variation
margin requirements. Those sales may be, but will not necessarily be,
at increased prices which reflect the rising market and may occur at a
time when the sales are disadvantageous to the Fund. Although the
buyer of an option cannot lose more than the amount of the premium
plus related transaction costs, a buyer or seller of futures contracts
could lose amounts substantially in excess of any initial margin
deposits made, due to the potential for adverse price movements
resulting in additional variation margin being required by such
positions. However, each Fund intends to monitor its investments
closely and will attempt to close its positions when the risk of loss
to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the
value of their underlying instruments. Because there are a limited
number of types of futures contracts, it is possible that the
standardized futures contracts available to a Fund will not match
exactly the Fund's current or potential investments. A Fund may buy
and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically
invests -- for example, by hedging investments in portfolio securities
with a futures contract based on a broad index of securities -- which
involves a risk that the futures position will not correlate precisely
with the performance of the Fund's investments.
Futures prices can also diverge from the prices of their
underlying instruments, even if the underlying instruments closely
correlate with a Fund's investments. Futures prices are affected by
such factors as current and anticipated short-term interest rates,
changes in volatility of the underlying instruments and the time
remaining until expiration of the contract. Those factors may affect
securities prices differently from futures prices. Imperfect
correlations between a Fund's investments and its futures positions
may also result from differing levels of demand in the futures markets
and the securities markets, from structural differences in how futures
and securities are traded, and from imposition of daily price
fluctuation limits for futures contracts. A Fund may buy or sell
futures contracts with a greater or lesser value than the securities
it wishes to hedge or is considering purchasing in order to attempt to
compensate for differences in historical volatility between the
futures contract and the securities, although this may not be
successful in all cases. If price changes in a Fund's futures
positions are poorly correlated with its other investments, its
futures positions may fail to produce desired gains or result in
losses that are not offset by the gains in the Fund's other
investments.
Because futures contracts are generally settled within a day
from the date they are closed out, compared with a longer settlement
period for most types of securities, the futures markets can provide
superior liquidity to the securities markets. Nevertheless, there is
no assurance a liquid secondary market will
-8-<PAGE>
exist for any particular futures contract at any particular time. In
addition, futures exchanges may establish daily price fluctuation
limits for futures contracts and may halt trading if a contract's
price moves upward or downward more than the limit in a given day. On
volatile trading days when the price fluctuation limit is reached, it
may be impossible for a Fund to enter into new positions or close out
existing positions. If the secondary market for a futures contract is
not liquid because of price fluctuation limits or otherwise, a Fund
may not be able to promptly liquidate unfavorable futures positions
and potentially could be required to continue to hold a futures
position until the delivery date, regardless of changes in its value.
As a result, a Fund's access to other assets held to cover its futures
positions also could be impaired.
Options on Futures Contracts. Each Fund may buy and write
----------------------------
options on futures contracts for hedging purposes. An option on a
futures contract gives the Funds the right (but not the obligation) to
buy or sell a futures contract at a specified price on or before a
specified date. The purchase of a call option on a futures contract
is similar in some respects to the purchase of a call option on an
individual security. Depending on the pricing of the option compared
to either the price of the futures contract upon which it is based or
the price of the underlying instrument, ownership of the option may or
may not be less risky than ownership of the futures contract or the
underlying instrument. As with the purchase of futures contracts, a
Fund may buy a call option on a futures contract to hedge against a
market advance, and a Fund might buy a put option on a futures
contract to hedge against a market decline.
The writing of a call option on a futures contract
constitutes a partial hedge against declining prices of the security
or foreign currency which is deliverable under, or of the index
comprising, the futures contract. If the futures price at the
expiration of the call option is below the exercise price, a Fund will
retain the full amount of the option premium which provides a partial
hedge against any decline that may have occurred in the Fund's
portfolio holdings. If a call option a Fund has written is exercised,
the Fund will incur a loss which will be reduced by the amount of the
premium it received. Depending on the degree of correlation between
change in the value of its portfolio securities and changes in the
value of the futures positions, a Fund's losses from existing options
on futures may to some extent be reduced or increased by changes in
the value of portfolio securities.
The purchase of a put option on a futures contract is
similar in some respects to the purchase of protective put options on
portfolio securities. For example, a Fund may buy a put option on a
futures contract to hedge the Fund's portfolio against the risk of
falling prices.
-9-<PAGE>
The amount of risk a Fund assumes when it buys an option on
a futures contract is the premium paid for the option plus related
transaction costs. In addition to the correlation risks discussed
above, the purchase of an option also entails the risk that changes in
the value of the underlying futures contract will not be fully
reflected in the value of the options bought.
Forward Foreign Currency Exchange Contracts. A forward
-------------------------------------------
contract is 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 assets at the time of delivery. The Funds
currently intend that the only forward contracts or commitments that
they might enter into for hedging purposes are forward foreign
currency exchange contracts, although the Funds may enter into
additional forms of forward contracts or commitments in the future if
they become available and advisable in light of the Funds' objectives
and investment policies. Forward contracts generally are negotiated
in an interbank market conducted directly between traders (usually
large commercial banks) and their customers. Unlike futures
contracts, which are standardized contracts, forward contracts can be
specifically drawn to meet the needs of the parties that enter into
them. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract
to maturity and complete the contemplated exchange.
The following discussion summarizes the Funds' principal
uses of forward foreign currency exchange contracts ("forward currency
contracts"). A Fund may enter into forward currency contracts with
stated contract values of up to the value of the Fund's assets. A
forward currency contract is an obligation to buy or sell an amount of
a specified currency for an agreed price (which may be in U.S. dollars
or a foreign currency). A Fund will exchange foreign currencies for
U.S. dollars and for other foreign currencies in the normal course of
business and may buy and sell currencies through forward currency
contracts in order to fix a price for securities it has agreed to buy
or sell ("transaction hedge"). A Fund also may hedge some or all of
its investments denominated in foreign currency against a decline in
the value of that currency relative to the U.S. dollar by entering
into forward currency contracts to sell an amount of that currency
approximating the value of some or all of its portfolio securities
denominated in that currency ("position hedge") or by participating in
futures contracts (or options on such futures) with respect to the
currency. A Fund also may enter into a forward currency contract with
respect to a currency where the Fund is considering the purchase or
sale of investments denominated in that currency but has not yet
selected the specific investments ("anticipatory hedge"). In any of
these circumstances a Fund may, alternatively, enter into a forward
currency contract to purchase or sell one foreign currency for a
second currency that is expected to perform more favorably relative to
the U.S. dollar if the portfolio manager
-10-<PAGE>
believes there is a reasonable degree of correlation between movements
in the two currencies ("cross-hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the
proceeds of or rates of return on a Fund's foreign currency
denominated portfolio securities. The matching of the increase in
value of a forward contract and the decline in the U.S. dollar
equivalent value of the foreign currency denominated asset that is the
subject of the hedge generally will not be precise. Shifting a Fund's
currency exposure from one foreign currency to another limits that
Fund's opportunity to profit from increases in the value of the
original currency and involves a risk of increased losses to such Fund
if its portfolio manager's projection of future exchange rates is
inaccurate. Cross-hedges may result in losses if the currency used to
hedge does not perform similarly to the currency in which hedged
securities are denominated. Unforeseen changes in currency prices may
result in poorer overall performance for a Fund than if it had not
entered into such contracts. Also, with regard to a Fund's use of
cross-hedges, there can be no assurance that historical correlations
between the movement of certain foreign currencies relative to the
U.S. dollar will continue. Thus, at any time poor correlation may
exist between movements in the exchange rates of the foreign
currencies underlying a Fund's cross-hedges and the movements in the
exchange rates of the foreign currencies in which the Fund's assets
that are the subject of such cross-hedges are denominated.
The Funds will cover outstanding forward currency contracts
by maintaining liquid portfolio securities denominated in the currency
underlying the forward contract or the currency being hedged. To the
extent that a Fund is not able to cover its forward currency positions
with underlying portfolio securities, the Funds' custodian will
segregate cash or high-grade liquid assets having a value equal to the
aggregate amount of such Fund's commitments under forward contracts
entered into. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund must find
alternative cover or segregate additional cash or high-grade liquid
assets on a daily basis so that the value of the covered and
segregated assets will be equal to the amount of a Fund's commitments
with respect to such contracts.
While forward contracts are not currently regulated by the
CFTC, the CFTC may in the future assert authority to regulate forward
contracts. In such event, the Funds' ability to utilize forward
contracts may be restricted. A Fund may not always be able to enter
into forward contracts at attractive prices and may be limited in its
ability to use these contracts to hedge Fund assets. In addition,
when a Fund enters into a privately negotiated forward contract with a
counterparty, the Fund assumes counterparty credit risk, that is, the
risk that the counterparty will fail to perform its obligations, in
which case the Fund could be worse off than if
-11-<PAGE>
the contract had not been entered into. Unlike many exchange-traded
futures contracts and options on futures, there are no daily price
fluctuation limits with respect to forward contracts and other
negotiated or over-the-counter instruments, and with respect to those
contracts, adverse market movements could therefore continue to an
unlimited extent over a period of time. However, each Fund intends to
monitor its investments closely and will attempt to renegotiate or
close its positions when the risk of loss to the Fund becomes
unacceptably high.
Options on Securities and Securities Indices. A Fund may
--------------------------------------------
buy or sell put or call options and write covered call options on
securities that are traded on United States or foreign securities
exchanges or over-the-counter. Buying an option involves the risk
that, during the option period, the price of the underlying security
will not increase (in the case of a call) to above the exercise price,
or will not decrease (in the case of a put) to below the exercise
price, in which case the option will expire without being exercised
and the holder would lose the amount of the premium. Writing a call
option involves the risk of an increase in the market value of the
underlying security, in which case the option could be exercised and
the underlying security would then be sold by a Fund to the option
holder at a lower price than its current market value and the Fund's
potential for capital appreciation on the security would be limited to
the exercise price. Moreover, when a Fund writes a call option on a
securities index, the Fund bears the risk of loss resulting from
imperfect correlation between movements in the price of the index and
the price of the securities set aside to cover such position.
Although they entitle the holder to buy equity securities, call
options to purchase equity securities do not entitle the holder to
dividends or voting rights with respect to the underlying securities,
nor do they represent any rights in the assets of the issuer of those
securities.
A call option written by a Fund is "covered" if the Fund
owns the underlying security covered by the call or has an absolute
and immediate right to acquire that security without additional cash
consideration (or for additional cash consideration held in a
segregated account by its custodian) upon conversion or exchange of
other securities held in its portfolio. A call option is also deemed
to be covered if a Fund holds a call on the same security and in the
same principal amount as the call written and the exercise price of
the call held (i) is equal to or less than the exercise price of the
call written or (ii) is greater than the exercise price of the call
written if the difference is maintained by the Fund in cash and high-
grade liquid assets in a segregated account with its custodian.
The writer of a call option may have no control when the
underlying securities must be sold. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This
amount, of course, may, in the case of a covered call option,
-12-<PAGE>
be offset by a decline in the market value of the underlying security
during the option period.
The writer of an exchange-traded call option that wishes to
terminate its obligation may effect a "closing purchase transaction."
This is accomplished by buying an option of the same series as the
option previously written. The effect of the purchase is that the
writer's position will be cancelled by the clearing corporation. If a
Fund desires to sell a particular security from the Fund's portfolio
on which the Fund has written a call option, the Fund will effect a
closing transaction prior to or concurrent with the sale of the
security. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. An
investor who is the holder of an exchange-traded option may liquidate
its position by effecting a "closing sale transaction." This is
accomplished by selling an option of the same series as the option
previously bought. There is no guarantee that either a closing
purchase or a closing sale transaction can be effected.
A Fund will realize a profit from a closing transaction if
the price of the purchase transaction is less than the premium
received from writing the option or the price received from a sale
transaction is more than the premium paid to buy the option; the Fund
will realize a loss from a closing transaction if the price of the
purchase transaction is more than the premium received from writing
the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market
price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from the
repurchase of a call option is likely to be offset in whole or in part
by appreciation of the underlying security owned by the Fund.
An option position may be closed out only where there exists
a secondary market for an option of the same series. If a secondary
market does not exist, it might not be possible to effect closing
transactions in particular options with the result that a Fund would
have to exercise the options in order to realize any profit. If a
Fund is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the
option expires or the Fund delivers the underlying security upon
exercise. Reasons for the absence of a liquid secondary market may
include the following: (i) there may be insufficient trading interest
in certain options, (ii) restrictions may be imposed by a national
securities exchange on which the option is traded ("Exchange") on
opening or closing transactions or both, (iii) trading halts,
suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal
operations on an Exchange, (v) the facilities of an Exchange or of the
Options Clearing Corporation ("OCC") may not at all times be adequate
to handle current trading volume, or (vi) one or more Exchanges could,
-13-<PAGE>
for economic or other reasons, decide or be compelled at some future
date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that
Exchange (or in that class or series of options) would cease to exist,
although outstanding options on that Exchange that had been issued by
the OCC as a result of trades on that Exchange would continue to be
exercisable in accordance with their terms.
In addition, when a Fund enters into an over-the-counter
option contract with a counterparty, the Fund assumes counterparty
credit risk, that is, the risk that the counterparty will fail to
perform its obligations, in which case the Fund could be worse off
than if the contract had not been entered into.
An option on a securities index is similar to an option on a
security except that, rather than the right to take or make delivery
of a security at a specified price, an option on a securities index
gives the holder the right to receive, on exercise of the option, an
amount of cash if the closing level of the securities index on which
the option is based is greater than, in the case of a call, or less
than, in the case of a put, the exercise price of the option.
A Fund may buy call options on securities or securities
indices to hedge against an increase in the price of a security or
securities that the Fund may buy in the future. The premium paid for
the call option plus any transaction costs will reduce the benefit, if
any, realized by a Fund upon exercise of the option, and, unless the
price of the underlying security or index rises sufficiently, the
option may expire and become worthless to the Fund. A Fund may buy
put options to hedge against a decline in the value of a security or
its portfolio. The premium paid for the put option plus any
transaction costs will reduce the benefit, if any, realized by a Fund
upon exercise of the option, and, unless the price of the underlying
security or index declines sufficiently, the option may expire and
become worthless to the Fund.
An example of a hedging transaction using an index option
would be if a Fund were to purchase a put on a stock index, in order
to protect the Fund against a decline in the value of all securities
held by it to the extent that the stock index moves in a similar
pattern to the prices of the securities held. While the correlation
between stock indices and price movements of the stocks in which the
Funds will generally invest may be imperfect, the Funds expect,
nonetheless, that the use of put options that relate to such indices
will, in certain circumstances, protect against declines in values of
specific portfolio securities or a Fund's portfolio generally.
Although the purchase of a put option may partially protect a Fund
from a decline in the value of a particular security or its portfolio
generally, the cost of a put will reduce the potential return on the
security or the portfolio.
PORTFOLIO TURNOVER. The portfolio turnover rates of each of
the Funds are shown in the tables under Financial Highlights in
-14-<PAGE>
Section 2 of the Prospectus. The annual portfolio turnover rates of
the Funds at times have exceeded 100%. A 100% annual turnover rate
results, for example, if the equivalent of all of the securities in
the Fund's portfolio are replaced in a period of one year. A 100%
turnover rate is higher than the turnover rate experienced by most
mutual funds. The Funds anticipate that their portfolio turnover
rates in future years may exceed 100%, and investment changes will be
made whenever management deems them appropriate even if this results
in a higher portfolio turnover rate. In addition, portfolio turnover
may increase as a result of large amounts of purchases and redemptions
of shares of a Fund due to economic, market or other factors that are
not within the control of management.
A high portfolio turnover rate increases the brokerage
expenses of a Fund. The existence of a high portfolio turnover rate
has no direct relationship to the tax liability of a Fund, although
sales of certain stocks will lead to realization of gains, and,
possibly, increased taxable distributions. The Funds' brokerage
policy is discussed further under Section 6 Brokerage Policy, and
additional information concerning income taxes is located under
Section 9 Income Dividends, Capital Gains Distributions and Tax
Treatment.
2. Investment Restrictions
-----------------------
Each Fund has adopted certain fundamental restrictions on
its investments and other activities, and none of these restrictions
may be changed without the approval of (i) 67% or more of the voting
securities of the Fund present at a meeting of shareholders thereof if
the holders of more than 50% of the outstanding voting securities are
present or represented by proxy, or (ii) more than 50% of the
outstanding voting securities of the Fund.
BERGER 100 FUND[R] AND BERGER GROWTH AND INCOME FUND
- ----------------------------------------------------
The following fundamental restrictions apply to each of the
Berger 100 Fund and the Berger Growth and Income Fund. A Fund may
not:
1. Purchase the securities of any one issuer (except U.S.
Government securities) if immediately after and as a result of such
purchase (a) the value of the holdings of the Fund in the securities
of such issuer exceeds 5% of the value of the Fund's total assets or
(b) the Fund owns more than 10% of the outstanding voting securities
or of any class of securities of such issuer.
2. Purchase securities of any company with a record of
less than three years' continuous operation (including that of
predecessors) if such purchase would cause the Fund's investments in
all such companies taken at cost to exceed 5% of the value of the
Fund's total assets.
-15-<PAGE>
3. Invest in any one industry more than 25% of the value
of its total assets at the time of such investment.
4. Make loans, except that the Fund may enter into
repurchase agreements in accordance with the Fund's investment
policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank
loan participation agreements, bank certificates of deposit, bankers'
acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities, to be
the making of a loan.
5. Borrow in excess of 5% of the value of its total
assets, or pledge, mortgage, or hypothecate its assets taken at market
value to an extent greater than 10% of the Fund's total assets taken
at cost (and no borrowing may be undertaken except from banks as a
temporary measure for extraordinary or emergency purposes). This
limitation shall not prohibit or restrict short sales or deposits of
assets to margin or guarantee positions in futures, options or forward
contracts, or the segregation of assets in connection with any of such
transactions.
6. Purchase or retain the securities of any issuer if
those officers and directors of the Fund or its investment advisor
owning individually more than 1/2 of 1% of the securities of such
issuer together own more than 5% of the securities of such issuer.
7. Purchase the securities of any other investment
company, except by purchase in the open market involving no commission
or profit to a sponsor or dealer (other than the customary broker's
commission).
8. Act as a securities underwriter (except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a security) or invest in real estate (although it may
purchase shares of a real estate investment trust), or invest in
commodities or commodity contracts except, only for the purpose of
hedging, (i) financial futures transactions, including futures
contracts on securities, securities indices and foreign currencies,
and options on any such futures, (ii) forward foreign currency
exchange contracts and other forward commitments and (iii) securities
index put or call options.
9. Participate on a joint or joint and several basis in
any securities trading account.
10. Invest in companies for the purposes of exercising
control of management.
In applying the industry concentration investment
restriction (no. 3 above), the Funds use the industry groups used in
the Data Monitor Portfolio Monitoring System of William O'Neil & Co.
Incorporated. Further, in implementing that restriction, each
-16-<PAGE>
Fund intends not to invest in any one industry 25% or more of the
value of its total assets at the time of such investment.
The directors have adopted additional non-fundamental
investment restrictions for each of the Berger 100 Fund and the Berger
Growth and Income Fund. These limitations may be changed by the
directors without a shareholder vote. The non-fundamental investment
restrictions include the following:
1. Only for the purpose of hedging, the Fund may purchase
and sell financial futures, forward foreign currency exchange
contracts and put and call options, but no more than 5% of the Fund's
total net assets at the time of purchase may be invested in initial
margins for financial futures transactions and premiums for options.
The Fund may only write call options that are covered and only up to
25% of the Fund's total assets.
2. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
3. The Fund may not purchase or sell any interest in an
oil, gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
4. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
5. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions, and may
not make short sales of securities, except that the Fund may make
short sales if, at the time of the short sale, the Fund owns or has
the right to acquire an equivalent kind and amount of the security
being sold short at no additional cost (i.e., short sales "against the
box"). This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making
margin payments and other deposits in connection therewith.
6. The Fund's investments in warrants valued at the lower
of cost or market, may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange.
-17-<PAGE>
Each of the Berger 100 Fund and the Berger Growth and Income
Fund has undertaken to the State of California that the Fund will buy,
write and sell put and call options that are traded over-the-counter
only with broker/dealers that are experienced with such transactions
and that have a total net capital in excess of $20,000,000.
Each of the Berger 100 Fund and the Berger Growth and Income
Fund has undertaken to the State of Arkansas that the Fund will not
invest more than 10% of its net assets in illiquid securities (defined
as a security that cannot be sold in the ordinary course of business
within seven days at approximately the value at which the Fund has
valued the security), excluding restricted securities eligible for
resale pursuant to Rule 144A under the Securities Act of 1933 that
have been determined to be liquid by the Fund's directors based upon
the trading markets for the securities.
Each of the Berger 100 Fund and the Berger Growth and Income
Fund has undertaken to the State of Ohio that the Fund will prohibit
the investment of more than 15% of its total assets in the securities
of issuers which together with any predecessors have a record of less
than three years continuous operation or securities of issuers which
are restricted as to disposition.
BERGER SMALL COMPANY GROWTH FUND[R]
- -----------------------------------
The following fundamental restrictions apply to the Berger
Small Company Growth Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets,
purchase the securities of any one issuer (except U.S. government
securities) if immediately after and as a result of such purchase
(a) the value of the holdings of the Fund in the securities of such
issuer exceeds 5% of the value of the Fund's total assets or (b) the
Fund owns more than 10% of the outstanding voting securities of such
issuer.
2. Invest in any one industry (other than U.S. government
securities) more than 25% of the value of its total assets at the time
of such investment.
3. Borrow money, except from banks for temporary or
emergency purposes in amounts not to exceed 25% of the Fund's total
assets (including the amount borrowed) taken at market value, nor
pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness and then only if such pledging, mortgaging or
hypothecating does not exceed 25% of the Fund's total assets taken at
market value. When borrowings exceed 5% of the Fund's total assets,
the Fund will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a security), issue senior securities
-18-<PAGE>
(except to the extent permitted under the Investment Company Act of
1940), invest in real estate (although it may purchase shares of a
real estate investment trust), or invest in commodities or commodity
contracts except financial futures transactions, futures contracts on
securities and securities indices and options on such futures, forward
foreign currency exchange contracts, forward commitments or securities
index put or call options.
5. Make loans, except that the Fund may enter into
repurchase agreements and may lend portfolio securities in accordance
with the Fund's investment policies. The Fund does not, for this
purpose, consider the purchase of all or a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, to be the making of a loan.
In applying the industry concentration investment
restriction (no. 2 above), the Fund uses the industry groups used in
the Data Monitor Portfolio Monitoring System of William O'Neil & Co.
Incorporated. Further, in implementing that restriction, the Fund
intends not to invest in any one industry 25% or more of the value of
its total assets at the time of such investment.
The trustees have adopted additional non-fundamental
investment restrictions for the Fund. These limitations may be
changed by the trustees without a shareholder vote. The non-
fundamental investment restrictions include the following:
1. The Fund may not purchase securities of any company
which, including its predecessors and parents, has a record of less
than three years' continuous operation, if such purchase would cause
the Fund's investments in all such companies taken at cost to exceed
10% of the value of the Fund's total assets.
2. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions, and may
not make short sales of securities, except that the Fund may make
short sales if, at the time of the short sale, the Fund owns or has
the right to acquire an equivalent kind and amount of the security
being sold short at no additional cost (i.e., short sales "against the
box"). This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making
margin payments and other deposits in connection therewith.
3. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission).
4. The Fund may not invest in companies for the purposes
of exercising control of management.
-19-<PAGE>
5. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
6. Only for the purpose of hedging, the Fund may purchase
and sell financial futures, forward foreign currency exchange
contracts and put and call options, but no more than 5% of the Fund's
total net assets at the time of purchase may be invested in initial
margins for financial futures transactions and premiums for options.
The Fund may only write call options that are covered and only up to
25% of the Fund's total assets.
7. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
8. The Fund may not purchase or sell any interest in an
oil, gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
9. The Fund's investments in warrants valued at the lower
of cost or market may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange.
The Trust has undertaken to the State of Texas that the Fund
will not invest in real estate limited partnerships.
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; and that it will prohibit the investment of
more than 15% of the Fund's total assets in the securities of issuers
which together with any predecessors have a record of less than three
years continuous operation or securities of issuers which are
restricted as to disposition.
3. Management of the Funds
-----------------------
The same directors or trustees and most of the same
executive officers serve each of the Funds. They are listed below,
together with information which includes their principal occupations
during the past five years and other principal business affiliations.
-20-<PAGE>
* RODNEY L. LINAFELTER, 210 University Boulevard, Suite 900,
Denver, CO 80206, age 36. President since November 1994
(formerly, Vice President from October 1990 to November
1994), a Portfolio Manager since October 1990 and a Director
since October 1994 of Berger 100 Fund and Berger Growth and
Income Fund. Trustee and President of Berger Investment
Portfolio Trust since its inception in August 1993.
President and Portfolio Manager of Berger IPT - 100 Fund and
Berger IPT - Growth and Income Fund and a Trustee of Berger
Institutional Products Trust since its inception in October
1995. Vice President (since December 1990) and Chief
Investment Officer (since October 1994), Director (since
January 1992) and, formerly, Portfolio Manager (January 1990
to December 1990), with Berger Associates. Formerly (April
1986 to December 1989), Financial Consultant (registered
representative) with Merrill Lynch, Pierce, Fenner & Smith,
Inc.
* WILLIAM R. KEITHLER, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 43. President since November 1994 (formerly,
Vice President from December 1993 to November 1994) and
Portfolio Manager of the Berger Small Company Growth Fund.
President and Portfolio Manager of the Berger New Generation
Fund since its inception in December 1995. President and
Portfolio Manager of the Berger IPT - Small Company Growth
Fund of the Berger Institutional Products Trust since its
inception in October 1995. Since December 1993, Vice
President-Investment Management of Berger Associates.
Formerly, Senior Vice President (January 1993 to December
1993), Vice President (January 1991 to January 1993) and
Portfolio Manager (January 1988 to January 1991) of INVESCO
Trust Company (investment management).
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 and Berger Institutional Products
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. Chairman (since 1994) and a Director (since 1973)
and, formerly, President (1973-1994) of Berger Associates.
-21-<PAGE>
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
and Berger Institutional Products Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age
50. 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 and
Berger Institutional Products 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 and Berger Institutional Products 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 and Berger Institutional
Products Trust.
HARRY T. LEWIS, JR., 370 17th Street, Suite 5150, Denver, CO
80202, age 62. 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 and Berger Institutional Products
Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman,
MT 59717, age 58. 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
-22-<PAGE>
Trustees of Berger Investment Portfolio Trust and Berger
Institutional Products 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
and Berger Institutional Products Trust.
* 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 and of Berger Institutional
Products Trust since its inception in October 1995. Also,
Vice President-Finance and Administration, Secretary and
Treasurer of Berger Associates since September 1991.
Formerly, Financial Consultant (registered representative)
with Neidiger Tucker Bruner, Inc. (broker-dealer) (October
1989 to September 1991) and Financial Consultant with
Merrill Lynch, Pierce, Fenner & Smith, Inc. (October 1985 to
October 1989).
____________________
* Interested person (as defined in the Investment Company Act of
1940) of each Fund and of Berger Associates.
DIRECTOR COMPENSATION
The officers of the Funds received no compensation from the Funds
during the fiscal year ended September 30, 1995. However, directors
and trustees of the Funds who are not interested persons of Berger
Associates are compensated for their services according to a fee
schedule, allocated among the Funds, which includes an annual fee
component and a per meeting fee component. Neither the officers of
the Funds nor the directors or trustees receive any form of pension or
retirement benefit compensation from the Funds.
Set forth below is information regarding compensation (including
reimbursement of expenses) paid or accrued during the fiscal year
ended September 30, 1995, for each director of the Berger 100 Fund and
Berger Growth and Income Fund and for each trustee of the Berger
Investment Portfolio Trust.
-23-<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION AGGREGATE COMPENSATION FROM
WITH BERGER FUNDS
==========================================================================================================
BERGER BERGER BERGER ALL
100 GROWTH INVESTMENT BERGER
FUND<F1> AND PORTFOLIO FUNDS
INCOME TRUST<F1>
FUND<F1>
==========================================================================================================
<S> <C> <C> <C> <C>
Rodney L.
Linafelter<F2><F3><F4> $ 0 $ 0 $ 0 $ 0
Dennis E. Baldwin<F3> $34,847 $ 5,936 $ 5,834 $46,617
William M.B.
Berger<F3><F4> $ 0 $ 0 $ 0 $ 0
Louis R. Bindner<F3> $29,739 $ 5,080 $ 4,868 $39,687
Katherine A.
Cattanach<F3> $33,644 $ 5,730 $ 5,626 $45,000
Lucy Black
Creighton<F3> $28,568 $ 4,879 $ 4,685 $38,132
Paul R. Knapp<F3> $38,083 $ 6,483 $ 6,410 $50,976
Harry T. Lewis<F3> $32,539 $ 5,540 $ 5,421 $43,500
Michael Owen<F3> $42,967 $ 7,302 $ 7,275 $57,544
William Sinclaire<F3> $28,653 $ 4,894 $ 4,700 $38,247
<FN>
<F1> Directors who are not interested persons of Berger Associates received as a group directors' compensation
(including reimbursement of expenses) from Berger 100 Fund of approximately $269,040, and from Berger Growth and
Income Fund of approximately $45,844, for the fiscal year ended September 30, 1995. Those trustees who are not
interested persons of Berger Associates received as a group trustees' compensation (including reimbursement of
expenses) from Berger Investment Portfolio Trust (relating to the Berger Small Company Growth Fund) of approximately
$44,819 during the same period. Since the Berger New Generation Fund was not established until December 1995, the
trustees of the Berger Investment Portfolio Trust did not receive any compensation relating to that Fund during the
fiscal year ended September 30, 1995. Similarly, since the Berger Institutional Products Trust was not established
until October 1995, the trustees of that Trust did not receive any compensation for their service in that capacity
during the 12-month period ended September 1995.
<F2> President of Berger 100 Fund, Berger Growth and Income Fund and Berger Investment Portfolio Trust.
<F3> Director of Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger Investment Portfolio Trust
and Berger Institutional Products Trust.
<F4> Interested person of Berger Associates.
</TABLE>
Commencing in January 1996, directors or trustees may elect
to defer receipt of all or a portion of their fees (both the
-24-<PAGE>
annual and per meeting components) pursuant to a fee deferral plan
adopted by each of the Berger 100 Fund, the Berger Growth and Income
Fund and the Berger Investment Portfolio Trust. A Fund's obligation
to make payments of deferred fees under the plan is a general
obligation of the Fund.
As of October 23, 1995, the officers and directors/trustees
of the Funds as a group owned of record or beneficially approximately
1.74% of the Berger Small Company Growth Fund and an aggregate of less
than 1% of the outstanding shares of each of the Berger 100 Fund and
the Berger Growth and Income Fund.
4. Investment Advisor
------------------
Berger Associates is the investment advisor to each Fund.
Rodney L. Linafelter, Vice President and Chief Investment Officer and
a director of Berger Associates, is also President, portfolio manager
and a director of both the Berger 100 Fund and the Berger Growth and
Income Fund, and President and a Trustee of the Berger Investment
Portfolio Trust. William R. Keithler, Vice President-Investment
Management of Berger Associates, is also President and portfolio
manager of the Berger Small Company Growth Fund and the Berger New
Generation Fund. Kevin R. Fay, Vice President-Finance and
Administration, Secretary and Treasurer of Berger Associates, also
serves as Vice President, Secretary and Treasurer of the Berger Funds.
Berger Associates serves as investment advisor to other
mutual funds, pension and profit-sharing plans, and other
institutional and private investors. At times, Berger Associates may
recommend purchases and sales of the same investment securities for a
Fund, other Berger Funds, and for one or more other investment
accounts. In such cases, it will be the practice of Berger Associates
to allocate the purchase and sale transactions among the participating
Berger Funds and the accounts in such manner as it deems equitable.
In making such allocation, the main factors to be considered are the
respective investment objectives of the Berger Funds and the accounts,
the relative size of portfolio holdings of the same or comparable
securities, the current availability of cash for investment by each of
the Berger Funds and each account, the size of investment commitments
generally held by each Berger Fund and each account, and the opinions
of the persons responsible for recommending investments to the Berger
Funds and the accounts.
The officers of Berger Associates are Gerard M. Lavin,
President, 210 University Blvd., Suite 900, Denver, CO 80206;
Rodney L. Linafelter, Vice President and Chief Investment Officer;
William R. Keithler, Vice President-Investment Management; Craig D.
Cloyed, Vice President and Chief Marketing Officer; and Kevin R. Fay,
Vice President-Finance and Administration, Secretary and Treasurer.
The directors of Berger Associates are Mr. Lavin, Landon H. Rowland,
114 West 11th Street, Kansas City, MO 64105, and Mr. Linafelter and
William M.B. Berger (both of whom also serve as
-25-<PAGE>
directors of the Berger 100 Fund and the Berger Growth and Income Fund
and as trustees of the Berger Investment Portfolio Trust).
Berger Associates permits its directors, officers and
employees to purchase and sell securities for their own accounts in
accordance with a Berger Associates policy regarding personal
investing. The policy requires all directors, officers and employees
of Berger Associates to conduct their personal securities transactions
in a manner which does not operate adversely to the interests of the
Funds or Berger Associates' other advisory clients. Directors and
officers of Berger Associates (including those who also serve as
directors or trustees of the Funds), investment personnel and other
designated 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 policy.
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 policy or would be deemed to
adversely affect any transaction then known to be under consideration
for or currently being effected on behalf of any client account,
including the Funds.
In addition to the pre-clearance requirements described
above, the policy subjects directors and officers of Berger Associates
(including those who also serve as directors or trustees of the
Funds), investment personnel and other access persons to various
trading restrictions and reporting obligations. All reportable
transactions are reviewed for compliance with Berger Associates'
policy. Those persons also may be required under certain
circumstances to forfeit their profits made from personal trading.
The policy is administered by Berger Associates and the provisions of
the policy are subject to interpretation by and exceptions authorized
by its board of directors.
Each Fund's current Investment Advisory Agreement with
Berger Associates came into effect on October 14, 1994, and will
continue in effect until the last day of April, 1996, and thereafter
from year to year if such continuation is specifically approved at
least annually by the directors or 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 directors or trustees who are not "interested persons"
(as that term is defined in the 1940 Act) of the Fund or Berger
Associates. Each Agreement is subject to termination by the Fund or
Berger Associates on 60 days' written notice, and terminates
automatically in the event of its assignment.
Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 80% of the outstanding shares of Berger Associates.
KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation services and financial asset management.
KCSI also owns approximately 41% of the outstanding shares of DST
Systems, Inc. ("DST"), a publicly traded
-26-<PAGE>
information and transaction processing company which acts as the
Funds' sub-transfer agent.
5. Expenses of the Funds
---------------------
Under their Investment Advisory Agreements, the Berger 100
Fund and the Berger Growth and Income Fund have each agreed to
compensate Berger Associates for its investment advisory services to
the Fund by the payment of a fee at the annual rate of .75 of 1%
(0.75%) of the average daily net assets of the Fund. The fee is
accrued daily and payable monthly. This fee may be higher than that
paid by most other mutual funds.
The investment advisory fee paid by the Berger 100 Fund and
the Berger Growth and Income Fund to Berger Associates was changed
with shareholder approval on October 14, 1994. The advisory fees paid
by the Berger 100 Fund and the Berger Growth and Income Fund to Berger
Associates for the last fiscal year and under the prior fee structure
for the previous two fiscal years are shown in the schedule in this
Section 5.
Under the Investment Advisory Agreement for Berger Small
Company Growth Fund, Berger Associates is compensated for its
investment advisory services to the Fund by the payment of a fee at
the annual rate of .9 of 1% (0.90%) of the average daily net assets of
the Berger Small Company Growth Fund. The fee is accrued daily and
payable monthly. This fee is higher than that paid by most other
mutual funds.
Each Fund pays all of its expenses not assumed by Berger
Associates, including, but not limited to, investment advisor fees,
custodian and transfer agent fees, legal and accounting expenses,
administrative and record keeping expenses, interest charges, federal
and state taxes, costs of share certificates, expenses of
shareholders' meetings, compensation of directors or trustees who are
not interested persons of Berger Associates, expenses of printing and
distributing reports to shareholders and federal and state
administrative agencies, and all expenses incurred in connection with
the execution of its portfolio transactions, including brokerage
commissions on purchases and sales of portfolio securities, which are
considered a cost of securities of each Fund. Each Fund also pays all
expenses incurred in complying with all federal and state laws and the
laws of any foreign country applicable to the issue, offer or sale of
shares of the Fund, including, but not limited to, all costs involved
in preparing and printing prospectuses of the Fund.
Each Fund has adopted a 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 .25 of 1%
(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 include the costs of preparing,
printing and mailing prospectuses to other than
-27-<PAGE>
existing shareholders, as well as promotional expenses directed at
increasing the sale of Fund shares.
The current 12b-1 Plans for the Berger 100 Fund and the
Berger Growth and Income Fund came into effect with shareholder
approval on October 14, 1994. The amounts paid pursuant to the Plans
for the fiscal year ended September 30, 1995, totalled $5,710,480 for
the Berger 100 Fund, $972,858 for the Berger Growth and Income Fund
and $892,107 for the Berger Small Company Growth Fund. All such
amounts were paid to Berger Associates under the Plans. A further
discussion of the Plans is contained in Section 8 of the Prospectus,
and is incorporated herein by this reference.
Each of the Funds has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent. In addition,
IFTC also serves as the Funds' custodian, transfer agent and dividend
disbursing agent. IFTC has engaged DST as sub-agent to provide
transfer agency and dividend disbursing services for the Funds. As
noted in the previous section, approximately 41% of the outstanding
shares of DST are owned by KCSI. The addresses and telephone numbers
for DST set forth in the Prospectus and this Statement of Additional
Information should be used for correspondence with the transfer agent.
As recordkeeping and pricing agent, IFTC calculates the
daily net asset value of each of the Funds and performs certain
accounting and recordkeeping functions required by the Funds. Each
Fund pays IFTC a monthly base fee of $500, plus an asset-based fee at
an annual rate of $.10 per $1,000 of the Fund's assets invested in
domestic securities (minimum monthly asset fee of $750 per Fund), plus
an additional $.10 per $1,000 of the Fund's assets invested in foreign
securities. IFTC is also reimbursed for certain out-of-pocket
expenses.
IFTC, as custodian, and its subcustodians have custody and
provide for the safekeeping of the Funds' securities and cash, and
receive and remit the income thereon as directed by the management of
the Funds. The custodian and subcustodians do not perform any
managerial or policy-making functions for the Funds. For its services
as custodian, IFTC receives a fee, payable monthly, at an annual rate
ranging from $.05 to $.10 per $1,000 of assets under custody invested
in domestic securities, based on the assets of all funds in the Berger
Funds complex, and $.50 to $4.50 per $1,000 of Fund assets under
custody invested in foreign securities. IFTC also receives certain
transaction fees and is reimbursed for out-of-pocket expenses.
As transfer agent and dividend disbursing agent, IFTC
(through DST, as sub-agent) maintains all shareholder accounts of
record; assists in mailing all reports, proxies and other information
to the Funds' shareholders; calculates the amount of, and delivers to
the Funds' shareholders, proceeds representing all dividends and
distributions; and performs other related services. For these
services, IFTC receives a fee from the Funds at an annual
-28-<PAGE>
rate of $15.05 per open Fund shareholder account, subject to scheduled
increases, plus certain transaction fees and fees for closed accounts,
and is reimbursed for out-of-pocket expenses, which fees in turn are
passed through to DST as sub-agent.
All of IFTC's fees are subject to reduction pursuant to an
agreed formula for certain earnings credits on the cash balances of
the Funds. The following table shows gross fees, earnings credits and
net fees paid to IFTC for the fiscal year ended September 30, 1995,
for each of the Funds.
BERGER 100 FUND BERGER GROWTH BERGER SMALL
AND INCOME FUND COMPANY
GROWTH FUND
Gross fees
payable to
IFTC $4,970,590 $1,084,041 $1,335,107
Earnings
credits
received
from IFTC $ 247,543 $ 57,096 $ 76,422
Net fees
paid to IFTC $4,723,047 $1,026,945 $1,258,685
The directors or trustees of each of the Funds have
authorized Berger Associates to place portfolio transactions on an
agency basis through DST Securities, Inc., a wholly-owned broker-
dealer subsidiary of DST ("DSTS"). When transactions for a Fund are
effected through DSTS, the portion of the commissions received by it
is credited against, and thereby reduces, certain operating expenses
that the Fund would otherwise be obligated to pay. No portion of the
commissions is retained by DSTS. See Section 6 Brokerage Policy for
further information concerning the expenses reduced as a result of
these arrangements.
The Funds and Berger Associates have entered into
arrangements with certain organizations (broker-dealers, recordkeepers
and administrators) to provide subtransfer agency, recordkeeping,
shareholder communications , subaccounting and/or other services to
investors purchasing shares of the Funds through investment programs
or pension plans established or serviced by those organizations. The
Funds and/or Berger Associates may pay fees to these organizations for
their services. Any such fees paid by a Fund will be for services
that otherwise would be provided or paid for by the Fund if all the
investors who own Fund shares through the organization were
registered record holders of shares in the Fund.
-29-<PAGE>
In addition, under a separate Administrative Services
Agreement with respect to each Fund, Berger Associates performs
certain administrative and recordkeeping services not otherwise
performed by IFTC, including the preparation of financial statements
and reports to be filed with the Securities and Exchange Commission
and state regulatory authorities. Each Fund pays Berger Associates a
fee at an annual rate of one one-hundredth of one percent (0.01%) of
its average daily net assets for such services. Those fees are in
addition to the investment advisory fees paid under the Investment
Advisory Agreement. The administrative services fees may be changed
by the directors or trustees without shareholder approval.
Whenever in any fiscal year the total cost to a Fund of
normal operating expenses chargeable to its income account, including
the fee payable to Berger Associates for investment advisory services,
but excluding the 12b-1 fee, brokerage commissions, interest, taxes
and other extraordinary expenses, exceeds the most restrictive expense
limitation imposed by any applicable state law, Berger Associates has
agreed to waive its advisory fee to the extent of that excess. The
Funds believe that the most restrictive limitation applicable to the
Funds is 2-1/2% of the first $30,000,000 of average daily net assets,
plus 2% of the next $70,000,000, plus 1-1/2% of the balance of the
average daily net assets of the Fund for that fiscal year.
The following tables show the cost to each Fund of the
previously applicable advisory fee and the fees for the administrative
services for certain periods, the amounts reimbursed to each Fund on
account of excess expenses under the then applicable expense
limitation, and the percentage of average daily net asset value of the
respective Fund that those represent.
Berger 100 Fund
---------------
Adminis-
Fiscal Year trative Expense Percent of
Ended Advisory Service Reim- Average
September 30, Fee Fee bursement* Total Net Assets
- ------------- -------- -------- ------------ ---------- ----------
1993 $ 4,547,903 $ 87,833 $ 0 $ 4,635,736 0.53%
1994 9,168,916 180,239 0 9,349,155 0.52%
1995 15,753,914 212,623 0 15,966,537 0.75%
Berger Growth and Income Fund
-----------------------------
Adminis-
Fiscal Year trative Expense Percent of
Ended Advisory Service Reim- Average
September 30, Fee Fee* bursement* Total Net Assets
- ------------- -------- -------- ------------ ---------- ----------
1993 $ 431,105 $ 5,900 $ (65,094) $ 371,911 0.63%
1994 1,525,695 27,388 (154,669) 1,398,414 0.51%
1995 2,680,832 36,143 0 2,716,975 0.75%
-30-<PAGE>
Berger Small Company Growth Fund
--------------------------------
Adminis-
Fiscal Year trative Expense Percent of
Ended Advisory Service Reim- Average
September 30, Fee Fee bursement* Total Net Assets
- ------------- -------- -------- ------------ ---------- ----------
1994** $ 760,561 $ 8,444 $ 0 $ 769,005 0.91%
1995 3,211,591 35,692 0 3,247,283 0.91%
____________________
* Under the Investment Advisory Agreement in effect until October 14,
1994, Berger Associates reimbursed the Berger 100 Fund and the Berger
Growth and Income Fund to the extent that the Fund's normal operating
expenses (exclusive of brokerage commissions, 12b-1 fees, interest and
taxes) exceeded 2% of the first $10,000,000, 1-1/2% of the next
$20,000,000 and 1% of the balance of the Fund's average daily net
assets for its fiscal year.
** Covers period from December 30, 1993 (date operations commenced)
through the end of the Fund's first fiscal year on September 30, 1994.
6. Brokerage Policy
----------------
Although each Fund retains full control over its own
investment policies, under the terms of its Investment Advisory
Agreement, Berger Associates is directed to place the portfolio
transactions of the Fund. Berger Associates is required to report on
the placement of brokerage business to the directors or trustees of
each Fund every quarter, indicating the brokers with whom Fund
portfolio business was placed and the basis for such placement. The
brokerage commissions paid by the Funds during the past three fiscal
years were as follows:
Berger Growth Berger Small
Fiscal Years Berger 100 and Income Company Growth
Ended Fund Brokerage Fund Brokerage Fund Brokerage
September 30, Commissions Commissions Commissions
- ------------- -------------- -------------- --------------
1993 $1,014,762 $106,174 $ N/A
1994 2,273,517 406,885 233,121*
1995 4,588,858 753,905 486,617
__________________
* Covers period from December 30, 1993 (date operations commenced)
through the end of the Fund's first fiscal year on September 30, 1994.
-31-<PAGE>
The Investment Advisory Agreement that each Fund has with
Berger Associates authorizes and directs Berger Associates to place
portfolio transactions for the Fund only with brokers and dealers who
render satisfactory service in the execution of orders at the most
favorable prices and at reasonable commission rates. However, each
Agreement specifically authorizes Berger Associates 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 Berger Associates
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 Berger Associates.
In accordance with this provision of the Agreement, Berger
Associates places portfolio brokerage business of each Fund with
brokers who provide useful research services to Berger Associates.
Such research services typically consist of studies made by investment
analysts or economists relating either to the past record of and
future outlook for companies and the industries in which they operate,
or to national and worldwide economic conditions, monetary conditions
and trends in investors' sentiment, and the relationship of these
factors to the securities market. In addition, such analysts may be
available for regular consultation so that Berger Associates may be
apprised of current developments in the above-mentioned factors.
During the fiscal year ended September 30, 1995, $498,712, $147,895
and $11,471 of the brokerage commissions paid by the Berger 100 Fund,
the Berger Growth and Income Fund and the Berger Small Company Growth
Fund, respectively, were paid to brokers who agreed to provide to the
Fund selected research services prepared by the broker or subscribed
or paid for by the broker on behalf of the Fund. Those services
included a service used by the independent directors or trustees of
the Funds in reviewing the Investment Advisory Agreements.
The research services received from brokers are often
helpful to Berger Associates in performing its investment advisory
responsibilities to the Funds, but they are not essential, and the
availability of such services from brokers does not reduce the respon-
sibility of Berger Associates' advisory personnel to analyze and
evaluate the securities in which the Funds invest. The research
services obtained as a result of the Funds' brokerage business also
will be useful to Berger Associates in making investment decisions for
its other advisory accounts, and, conversely, information obtained by
reason of placement of brokerage business of such other accounts may
be used by Berger Associates in rendering investment advice to the
Funds. Although such research services may be deemed to be of value
to Berger Associates, they are not expected to decrease the expenses
that Berger Associates would otherwise incur in performing its
investment advisory services for the Funds nor will the advisory fees
that are received by Berger Associates from the Funds be
-32-<PAGE>
reduced as a result of the availability of such research services from
brokers.
Although investment decisions for each of the Funds are made
independently from those for other investment advisory clients of
Berger Associates, the same investment decision may be made for both a
Fund and one or more other advisory clients, including other mutual
funds advised by Berger Associates. If any of the Funds and other
clients of Berger Associates should purchase or sell the same class of
securities on the same day, the orders for such transactions may be
combined in order to seek the best combination of net price and
execution for each. In such event, the amount and net price of the
transactions would be allocated in a manner considered equitable to
the Fund and each such other client.
Commencing in July 1995, the directors or trustees of each
of the Funds authorized Berger Associates to place portfolio
transactions on an agency basis through DSTS, a wholly-owned broker-
dealer subsidiary of DST. When transactions for a Fund are effected
through DSTS, the portion of the commissions received by DSTS is
credited against, and thereby reduces, certain operating expenses that
the Fund would otherwise be obligated to pay. No portion of the
commissions is retained by DSTS.
Included in the brokerage commissions paid by the Funds
during the fiscal year ended September 30, 1995, as stated in the
preceding table, are the following amounts paid to DSTS, which served
to reduce each Fund's out-of-pocket expenses as follows:
Commissions Paid Reduction in
Through DSTS (1) Expenses (1)
Berger 100 Fund $13,446 (2) $10,084
Berger Growth and $ 0 $ 0
Income Fund
Berger Small $ 0 $ 0
Company Growth Fund
(1) No portion of the commissions is retained by DSTS. Difference
between commissions paid through DSTS and reduction in expenses
constitute commissions paid to an unaffiliated clearing broker.
(2) Constitutes less than 1% of the aggregate brokerage commissions
paid by the Berger 100 Fund and less than 1% of the aggregate dollar
amount of transactions placed by the Berger 100 Fund.
-33-<PAGE>
7. How To Purchase Shares In the Funds
-----------------------------------
Minimum Initial Investment $500.00
Minimum Subsequent Investment $ 50.00
To purchase shares in any of the Funds, simply complete the
application form enclosed with the Prospectus. Then mail it with a
check payable to "Berger Funds" to the Funds in care of DST Systems,
Inc., the Funds' sub-transfer agent, as follows:
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
Funds at 1-800-551-5849, 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.
Alternatively, investors may establish an Automatic
Investment Plan, in which case the $500 minimum initial investment
will be waived, subject to initial and subsequent monthly investment
minimums of $50.
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
fee for their services, may require different minimum initial and
subsequent investments than the Funds and may impose other charges or
restrictions different from those applicable to shareholders who
invest in the Funds 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 each Fund is determined once daily,
at the close of the regular trading session of the New York Stock
Exchange ("NYSE") (normally 4:00 p.m., New York time, Monday through
Friday) each day that the NYSE is open. The NYSE is closed and the
net asset value of the Funds is not determined on weekends and on New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day and Christmas Day each year. The per
share net asset value of each Fund is determined by dividing the total
value of its securities and other assets, less liabilities, by the
total number of shares outstanding.
-34-<PAGE>
In determining net asset value, securities listed or traded
primarily on national exchanges, The Nasdaq Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if
such a price is lacking for the trading period immediately preceding
the time of determination, such securities are valued at the mean of
their current bid and asked prices. Securities that are traded in the
over-the-counter market are valued at the mean between their current
bid and asked prices. Foreign securities and currencies are converted
to U.S. dollars using the exchange rate in effect shortly before the
close of the NYSE. The market value of individual securities held by
each Fund will be determined by using prices provided by pricing
services which provide market prices to other mutual funds or, as
needed, by obtaining market quotations from independent
broker/dealers. Short-term money market securities maturing within 60
days are valued on the amortized cost basis, which approximates market
value. 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 directors or
trustees.
9. Income Dividends, Capital Gains
Distributions and Tax Treatment
-------------------------------
It is the policy of each Fund to meet the requirements of
Subchapter M of the Internal Revenue Code and to distribute to its
investors all or substantially all of its taxable income as defined in
the Code. Each of the Funds met the requirements for the last fiscal
year end, and intends to meet them in the future. If the Funds meet
the Subchapter M requirements, they are not liable for federal income
taxes to the extent their earnings are distributed. Qualification as
a regulated investment company under the Internal Revenue Code does
not, however, involve any federal supervision of management or of the
investment practices or policies of the Funds. If a Fund distributes
annually less than 98% of its income and gain, it will be subject to a
nondeductible excise tax equal to 4% of the shortfall.
Advice as to the tax status of each year's dividends and
distributions will be mailed annually to the shareholders of each
Fund. Dividends paid by a 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 a 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 sale or exchange of a 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 a Fund may
be eligible for the dividends received deduction for corporate
shareholders to the extent that
-35-<PAGE>
the Fund's income consists of dividends paid by United States
corporations. If a shareholder is not subject to federal income tax,
the shareholder will not generally be taxed on amounts distributed by
a Fund.
Dividends and interest received by the Funds on foreign
securities may give rise to withholding and other taxes imposed by
foreign countries. It is expected that foreign taxes paid by the
Funds will be treated as expenses of the Funds. Tax conventions
between certain countries and the United States may reduce or
eliminate such taxes.
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 percent maximum rate, whereas ordinary income is taxed at a
39.6 percent 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).
10. Suspension of Redemption Rights
-------------------------------
The right of redemption may be suspended for any period
during which the New York Stock Exchange is closed or the Securities
and Exchange Commission determines that trading on the Exchange is
restricted, or when there is an emergency as determined by the
Securities and Exchange Commission as a result of which it is not
reasonably practicable for a Fund to dispose of securities owned by it
or to determine the value of its net assets, or for such other period
as the Securities and Exchange Commission may by order permit for the
protection of shareholders of a Fund.
Each Fund intends to redeem its shares only for cash,
although it retains the right to redeem its shares in kind under
unusual circumstances, in order to protect the interests of the
remaining shareholders, by the delivery of securities selected from
its assets at its discretion. Each Fund has, however, elected to be
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 might
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.
11. Tax-Sheltered Retirement Plans
------------------------------
The Funds offer a Profit-Sharing Plan, a Money Purchase
Pension Plan, an Individual Retirement Account and a 403(b)
-36-<PAGE>
Custodial Account for adoption by employers and individuals who wish
to participate in such Plans by accumulating shares of any of the
Funds 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 Funds. 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 any 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 Funds. IFTC serves as trustee of the Plan, for
which it charges an annual trustee's fee of $12 for each Fund or Cash
Account Trust Money Portfolio (discussed below) in which the
participant's account is invested. Contributions under the Plans are
invested exclusively in shares of the 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 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% 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 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
-37-<PAGE>
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, Colorado
80217, or call 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
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 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 any
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 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.
In order to receive the necessary materials to create an IRA
account, please write to the Funds, c/o Berger Associates, Inc., 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)
-38-<PAGE>
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 federal income tax. 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% 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 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 a Fund in
conjunction with a 403(b) Custodial Account may use a Custodian
Account Agreement and related forms available from the Funds. IFTC
serves as custodian of the 403(b) Custodial Account, for which it
charges an annual custodian fee of $12 per 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 Funds, c/o Berger
Associates, Inc., P.O. Box 5005, Denver, Colorado 80217, or call
1-800-333-1001.
12. Exchange Privilege and Systematic Withdrawal Plan
-------------------------------------------------
A shareholder who owns shares of any of the Funds 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 in which the shareholder
is invested.
To establish a Systematic Withdrawal account, the share-
holder 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
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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's portfolio, 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 any of the Funds for shares of any of the other 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 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 any of the Funds or Berger Associates. Exchanges
into or out of the Funds 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 federal income tax
purposes. An exchange of shares may be made by written request
directed to DST Systems, Inc., or simply by telephoning the Berger
Funds at 1-800-551-5849. This privilege is revocable by any of the
Funds, and is not available in any state in which the shares of the
Fund or CAT Portfolio 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 Funds will
be expressed in terms of the average annual compounded rate of return
of a hypothetical investment in the Fund over periods of 1, 5 and
10 years. 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
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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.
For the one, five and ten year periods ending September 30,
1995, and for the period from September 30, 1974 (immediately prior to
Berger Associates assuming the duties as the investment advisor for
those Funds) through September 30, 1995, the average annual total
returns were 18.4%, 25.8%, 20.4% and 15.3%, respectively, for the
Berger 100 Fund, and 14.1%, 20.5%, 13.3% and 13.7%, respectively, for
the Berger Growth and Income Fund. Since the 12b-1 fees for the
Berger 100 Fund and the Berger Growth and Income Fund did not take
effect until June 19, 1990, the foregoing performance figures do not
reflect the deduction of the 12b-1 fees for the full length of the
ten-year and longer periods.
For the Berger Small Company Growth Fund, the average annual
total return was 31.9% for the one-year period ending September 30,
1995, and 23.4% for the period December 30, 1993 (date operations
commenced) through September 30, 1995.
14. Additional Information
----------------------
The Berger 100 Fund and Berger Growth and Income Fund are
separate corporations which were incorporated under the laws of the
State of Maryland on March 10, 1966, as "The One Hundred Fund, Inc."
and "The One Hundred and One Fund, Inc.", respectively. The names
"Berger One Hundred Fund[R]", "Berger 100 Fund[R]", "Berger One
Hundred and One Fund[R]" and "Berger 101 Fund[R]" were adopted by the
respective Funds as service marks and trade names in November 1989.
In 1990, the shareholders of the Berger Growth and Income Fund
approved changing its formal corporate name to "Berger One Hundred and
One Fund, Inc." and the Fund began doing business under the trade name
"Berger Growth and Income Fund, Inc." in January 1996.
Berger Small Company Growth Fund is a separate portfolio
established under the Berger Investment Portfolio Trust, a Delaware
business trust organized under the Delaware Business Trust Act on
August 23, 1993. The name "Berger Small Company Growth Fund[R]" was
registered as a service mark in September 1995. 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
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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 Small Company Growth 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 Funds have no preemptive rights, and since
each Fund has only one class of securities there are no sinking funds
or arrearage provisions which may affect the rights of the Fund
shares. Fund shares have no conversion or subscription rights.
Shares of the Funds may be transferred by endorsement, or other
customary methods, but none of the Funds is bound to recognize any
transfer until it is recorded on its books.
Insofar as the management of the Funds is aware, as of
October 23, 1995, no person owned, beneficially or of record, more
than 5% of the outstanding shares of any of the Funds, except for
Charles Schwab & Co. Inc. ("Schwab"), 101 Montgomery Street,
San Francisco, California 94104, which owned of record 28.89%, 31.53%
and 28.11% of the outstanding shares of the Berger 100 Fund, the
Berger Growth and Income Fund and the Berger Small Company Growth
Fund, respectively, and National Financial Services Corporation
("Fidelity"), 82 Devonshire Street, R20A, Boston, MA 02109, which
owned of record 5.20% and 10.15% of the outstanding shares of the
Berger Growth and Income Fund and the Berger Small Company Growth
Fund, respectively. According to information provided by Schwab and
Fidelity, Schwab and Fidelity hold such shares as nominee for the
beneficial owners of such shares (none of whom own more than 5% of any
of the Fund's outstanding shares), and with respect to such shares,
Schwab and Fidelity have no investment
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discretion and, as nominee holders, only limited discretionary voting
power.
Davis, Graham & Stubbs, L.L.C., 370 Seventeenth Street,
Denver, Colorado, has passed on legal matters relating to this
offering as counsel for each Fund.
Price Waterhouse LLP, 950 Seventeenth Street, Denver,
Colorado, acted as independent accountants for each Fund for the
fiscal year ended September 30, 1995.
The Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Investment Portfolio Trust have each filed with
the Securities and Exchange Commission, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as amended,
with respect to the securities of the Berger 100 Fund, the Berger
Growth and Income Fund and the Berger Small Company Growth Fund,
respectively, of which this Statement of Additional Information is a
part. If further information is desired with respect to any of the
Funds or such securities, reference is made to the Registration
Statements and the exhibits filed as a part thereof.
Financial Statements
- --------------------
The statement of assets and liabilities, including the
schedule of investments, and the related statements of operations and
of changes in net assets and the financial highlights for the Funds
for the fiscal year ended September 30, 1995, and in each case the
Report of Independent Accountants thereon dated October 27, 1995, are
incorporated by reference into this Statement of Additional
Information from the Annual Report to Shareholders dated September 30,
1995, for each of the Funds. A copy of the 1995 Annual Report for
each of the Funds is enclosed with this Statement of Additional
Information.
The report of the Funds' prior independent accountants,
dated October 28, 1994, to the extent it covers the statement of
changes in net assets for each of the Funds for the year ended
September 30, 1994, and the financial highlights for each of the Funds
for the four years ended September 30, 1994, is incorporated by
reference into this Statement of Additional Information from the
Annual Report to Shareholders dated September 30, 1994, for each of
the Funds. A copy of the 1994 Annual Report for each of the Funds may
be obtained upon request without charge by calling the Funds at
1-800-333-1001.
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APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Funds may purchase securities which are convertible into
common stock when the Funds' management believes they offer the
potential for a higher total return than nonconvertible securities.
While fixed income securities generally have a priority claim on a
corporation's assets over that of common stock, some of the
convertible securities which the Funds may hold are high-yield/high-
risk securities that are subject to special risks, including the risk
of default in interest or principal payments which could result in a
loss of income to a Fund or a decline in the market value of the
securities. Convertible securities often display a degree of market
price volatility that is comparable to common stocks.
Specifically, corporate debt securities which are below
investment grade (securities rated Ba or lower by Moody's or BB or
lower by Standard & Poor's) and unrated securities which a Fund may
purchase and hold are subject to a higher risk of non-payment of
principal or interest, or both, than higher grade debt securities.
Generally speaking, the lower the quality of a debt security (which
may be reflected in its Moody's and/or Standard & Poor's ratings), the
higher the yield it will provide, but the greater the risk that
interest or principal payments will not be made when due. Thus, the
lower the grade of a security, the more speculative characteristics it
generally has. Information about the ratings of Moody's and Standard
& Poor's, and the investment risks associated with the various
ratings, is set forth below.
The market prices of these lower grade convertible securities are
generally less sensitive to interest rate changes than higher-rated
investments, but more sensitive to economic changes or individual
corporate developments. Periods of economic uncertainty and change
can be expected to result in volatility of prices of these securities.
Lower rated securities also may have less liquid markets than higher
rated securities, and their liquidity as well as their value may be
adversely affected by poor economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a
negative impact on the market for high-yield/high-risk bonds.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard &
Poor's are a generally accepted measurement of credit risk. However,
they are subject to certain limitations. Ratings are generally based
upon historical events and do not necessarily reflect the future. In
addition, there is a period of time between the issuance of a rating
and the update of the rating, during which time a published rating may
be inaccurate.
-44-<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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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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