<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 15, 2000
1933 Act File No. 2-25384
1940 Act File No. 811-1382
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[X] Post-Effective Amendment No. 63
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[X] Amendment No. 42
(Check appropriate box or boxes)
BERGER GROWTH FUND, INC.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
--------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
--------------
Jack R. Thompson, 210 University Boulevard, Suite 900, Denver, CO 80206
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
immediately upon filing pursuant to paragraph (b)
----
on (date), pursuant to paragraph (b)
----
XX 60 days after filing pursuant to paragraph (a)(1)
----
on (date) pursuant to paragraph (a)(1)
----
75 days after filing pursuant to paragraph (a)(2)
----
on (date) pursuant to paragraph (a)(2) of Rule 485
----
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Capital Stock
------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
This amendment to the Registration Statement of Berger Growth Fund contains
the following:
<TABLE>
<S> <C>
One combined Prospectus for the retail Berger Funds, including the Berger Growth Fund
One combined SAI for the retail Berger Funds, including the Berger Growth Fund
One Part C
</TABLE>
<PAGE> 3
January 29, 2001
Berger Funds
Prospectus
[BERGER FUNDS LOGO]
BERGER INFORMATION TECHNOLOGY FUND - INVESTOR SHARES
BERGER NEW GENERATION FUND - INVESTOR SHARES
BERGER SELECT FUND
BERGER SMALL COMPANY GROWTH FUND - INVESTOR SHARES
BERGER MID CAP GROWTH FUND
BERGER MID CAP VALUE FUND
BERGER GROWTH FUND
BERGER INTERNATIONAL FUND
BERGER LARGE CAP GROWTH FUND
BERGER BALANCED FUND
The Securities and Exchange Commission has not approved or disapproved any
shares offered in this prospectus, or determined whether this prospectus is
accurate or complete. Anyone who tells you otherwise is committing a crime. Like
all mutual funds, an investment in the Berger Funds is not a bank deposit and is
not insured or guaranteed by the FDIC or any other government agency. There is
no guarantee that the Funds will meet their investment goals, and although you
have the potential to make money, you could also lose money in the Funds.
<PAGE> 4
BERGER FUNDS, BERGER NEW GENERATION FUND, BERGER SMALL COMPANY GROWTH FUND,
BERGER BALANCED FUND, BERGER MID CAP GROWTH FUND and BERGER MID CAP VALUE FUND
are registered service marks of Berger LLC; The BERGER MOUNTAIN LOGO is a
registered trademark of Berger LLC; BERGER INFORMATION TECHNOLOGY FUND, BERGER
SELECT FUND, BERGER INTERNATIONAL FUND, BERGER GROWTH FUND and BERGER LARGE CAP
GROWTH FUND are service marks of Berger LLC; other marks referred to herein are
the trademarks, service marks, registered trademarks or registered service marks
of the respective owners thereof.
<PAGE> 5
3
CONTENTS
--------------------------------------------------------------------------------
BERGER FUNDS(R) are a no-load family of mutual funds. A mutual fund pools money
from shareholders and invests in a portfolio of securities. Each of the
following sections introduces a Fund, its goal(s), principal investment
strategies and principal risks. They also contain expense and performance
information.
<TABLE>
<S> <C>
Berger Information Technology Fund(SM) - Investor Shares ...................... 4
Berger New Generation Fund(R) - Investor Shares ............................... 6
Berger Select Fund(SM) ........................................................ 8
Berger Small Company Growth Fund(R) - Investor Shares ......................... 10
Berger Mid Cap Growth Fund(R) ................................................. 12
Berger Mid Cap Value Fund(R) .................................................. 14
Berger Growth Fund(SM) ........................................................ 16
Berger International Fund(SM) ................................................. 18
Berger Large Cap Growth Fund(SM) .............................................. 20
Berger Balanced Fund(R) ....................................................... 22
INVESTMENT TECHNIQUES, SECURITIES AND ASSOCIATED RISKS ........................ 24
Risk and Investment Table ..................................................... 25
Risk and Investment Glossary .................................................. 26
BUYING SHARES ................................................................. 28
SELLING (REDEEMING) SHARES .................................................... 29
INFORMATION ABOUT YOUR ACCOUNT ................................................ 30
Exchanging Shares ............................................................. 30
Signature Guarantees/Special Documentation .................................... 30
Your Share Price .............................................................. 30
OTHER INFORMATION ABOUT YOUR ACCOUNT .......................................... 31
Distributions and Taxes ....................................................... 33
Tax-Sheltered Retirement Plans ................................................ 33
ORGANIZATION OF THE BERGER FUNDS FAMILY ....................................... 34
Investment Managers ........................................................... 34
12b-1 Arrangements ............................................................ 36
Special Fund Structures ....................................................... 36
FINANCIAL HIGHLIGHTS FOR THE BERGER FUNDS FAMILY .............................. 37
Berger Information Technology Fund - Investor Shares .......................... 37
Berger New Generation Fund - Investor Shares .................................. 39
Berger Select Fund ............................................................ 39
Berger Small Company Growth Fund - Investor Shares ............................ 40
Berger Mid Cap Growth Fund .................................................... 41
Berger Mid Cap Value Fund ..................................................... 41
Berger Growth Fund ............................................................ 42
Berger International Fund ..................................................... 42
Berger Large Cap Growth Fund .................................................. 44
Berger Balanced Fund .......................................................... 44
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 6
4
BERGER INFORMATION TECHNOLOGY FUND -- INVESTOR SHARES Ticker Symbol BINVX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing its goal, the Fund invests
at least 80% of its assets in common stocks of companies in the information
technology group of industries, such as software, hardware, computer consulting
services, communications and Internet services and products. The Fund's
investment manager analyzes trends in information technology spending and
demand, then identifies companies it believes are best positioned to benefit
from those trends. The Fund generally invests the remainder of its assets in
information technology-related companies whose stock price the investment
manager believes is undervalued relative to their assets, earnings, cash flow or
business franchise.
The Fund's investment manager generally looks for companies:
o That dominate their industries or a particular market segment
o That have or are developing products or services that represent significant
technological advancements or improvements
o That have strong fundamentals, strong management and strong product
positioning.
The Fund primarily invests in common stocks. The Fund is free to invest in
companies of any size market capitalization. The Fund's investment manager will
generally sell a security when it no longer meets the manager's investment
criteria or when it has met the manager's expectations for appreciation.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
Given the Fund's concentration in industries that are rapidly changing, its
share price may fluctuate more than that of funds invested in more stable
industries. Companies in the information technology industries may have narrow
product lines and their products and services are often subject to intense
competition and rapid obsolescence.
Because the Fund's investments are focused in the information technology sector,
the Fund is more susceptible to adverse events and market pressures impacting
the industries included in that sector, which may pose greater market and
liquidity risk.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show how the Fund's performance has varied by illustrating
the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1998 62.72%
1999 161.40%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Wilshire 5000 Index
(Wilshire 5000). While the Fund does not seek to match the returns of the
Wilshire 5000, this index is a good indicator of general stock market
performance. You may not invest in the Wilshire 5000, and unlike the Fund, it
does not incur fees or charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 7
5
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year (April 8, 1997)
--------------------------------------------------------------------------------
<S> <C> <C>
The Fund % %
Wilshire 5000 % %
--------------------------------------------------------------------------------
</TABLE>
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, but you do
indirectly bear Annual Fund Operating Expenses, which vary from year to year.
<TABLE>
SHAREHOLDER TRANSACTION EXPENSES %
--------------------------------------------------------------------------------
<S> <C>
Redemption Fee (as a percentage of amount redeemed
or exchanged of shares are held less than 6 months) 1.00
Exchange Fee* None
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .85
Distribution (12b-1) fee .25
Other expenses .53
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.63
--------------------------------------------------------------------------------
</TABLE>
*The 1% redemption fee referenced in the table will be imposed on shares
exchanged if held less than 6 months, since an exchange is treated as a
redemption followed by a purchase.
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 8
6
BERGER NEW
GENERATION FUND --
INVESTOR SHARES Ticker Symbol BENGX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of companies with potential for
significant earnings growth.
The Fund focuses on leading-edge companies with new ideas, technologies or
methods of doing business. Its investment manager seeks companies it believes
have the potential to change the direction or dynamics of the industries in
which they operate or significantly influence the way businesses or consumers
conduct their affairs.
THE FUND'S INVESTMENT MANAGER GENERALLY LOOKS FOR COMPANIES:
o In business sectors characterized by rapid change, regardless of the
company's size
o With favorable long-term growth potential because of their new or
innovative products or services
o With management and financial strength to fulfill their vision and grow
their business.
The Fund invests in common stocks, both domestic and foreign, and other
securities with equity features, such as convertible securities and preferred
stocks. Due to the Fund's focus on companies with the characteristics described
above, the Fund generally is weighted toward small market capitalization
companies, although it is free to invest in companies with larger market
capitalizations as well. The Fund's investment manager will generally sell a
security when it no longer meets the manager's investment criteria or when it
has met the manager's expectations for appreciation. The Fund's investment
manager may actively trade the portfolio in pursuit of the Fund's goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
Given the Fund's weighting toward small companies in rapidly changing
industries, its share price may fluctuate more than that of funds invested in
larger companies or more stable industries. Small companies may pose greater
market, liquidity and information risks because of narrow product lines, limited
financial resources, less depth in management or a limited trading market for
their stocks. In addition, products and services in rapidly changing industries
may be subject to intense competition and rapid obsolescence and may require
regulatory approvals prior to their use. The Fund's investments are often
focused in a small number of business sectors, which may pose greater market and
liquidity risks. In addition, the Fund's active trading will cause the Fund to
have an increased portfolio turnover rate. Higher turnover rates may result in
higher brokerage costs to the Fund and in higher net taxable gains for you as an
investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1997 24.22%
1998 23.00%
1999 144.20%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 9
7
BERGER FUNDS
--------------------------------------------------------------------------------
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Standard & Poor's 500
Index (S&P 500). While the Fund does not seek to match the returns of the S&P
500, this index is a good indicator of general stock market performance. You may
not invest in the S&P 500, and unlike the Fund, it does not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
Life of the Fund
1 Year (March 29, 1996)
--------------------------------------------------------------------------------
The Fund % %
S&P 500 % %
--------------------------------------------------------------------------------
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .83
Distribution (12b-1) fee .25
Other expenses .22
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.30
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 10
8
BERGER
SELECT FUND Ticker Symbol BESLX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of companies with superior potential for
strong earnings growth.
This nondiversified Fund normally invests in a core portfolio of 20-30 common
stocks selected by the Fund's three co-portfolio managers. Each co-portfolio
manager selects a portion of the stocks that comprise the portfolio. The stock
selection focuses on companies of any size whose growth potential is not yet
fully reflected in the company's stock price.
The Fund's investment manager generally looks for companies with:
o Solid fundamental growth opportunities and that are market share leaders in
their industries or have the potential to develop a large market for their
products and services
o Strong, capable management teams with clearly defined strategies for revenue
and earnings growth
o A Catalyst for positive earnings developments such as evolving product
cycles, special situations or changing economic conditions.
The Fund's investment manager will generally sell a security when it no longer
meets the manager's investment criteria or when it has met the manager's
expectations for appreciation. The Fund's investment manager may actively trade
the portfolio in pursuit of the Fund's goal. Due to this and the Fund's
relatively small number of holdings, the annual portfolio turnover rate may be
higher than other mutual funds.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
The Fund's share price may fluctuate more than the market in general and most
equity funds because of its ability as a nondiversified fund to take larger
positions in a smaller number of companies. As a result, the gains or losses on
a single stock will have a greater impact on the Fund's share price. The Fund's
investments are often focused in a small number of business sectors, which may
pose greater market and liquidity risks. In addition, the Fund's active trading
will cause the Fund to have an increased portfolio turnover rate. Higher
turnover rates may result in higher brokerage costs to the Fund and in higher
net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1998 72.26%
1999 81.68%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Standard & Poor's 500
Index (S&P 500). While the Fund does not seek to match the returns of the S&P
500, this index is a good indicator of general stock market performance. You may
not invest in the S&P 500, and unlike the Fund, it does not incur fees or
charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 11
9
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year (December 31, 1997)
--------------------------------------------------------------------------------
<S> <C> <C>
The Fund % %
S&P 500 % %
--------------------------------------------------------------------------------
</TABLE>
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .75
Distribution (12b-1) fee .25
Other expenses .23
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.23
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 12
10
BERGER SMALL COMPANY
GROWTH FUND --
INVESTOR SHARES Ticker Symbol BESCX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of small companies with the potential for
rapid earnings growth.
The Fund's stock selection focuses on companies that either occupy a dominant
position in an emerging industry or have a growing market share in a larger,
fragmented industry.
The Fund's investment manager generally looks for companies with:
o A proprietary technology, product or service that may enable the company to
be a market share leader
o Strong entrepreneurial management with clearly defined strategies for growth
o Relatively strong balance sheets.
Under normal circumstances, the Fund invests at least 65% of its assets in
equity securities of companies whose market capitalization, at the time of
initial purchase, is less than the 12-month average of the maximum market
capitalization for companies included in the Russell 2000 Index (Russell 2000).
This average is updated monthly. The Fund's investment manager will generally
sell a security when it no longer meets the manager's investment criteria or
when it has met the manager's expectations for appreciation. The Fund's
investment manager may actively trade the portfolio in pursuit of the Fund's
goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in stocks of mid-sized and large companies. Small company securities may
underperform as compared to the securities of larger companies. They may also
pose greater market, liquidity and information risks because of narrow product
lines, limited financial resources, less depth in management or a limited
trading market for their stocks. The Fund's investments are often focused in a
small number of business sectors, which may pose greater market and liquidity
risks. In addition, the Fund's active trading will cause the Fund to have an
increased portfolio turnover rate. Higher turnover rates may result in higher
brokerage costs to the Fund and in higher net taxable gains for you as an
investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART}
<TABLE>
<S> <C>
1994 13.73%
1995 33.80%
1996 16.77%
1997 16.16%
1998 3.17%
1999 104.39%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Russell 2000. While the
Fund does not seek to match the returns of the Russell 2000, this index is a
good indicator of small company stock market performance. You may not invest in
the Russell 2000, and unlike the Fund, it does not incur fees or charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 13
11
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year 5 Years (December 30, 1993)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
The Fund % % %
Russell 2000 % % %
--------------------------------------------------------------------------------
</TABLE>
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .81
Distribution (12b-1) fee .25
Other expenses .21
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.27
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 14
12
BERGER MID CAP
GROWTH FUND Ticker Symbol BEMGX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of mid-sized companies with the potential
for strong earnings growth.
Stock selection focuses on companies that commit their resources to innovative
products or services for unique, changing or rapidly growing markets.
The Fund's investment manager generally looks for companies with:
o Strong revenue and earnings growth fundamentals and dominant market share in
their industry or business sector
o Strong management teams with established organizational structures
o Solid balance sheets and the ability to efficiently finance their growth
through sufficient resources and access to capital.
Under normal circumstances, the Fund invests at least 65% of its assets in
equity securities of companies whose market capitalization falls, at the time of
initial purchase, within a range of $1 billion to the 12-month average of the
maximum market capitalization for companies included in the Standard & Poor's
Mid Cap 400 Index (S&P 400). This average is updated monthly. The Fund's
investment manager will generally sell a security when it no longer meets the
manager's investment criteria or when it has met the manager's expectations for
appreciation. The Fund's investment manager may actively trade the portfolio in
pursuit of the Fund's goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in stocks of large companies. Mid-sized companies may pose greater market,
liquidity and information risks because of narrow product lines, limited
financial resources, less depth in management or a limited trading market for
their stocks. The Fund's investments are often focused in a small number of
business sectors, which may pose greater market and liquidity risks. In
addition, the Fund's active trading will cause the Fund to have an increased
portfolio turnover rate. Higher turnover rates may result in higher brokerage
costs to the Fund and in higher net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1998 54.38%
1999 151.46%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the S&P 400. While the Fund
does not seek to match the returns of the S&P 400, this index is a good
indicator of general stock market performance for mid-sized companies. You may
not invest in the S&P 400, and unlike the Fund, it does not incur fees or
charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 15
13
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year (December 31, 1997)
--------------------------------------------------------------------------------
<S> <C> <C>
The Fund % %
S&P 400 % %
--------------------------------------------------------------------------------
</TABLE>
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .75
Distribution (12b-1) fee .25
Other expenses .28
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.28
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 16
14
BERGER MID CAP
VALUE FUND Ticker Symbol BEMVX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the common stocks of mid-sized companies whose stock prices
are believed to be undervalued.
Investment selection focuses on companies that have fallen out of favor with the
market or are temporarily misunderstood by the investment community. To a lesser
degree, the Fund also invests in companies that demonstrate special situations
or turnarounds, meaning companies that have experienced significant business
problems but are believed to have favorable prospects for recovery.
The Fund's investment manager generally looks for companies with:
o A low price relative to their assets, earnings, cash flow or business
franchise
o Products and services that give them a competitive advantage
o Quality balance sheets and strong management.
The investment manager's philosophy is to weigh a security's downside risk
before considering its upside potential, which may help provide an element of
capital preservation. Under normal circumstances, the Fund invests at least 65%
of its assets in equity securities of mid-sized companies whose market
capitalization falls, at the time of initial purchase, within a range of $1
billion to the 12-month average of the maximum market capitalization for
companies included in the Standard & Poor's Mid Cap 400 Index (S&P 400). This
average is updated monthly. The Fund's investment manager will generally sell a
security when it no longer meets the manager's investment criteria or when it
has met the manager's expectations for appreciation. The Fund's investment
manager may actively trade the portfolio in pursuit of the Fund's goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with above-average risk
and intend to make a long-term investment commitment. Like all managed funds,
there is a risk that the investment manager's strategy for managing the Fund may
not achieve the desired results. In addition, the price of common stock moves up
and down in response to corporate earnings and developments, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in large companies. Mid-sized companies may pose greater market, liquidity and
information risks because of narrow product lines, limited financial resources,
less depth in management or a limited trading market for their stocks. The
Fund's investments are often focused in a small number of business sectors,
which may pose greater market and liquidity risks. In addition, the Fund may
invest in certain securities with unique risks, such as special situations which
could present increased market and information risks. The Fund's active trading
will cause the Fund to have an increased portfolio turnover rate. Higher
turnover rates may result in higher brokerage costs to the Fund and in higher
net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Total return shows you the Fund's performance for the one full calendar year
since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1999 21.56%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the S&P 400. While the Fund
does not seek to match the returns of the S&P 400, this index is a good
indicator of general stock market performance for mid-sized companies. You may
not invest in the S&P 400, and unlike the Fund, it does not incur fees or
charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 17
15
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year (August 12, 1998)
--------------------------------------------------------------------------------
<S> <C> <C>
The Fund % %
S&P 400 % %
--------------------------------------------------------------------------------
</TABLE>
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .75
Distribution (12b-1) fee .25
Other expenses .59
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.59
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 18
16
BERGER
GROWTH FUND Ticker Symbol BEONX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for long-term capital appreciation. In pursuing that goal, the
Fund primarily invests in the common stocks of established companies with the
potential for growth.
Stock selection by the Fund's investment manager focuses on companies believed
to have strong growth potential regardless of the company's size.
The Fund's investment manager generally looks for companies with:
o Opportunities for rapid revenue and earnings growth
o Large market potential for their products and services
o Strong, capable management teams that have the vision necessary to increase
their market share in growing industries.
The Fund's investment manager will generally sell a security when it no longer
meets the manager's investment criteria or when it has met the manager's
expectations for appreciation. The Fund's investment manager may actively trade
the portfolio in pursuit of the Fund's goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with the risks of
equity investing and intend to make a long-term investment commitment. Like all
managed funds, there is a risk that the investment manager's strategy for
managing the Fund may not achieve the desired results. In addition, the price of
common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events. As a
result, the price of the Fund's investments may go down and you could lose money
on your investment.
The Fund's share price may fluctuate more than that of funds primarily invested
in stocks of large companies. Small and mid-sized companies may pose greater
market, liquidity and information risks because of narrow product lines, limited
financial resources, less depth in management or a limited trading market for
their stocks. The Fund's investments may focus in a small number of business
sectors, which may pose greater market and liquidity risks. In addition, the
Fund's active trading will cause the Fund to have an increased portfolio
turnover rate. Higher turnover rates may result in higher brokerage costs to the
Fund and in higher net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflects Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C> <C>
1991 88.81%
1992 8.53%
1993 21.20%
1994 (6.66)%
1995 21.34%
1996 13.73%
1997 13.57%
1998 16.23%
1999 52.28%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Standard & Poor's 500
Index (S&P 500). While the Fund does not seek to match the returns of the S&P
500, this index is a good indicator of general stock market performance. You may
not invest in the S&P 500, and unlike the Fund, it does not incur fees or
charges.
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year 5 Years 10 Years (September 30, 1974)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Fund % % % %
S&P 500 % % % %
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 19
17
BERGER FUNDS
--------------------------------------------------------------------------------
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .69
Distribution (12b-1) fee .25
Other expenses .19
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.13
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 20
18
BERGER
INTERNATIONAL FUND Ticker Symbol BBINX
--------------------------------------------------------------------------------
THE FUND'S GOAL AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for long-term capital appreciation. In pursuing that goal, the
Fund primarily invests in common stocks of well-established foreign companies.
The Fund invests all of its assets in the Berger International Portfolio
(Portfolio), which has the same goals and policies as the Fund.
The portfolio's investment manager first identifies economic and business themes
that it believes provide a favorable framework for selecting stocks. Using
fundamental analysis, the investment manager then selects individual companies
best positioned to take advantage of opportunities presented by these themes.
The Portfolio's investment manager generally looks for companies with:
o Securities that are fundamentally undervalued relative to their long-term
prospective earnings growth rates, their historic valuation levels and their
competitors
o Business operations predominantly in well-regulated and more stable foreign
markets
o Substantial size and liquidity, strong balance sheets, proven management and
diversified earnings.
The Portfolio invests primarily in common stocks with 65% of its total assets in
securities of companies located in at least five different countries outside the
United States. Recently, the Portfolio has been weighted toward the United
Kingdom, Europe and selectively in Japan and the Far East. However, it may also
invest in other foreign countries, including developing countries. A majority of
the Portfolio's assets are invested in mid-sized to large capitalization
companies. The Portfolio's investment manager will generally sell a security
when it has met the manager's expectations for appreciation.
See "Organization of the Berger Funds Family--Special Fund Structures--Master/
Feeder" later in this prospectus for more information on the Fund's investment
in the Portfolio.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with the risks of
international investing and intend to make a long-term investment commitment.
Like all managed funds, there is a risk that the investment manager's strategy
for managing the Fund may not achieve the desired results. In addition, the
price of common stock moves up and down in response to corporate earnings and
developments, economic and market conditions and unanticipated events. As a
result, the price of the Fund's investments may go down and you could lose money
on your investment. There are additional risks with investing in foreign
countries, especially in developing countries--specifically, economic, market,
currency, liquidity, information, political and transaction risks. As a result
of these additional risks, the Fund may be more volatile than a domestic stock
fund. In addition, foreign stocks may not move in concert with the U.S. markets.
In addition, the Fund may invest in certain securities with unique risks, such
as forward foreign currency contracts, which may present hedging, credit,
correlation, opportunity and leverage risks.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1991 13.18%
1992 10.21%
1993 36.38%
1994 (7.80%)
1995 18.78%
1996 18.51%
1997 2.90%
1998 14.92%
1999 30.90%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Morgan Stanley Capital
International Europe, Australasia and the Far East Index (EAFE Index). While the
Fund does not seek to match the returns of the EAFE Index, this index is a good
indicator of foreign stock markets. You may not invest in the EAFE Index, and
unlike the Fund, it does not incur fees or charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 21
19
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000(2)
<TABLE>
<CAPTION>
Life of the Fund
1 Year 5 Years 10 Years (July 31, 1989)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Fund % % % %
EAFE Index % % % %
--------------------------------------------------------------------------------
</TABLE>
2. Predecessor Performance: performance figures covering periods prior to
October 11, 1996, include the performance of a pool of assets advised by the
Portfolio's investment manager for periods before the Portfolio began
operations. This performance has been adjusted to reflect the increased expenses
expected in operating the Fund, net of fee waivers. The asset pool was not
registered with the SEC and was not subject to the investment restrictions
imposed on mutual funds. If the pool had been registered, its performance might
have been adversely affected.
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(1)
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .85
Distribution (12b-1) fee .25
Other expenses .58
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.68
--------------------------------------------------------------------------------
</TABLE>
1. Annual fund operating expenses consist of the Fund's expenses plus the Fund's
share of the expenses of the Portfolio.
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
Years $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 22
20
BERGER LARGE CAP
GROWTH FUND Ticker Symbol BEOOX
--------------------------------------------------------------------------------
THE FUND'S GOALS AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation. In pursuing that goal, the Fund
primarily invests in the securities of large, well-established growing
companies.
Security selection focuses on the common stocks and convertible securities of
companies that have demonstrated a history of growth in revenues and earnings.
The Fund's investment manager generally looks for companies with:
o Opportunities for above-average revenue and earnings growth
o Strong market positions for their products and services
o Strong, seasoned management teams with well-established and clearly defined
strategies.
Under normal circumstances, the Fund invests at least 65% of its assets in
equity securities of companies whose market capitalization, at the time of
initial purchase, is $10 billion or more. The Fund may invest up to 20% of its
assets in convertible securities rated below investment grade (BB or lower by
S&P, Ba or lower by Moody's). The Fund's investment manager will generally sell
a security when it no longer meets the manager's investment criteria or when it
has met the manager's expectations for appreciation. The Fund's investment
manager may actively trade the portfolio in pursuit of the Fund's goal.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with the risks of
equity investing and intend to make a long-term investment commitment. Like all
managed funds, there is a risk that the investment manager's strategy for
managing the Fund may not achieve the desired results. In addition, the price of
common stock moves up and down in response to corporate earnings and
developments, interest rate movements, economic and market conditions and
unanticipated events. As a result, the price of the Fund's investments may go
down and you could lose money on your investment.
To the extent the Fund invests in fixed-income securities it takes on different
risks, including movements in interest rates and default on payment of principal
or interest. In addition, the Fund may invest in convertible securities rated
below investment grade, which may pose greater market, interest rate, prepayment
and credit risks. These issuers are less financially secure, and are more likely
to be hurt by interest rate movements. In addition, if the Fund does engage in
active trading, this will cause the Fund to have an increased portfolio turnover
rate. Higher turnover rates may result in higher brokerage costs to the Fund and
in higher net taxable gains for you as an investor.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year for the past ten years.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31(1)
[CHART]
<TABLE>
<S> <C>
1991 60.97%
1992 4.82%
1993 23.57%
1994 (9.07%)
1995 23.92%
1996 15.61%
1997 22.70%
1998 22.49%
1999 61.32%
2000 %
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Standard & Poor's 500
Index (S&P 500). While the Fund does not seek to match the returns of the S&P
500, this index is a good indicator of general stock market performance. You may
not invest in the S&P 500, and unlike the Fund, it does not incur fees or
charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 23
21
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 20001
<TABLE>
<CAPTION>
Life of the Fund
1 Year 5 Years 10 Years (September 30, 1974)
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Fund % % % %
S&P 500 % % % %
--------------------------------------------------------------------------------
</TABLE>
1. Effective January 29, 2001, the Fund changed its name and non-fundamental
investment strategies from that of a Growth and Income Fund to a Large Cap
Growth Fund.
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund) %
--------------------------------------------------------------------------------
<S> <C>
Management fee .74
Distribution (12b-1) fee .25
Other expenses .19
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.18
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
YEARS $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 24
22
BERGER
BALANCED FUND Ticker Symbol BEBAX
--------------------------------------------------------------------------------
THE FUND'S GOALS AND PRINCIPAL INVESTMENT STRATEGIES
The Fund aims for capital appreciation and current income. In pursuing these
goals, the Fund primarily invests in a diversified group of domestic equity and
fixed-income securities.
The allocation between equity and fixed-income securities is based upon the
investment manager's assessment of available investment opportunities and
relevant market, economic and financial factors.
The Fund's investment manager generally looks for companies with:
o Reasonably priced equity securities with strong, consistent and predictable
earnings growth rates
o Strong, seasoned management teams and competitive products or services
o Well-capitalized balance sheets.
The Fund's equity investments consist primarily of common stocks of companies
with mid-sized to large market capitalizations. The Fund's fixed-income
investments are a variety of income-producing securities, such as short- to
long-term corporate and government debt securities, convertible securities,
preferred stocks and mortgage-backed securities. The investment manager believes
its investment style emphasizing equity securities offers shareholders the
opportunity for capital appreciation along with a reasonable level of capital
preservation. Normally, equity securities are expected to range from 45% to 65%
of the Fund's total assets. However, it is the Fund's policy to invest at least
25% of its total assets in fixed-income senior securities and at least 25% in
equity securities. The Fund may invest up to 20% of its assets in convertible
securities rated below investment grade (BB or lower by S&P, Ba or lower by
Moody's).
The Fund's investment manager will generally sell a security when it no longer
meets the manager's investment criteria or when it has met the manager's
expectations for appreciation.
PRINCIPAL RISKS
You may be interested in the Fund if you are comfortable with the risks of
equity and fixed-income investing and intend to make a long-term investment
commitment. Like all managed funds, there is a risk that the investment
manager's strategy for managing the Fund may not achieve the desired results. In
addition, the price of common stock moves up and down in response to corporate
earnings and developments, interest rate movements, economic and market
conditions and unanticipated events. As a result, the price of the Fund's
investments may go down and you could lose money on your investment. The Fund
may be riskier than other balanced funds that invest more heavily in
fixed-income securities.
To the extent the Fund invests in fixed-income securities it takes on different
risks, including movements in interest rates and default on payment of principal
or interest, as well as market and call risks. In addition, the Fund may invest
in convertible securities rated below investment grade, which may pose greater
market, interest rate, prepayment and credit risks. These issuers are less
financially secure, and are more likely to be hurt by interest rate movements.
When interest rates are low, the Fund's income distributions to you may be
reduced or eliminated.
See "Investment Techniques, Securities and Associated Risks" later in this
prospectus for more information on principal risks and other risks.
THE FUND'S PAST PERFORMANCE
The information below shows the Fund's performance since it began operations
through December 31, 2000. These returns include reinvestment of all dividends
and capital gains distributions and reflect Fund expenses. As with all mutual
funds, past performance does not guarantee future results.
Year-by-year returns show you how the Fund's performance has varied by
illustrating the differences for each full calendar year since the Fund began.
YEAR-BY-YEAR TOTAL RETURN AS OF DECEMBER 31
[CHART]
<TABLE>
<S> <C>
1998 34.38%
1999 44.58%
2000
</TABLE>
BEST QUARTER: %
WORST QUARTER: %
Average annual total return is a measure of the Fund's performance over time.
The Fund's average annual return is compared with the Standard & Poor's 500
Index (S&P 500). While the Fund does not seek to match the returns of the S&P
500, this index is a good indicator of general stock market performance. You may
not invest in the S&P 500, and unlike the Fund, it does not incur fees or
charges.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 25
23
BERGER FUNDS
--------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS AS OF DECEMBER 31, 2000
<TABLE>
<CAPTION>
Life of the Fund
1 Year (September 30, 1997)
--------------------------------------------------------------------------------
<S> <C> <C>
The Fund % %(1)
S&P 500 % %
--------------------------------------------------------------------------------
</TABLE>
1. Includes returns for the last quarter of 1997, which reflect a higher than
normal level of trading activity undertaken to pursue equity opportunities
available as the advisor was beginning to implement the Fund's long-term
approach to equity management.
FUND EXPENSES
As a shareholder in the Fund, you do not pay any sales loads, redemption or
exchange fees, but you do indirectly bear Annual Fund Operating Expenses, which
vary from year to year.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(deducted directly from the Fund)%
--------------------------------------------------------------------------------
<S> <C>
Management fee .70
Distribution (12b-1) fee .25
Other expenses .19
--------------------------------------------------------------------------------
Total Annual Fund Operating Expenses 1.14
--------------------------------------------------------------------------------
</TABLE>
UNDERSTANDING EXPENSES
Annual Fund operating expenses are paid by the Fund. As a result, they reduce
the Fund's return. Fund expenses include management fees, 12b-1 fees and
administrative costs such as shareholder recordkeeping and reports, custodian
and pricing services and registration fees.
EXAMPLE COSTS
The following example helps you compare the cost of investing in the Fund with
the cost of investing in other mutual funds by showing what your costs may be
over time. It uses the same assumptions that other funds use in their
prospectuses:
o $10,000 initial investment
o 5% total return for each year
o Fund operating expenses remain the same for each period
o Redemption after the end of each period
Your actual costs may be higher or lower, so this example should be used for
comparison only. Based on these assumptions your costs at the end of each period
would be:
<TABLE>
<CAPTION>
YEARS $
--------------------------------------------------------------------------------
<S> <C>
One
Three
Five
Ten
--------------------------------------------------------------------------------
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 26
24
INVESTMENT TECHNIQUES,
SECURITIES AND
ASSOCIATED RISKS
--------------------------------------------------------------------------------
BEFORE YOU INVEST...
in any of the Berger Funds, make sure you understand the risks involved. All
investments involve risk. Generally, the greater the risk, the greater the
potential for return. The reverse is also generally true--the lower the risk,
the lower the potential for return.
Like all mutual funds, an investment in the Berger Funds is not a bank deposit
and is not insured or guaranteed by the FDIC or any other government agency. The
Funds are not a complete investment program, but may serve to diversify other
types of investments in your portfolio. There is no guarantee that the Funds
will meet their investment goals, and although you have the potential to make
money, you could also lose money by investing in the Funds.
The table on the opposite page will help you further understand the risks the
Funds take by investing in certain securities and the investment techniques used
by the Berger Funds. A glossary follows the opposite page. You may get more
detailed information about the risks of investing in the Berger Funds in the
Statement of Additional Information (SAI), including a discussion of debt
security ratings in Appendix A to the SAI.
KEY TO TABLE
Follow down the columns under the name of the Fund in which you are interested.
The boxes will tell you:
Y Yes, the security or technique is permitted by a Fund and is emphasized by
a Fund.
< (Note: character is a hollow Y) Yes, the security or technique is permitted
by a Fund.
N No, the security or technique is not permitted by a Fund.
F The restriction is fundamental to a Fund. (Fundamental restrictions cannot
be changed without a shareholder vote.)
5 Use of a security or technique is permitted, but subject to a restriction
of up to 5% of total assets.
10 Use of a security or technique is permitted, but subject to a restriction
of up to 10% of total assets.
25 Use of a security or technique is permitted, but subject to a restriction
of up to 25% of total assets.
33.3 Use of a security or technique is permitted, but subject to a restriction
of up to 33 1/3% of total assets.
[ ] (Note: character is a hollow 5) Use of a security or technique is
permitted, but subject to a restriction of up to 5% of net assets.
[ ][ ] (Note: character is a hollow 10) Use of a security or technique is
permitted, but subject to a restriction of up to 10% of net assets.
[ ][ ][ ] (Note: character is a hollow 15) Use of a security or technique is
permitted, but subject to a restriction of up to 15% of net assets.
Notes to table
1. The Funds have no minimum quality standards for convertible securities,
although they will not invest in defaulted securities. They also will not invest
20% or more of their assets in convertible securities rated below investment
grade or in unrated convertible securities that the advisor considers to be
below investment grade.
2. IPOs constituted a significant portion of the Fund's performance during the
last fiscal year. However, there can be no assurance that IPOs will continue to
have such a significant impact, if the quality or number of available IPOs
diminishes or if the Fund grows in size and IPOs become an insignificant part of
the Fund's total portfolio.
3. The Berger Balanced Fund may invest only in mortgage-backed securities that
are issued or guaranteed by the U.S. Government or its agencies or
instrumentalities, or in privately issued mortgage-backed or asset-backed
securities that are rated AA/Aa (S&P/Moody's) or above.
4. The Funds may use futures, forwards and options only for hedging. Not more
than 5% of a Fund's net assets may be used for initial margins for futures and
premiums for options, although a Fund may have more at risk under these
contracts than the initial margin or premium. However, a Fund's aggregate
obligations under these contracts may not exceed the total market value of the
assets being hedged, such as some or all of the value of the Fund's equity
securities.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 27
25
BERGER FUNDS
--------------------------------------------------------------------------------
RISK AND INVESTMENT TABLE
<TABLE>
<CAPTION>
BERGER BERGER
BERGER BERGER SMALL MID
INFORMATION NEW BERGER COMPANY CAP
TECHNOLOGY GENERATION SELECT GROWTH GROWTH
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
Diversification F F NF F F
Small and mid-sized company securities < Y < Y Y
Market, liquidity and information risk
Foreign securities < < < < <
Market, currency, transaction,
liquidity, information and
political risk
Sector focus Y Y Y Y Y
Market and liquidity risk
Convertible securities(1) < < < < <
Market, interest rate,
prepayment and credit risk
Investment grade bonds (nonconvertible) Y Y Y Y Y
Interest rate, market, call
and credit risk
Companies with limited operating histories < < < < <
Market, liquidity and information risk
Illiquid and restricted securities [ ][ ][ ] [ ][ ][ ] [ ][ ][ ] [ ][ ][ ] [ ][ ][ ]
Market, liquidity and transaction risk
Special situations < < < < <
Market and information risk
Initial Public Offerings (IPOs) <2 <2 < < <2
Market, liquidity and information risk
Mortgage-backed and asset-backed
securities(3) N N N N N
Interest rate, prepayment, extension,
market and credit risk
Temporary defensive measures N < < < <
Opportunity risk
Lending portfolio securities 33.3 33.3 33.3 33.3 33.3
Credit risk
Borrowing 25F 25F 25F 25F 25F
Leverage risk
Financial futures(4) [ ] [ ] [ ] [ ] [ ]
Hedging, correlation, opportunity
and leverage risk
Forward foreign currency contracts(4) < < < < <
Hedging, credit, correlation,
opportunity and leverage risk
Hedging Strategies
Options(4) (exchange-traded and
over-the-counter) [ ] [ ] [ ] [ ] [ ]
Hedging, credit, correlation and
leverage risk
Writing (selling) covered call options(4) 25 25 25 25 25
(exchange-traded and over-the-counter)
Opportunity, credit and leverage risk
<CAPTION>
BERGER BERGER
MID LARGE
CAP BERGER BERGER CAP BERGER
VALUE GROWTH INTERNATIONAL GROWTH BALANCED
FUND FUND FUND FUND FUND
<S> <C> <C> <C> <C> <C>
Diversification F F F F F
Small and mid-sized company securities Y Y < < <
Market, liquidity and information risk
Foreign securities < < Y < <
Market, currency, transaction,
liquidity, information and
political risk
Sector focus Y Y < < <
Market and liquidity risk
Convertible securities(1) < < < Y Y
Market, interest rate,
prepayment and credit risk
Investment grade bonds (nonconvertible) < < < < Y
Interest rate, market, call
and credit risk
Companies with limited operating histories < 5F < 5F <
Market, liquidity and information risk
Illiquid and restricted securities [ ][ ][ ] [ ][ ][ ] [ ][ ][ ] [ ][ ][ ] [ ][ ][ ]
Market, liquidity and transaction risk
Special situations Y < < < <
Market and information risk
Initial Public Offerings (IPOs) < < < < <
Market, liquidity and information risk
Mortgage-backed and asset-backed
securities(3) N N N N <
Interest rate, prepayment, extension,
market and credit risk
Temporary defensive measures < < N < <
Opportunity risk
Lending portfolio securities 33.3 NF 33.3 NF 33.3
Credit risk
Borrowing 25F 5F 25F 5F 25F
Leverage risk
Financial futures(4) [ ] [ ] N [ ] [ ]
Hedging, correlation, opportunity
and leverage risk
Forward foreign currency contracts(4) < < Y < <
Hedging, credit, correlation,
opportunity and leverage risk
Hedging Strategies
Options(4) (exchange-traded and
over-the-counter) [ ] [ ] N [ ] [ ]
Hedging, credit, correlation and
leverage risk
Writing (selling) covered call options(4) 25 25 N 25 25
(exchange-traded and over-the-counter)
Opportunity, credit and leverage risk
</TABLE>
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 28
26
RISK AND INVESTMENT
GLOSSARY
--------------------------------------------------------------------------------
BORROWING refers to a loan of money from a bank or other financial institution
undertaken by a Fund for temporary or emergency reasons only.
CALL RISK is the possibility that an issuer may redeem or "call" a fixed-income
security before maturity at a price below its current market price. An increased
likelihood of a call may reduce the security's price.
COMMON STOCK is a share of ownership (equity) interest in a company.
COMPANIES WITH LIMITED OPERATING HISTORIES are securities issued by companies
that have been in continuous operation for less than three years. Sometimes
called "unseasoned" issuers.
CONVERTIBLE SECURITIES are debt or equity securities that may be converted on
specified terms into stock of the issuer.
CORRELATION RISK occurs when a Fund "hedges" ~ uses one investment to offset the
Fund's position in another. If the two investments do not behave in relation to
one another the way Fund managers expect them to, then unexpected results may
occur.
CREDIT RISK means that the issuer of a security or the counterparty to an
investment contract may default or become unable to pay its obligations when
due.
CURRENCY RISK happens when a Fund buys or sells a security denominated in
foreign currency. Foreign currencies "float" in value against the U.S. dollar.
Adverse changes in foreign currency values can cause investment losses when a
Fund's investments are converted to U.S. dollars.
DIVERSIFICATION means a diversified fund may not, with respect to at least 75%
of its assets, invest more than 5% in the securities of one company. A
nondiversified fund may be more volatile than a diversified fund because it
invests more of its assets in a smaller number of companies and the gains or
losses on a single stock will therefore have a greater impact on the Fund's
share price. All of the Berger Funds are diversified funds, except the Berger
Select Fund.
EXTENSION RISK is the risk that, as interest rates rise, borrowers are less
likely to refinance their mortgages or other debts. As a result, the principal
on mortgage-backed or asset-backed securities may be paid later than expected,
which could cause the value of the securities to go down.
FINANCIAL FUTURES are exchange-traded contracts on securities, securities
indexes or foreign currencies that obligate the holder to take or make future
delivery of a specified quantity of those underlying securities or currencies on
a predetermined future date at a predetermined price.
FOREIGN SECURITIES are issued by companies located outside of the United States.
A Fund considers a company to be located outside the United States if the
principal securities trading market for its equity securities is located outside
the U.S. or it is organized under the laws of, and has a principal office in, a
country other than the U.S.
FORWARD FOREIGN CURRENCY CONTRACTS are privately negotiated contracts committing
the holder to purchase or sell a specified quantity of a foreign currency on a
predetermined future date at a predetermined price.
HEDGING RISK comes into play when a Fund uses a security whose value is based on
an underlying security or index to "offset" the Fund's position in another
security or currency. The objective of hedging is to offset potential losses in
one security with gains in the hedge. But a hedge can eliminate or reduce gains
as well as offset losses. (Also see "Correlation risk.")
ILLIQUID AND RESTRICTED SECURITIES are securities which, by rules of their issue
or by their nature, cannot be sold readily. These do not include liquid Rule
144A securities.
INFORMATION RISK means that information about a security or issuer might not be
available, complete, accurate or comparable.
INITIAL PUBLIC OFFERING (IPO) is the sale of a company's securities to the
public for the first time. IPO companies can be small and have limited operating
histories. The price of IPO securities can be highly unstable because of
prevailing market psychology and the small number of shares available. In
addition, the quality and number of IPOs available for purchase may diminish in
the future, and their contribution to Fund performance may be less significant
as a Fund grows in size.
INTEREST RATE RISK is the risk that changes in interest rates will adversely
affect the value of an investor's securities. When interest rates rise, the
value of fixed-income securities will generally fall. Conversely, a drop in
interest rates will generally cause an increase in the value of fixed-income
securities. Longer-term securities are subject to greater interest rate risk.
INVESTMENT-GRADE BONDS are rated BBB (Standard & Poor's) or Baa (Moody's) or
above. Bonds rated below investment grade are subject to greater credit risk
than investment-grade bonds.
LENDING PORTFOLIO SECURITIES to qualified financial institutions is undertaken
in order to earn income. The Funds lend securities only on a fully
collateralized basis.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 29
27
BERGER FUNDS
--------------------------------------------------------------------------------
LEVERAGE RISK occurs in some securities or techniques that tend to magnify the
effect of small changes in an index or a market. This can result in a loss that
exceeds the amount that was invested in the contract.
LIQUIDITY RISK occurs when investments cannot be sold readily. A Fund may have
to accept a less-than-desirable price to complete the sale of an illiquid
security or may not be able to sell it at all.
MARKET CAPITALIZATION is the total current market value of a company's
outstanding common stock.
MARKET RISK exists in all mutual funds and means the risk that the prices of
securities in a market, a sector, or an industry will fluctuate and that such
movements might reduce an investment's value.
MORTGAGE-BACKED SECURITIES are securities that represent interests in "pools" of
mortgages or that are backed by mortgages where the interest and principal
payments on the mortgages are "passed-through" to the security holder.
Mortgage-backed securities may be issued or guaranteed by the U.S. Government.
They may also be privately issued and backed by U.S. Government guaranteed
securities or by private arrangements to make them more secure.
ASSET-BACKED SECURITIES are similar, except backed by assets such as car loans
or credit card receivables rather than mortgages.
OPPORTUNITY RISK means missing out on an investment opportunity because the
assets necessary to take advantage of it are committed to less advantageous
investments or strategies.
OPTIONS are contracts giving the holder the right but not the obligation to
purchase or sell a security on or before a predetermined future date at a fixed
price. Options on securities indexes are similar, but settle in cash.
POLITICAL RISK comes into play with investments, particularly foreign
investments, that may be adversely affected by nationalization, taxation, war,
government instability or other economic or political actions or factors.
PREPAYMENT RISK is the risk that, as interest rates fall, borrowers are more
likely to refinance their debts. As a result, the principal on certain
fixed-income securities may be paid earlier than expected, which could cause
investment losses and cause prepaid amounts to have to be reinvested at a
relatively lower interest rate.
SECTOR FOCUS occurs when a significant portion of a Fund's assets are invested
in a relatively small number of related industries. The Funds will not
concentrate more than 25% of their total assets in any one industry. Sector
focus may increase both market and liquidity risk.
SMALL AND MID-SIZED COMPANY SECURITIES are securities issued by small or
mid-sized companies, as measured by their market capitalization. The market
capitalization range targeted by each of the Funds investing primarily in small
or mid-sized companies varies by Fund and appears in the description for those
Funds under the heading "The Fund's Goal and Principal Investment Strategies."
In general, the smaller the company, the greater its risks.
SPECIAL SITUATIONS are companies about to undergo a structural, financial or
management change that may significantly affect the value of their securities.
TEMPORARY DEFENSIVE MEASURES may be taken when a Fund's investment manager
believes they are warranted because of market conditions. When this happens, the
Fund may increase its investment in government securities and other short-term
securities without regard to the Fund's investment restrictions, policies or
normal investment emphasis.
TRANSACTION RISK means that a Fund may be delayed or unable to settle a
transaction or that commissions and settlement expenses may be higher than
usual. In the case of foreign securities, use of a foreign securities depository
to maintain Fund assets may increase this risk. This risk may be minimized
through an analysis and continuous monitoring, by the Funds' primary custodian,
of the custodial risks of using the depository.
WRITING (SELLING) COVERED CALL OPTIONS is the selling of a contract to another
party, which gives them the right but not the obligation to buy a particular
security from you. A Fund will write call options only if it already owns the
security (if it is "covered").
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 30
28
BUYING SHARES
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Minimum Initial Investments
--------------------------------------------------------------------------------
<S> <C>
Regular investment $2,000
Low Minimum Investment Plan $ 100
IRA $ 500
--------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Minimum Subsequent Investments
--------------------------------------------------------------------------------
<S> <C>
Regular investment $ 50
Regular automatic investment $ 50
Low Minimum Investment Plan $ 100
(required monthly automatic investments)
--------------------------------------------------------------------------------
</TABLE>
Send new account applications to
Berger Funds
P.O. Box 219958
Kansas City, MO 64121-9958
OR for overnight, certified or registered mail only
Berger Funds
330 West 9th Street, 1st Floor
Kansas City, MO 64105
Important notes about paying for your shares
o Your check must be made payable to Berger Funds.
o You may not purchase shares by cash, credit card, third-party checks or
checks drawn on foreign banks.
o Telephone and online purchase orders may not exceed $100,000 on the date
the order is placed. Shares previously bought by telephone or online access
are included in calculating account size only if payment has been received
for those shares.
o Orders not paid for on time will be canceled, and shares will be redeemed
from your account to compensate for any decline in price of the shares
canceled.
o The Funds reserve the right to reject any order and to waive or reduce
minimums, or increase minimums following notice.
BY MAIL
o Read this prospectus.
o Fill out the application if you are opening a new account.
o Make out a check to Berger Funds for the amount you want to invest.
o Send the application and check to the Berger Funds in the envelope
provided.
o To add to an existing account, be sure to include your account number on
your check and mail it to the appropriate address above.
BY TELEPHONE*
o If you already have a Berger Funds account, you may purchase additional
shares by telephone order.
o You must pay for them within three business days by wire, electronic funds
transfer or overnight delivery of a check.
o Call (800) 551-5849 for current wire or electronic funds transfer
instructions.
BY ONLINE ACCESS*
o If you have established a Berger Funds account with electronic funds
transfer privileges you may purchase additional shares via online access.
o You will find us online at bergerfunds.com.
BY SYSTEMATIC INVESTMENT PLAN
o To automatically purchase more shares on a regular basis for a regular
minimum or Low Minimum Investment Plan account, fill out the Systematic
Investment Plan section of the application. Investments are transferred
automatically from your bank account.
o The Low Minimum Investment Plan is designed for investors who would like to
begin a regular investment program but are reluctant to commit to higher
lump sum initial investments. In order to qualify for the Low Minimum
Investment Plan, an investor must commit to automatic monthly investments
totaling no less than $100 per month per account. Automatic monthly
investments must be made until the value of each account opened under the
Plan is at least $2,000 or the account will be assessed an annual charge of
$10.
* All shareholders are automatically granted telephone and online transaction
privileges unless they decline them explicitly in writing, either on the
account application or by writing to the Berger Funds at the address above.
You may give up some level of security by choosing to buy and sell shares
by telephone or online rather than by mail.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 31
29
BERGER FUNDS
SELLING (REDEEMING)
SHARES
--------------------------------------------------------------------------------
IMPORTANT NOTES ABOUT PAYMENT FOR YOUR REDEEMED SHARES
In times of extreme economic or market conditions, transactions by telephone or
online may be difficult.
o Generally, payment for your redeemed shares will be sent to you within
three business days after receipt of your redemption request in good order.
o You may receive payment for redeemed shares via wire or electronic funds
transfer. You may elect these services on the account application or send
to the Berger Funds a written request providing your bank information with
your signature guaranteed. (See "Signature Guarantees/ Special
Documentation" below.)
o Wire and electronic funds transfers are subject to a $1,000 minimum and
$100,000 maximum.
o You will be charged $10 if you request a wire transfer. There is no charge
for an electronic funds transfer.
o A wire transfer will be sent the next business day after receipt of your
order, and an electronic funds transfer will be sent the second business
day after receipt of your order.
o Proceeds from the redemption of shares purchased by check may be delayed
until full payment for the shares has been received and cleared, which may
take up to 15 days from the purchase date.
o The Berger Information Technology Fund will deduct a 1% redemption fee from
your redemption proceeds if you redeem shares of that Fund held less than 6
months. This fee is intended to discourage investors from short-term
trading of Fund shares and to offset the cost to the Fund of excess
brokerage and other costs incurred as a result of such trading. This fee
will not be charged to retirement plan accounts or in the case of
redemptions resulting from the death of the shareholder.
BY MAIL
o Send a written request indicating your account number and the dollar amount
or number of shares you are redeeming to the appropriate address shown
under "Buying Shares."
o Your request must be signed by each registered shareholder, with the
signature(s) appearing exactly as they do on your account registration.
BY TELEPHONE*
o Call (800) 551-5849.
BY ONLINE ACCESS*
o You will find us online at bergerfunds.com.
BY SYSTEMATIC WITHDRAWAL PLAN
o Shares may be redeemed automatically ($50 minimum) monthly, quarterly,
semi-annually or annually.
o A systematic withdrawal plan may be established if you own shares in a Fund
worth at least $5,000.
o Call (800) 551-5849 for more information and forms.
* For limitations on telephone and online redemptions see "Signature
Guarantees/Special Documentation" below. Telephone and online redemptions
are not available for shares held in retirement accounts sponsored by the
Funds.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 32
30
INFORMATION ABOUT
YOUR ACCOUNT
--------------------------------------------------------------------------------
EXCHANGING SHARES
Shares of the Funds described in this prospectus may be exchanged for shares of
any other Berger Fund or for shares in the Cash Account Trust Portfolios (the
CAT Portfolios). The CAT Portfolios are three separately managed, unaffiliated
money market funds: the Money Market Portfolio, the Government Securities
Portfolio and the Tax-Exempt Portfolio.
The exchange privilege with the CAT Portfolios does not constitute an offering
or recommendation of the shares of these portfolios by the Berger Funds or
Berger LLC. Berger LLC is compensated for administrative services it performs
with respect to the CAT Portfolios.
When exchanging shares:
o Each account must be registered identically ~ have the same signatures and
addresses.
o Each Fund or CAT Portfolio must be legally eligible for sale in your state
of residence.
o You may exchange out of each of the Berger Funds up to four times per
calendar year. At this time, there is no limit on the number of exchanges
permitted out of the CAT Portfolios.
o You may exchange by telephone, online access or mail.
o You are responsible for obtaining and reading the prospectus for the Fund
or CAT Portfolio into which you are exchanging.
o An exchange out of a Berger Fund results in the sale of that Fund's shares
and the purchase of another, normally resulting in a taxable event for you.
o Exchanges into any new Fund or CAT Portfolio are subject to that Fund's or
Portfolio's initial and subsequent investment minimums.
o The Berger Information Technology Fund will deduct a 1% redemption fee from
the amount you exchange if you exchange shares of that Fund held less than
6 months. This fee is intended to discourage investors from short-term
trading of Fund shares and to offset the cost to the Fund of excess
brokerage and other costs incurred as a result of such trading. This fee
will not be charged to retirement plan accounts.
The Funds may terminate or modify the exchange privilege in the future.
SIGNATURE GUARANTEES/SPECIAL DOCUMENTATION
The Funds use Signature Guarantees to protect you and the Funds from possible
fraudulent requests for redeemed shares. Your redemption request must be in
writing and accompanied by a Signature Guarantee if:
o Your request exceeds $100,000.
o You request that payment be made to a name other than the one on your
account registration.
o You request that payment be mailed to an address that has been changed
within 30 days of your redemption request or to an address other than the
one of record.
o You change or add information relating to your designated bank.
Berger Funds reserve the right to require Signature Guarantees under other
certain circumstances.
You can get a Signature Guarantee from most broker-dealers, national or state
banks, credit unions, federal savings and loan associations or other eligible
institutions. You cannot obtain a Signature Guarantee from a notary public.
Make sure the Signature Guarantee appears:
o Together with the signature(s) of all registered owner(s) of the redeemed
shares on the written redemption request.
o On any share certificates you hold for the redeemed shares or on a separate
statement of assignment (stock power) that may be obtained from a bank or
broker.
Additional documents are required for redemptions by corporations, executors,
administrators, trustees and guardians. For instructions, call (800) 551-5849,
or write to the Berger Funds, P.O. Box 219958, Kansas City, MO 64121-9958.
YOUR SHARE PRICE
The price at which you buy, sell or exchange Fund shares is the share price or
net asset value (NAV). The share price for each Fund is determined by adding the
value of that Fund's investments, cash and other assets, deducting liabilities,
and then dividing that value by the total number of that Fund's shares
outstanding. For Funds offering more than one class of shares, share price is
calculated separately for each class.
Each Fund's share price is calculated at the close of the regular trading
session of the New York Stock Exchange
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 33
31
BERGER FUNDS
OTHER INFORMATION
ABOUT YOUR ACCOUNT
--------------------------------------------------------------------------------
(normally 4:00 p.m. Eastern time) each day that the Exchange is open. Share
price is not calculated on the days that the Exchange is closed.
For a purchase, redemption or exchange of Fund shares, your price is the share
price next calculated after your request is received in good order and accepted
by the Fund, its authorized agent or designee. To receive a specific day's
price, your request must be received before the close of the New York Stock
Exchange on that day.
When the Funds calculate their share price, they value the securities they hold
at market value. Sometimes market quotes for some securities are not available
or are not representative of market value. Examples would be when events occur
that materially affect the value of a security at a time when the security is
not trading or when the securities are illiquid. In that case, securities may be
valued in good faith at fair value, using consistently applied procedures
decided on by the trustees or directors. Money market instruments maturing
within 60 days are valued at amortized cost, which approximates market value.
Assets and liabilities expressed in foreign currencies are converted into U.S.
dollars at the prevailing market rates quoted by one or more banks or dealers
shortly before the close of the Exchange.
A Fund's foreign securities may trade on days that the Exchange is closed and
the Fund's daily share price is not calculated. As a result, the Fund's daily
share price may be affected, and you will not be able to purchase or redeem
shares.
SECURITY CONSIDERATIONS
You may give up some level of security by choosing to buy or sell shares by
telephone or online, rather than by mail. The Funds use procedures designed to
give reasonable assurance that telephone and online instructions are genuine,
including recording the transactions, testing the identity of the shareholder
placing the order and sending prompt written confirmation of transactions to the
shareholder of record.
The Funds and their service providers are not liable for acting upon
instructions communicated by telephone or online that they believe to be genuine
if these procedures are followed.
CONFIRMATION OF YOUR PURCHASES AND REDEMPTIONS
After any transaction, you will receive written confirmation including the share
price and the dollar amount and number of shares bought or redeemed. Exception:
Shares purchased under Systematic Investment Plans or redeemed under Systematic
Withdrawal Plans will be confirmed quarterly. Partial shares will be calculated
to three decimal places.
SHAREHOLDER REPORTS
To reduce expenses, a Fund may mail only one copy of most financial reports,
prospectuses and proxies to your household, even if you have more than one
account in the Fund. Call (800) 551-5849 if you need additional copies of
financial reports or prospectuses.
SHARE CERTIFICATES
To assist in minimizing administrative costs, share certificates will not be
issued. Records of share ownership are maintained by the Fund's transfer agent
in book entry form. If you are selling shares previously issued in certificate
form, you need to include the certificate along with your redemption or exchange
request. If you have lost your certificate, please call us at (800) 551-5849.
PURCHASES THROUGH BROKER-DEALERS
You may buy Fund shares through certain broker-dealers or other financial
organizations, but these organizations may charge you a fee or may have
different minimums for first-time or additional investments that are not
applicable if you buy shares directly from the Funds.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 34
32
OTHER INFORMATION
ABOUT YOUR ACCOUNT
(CONTINUED)
--------------------------------------------------------------------------------
THIRD-PARTY ADMINISTRATORS
Certain brokerage firms and other companies may provide administrative services
(such as sub-transfer agency, recordkeeping or shareholder communications
services) to investors purchasing shares of the Funds through those companies. A
Fund's advisor or a Fund (if approved by its directors or trustees) may pay fees
to these companies for their services. These companies may also be appointed as
agents for or authorized by the Funds to accept on their behalf purchase and
redemption requests that are received in good order. Subject to Fund approval,
certain of these companies may be authorized to designate other entities to
accept purchase and redemption orders on behalf of the Funds.
DATE-RELATED INFORMATION
Mutual funds and businesses around the world could be adversely affected if
computers do not properly process date-related information. The Funds' advisors
are addressing these issues for their computers and are getting reasonable
assurances from the Funds' other major service providers that they too are
addressing these issues to preserve smooth functioning of the Funds' trading,
pricing, shareholder account, custodial and other operations. There can be no
assurances, however, that all problems will be avoided.
These computer problems could also adversely affect the Funds' investments.
Improperly functioning computers may disrupt securities markets generally or
result in overall economic uncertainty. Individual companies may also be
adversely affected by the cost of fixing their computers, which could be
substantial. The Funds' investment managers consider these issues when
evaluating investments for the Funds.
REDEMPTIONS IN-KIND
Each Fund intends to redeem its shares only for cash, although in order to
protect the interest of remaining shareholders, it retains the right to redeem
its shares in-kind under unusual circumstances. In-kind payment means payment
will be made to you in portfolio securities rather than cash. If this occurs,
you will incur transaction costs if you sell the securities for cash. You may
have difficulty selling the securities and recovering the amount of your
redemption if the securities are illiquid.
ACCOUNT MINIMUMS
The Funds will charge all shareholder accounts with a balance of less than
$2,000 an annual fee of $10 unless the shareholder account is making automatic
monthly investments. This charge is designed to help offset the proportionately
higher costs of maintaining small accounts.
This charge will apply to accounts that have been over $2,000 at some point in
time only if the balance has dropped below this amount because shares were
redeemed, not because the share value declined.
Shares in accounts that do not meet the minimum balance requirement applicable
to them as described below may also be subject to involuntary redemption by the
Funds.
REDEMPTIONS BY THE FUNDS OF CERTAIN ACCOUNTS
To reduce their expenses, all Funds other than the Berger Growth Fund may
involuntarily redeem the shares in your account if your balance drops below
$2,000 - but only if it drops below this amount because you have redeemed
shares, not because the share value has declined. You will be given 60 days'
notice before a Fund undertakes any involuntary redemption. During that time,
you may buy more shares to bring your account above the minimum. Existing
shareholders of the following Funds have lower minimum balance requirements and
must maintain these minimum balances to avoid involuntary redemption:
<TABLE>
<CAPTION>
IF YOUR SHARES WERE YOUR MINIMUM IF YOUR SHARES WERE YOUR MINIMUM
FUND PURCHASED BEFORE... ACCOUNT BALANCE IS PURCHASED BEFORE... ACCOUNT BALANCE IS
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Berger Growth and Income Fund January 26, 1996 $250 November 28, 1996 $ 500
Berger Small Company Growth Fund January 26, 1996 $250 November 28, 1996 $ 500
Berger New Generation Fund November 28, 1996 $ 1,000
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Funds also reserve the right to close any account if it believes the
shareholder is engaging in activities which may be detrimental to the Funds.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 35
33
BERGER FUNDS
--------------------------------------------------------------------------------
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS OF INCOME AND GAINS
Unless you tell us that you want to receive your distributions in cash, they
will be reinvested automatically in Fund shares.
The Funds generally make two kinds of distributions:
o Capital gains from the sale of portfolio securities held by a fund. Each
Fund will distribute any net realized capital gains annually, normally in
December.
o Net investment income from interest or dividends received on securities
held by a fund. The Funds will distribute their investment income as
follows:
<TABLE>
<CAPTION>
DISTRIBUTIONS OF
FUND NET INVESTMENT INCOME
--------------------------------------------------------------------------------
<S> <C>
Berger Growth and Income Fund Quarterly
(normally in March, June,
September and December)
Berger Balanced Fund Quarterly
(normally in March, June,
September and December)
All other Berger Funds Annually
(normally in December)
--------------------------------------------------------------------------------
</TABLE>
The Funds reserve the right to reinvest into your account undeliverable or
uncashed dividend or distribution checks that remain outstanding for six months.
The dividend or distribution amount will be reinvested in shares of the
applicable Fund at the NAV next computed after the check is cancelled.
YOUR TAXES
You generally will owe tax on amounts distributed to you by the Funds in any
non-retirement account whether you reinvest them in additional shares or receive
them in cash. Distributions of gains from the sale of assets held by a Fund for
more than one year generally are taxable to you at the applicable long-term
capital gains rate, regardless of how long you have owned your Fund shares.
Distributions from other sources generally are taxed as ordinary income.
Distributions made by the Funds to you will normally be capital gains. A portion
of those gains may be net short-term capital gains, which are taxed as ordinary
income. The Berger Growth and Income Fund and the Berger Balanced Fund normally
will also distribute net investment income, which is taxed as ordinary income.
The other Berger Funds generally will not distribute net investment income,
although any net investment income that is generated as a by-product of managing
their portfolios will be distributed to you.
If you redeem Fund shares that have appreciated in value, you will have a
taxable gain upon redemption. Exchanges are treated as a redemption and purchase
for tax purposes. Therefore, you will also have a taxable gain if you exchange
shares that have appreciated in value.
ADDITIONAL TAX INFORMATION
You should consult your own tax advisor about your particular situation. For
more information about other tax matters, including backup withholding for
certain taxpayers and other tax aspects of redemptions, see the SAI.
TAX-SHELTERED RETIREMENT PLANS
The Funds offer several tax-qualified retirement plans for individuals,
businesses and nonprofit organizations. For information about establishing an
IRA, Roth IRA, profit-sharing or money purchase pension plan, 403(b) Custodial
Account, SEP-IRA, SIMPLE IRA account or other retirement plans, please call
(800) 551-5849, or write to the Berger Funds, P.O. Box 219958, Kansas City, MO
64121-9958. Trustees for existing 401(k) or other plans interested in using Fund
shares as an investment or investment alternative in their plans are invited to
call the Funds at (800) 259-2820.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 36
34
ORGANIZATION OF THE
BERGER FUNDS FAMILY
--------------------------------------------------------------------------------
INVESTMENT MANAGERS
The following companies provide investment management and administrative
services to the Funds. The advisory fees paid for the most recent fiscal year
are shown in the following table as a percentage of each Fund's average daily
net assets.
Berger LLC (210 University Blvd., Suite 900, Denver, CO 80206) serves as
investment advisor, sub-advisor or administrator to mutual funds and
institutional investors. Berger LLC has been in the investment advisory business
for 26 years. When acting as investment advisor, Berger LLC is responsible for
managing the investment operations of the Funds. Berger LLC also provides
administrative services to the Funds.
Bank of Ireland Asset Management (U.S.) Limited (BIAM) (75 Holly Hill Lane,
Greenwich, CT 06830 [representative office]; 26 Fitzwilliam Place, Dublin 2,
Ireland [main office]) serves as investment advisor or sub-advisor to pension
and profit-sharing plans and other institutional investors and mutual funds.
Bank of Ireland's investment management group was founded in 1966. As
sub-advisor, BIAM provides day-to-day management of the investment operations of
the Berger International Portfolio.
Perkins, Wolf, McDonnell & Company (PWM) (53 West Jackson Boulevard, Suite 722,
Chicago, IL 60604) provides day-to-day management of the investment operations
as sub-advisor of the Berger Mid Cap Value Fund.
Bay Isle Financial Corporation (Bay Isle) (160 Sansome Street, 17th Floor, San
Francisco, CA 94104) has been in the investment advisory business since 1987.
Bay Isle served as investment advisor to the Berger Information Technology Fund
(then known as the InformationTech 100(R) Fund) from its inception in April 1997
until July 1999, when Bay Isle became sub-advisor to the Fund. As sub-advisor,
Bay Isle provides day-to-day management of the Fund's investment operations.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 37
35
BERGER FUNDS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Advisory Fee Paid
by the Fund or
Fund Portfolio The Fund's Investment Manager
---- ----------------- -----------------------------
<S> <C> <C>
Berger 0.85% paid to William F. K. Schaff, co-founder, co-owner and Chief Investment Officer of Bay
Information Berger LLC(1) Isle, has been the investment manager for the Berger Information Technology Fund
Technology Fund since its inception in April 1997. Mr. Schaff has been managing accounts of Bay
Isle clients since 1987.
Berger New 0.83% paid to Mark S. Sunderhuse, Executive Vice President of Berger LLC, is the investment
Generation Fund Berger LLC manager of the Berger New Generation Fund. Mr. Sunderhuse joined Berger LLC in
January 1998 and assumed management of the Fund in January 1999. Mr. Sunderhuse
has more than twelve years of experience in the investment management industry.
Berger Select 0.75% paid to Jay W. Tracey, CFA (see Berger Growth Fund), Mark Sunderhuse (see Berger New
Fund Berger LLC Generation Fund), and Steve Fossel (see Berger Balanced Fund) are co-managers of
the Berger Select Fund. Mr. Tracey and Mr. Fossel assumed co-management of the
Fund in June 2000, and Mr. Sunderhuse assumed co-management of the Fund in May
1999. Each co-portfolio manager selects a portion of the stocks that comprise
the Fund's portfolio.
Berger Small 0.81% paid to Jay W. Tracey, CFA (see Berger Growth Fund) and Mark Sunderhuse (see Berger New
Company Growth Berger LLC Generation Fund) are interim investment managers of the Berger Small Company
Fund Growth Fund, assuming management of the Fund in June 2000.
Berger Mid Cap 0.75% paid to Jay W. Tracey, CFA (see Berger Growth Fund) and Mark Sunderhuse (see Berger New
Growth Fund Berger LLC Generation Fund) are interim investment managers of the Berger Mid Cap Growth
Fund, assuming management of the Fund in June 2000.
Berger Mid Cap 0.75% paid to Thomas M. Perkins has been the lead investment manager for the Berger Mid Cap Value
Value Fund Berger LLC Fund since its inception in August 1998. Thomas Perkins has been an investment manager
since 1974 and joined Perkins, Wolf, McDonnell & Company as a portfolio manager in
1998. Robert H. Perkins has served as investment manager of the Berger Mid Cap Value
Fund since its inception in August 1998. Robert Perkins has been an investment manager
since 1970 and serves as President and a director of PWM. As lead manager, Tom Perkins
is responsible for the daily decisions on the Fund's security selection.
Berger Growth 0.69% paid to Jay W. Tracey, CFA Executive Vice President and Chief Investment Officer of Berger LLC.
Fund Berger LLC assumed management of the Fund in August 2000. Mr. Tracey joined Berger LLC in June
2000 and has more than 24 years experience in the investment management industry.
Berger 0.85% paid to BIAM, using a team approach, has been the investment manager for the Portfolio, in which
International Berger LLC(1) the Fund is invested, since its inception in 1996. BIAM is the sub-advisor to the Portfolio
Fund and is part of Bank of Ireland's asset management group, established in 1966. Most of the
team of investment professionals have been with the group for at least ten years.
Berger Large 0.74% paid to Steven L. Fossel, CFA (see Berger Balanced Fund) was appointed interim portfolio manager
Cap Growth Fund Berger LLC in August 2000.
Berger Balanced 0.70% paid to Steven L. Fossel, CFA, Vice President of Berger LLC, is the investment manager of the
Fund Berger LLC Berger Balanced Fund. Mr. Fossel joined Berger LLC in March 1998 and assumed management
of the Berger Balance Fund in June 2000. Mr. Fossel has more than nine years of
experience in the investment management industry.
</TABLE>
(1) BBOI Worldwide LLC, a joint venture between Berger LLC and BIAM, was the
advisor to the Berger International Fund until May 12, 2000, when Berger
LLC became the Fund's advisor.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 38
36
ORGANIZATION OF THE
BERGER FUNDS FAMILY
(CONTINUED)
--------------------------------------------------------------------------------
PORTFOLIO TURNOVER
Portfolio changes are made whenever the Fund's investment manager believes that
the Fund's goal could be better achieved by investment in another security,
regardless of portfolio turnover. At times, portfolio turnover for a Fund may
exceed 100% per year. A turnover rate of 100% means the securities owned by a
Fund were replaced once during the year. Higher turnover rates may result in
higher brokerage costs to the Funds and in higher net taxable gains for you as
an investor. Each Fund's portfolio turnover rate can be found under the heading
"Financial Highlights for the Berger Funds Family."
12b-1 Arrangements
The Funds are "no-load" funds, meaning that you pay no sales charge or
commissions when you buy or sell Fund shares. However, each Fund has adopted a
12b-1 plan permitting it to pay a fee in connection with distribution of its
shares. Berger LLC is entitled to be paid a fee under each plan of 0.25% of each
Fund's average daily net assets. Because this fee is paid on an ongoing basis,
this may result in the cost of your investment increasing and over time may cost
you more than other types of sales charges. The fee may be used for such things
as marketing and promotion, compensation to dealers and others who provide
distribution and administrative services, and shareholder support services (such
as routine requests for information).
Special Fund Structures
MULTI-CLASS
The Berger Information Technology Fund, the Berger New Generation Fund and the
Berger Small Company Growth Fund each currently has two classes of shares. The
Investor Shares offered in this prospectus are available to the general public.
The other class of shares, Institutional Shares, are offered through a separate
prospectus and are designed for investors who maintain a minimum account balance
of $250,000. Each class of shares has its own expenses so that share price,
performance and distributions will differ between classes. The 12b-1 plans
adopted by these Funds apply only to the Investor Shares. For more information
on Institutional Shares, please call (800) 259-2820.
MASTER/FEEDER
The Berger International Fund is organized as a "feeder" fund in a
"master/feeder" structure. This means that the Fund's assets are all invested in
a larger "master" portfolio of securities, the Berger International Portfolio,
which has investment goals and policies identical to those of the Fund. The
other feeders investing in the Portfolio are the International Equity Fund and
the Berger International CORE Fund. The International Equity Fund has a minimum
balance requirement of $1,000,000 and the Berger International CORE Fund has a
minimum balance requirement of $250,000. Each Fund shares its own expenses so
that share price, performance and distributions will differ among feeders. For
more information on these feeders, please call (800) 259-2820.
The Fund may withdraw its investment in the Portfolio at any time, if the
Trustees determine that it is in the best interests of the Fund to do so. In
that event, the Fund might transfer to another master fund or hire its own
investment advisor. A withdrawal could result in the Fund receiving an in-kind
distribution of portfolio securities from the Portfolio. In that case, the Fund
could incur brokerage, tax or other charges if it converted the securities to
cash. In addition, an in-kind distribution could adversely affect the liquidity
of the Fund.
For more information on multi-class and master/feeder fund structures, see the
SAI.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 39
37
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
FOR THE BERGER FUNDS
FAMILY
--------------------------------------------------------------------------------
The financial highlights will help you understand each Fund's financial
performance for the periods indicated. Certain information reflects financial
results for a single Fund share. Total return shows how much your investment in
the Fund increased or decreased during each period, assuming you reinvested all
dividends and distributions. Except as otherwise noted, PricewaterhouseCoopers
LLP, independent accountants, audited this information. Their report is included
in the Funds' annual report, which is available without charge upon request.
Berger Information Technology Fund ~ Investor Shares
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
YEAR ENDED PERIOD FROM JULY 2, 1999(1)
SEPTEMBER 30, 2000 TO SEPTEMBER 30, 1999
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period $53.47
---------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(5)
Net realized and unrealized gains (losses) on investments
and foreign currency transactions 3.99
Total from investment operations 3.99
Net asset value, end of period $57.46
---------------------------------------------------------------------------------------------------------------------------
Total Return(2) 7.46%
---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $4,811
Net expense ratio to average net assets(3) 1.83%(4)
Ratio of net income (loss) to average net assets (1.58)%(4)
Gross expense ratio to average net assets 2.16%(4)
Portfolio turnover rate(2) 31%
</TABLE>
1. Commencement of investment operations for Investor Shares.
2. Not annualized.
3. Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
4. Annualized.
5. Amount represents less than $0.01 per share.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 40
38
FINANCIAL HIGHLIGHTS
FOR THE BERGER FUNDS
FAMILY
--------------------------------------------------------------------------------
Berger Information Technology Fund
Supplemental Financial Highlights
For a Share Outstanding Throughout the Period
The following financial highlights are for the Fund for periods ending February
28, 1998 and 1999, and for the period from March 1, 1999 to July 1, 1999, prior
to the Fund's reorganization. Prior to the Fund's reorganization on July 2,
1999, the Fund was known as the InformationTech 100(R) Fund. At the time of the
reorganization, the Fund adopted share classes and first began offering the
Investor Shares. Therefore, the 0.25% 12b-1 fee paid by the Investor Shares is
not reflected in the data on the table. Unless otherwise noted, this information
was audited by the Fund's prior independent accountants. Their report appears in
the 1999 Annual Report to Shareholders of the InformationTech 100(R) Fund and is
available from the Fund without charge upon request. The information for the
period March 1, 1999 to July 1, 1999 is unaudited.
<TABLE>
<CAPTION>
Period from
March 1, 1999 Period from
to July 1, 1999 Year Ended April 8, 1997(1)
(Unaudited) February 28, 1999 to February 28, 1998
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $44.36 $ 30.15 $20.00
--------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.19) (0.31) (0.10)
Net realized and unrealized gains (losses)
on investments and foreign
currency transactions 10.02 14.52 10.25
--------------------------------------------------------------------------------------------------------------------------
Total from investment operations 9.83 14.21 10.15
--------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Distributions (from capital gains) (0.72) -- --
Total dividends and distributions (0.72) -- --
Net asset value, end of period $53.47 $ 44.36 $30.15
--------------------------------------------------------------------------------------------------------------------------
Total Return(2) 20.54% 47.13% 50.75%
--------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $18,101 $12,446 $2,674
Net expense ratio to average net assets(3) 1.48%(4) 1.50% 1.50%(4)
Ratio of net income (loss) to average net assets (1.22)%(4) (1.19)% (1.01)%(4)
Gross expense ratio to average net assets 2.03%(4) 2.67% 12.17%(4)
Portfolio turnover rate(2) 11% 35% 33%
</TABLE>
(1) Commencement of investment operations for the Fund.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(4) Annualized.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 41
39
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Berger New Generation Fund - Investor Shares
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period from March 29,
Years Ended September 30, 1996(1) to September 30,
2000 1999 1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 12.66 $ 14.72 $ 11.82 $ 10.00
-----------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(6) -- (0.13) 0.56
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 13.61 (2.06) 3.64 1.26
-----------------------------------------------------------------------------------------------------------------------------
Total from investment operations 13.61 (2.06) 3.51 1.82
-----------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) -- -- (0.61) --
Distributions (from capital gains) (0.50) -- -- --
Total dividends and distributions (0.50) (0.61) --
Net asset value, end of period $ 25.77 $ 12.66 $ 14.72 $ 11.82
-----------------------------------------------------------------------------------------------------------------------------
Total Return(2) 110.82% (13.99)% 31.53% 18.20%
-----------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $330,938 $113,693 $190,164 $116,912
Net expense ratio to average net assets(3) 1.54% 1.72% 1.89% 1.90%(4)
Ratio of net income (loss) to average net assets (1.29)% (1.37)% (1.51)% 12.35%(4)
Gross expense ratio to average net assets 1.54% 1.72% 1.89% 2.09%(4)
Portfolio turnover rate(2) 168% 243% 184% 474%(5)
</TABLE>
(1) Commencement of investment operations for Investor Shares.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(4) Annualized.
(5) Portfolio turnover was greater than anticipated during this period due to
active trading undertaken in response to market conditions at a time when
the Fund's assets were still relatively small and before the Fund was fully
invested.
(6) Amount represents less than $0.01 per share.
Berger Select Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period from
Years Ended September 30, December 31, 1997(1)
2000 1999 to September 30, 1998
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.26 $ 10.00
-------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) 0.01 0.07
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 6.80 3.19
-------------------------------------------------------------------------------------------------------
Total from investment operations 6.81 3.26
-------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.05) --
Dividends (in excess of net investment income) (0.01) --
Distributions (from capital gains) (0.84) --
Total dividends and distributions (0.90) --
Net asset value, end of period $ 19.17 $ 13.26
-------------------------------------------------------------------------------------------------------
Total Return(2) 53.06% 32.60%
-------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 101,352 $ 41,571
Net expense ratio to average net assets(3) 1.29% 1.48%(5)
Ratio of net income (loss) to average net assets 0.27% 1.13%(5)
Gross expense ratio to average net assets 1.29% 1.48%(5)
Portfolio turnover rate(2) 696% 1486%(4)
</TABLE>
(1) Commencement of investment operations.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(4) Portfolio turnover was greater than expected during this period due to
active trading undertaken in response to market conditions at a time when
the Fund's assets were still relatively small and before the Fund was fully
invested.
(5) Annualized.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 42
40
FINANCIAL HIGHLIGHTS
FOR THE BERGER FUNDS
FAMILY
--------------------------------------------------------------------------------
Berger Small Company Growth Fund ~ Investor Shares
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998 1997 1996
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 3.61 $ 5.33 $ 4.74 $ 3.61
----------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(1) -- (0.05) (0.03)
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 1.95 (1.24) 0.84 1.16
----------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.95 (1.24) 0.79 1.13
----------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) -- -- -- --
Distributions (from capital gains) (0.70) (0.48) (0.20) --
Total dividends and distributions (0.70) (0.48) (0.20) --
Net asset value, end of period $ 4.86 $ 3.61 $ 5.33 $ 4.74
----------------------------------------------------------------------------------------------------------------------------------
Total Return 62.78% (24.70)% 17.68% 31.30%
----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $675,637 $561,741 $902,685 $871,467
Net expense ratio to average net assets(2) 1.60% 1.48% 1.67% 1.68%
Ratio of net income (loss) to average net assets (1.21)% (1.01)% (1.09)% (0.97)%
Gross expense ratio to average net assets 1.60% 1.59% 1.67% 1.68%
Portfolio turnover rate 128% 97% 111% 91%
</TABLE>
(1) Amount represents less than $0.01 per share.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 43
41
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
Berger Mid Cap Growth Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period from
Years ended September 30, December 31,1997(1)
2000 1999 to September 30, 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 10.93 $ 10.00
----------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(5) --
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 11.10 0.93
----------------------------------------------------------------------------------------------------------
Total from investment operations 11.10 0.93
----------------------------------------------------------------------------------------------------------
Less dividends and distributions
Distributions (from capital gains) (0.21) --
Total dividends and distributions (0.21) --
Net asset value, end of period $ 21.82 $ 10.93
----------------------------------------------------------------------------------------------------------
Total Return(2) 102.76% 9.30%
----------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 25,550 $ 4,283
Net expense ratio to average net assets(3) 1.78% 2.00%(4)
Ratio of net income (loss) to average net assets (1.03)% (0.82)%(4)
Gross expense ratio to average net assets 1.78% 2.46%(4)
Portfolio turnover rate(2) 178% 262%
</TABLE>
(1) Commencement of investment operations.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(4) Annualized.
(5) Amount represents less than $0.01 per share.
Berger Mid Cap Value Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period from
Years Ended September 30, August 12, 1998(1)
2000 1999 to September 30, 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.33 $ 10.00
---------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) 0.07 0.03
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 2.83 (0.70)
---------------------------------------------------------------------------------------------------------
Total from investment operations 2.90 (0.67)
---------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.06) --
Total dividends and distributions (0.06) --
Net asset value, end of period $ 12.17 $ 9.33
---------------------------------------------------------------------------------------------------------
Total Return(2) 31.12% (6.70)%
---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 22,918 $ 19,710
Net expense ratio to average net assets(3) 1.62% 1.68%(4)
Ratio of net income (loss) to average net assets 0.54% 2.30%(4)
Gross expense ratio to average net assets 1.62% 1.68%(4)
Portfolio turnover rate(2) 154% 25%
</TABLE>
(1) Commencement of investment operations.
(2) Not annualized.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(4) Annualized.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 44
42
FINANCIAL HIGHLIGHTS
FOR THE BERGER FUNDS
FAMILY
--------------------------------------------------------------------------------
Berger Growth Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998 1997(1) 1996(1)
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 11.99 $ 21.51 $ 19.64 $ 18.89
--------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(2) -- (0.09) (0.08)
Net realized and unrealized gains (losses) on
investments and foreign currency transactions 4.55 (2.57) 4.73 1.76
--------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.55 (2.57) 4.64 1.68
--------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Distributions (from capital gains) (0.98) (6.95) (2.77) (0.93)
Total dividends and distributions (0.98) (6.95) (2.77) (0.93)
Net asset value, end of period $ 15.56 $ 11.99 $ 21.51 $ 19.64
--------------------------------------------------------------------------------------------------------------------------------
Total Return 38.96% (16.08)% 26.50% 9.36%
--------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $1,333,794 $1,286,828 $1,889,048 $2,012,706
Net expense ratio to average net assets(3) 1.36% 1.38% 1.41% 1.42%
Ratio of net income (loss) to average net assets (0.38)% (0.38)% (0.40)% (0.43)%
Gross expense ratio to average net assets 1.36% 1.38% 1.41% 1.42%
Portfolio turnover rate 274% 280% 200% 122%
</TABLE>
(1) Per share calculations for the period were based on average shares
outstanding.
(2) Amount represents less than $0.01 per share.
(3) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
Berger International Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period from
Years ended September 30, November 7, 1996(1)
2000 1999 1998 to September 30, 1997
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.06 $ 11.46 $ 10.00
---------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.07) 0.50(2) 0.05
Net realized and unrealized gains (losses)
on investments and foreign currency transactions 3.01 (1.46)(2) 1.41
---------------------------------------------------------------------------------------------------------------------------
Total from investment operations 2.94 (0.96) 1.46
---------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.47) (0.06) --
Distributions (in excess of capital gains) (0.02) (0.38) --
Total dividends and distributions (0.49) (0.44) --
Net asset value, end of period $ 12.51 $ 10.06 $ 11.46
---------------------------------------------------------------------------------------------------------------------------
Total Return(3) 29.64% (8.46)% 14.60%
---------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 23,014 $ 16,515 $ 18,673
Net expense ratio to average net assets(4),(5) 1.76% 1.80% 1.90%(6)
Ratio of net income (loss) to average net assets (0.01)% 2.20% 0.61%(6)
Gross expense ratio to average net assets(5) 1.77% 1.83% 1.99%(6)
Portfolio turnover rate(3),(7) 16% 17% 17%
</TABLE>
(1) Commencement of investment operations.
(2) Restated.
(3) Not annualized.
(4) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Portfolio's Advisor.
(5) Reflects the Fund's expenses plus the Fund's pro rata share of the
Portfolio's expenses.
(6) Annualized.
(7) Represents the portfolio turnover rate of the Portfolio. All of the
investable assets of the Fund are invested in the Portfolio.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 45
43
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following table is based on the historical financial statements of the pool
of assets that was, in a practical sense, the predecessor to the Portfolio in
which the Berger International Fund is invested. The total return, expense
ratios and per share data on the table have been adjusted to reflect the
increase in Fund operating expenses that was expected to occur when the pool's
assets were transferred to the Portfolio over the pool's actual operating
expenses for each period shown.
The table covers the period from the beginning of the pool through October 11,
1996, when the pool's assets were transferred to the Portfolio. The pool was not
registered with the SEC and was not subject to the investment restrictions
imposed on mutual funds. If the pool had been registered, the pool's financial
results might have been adversely affected.
International Equity Pool
Adjusted Selected Data (Unaudited)
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Period From Period From
January 1, July 31,
1996 TO 1989(1) TO
October 11 Years Ended December 31, December 31,
1996(2) 1995 1994 1993 1992 1991 1990 1989
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Per Share Data:(3)
Net asset value, beginning of
period $ 8.94 $ 7.52 $ 8.16 $ 5.98 $ 5.43 $ 4.80 $ 5.00 $ 4.11
-------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) 0.11 0.12 0.06 0.10 0.08 0.08 0.06 0.02
Net realized and unrealized
gain (loss) on
investments 0.95 1.30 (0.70) 2.08 0.47 0.55 (0.26) 0.87
-------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.06 1.42 (0.64) 2.18 0.55 0.63 (0.20) 0.89
-------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 10.00 $ 8.94 $ 7.52 $ 8.16 $ 5.98 $ 5.43 $ 4.80 $ 5.00
-------------------------------------------------------------------------------------------------------------------------------
Total Return(3) 11.91% 18.78% (7.80)% 36.38% 10.21% 13.18% (4.11)% 21.80%
-------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net Assets, end of period
(in thousands) $ 4,482 $ 5,662 $ 6,215 $ 5,495 $ 3,016 $ 2,364 $ 1,201 $ 916
Net expense ratio to average
net assets(3),(4) 1.78%(5) 1.78% 1.78% 1.78% 1.78% 1.78% 1.78% 1.78%(5)
Ratio of net income (loss) to
average net assets(3) 1.11%(5) 1.03% 0.42% 0.92% 0.78% 1.26% 0.79% (0.47)%(5)
Gross expense ratio to average
net assets(3) 1.83%(5) 1.83% 1.83% 1.83% 1.83% 1.83% 1.83% 1.83%(5)
Portfolio turnover rate 30% 34% 62% 41% 36% 27% 31% 413%
</TABLE>
(1) Commencement of operations of the pool.
(2) Commencement of operations of the Portfolio in which the Fund is invested.
(3) Adjusted to reflect the increase in expenses expected in operating the
Fund, including the Fund's pro rata share of the Portfolio's expenses, net
of fee waivers. Additionally, total return is not annualized for periods of
less than one full year.
(4) Net expenses represent gross expenses less fees that would have been waived
by the Advisor of the Portfolio if the fee waiver in effect for the
Portfolio had been in effect for the pool.
(5) Annualized.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 46
44
FINANCIAL HIGHLIGHTS
FOR THE BERGER FUNDS
FAMILY
--------------------------------------------------------------------------------
Berger Growth and Income Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998 1997 1996
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 13.60 $ 16.72 $ 14.06 $ 12.89
------------------------------------------------------------------------------------------------------------------------------
From investment operations
Net investment income (loss) (0.00)(3) 0.04 0.14 0.20
Net realized and unrealized gains (losses)
on investments and foreign currency transactions 4.53 (0.30) 4.28 1.17
------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 4.53 (0.26) 4.42 1.37
------------------------------------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) -- (0.03) (0.13) (0.20)
Dividends (in excess of net investment income) (0.01) (0.01) -- --
Distributions (from capital gains) (2.80) (2.82) (1.63) --
Total dividends and distributions (2.81) (2.86) (1.76) (0.20)
------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 15.32 $ 13.60 $ 16.72 $ 14.06
------------------------------------------------------------------------------------------------------------------------------
Total Return 38.67% (1.60)% 34.56% 10.66%
------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 379,356 $ 301,330 $ 357,023 $ 315,538
Net expense ratio to average net assets(1) 1.35% 1.44% 1.51% 1.56%
Ratio of net income (loss) to average net assets (0.22)% 0.25% 0.87% 1.39%
Gross expense ratio to average net assets 1.35% 1.44% 1.51% 1.56%
Portfolio turnover rate 173% 417%(2) 173% 112%
</TABLE>
(1) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(2) Portfolio turnover was greater than anticipated during this period due to
higher than normal trading activity undertaken in response to market
conditions that existed at that time.
(3) Amount represents less than $0.01 per share.
Berger Balanced Fund
For a Share Outstanding Throughout the Period
<TABLE>
<CAPTION>
Years Ended September 30,
2000 1999 1998(1)
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.28 $ 10.00
-----------------------------------------------------------------------------------------------------
From investment operations
Net investment income 0.23 0.22
Net realized and unrealized gains on investments
and foreign currency transactions 4.69 5.17
-----------------------------------------------------------------------------------------------------
Total from investment operations 4.92 5.39
-----------------------------------------------------------------------------------------------------
Less dividends and distributions
Dividends (from net investment income) (0.23) (0.21)
Distributions (from capital gains) (1.35) (1.90)
Total dividends and distributions (1.58) (2.11)
-----------------------------------------------------------------------------------------------------
Net asset value, end of period $ 16.62 $ 13.28
-----------------------------------------------------------------------------------------------------
Total Return 39.41% 56.77%
-----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data:
Net assets, end of period (in thousands) $ 122,766 $ 30,721
Net expense ratio to average net assets(2) 1.23% 1.50%
Ratio of net income to average net assets 1.63% 1.81%
Gross expense ratio to average net assets 1.23% 1.57%
Portfolio turnover rate 227% 658%(3)
</TABLE>
(1) The Fund had no financial highlights for the one day of operations during
the period ended September 30, 1997.
(2) Net expenses represent gross expenses reduced by fees waived and/or
reimbursed by the Advisor.
(3) Portfolio turnover was greater than expected during this period due to
higher than normal trading activity undertaken in response to market
conditions at a time when the Fund's assets were still relatively small and
before the Fund was fully invested.
Berger Funds o January 29, 2001 Combined Prospectus
<PAGE> 47
This page intentionally left blank.
<PAGE> 48
This page intentionally left blank.
<PAGE> 49
FOR MORE INFORMATION
Additional information about the Funds' investments is available in the Funds'
semi-annual and annual reports to shareholders. the Funds' annual report
contains a discussion of the market conditions and investment strategies that
affected the Funds' performance over the past year.
You may wish to read the Statement of Additional Information (SAI) for more
information on the Funds and the securities they invest in. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the annual and semi-annual reports and the SAI,
request other information or get answers to your questions about the Funds by
writing or calling the Funds at:
Berger Funds
P.O. Box 219958
Kansas City, MO 64121-9958
(800)333-1001
bergerfunds.com
Text-only versions of Fund documents can be viewed online or downloaded from
the EDGAR database on the SEC's Web site at sec.gov.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington D.C. For information on the operation of the Public Reference Room,
call (202) 942-8090. Copies of documents may also be obtained, after paying a
duplicating fee, by sending your request to the following e-mail address:
[email protected]. or by writing to the SEC's Public Reference Section,
Washington, D.C. 20549-6009.
INVESTMENT COMPANY ACT FILE NUMBERS:
Berger Investment portfolio Trust 811-8046
o Berger Information Technology Fund - Investor Shares
o Berger New Generation Fund - Investor Shares
o Berger Select Fund
o Berger Small Company Growth Fund - Investor Shares
o Berger Mid Cap Growth Fund
o Berger Mid Cap Value Fund
o Berger Balanced Fund
Berger Growth Fund, Inc. 811-1382
o Berger Growth Fund
Berger Worldwide Funds Trust 811-07669
o Berger International Fund
Berger Growth and Income Fund, Inc. 811-1383
o Berger Growth and Income Fund
Compros
<PAGE> 50
BERGER INFORMATION TECHNOLOGY FUND - INVESTOR SHARES
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER NEW GENERATION FUND - INVESTOR SHARES
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER SELECT FUND
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER SMALL COMPANY GROWTH FUND - INVESTOR SHARES
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER MID CAP GROWTH FUND
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER MID CAP VALUE FUND
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
BERGER GROWTH FUND
BERGER INTERNATIONAL FUND
A SERIES OF BERGER WORLDWIDE FUNDS TRUST
BERGER LARGE CAP GROWTH FUND
BERGER BALANCED FUND
A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information ("SAI") is not a prospectus. It
relates to the Prospectus for the Berger Funds listed above (the "Funds"), dated
January 29, 2001, as it may be amended or supplemented from time to time, which
may be obtained by writing the Funds at P.O. Box 5005, Denver, Colorado 80217,
or calling 1-800-333-1001.
The Funds are all "no-load" mutual funds, meaning that a buyer pays no
commissions or sales loads when buying or redeeming shares of the Funds,
although each Fund pays certain costs of distributing its shares. See "Section
5. Expenses of the Funds -- 12b-1 Plans" below. This SAI describes each of these
Funds which have many features in common, but may have different investment
objectives and different investment emphases.
The following financial statements of the Funds are incorporated herein by
reference:
[TO BE UPDATED]
Copies of the Annual Report are available, without charge, upon request, by
calling 1-800-333-1001.
DATED JANUARY 29, 2001
<PAGE> 51
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
<TABLE>
<CAPTION>
CROSS-REFERENCES TO
PAGE RELATED DISCLOSURES
SECTION NO. IN PROSPECTUS
------- ---- -------------------
<S> <C> <C>
Introduction 1 Table of Contents
1. Investment Strategies and Risks of the Funds. 1 Berger Funds; Investment Techniques,
Securities and the Associated Risks
2. Investment Restrictions 16 Berger Funds; Investment Techniques,
Securities and the Associated Risks
3. Management of the Funds 22 Organization of the Berger Funds Family
4. Investment Advisors and Sub-Advisors 29 Organization of the Berger Funds Family
5. Expenses of the Funds 36 Berger Funds; Organization of the Berger Funds
Family; Financial Highlights for the Berger
Funds Family
6. Brokerage Policy 45 Organization of the Berger Funds Family
7. How to Purchase and Redeem Shares in the Funds 50 Buying Shares; Selling (Redeeming) Shares
8. How the Net Asset Value is Determined 51 Your Share Price
9. Income Dividends, Capital Gains Distributions and Tax 53 Distributions and Taxes
Treatment
10. Suspension of Redemption Rights 54 Other Information About Your Account
11. Tax-Sheltered Retirement Plans 54 Tax-Sheltered Retirement Plans
12. Exchange Privilege and Systematic Withdrawal 57 Exchanging Shares
Plan
13. Performance Information 57 Financial Highlights for the Berger Funds
Family
14. Additional Information 60 Organization of the Berger Funds Family;
Special Fund Structures
Financial Information 68 Financial Highlights
</TABLE>
-i-
<PAGE> 52
<PAGE> 53
INTRODUCTION
The Funds described in this SAI are all mutual funds, or open-end,
management investment companies. All of the Funds are diversified funds, except
the Berger Select Fund. See below under "Non-Diversification" in Section 1 for
further information concerning the Berger Select Fund. 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 or SAI
concerning the other Funds.
1. INVESTMENT STRATEGIES AND RISKS OF THE FUNDS
The Prospectus describes the investment objective of each of the Funds and
the principal investment policies and strategies used to achieve that objective.
It also describes the principal risks of investing in each Fund.
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. For the Berger
International Fund, the term "Fund" in this Section 1 should be read to mean the
Berger International Portfolio (the "Portfolio"), in which all the investable
assets of the Fund are invested.
COMMON AND PREFERRED STOCKS. Stocks represent shares of ownership in a
company. Generally, preferred stock has a specified dividend and ranks after
bonds and before common stocks in its claim on income for dividend payments and
on assets should the company be liquidated. After other claims are satisfied,
common stockholders participate in company profits on a pro-rata basis. Profits
may be paid out in dividends or reinvested in the company to help it grow.
Increases and decreases in earnings are usually reflected in a company's stock
price, so common stocks generally have the greatest appreciation and
depreciation potential of all corporate securities. While most preferred stocks
pay dividends, any of the Funds may purchase preferred stock where the issuer
has omitted, or is in danger of omitting, payment of its dividends. Such
investments would be made primarily for their capital appreciation potential.
All investments in stocks are subject to market risk, meaning that their prices
may move up and down with the general stock market, and that such movements
might reduce their value.
DEBT SECURITIES. Debt securities (such as bonds or debentures) are
fixed-income securities that bear interest and are issued by corporations or
governments. The issuer has a contractual obligation to pay interest at a stated
rate on specific dates and to repay principal on a specific maturity date. In
addition to market risk, debt securities are generally subject to two other
kinds of risk: credit risk and interest rate risk. Credit risk refers to the
ability of the issuer to meet interest or principal payments as they come due.
The lower the rating given a security by a rating service (such as Moody's
Investor Service ("Moody's") and Standard & Poor's ("S&P")), the greater the
credit risk the rating service perceives with respect to that security. None of
the Funds will purchase any nonconvertible securities rated below investment
grade (Ba or lower by Moody's, BB or lower by S&P). In cases where the ratings
assigned by more than one rating agency differ, the Funds will consider the
security as rated in the higher category. If nonconvertible securities purchased
by a Fund are downgraded to below investment grade following purchase, the
directors or trustees of the Fund, in consultation with the Fund's advisor or
sub-advisor, will determine what action, if any, is appropriate in light of all
relevant circumstances. For a further discussion of debt security ratings, see
Appendix A to this SAI.
Interest rate risk refers to the fact that the value of fixed-income
securities (like debt securities) generally fluctuates in response to changes in
interest rates. A decrease in interest rates will generally result in an
increase in the price of fixed-income securities held by a Fund. Conversely,
during periods of rising interest rates, the value of fixed-income securities
held by a Fund will generally decline. Longer-term securities are generally more
sensitive to interest rate changes and are more volatile than shorter-term
securities, but they generally offer higher yields to compensate investors for
the associated risks.
Certain debt securities can also present prepayment risk. For example, a
security may contain redemption and call provisions. If an issuer exercises
these provisions when interest rates are declining, the Fund could sustain
investment losses as well as have to reinvest the proceeds from the security at
lower interest rates, resulting in a decreased return for the Fund.
-1-
<PAGE> 54
CONVERTIBLE SECURITIES. The Funds may also purchase debt or equity
securities which are convertible into common stock when the Fund's advisor or
sub-advisor believes they offer the potential for a higher total return than
nonconvertible securities. While fixed-income securities generally have a
priority claim on a corporation's assets over that of common stock, some of the
convertible securities which the Funds may hold are high-yield/high-risk
securities that are subject to special risks, including the risk of default in
interest or principal payments which could result in a loss of income to the
Fund or a decline in the market value of the securities. Convertible securities
often display a degree of market price volatility that is comparable to common
stocks. The credit risk associated with convertible securities generally is
reflected by their ratings by organizations such as Moody's or S&P or a similar
determination of creditworthiness by the Fund's advisor or sub-advisor. The
Funds have no pre-established minimum quality standards for convertible
securities and may invest in convertible securities of any quality, including
lower rated or unrated securities. However, the Funds will not invest in any
security in default at the time of purchase, and each of the Funds will invest
less than 20% of the market value of its assets at the time of purchase in
convertible securities rated below investment grade. If convertible securities
purchased by a Fund are downgraded following purchase, or if other circumstances
cause 20% or more of a Fund's assets to be invested in convertible securities
rated below investment grade, the directors or trustees of the Fund, in
consultation with the Fund's advisor or sub-advisor, will determine what action,
if any, is appropriate in light of all relevant circumstances. For a further
discussion of debt security ratings, see Appendix A to this SAI. Convertible
securities will be included in the 25% of total assets the Berger Balanced Fund
will keep in fixed-income senior securities. However, only that portion of their
value attributable to their fixed-income characteristics will be used in
calculating the 25%.
ZEROS/STRIPS. Each of the Funds, except the Berger New Generation Fund, the
Berger Small Company Growth Fund and the Berger International Fund, may 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.
SECURITIES OF SMALLER COMPANIES. Each of the Funds may invest in securities
of companies with small or mid-sized market capitalizations. Market
capitalization is defined as total current market value of a company's
outstanding common stock. Investments in companies with smaller market
capitalizations may involve greater risks and price volatility (that is, more
abrupt or erratic price movements) than investments in larger, more mature
companies since smaller companies may be at an earlier stage of development and
may have limited product lines, reduced market liquidity for their shares,
limited financial resources or less depth in management than larger or more
established companies. Smaller companies also may be less significant factors
within their industries and may have difficulty withstanding competition from
larger companies. While smaller companies may be subject to these additional
risks, they may also realize more substantial growth than larger or more
established companies.
SECURITIES OF COMPANIES WITH LIMITED OPERATING HISTORIES. Each of the Funds
may invest in securities of companies with limited operating histories. The
Funds consider these to be securities of companies with a record of less than
three years' continuous operation, even including the operations of any
predecessors and parents. (These are sometimes referred to as "unseasoned
issuers.") These companies by their nature have only a limited operating history
which can be used for evaluating the company's growth prospects. As a result,
investment decisions for these securities may place a greater emphasis on
current or planned product lines and the reputation and experience of the
company's management and less emphasis on fundamental valuation factors than
would be the case for more mature companies. In addition, many of these
companies may also be small companies and involve the risks and price volatility
associated with smaller companies.
INITIAL PUBLIC OFFERINGS. The Funds may invest in a company's securities at
the time the company first offers securities to the public, that is, at the time
of the company's initial public offering or IPO. Although companies can be any
age or size at the time of their IPOs, they are often smaller and have a limited
operating history, which involve a greater potential for the value of their
securities to be impaired following the IPO. See "Securities of Smaller
Companies" and "Securities of Companies with Limited Operating Histories" above.
Investors in IPOs can be adversely affected by substantial dilution in the
value of their shares, by sales of additional shares and by concentration of
control in existing management and principal shareholders. In addition, all of
the factors that affect stock market performance may have a greater impact on
the shares of IPO companies.
-2-
<PAGE> 55
The price of a company's securities may be highly unstable at the time of
its IPO and for a period thereafter due to market psychology prevailing at the
time of the IPO, the absence of a prior public market, the small number of
shares available and limited availability of investor information. As a result
of this or other factors, a Fund's advisor or sub-advisor might decide to sell
an IPO security more quickly than it would otherwise, which may result in a
significant gain or loss and greater transaction costs to the Fund. Any gains
from shares held for 12 months or less will be treated as short-term gains,
taxable as ordinary income to the Fund's shareholders. In addition, IPO
securities may be subject to varying patterns of trading volume and may, at
times, be difficult to sell without an unfavorable impact on prevailing prices.
The effect of an IPO investment can have a magnified impact on a Fund's
performance when the Fund's asset base is small. Consequently, IPOs may
constitute a significant portion of a Fund's returns particularly when the Fund
is small. Since the number of securities issued in an IPO is limited, it is
likely that IPO securities will represent a smaller component of a Fund's assets
as it increases in size, and therefore have a more limited effect on the Fund's
performance.
There can be no assurance that IPOs will continue to be available for any
of the Funds to purchase. The number or quality of IPOs available for purchase
by a Fund may vary, decrease or entirely disappear. In some cases, a Fund may
not be able to purchase IPOs at the offering price, but may have to purchase the
shares in the aftermarket at a price greatly exceeding the offering price,
making it more difficult for the Fund to realize a profit.
The advisor's or sub-advisor's IPO trade allocation procedures govern which
Funds and other advised accounts participate in the allocation of any IPO. See
the heading "Trade Allocations" under Section 4 below. Under the IPO allocation
procedures of Berger LLC, a Fund generally will not participate in an IPO if the
securities available for allocation to the Fund are insignificant relative to
the Fund's net assets. As a result, any Fund or account whose assets are very
large (such as the Berger Growth Fund) is not likely to participate in the
allocation of many IPOs.
FOREIGN SECURITIES. Each Fund may invest in foreign securities, which may
be traded in foreign markets and denominated in foreign currency. The Funds'
investments may also include American Depositary Receipts (ADRs), European
Depositary Receipts (EDRs) which are similar to ADRs, in bearer form, designed
for use in the European securities markets, and in Global Depositary Receipts
(GDRs).
Investments in foreign securities involve some risks that are different
from the risks of investing in securities of U.S. issuers, such as the risk of
adverse political, social, diplomatic and economic developments and, with
respect to certain countries, the possibility of expropriation, taxes imposed by
foreign countries or limitations on the removal of monies or other assets of the
Funds. Moreover, the economies of individual foreign countries will vary in
comparison to the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, capital reinvestment, resources, self-sufficiency
and balance of payments position. Securities of some foreign companies,
particularly those in developing countries, are less liquid and more volatile
than securities of comparable domestic companies. 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
and securities than domestic issuers and securities, and foreign issuers
generally are not subject to accounting, auditing and financial reporting
standards, requirements and practices comparable to those applicable to domestic
issuers. Also, there is generally less government supervision and regulation of
exchanges, brokers, financial institutions and issuers in foreign countries than
there is in the U.S. Foreign financial markets typically have substantially less
volume than U.S. markets. Foreign markets also have different clearance and
settlement procedures and, in certain markets, delays or other factors could
make it difficult to effect transactions, potentially causing a Fund to
experience losses or miss investment opportunities. The use of a foreign
securities depository may increase this risk. The Funds may maintain assets with
a foreign securities depository if certain conditions are met. A foreign
securities depository may maintain assets on behalf of a Fund if the depository:
(i) acts as or operates a system for the central handling of securities that is
regulated by a foreign financial regulatory authority; (ii) holds assets on
behalf of the Fund under safekeeping conditions no less favorable than those
that apply to other participants; (iii) maintains records that identify the
assets of participants, and keep its own assets separated from the assets of
participants; (iv) provides periodic reports to participants; and (v) undergoes
periodic examination by regulatory authorities or independent accountants. In
addition, the Funds' primary custodian provides the Fund with an analysis of the
custodial risks of using a depository, monitors the depository on a continuous
basis, and notifies the Funds of any material changes in risks associated with
using the depository. In general, the analysis may
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include an analysis of a depository's expertise and market reputation, the
quality of its services, its financial strength, and insurance or
indemnification arrangements, the extent and quality of regulation and
independent examination of the depository, its standing in published ratings,
its internal controls, and other procedures for safeguarding investments, and
any related legal proceedings.
Costs associated with transactions in foreign securities are generally
higher than with transactions in U.S. securities. A Fund will incur greater
costs in maintaining assets in foreign jurisdictions and in buying and selling
foreign securities generally, resulting in part from converting foreign
currencies into U.S. dollars. In addition, a Fund might have greater difficulty
taking appropriate legal action with respect to foreign investments in non-U.S.
courts than with respect to domestic issuers in U.S. courts, which may heighten
the risk of possible losses through the holding of securities by custodians and
securities depositories in foreign countries.
For any Fund invested in securities denominated or quoted in currencies
other than the U.S. dollar, changes in foreign currency exchange rates will
affect the value of the investments in its portfolio and the unrealized
appreciation or depreciation of investments insofar as U.S. investors are
concerned. If the foreign currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the foreign currency
against the U.S. dollar would adversely affect the dollar value of the foreign
securities. Foreign currency exchange rates are determined by forces of supply
and demand on the foreign exchange markets, which are in turn affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICS). The Funds may purchase the
securities of certain companies considered Passive Foreign Investment Companies
(PFICs) under U.S. tax laws. For certain types of PFICs, in addition to bearing
their proportionate share of a Fund's expenses (management fees and operating
expenses), shareholders will also indirectly bear similar expenses of such PFIC.
PFIC investments also may be subject to less favorable U.S. tax treatment, as
discussed in Section 9 below.
ILLIQUID AND RESTRICTED SECURITIES. Each of the Funds is authorized to
invest in securities which are illiquid or not readily marketable because they
are subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities, no ready
market is available. None of the Funds will purchase any such security, the
purchase of which would cause the Fund to invest more than 15% of its net
assets, measured at the time of purchase, in illiquid securities. Investments in
illiquid securities involve certain risks to the extent that a Fund may be
unable to dispose of such a security at the time desired or at a reasonable
price or, in some cases, may be unable to dispose of it at all. In addition, in
order to resell a restricted security, a Fund might have to incur the
potentially substantial expense and delay associated with effecting
registration. If securities become illiquid following purchase or other
circumstances cause more than 15% of a Fund's net assets to be invested in
illiquid securities, the directors or trustees of that Fund, in consultation
with the Fund's advisor, will determine what action, if any, is appropriate in
light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be considered
as illiquid for purposes of this restriction. Pursuant to guidelines established
by the directors or trustees, a Fund's advisor or sub-advisor will determine
whether securities eligible for resale to qualified institutional buyers
pursuant to SEC Rule 144A under the Securities Act of 1933 should be treated as
illiquid investments considering, among other things, the following factors: (1)
the frequency of trades and quotes for the security; (2) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and (4)
the nature of the security and the marketplace trades (e.g., the time needed to
dispose of the security, the method of soliciting offers, and the mechanics of
the transfer). The liquidity of a Fund's investments in Rule 144A securities
could be impaired if qualified institutional buyers become uninterested in
purchasing these securities.
REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements with
various financial organizations, including commercial banks, registered
broker-dealers and registered government securities dealers. A repurchase
agreement is an agreement under which a Fund acquires a debt security (generally
a debt 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
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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 net assets
would be invested in such repurchase agreements and other illiquid securities.
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 certain risks, such as credit risk to the Fund if the other party
defaults on its obligation and the Fund is delayed or prevented from liquidating
the collateral. 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 and delayed. Further, 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. The Funds
expect that these risks can be controlled through careful monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. Each Fund may purchase and
sell securities on a when-issued or delayed delivery basis. However, none of the
Funds currently intends to purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total assets taken at
market value at the time of purchase would be invested in such securities.
When-issued or delayed delivery transactions arise when securities (normally,
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 available on a comparable security when delivery takes place may vary from
the yield on the security at the time that the when-issued or delayed delivery
transaction was entered into. Any failure to consummate a when-issued or delayed
delivery transaction may result in a Fund missing the opportunity of obtaining a
price or yield considered to be advantageous. When-issued and delayed delivery
transactions may generally be expected to settle within one month from the date
the transactions are entered into, but in no event later than 90 days. However,
no payment or delivery is made by a Fund until it receives delivery or payment
from the other party to the transaction.
When a Fund purchases securities on a when-issued basis, it will maintain
in a segregated account with its custodian cash, U.S. government securities or
other liquid assets having an aggregate value equal to the amount of such
purchase commitments, until payment is made. If necessary, additional assets
will be placed in the account daily so that the value of the account will equal
or exceed the amount of the Fund's purchase commitments.
LENDING OF PORTFOLIO SECURITIES. Each of the Funds, except the Berger
Growth Fund and the Berger Large Cap Growthand Fund, may lend their securities
to qualified institutional investors (such as brokers, dealers or other
financial organizations) 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. Loans of securities by a Fund
will be collateralized by cash, letters of credit, or securities issued or
guaranteed by the U.S. Government or its agencies. The collateral will equal at
least 100% of the current market value of the loaned securities,
marked-to-market on a daily basis. By lending its securities, a Fund will be
attempting to generate income through the receipt of interest on the loan which,
in turn, can be invested in additional securities to pursue the Fund's
investment objective. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the account of
the Fund.
Each Fund permitted to lend its portfolio securities may lend 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
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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
receives 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 receives all dividends and distributions on the loaned securities and
any increase in the market value of the loaned securities.
A Fund lending securities bears risk of loss in the event that the other
party to a securities lending transaction defaults on its obligations and the
Fund is delayed in or prevented from exercising its rights to dispose of the
collateral, including the risk of a possible decline in the value of the
collateral securities during the period in which the Fund seeks to assert these
rights, the risk of incurring expenses associated with asserting these rights
and the risk of losing all or a part of the income from the transaction. None of
the Funds will lend its portfolio securities if, as a result, the aggregate
value of such loans would exceed 33-1/3% of the value of the Fund's total assets
(including the value of the collateral received to secure the loan). Loan
arrangements made by a Fund will comply with all other applicable regulatory
requirements, including the rules of the New York Stock Exchange, which rules
presently require the borrower, after notice, to redeliver the securities within
the normal settlement time of three business days. All relevant facts and
circumstances, including creditworthiness of the broker, dealer or institution,
will be considered in making decisions with respect to the lending of
securities, subject to review by the Fund's trustees.
Although voting rights with respect to loaned securities pass to the
borrower, lending Funds retain the right to recall a security (or terminate a
loan) for the purpose of exercising the security's voting rights. Efforts to
recall loaned securities in time to exercise voting rights may be unsuccessful,
especially for foreign securities or thinly traded securities. In addition, it
is expected that loaned securities will be recalled for voting only when the
items being voted on are, in the judgment of the lending Fund's advisor, either
material to the economic value of the security or threaten to materially impact
the issuing company's corporate governance policies or structure.
SHORT SALES. Each Fund (other than the Berger International Fund) currently
is only permitted to engage in short sales if, at the time of the short sale,
the Fund owns or has the right to acquire an equivalent kind and amount of the
security being sold short at no additional cost (i.e., short sales "against the
box"). The Berger International Fund is not permitted to engage in short sales
at all.
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.
Under prior law, a Fund could have made a short sale, as described above,
when it wanted to sell a security it owned at a current attractive price, but
also wished 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. However, federal tax legislation has
since eliminated the ability to defer recognition of gain or loss in short sales
against the box and accordingly, it is not anticipated that any of the Funds
will be engaging in these transactions unless there are further legislative
changes.
SPECIAL SITUATIONS. Each Fund may also invest in "special situations."
Special situations are companies that have recently experienced or are
anticipated to experience a significant change in structure, management,
products or services which may significantly affect the value of their
securities. Examples of special situations are companies being reorganized or
merged, companies emerging from bankruptcy, companies introducing unusual new
products or which enjoy particular tax advantages. Other examples are companies
experiencing changes in senior management, extraordinary corporate events,
significant changes in cost or capital structure or which are believed to be
probable takeover candidates. The opportunity to invest in special situations,
however, is limited and depends in part on the market's assessment of these
companies and their circumstances. By its nature, a "special situation" company
involves to some degree a break with the company's past experience. This creates
greater uncertainty and potential risk of loss than if the company were
operating according to long-
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established patterns. In addition, stocks of companies in special situations may
decline or not appreciate as expected if an anticipated change or development
does not occur or is not assessed by the market as favorably as expected.
HEDGING TRANSACTIONS. Each Fund is authorized to make limited use of
certain types of futures, forwards and/or options, but only for the purpose of
hedging, that is, protecting against market risk due to market movements that
may adversely affect the value of a Fund's securities or the price of securities
that a Fund is considering purchasing. 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. In addition, none of the Funds is
required to hedge. Decisions regarding hedging are subject to the advisor's or
sub-advisor's judgment of the cost of the hedge, its potential effectiveness and
other factors the advisor or sub-advisor considers pertinent.
A hedging transaction may partially protect a Fund from a decline in the
value of a particular security or its portfolio generally, although hedging may
also limit a Fund's opportunity to profit from favorable price movements, and
the cost of the transaction will reduce the potential return on the security or
the portfolio. Use of these instruments by a Fund involves the potential for a
loss that may exceed the amount of initial margin the Fund would be permitted to
commit to the contracts under its investment limitation, or in the case of a
call option written by the Fund, may exceed the premium received for the option.
However, a Fund is permitted to use such instruments for hedging purposes only,
and only if the aggregate amount of its obligations under these contracts does
not exceed the total market value of the assets the Fund is attempting to hedge,
such as a portion or all of its exposure to equity securities or its holding in
a specific foreign currency. To help ensure that the Fund will be able to meet
its obligations under its futures and forward contracts and its obligations
under options written by that Fund, the Fund will be required to maintain liquid
assets in a segregated account with its custodian bank or to set aside portfolio
securities to "cover" its position in these contracts.
The principal risks of a Fund utilizing futures transactions, forward
contracts and options are: (a) losses resulting from market movements not
anticipated by the Fund; (b) possible imperfect correlation between movements in
the prices of futures, forwards and options and movements in the prices of the
securities or currencies hedged or used to cover such positions; (c) lack of
assurance that a liquid secondary market will exist for any particular futures
or options at any particular time, and possible exchange-imposed price
fluctuation limits, either of which may make it difficult or impossible to close
a position when so desired; (d) lack of assurance that the counterparty to a
forward contract would be willing to negotiate an offset or termination of the
contract when so desired; and (e) the need for additional information and skills
beyond those required for the management of a portfolio of traditional
securities. In addition, when the Fund enters into an over-the-counter contract
with a counterparty, the Fund will assume counterparty credit risk, that is, the
risk that the counterparty will fail to perform its obligations, in which case
the Fund could be worse off than if the contract had not been entered into.
Following is additional information concerning the futures, forwards and
options which the Berger Information Technology Fund, the Berger New Generation
Fund, the Berger Select Fund, the Berger Small Company Growth Fund, the Berger
Mid Cap Growth Fund, the Berger Mid Cap Value Fund, the Berger Growth Fund, the
Berger Large Cap Growthand Fund and the Berger Balanced Fund may utilize,
provided that no more than 5% of the Fund's net assets at the time the contract
is entered into may be used for initial margins for financial futures
transactions and premiums paid for the purchase of options. In addition, those
Funds may only write call options that are covered and only up to 25% of the
Fund's total assets.
Currently, the Berger International Fund is authorized to utilize only
forward contracts for hedging purposes and is not permitted to utilize futures
or options. Consequently, the following additional information should be read as
applicable to that Fund only to the extent it discusses forwards. If the
trustees ever authorize that Fund to utilize futures or options, such
investments would be permitted solely for hedging purposes, and the Fund would
not be permitted to invest more than 5% of its net assets at the time of
purchase in initial margins for financial futures transactions and premiums for
options. In addition, the Fund's advisor or sub-advisor may be required to
obtain bank regulatory approval before that Fund engages in futures and options
transactions.
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Futures Contracts. Financial futures contracts are exchange-traded
contracts on financial instruments (such as securities and foreign currencies)
and securities indices that obligate the holder to take or make delivery of a
specified quantity of the underlying financial instrument, or the cash value of
an index, at a future date. Although futures contracts by their terms call for
the delivery or acquisition of the underlying instruments or a cash payment
based on the mark-to-market value of the underlying instruments, in most cases
the contractual obligation will be offset before the delivery date by buying (in
the case of an obligation to sell) or selling (in the case of an obligation to
buy) an identical futures contract. Such a transaction cancels the original
obligation to make or take delivery of the instruments.
Certain Funds may enter into contracts for the purchase or sale for future
delivery of financial instruments, such as securities and foreign currencies, or
contracts based on financial indices including indices of U.S. Government
securities, foreign government securities or equity securities. U.S. futures
contracts are traded on exchanges which have been designated "contract markets"
by the Commodity Futures Trading Commission ("CFTC") and must be executed
through a futures commission merchant (an "FCM"), or brokerage firm, which is a
member of the relevant contract market. Through their clearing corporations, the
exchanges guarantee performance of the contracts as between the clearing members
of the exchange.
Both the buyer and seller are required to deposit "initial margin" for the
benefit of the FCM when a futures contract is entered into. Initial margin
deposits are equal to a percentage of the contract's value, as set by the
exchange on which the contract is traded, and may be maintained in cash or other
liquid assets. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments to the other party to
settle the change in value on a daily basis. Initial and variation margin
payments are similar to good faith deposits or performance bonds or
party-to-party payments resulting from daily changes in the value of the
contract, unlike margin extended by a securities broker, and would be released
or credited to the Funds upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Unlike margin extended by a
securities broker, initial and variation margin payments do not constitute
purchasing securities on margin for purposes of a Fund's investment limitations.
A Fund will incur brokerage fees when it buys or sells 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. A Fund will
attempt to minimize this 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.
Where applicable, 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, a 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 a Fund will hold cash and liquid assets in a segregated account
with a mark-to-market value sufficient to cover the Fund's open futures
obligations, the segregated assets will be available to the Fund immediately
upon closing out the futures position.
The acquisition or sale of a futures contract may occur, for example, when
a Fund is considering purchasing or holds equity securities and seeks to protect
itself from fluctuations in prices without buying or selling those securities.
For example, if prices were expected to decrease, the Fund might sell equity
index futures contracts, thereby hoping to offset a potential decline in the
value of equity securities in the portfolio by a corresponding increase in the
value of the futures contract position held by the Fund and thereby preventing
the Fund's net asset value from declining as much as it otherwise would have. A
Fund also could protect against potential price declines by selling portfolio
securities and investing in money market instruments. However, the use of
futures contracts as a hedging technique allows a Fund 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
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stabilized. At that time, the futures contracts could be liquidated and the Fund
could buy equity securities on the cash market.
The ordinary spreads between prices in the cash and futures markets, due to
differences in the nature of those markets, are subject to distortions. First,
all participants in the futures market are subject to initial margin and
variation margin requirements. Rather than meeting additional variation margin
requirements, investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between the cash
and futures markets. Second, the liquidity of the futures market depends on
participants entering into offsetting transactions rather than making or taking
delivery. To the extent participants decide to make or take delivery, liquidity
in the futures market could be reduced and prices in the futures market
distorted. Third, from the point of view of speculators, the margin deposit
requirements in the futures market are less than margin requirements in the
securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
the foregoing distortions, a correct forecast of general price trends by a Fund
still may not result in a successful use of futures.
Futures contracts entail additional risks. Although a Fund will only
utilize futures contracts when it believes that use of such contracts will
benefit the Fund, if the Fund's investment judgment is incorrect, the Fund's
overall performance could be worse than if the Fund had not entered into futures
contracts. For example, if the Fund has hedged against the effects of a possible
decrease in prices of securities held in the Fund's portfolio and prices
increase instead, the Fund will lose part or all of the benefit of the increased
value of these securities because of offsetting losses in the Fund's futures
positions. In addition, if the Fund has insufficient cash, it may have to sell
securities from its portfolio to meet daily variation margin requirements. Those
sales may be, but will not necessarily be, at increased prices which reflect the
rising market and may occur at a time when the sales are disadvantageous to the
Fund. Although the buyer of an option cannot lose more than the amount of the
premium plus related transaction costs, a buyer or seller of futures contracts
could lose amounts substantially in excess of any initial margin deposits made,
due to the potential for adverse price movements resulting in additional
variation margin being required by such positions. However, each Fund utilizing
futures contracts 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 value less than or equal to the
securities it wishes to hedge or is considering purchasing. If price changes in
a Fund's futures positions are poorly correlated with its other investments, its
futures positions may fail to produce desired gains or result in losses that are
not offset by the gains in the Fund's other investments.
Because futures contracts are generally settled within a day from the date
they are closed out, compared with a longer settlement period for most types of
securities, the futures markets can provide superior liquidity to the securities
markets. Nevertheless, there is no assurance a liquid secondary market will
exist for any particular futures contract at any particular time. In addition,
futures exchanges may establish daily price fluctuation limits for futures
contracts and may halt trading if a contract's price moves upward or downward
more than the limit in a given day. On volatile trading days when the price
fluctuation limit is reached, it may be impossible for a Fund to enter into new
positions or close out existing positions. If the secondary market for a futures
contract is not liquid because of price fluctuation limits or otherwise, a Fund
may not be able to promptly liquidate unfavorable futures positions and
potentially could be required to continue to hold a futures position until the
delivery date, regardless of changes in its value. As a result, a Fund's access
to other assets held to cover its futures positions also could be impaired.
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Options on Futures Contracts. Certain Funds may buy and write options on
futures contracts for hedging purposes. An option on a futures contract gives a
Fund 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.
The amount of risk a Fund assumes when it buys an option on a futures
contract is the premium paid for the option plus related transaction costs. In
addition to the correlation risks discussed above, the purchase of an option
also entails the risk that changes in the value of the underlying futures
contract will not be fully reflected in the value of the options bought.
Forward Foreign Currency Exchange Contracts. A forward contract is a
privately negotiated agreement between two parties in which one party is
obligated to deliver a stated amount of a stated asset at a specified time in
the future and the other party is obligated to pay a specified invoice amount
for the assets at the time of delivery. The Funds authorized to utilize forward
contracts currently intend that they will only use forward contracts or
commitments for hedging purposes and will only use forward foreign currency
exchange contracts, although a Fund may enter into additional forms of forward
contracts or commitments in the future if they become available and advisable in
light of the Funds' objectives and investment policies. Forward contracts
generally are negotiated in an interbank market conducted directly between
traders (usually large commercial banks) and their customers. Unlike futures
contracts, which are standardized exchange-traded contracts, forward contracts
can be specifically drawn to meet the needs of the parties that enter into them.
The parties to a forward contract may agree to offset or terminate the contract
before its maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the relevant Funds' principal uses of
forward foreign currency exchange contracts ("forward currency contracts"). A
Fund may enter into forward currency contracts with stated contract values of up
to the value of the Fund's assets. A forward currency contract is an obligation
to buy or sell an amount of a specified currency for an agreed price (which may
be in U.S. dollars or a foreign currency) on a specified date. A Fund will
exchange foreign currencies for U.S. dollars and for other foreign currencies in
the normal course of business and may buy and sell currencies through forward
currency contracts in order to fix a price (in terms of a specified currency)
for securities it has agreed to buy or sell ("transaction hedge"). A Fund also
may hedge some or all of its investments denominated in foreign currency against
a decline in the value of that currency (or a proxy currency whose price
movements are expected to have a high degree of correlation with the currency
being hedged) relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency approximating the value of some or
all of its portfolio securities denominated in that currency ("position hedge")
or by participating in futures contracts (or options on such futures) with
respect to the currency. A Fund also may enter into a forward currency contract
with respect to a currency where the Fund is considering the purchase or sale of
investments denominated in that currency but has not yet selected the specific
investments ("anticipatory hedge").
These types of hedging minimize the effect of currency appreciation as well
as depreciation, but do not eliminate fluctuations in the underlying U.S. dollar
equivalent value of the proceeds of or rates of return on a Fund's foreign
currency denominated portfolio securities. The matching of the increase in value
of a forward contract and the decline in the U.S. dollar equivalent value of the
foreign currency denominated asset that is the subject of the hedge generally
will not be
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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 investment manager's projection of future exchange rates is inaccurate.
Unforeseen changes in currency prices may result in poorer overall performance
for a Fund than if it had not entered into such contracts.
A Fund will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in the currency underlying the forward
contract or the currency being hedged. To the extent that a Fund is not able to
cover its forward currency positions with underlying portfolio securities, the
Funds' custodian will segregate cash or liquid assets having a value equal to
the aggregate amount of such Fund's commitments under forward contracts entered
into. If the value of the securities used to cover a position or the value of
segregated assets declines, the Fund must find alternative cover or segregate
additional cash or liquid assets on a daily basis so that the value of the
covered and segregated assets will be equal to the amount of a Fund's
commitments with respect to such contracts.
While forward contracts are not currently regulated by the CFTC, the CFTC
may in the future assert authority to regulate forward contracts. In such event,
the Funds' ability to utilize forward contracts may be restricted. A Fund may
not always be able to enter into forward contracts at attractive prices and may
be limited in its ability to use these contracts to hedge Fund assets. In
addition, when a Fund enters into a privately negotiated forward contract with a
counterparty, the Fund assumes counterparty credit risk, that is, the risk that
the counterparty will fail to perform its obligations, in which case the Fund
could be worse off than if the contract had not been entered into. Unlike many
exchange-traded futures contracts and options on futures, there are no daily
price fluctuation limits with respect to forward contracts and other negotiated
or over-the-counter instruments, and with respect to those contracts, adverse
market movements could therefore continue to an unlimited extent over a period
of time. However, each Fund utilizing forward contracts 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. Certain Funds may buy or sell
put or call options and write covered call options on securities that are traded
on United States or foreign securities exchanges or over-the-counter. Buying an
option involves the risk that, during the option period, the price of the
underlying security will not increase (in the case of a call) to above the
exercise price, or will not decrease (in the case of a put) to below the
exercise price, in which case the option will expire without being exercised and
the holder would lose the amount of the premium. Writing a call option involves
the risk of an increase in the market value of the underlying security, in which
case the option could be exercised and the underlying security would then be
sold by a Fund to the option holder at a lower price than its current market
value and the Fund's potential for capital appreciation on the security would be
limited to the exercise price. Moreover, when a Fund writes a call option on a
securities index, the Fund bears the risk of loss resulting from imperfect
correlation between movements in the price of the index and the price of the
securities set aside to cover such position. Although they entitle the holder to
buy equity securities, call options to purchase equity securities do not entitle
the holder to dividends or voting rights with respect to the underlying
securities, nor do they represent any rights in the assets of the issuer of
those securities.
A call option written by a Fund is "covered" if the Fund owns the
underlying security covered by the call or has an absolute and immediate right
to acquire that security without additional cash consideration (or for
additional cash consideration held in a segregated account by its custodian)
upon conversion or exchange of other securities held in its portfolio. A call
option is also deemed to be covered if a Fund holds a call on the same security
and in the same principal amount as the call written and the exercise price of
the call held (i) is equal to or less than the exercise price of the call
written or (ii) is greater than the exercise price of the call written if the
difference is maintained by the Fund in liquid assets in a segregated account
with its custodian.
The writer of a call option may have no control when the underlying
securities must be sold. Whether or not an option expires unexercised, the
writer retains the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the market value of the
underlying security during the option period.
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.
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A Fund will realize a profit from a closing transaction if the price of the
purchase transaction is less than the premium received from writing the option
or the price received from a sale transaction is more than the premium paid to
buy the option; the Fund will realize a loss from a closing transaction if the
price of the purchase transaction is more than the premium received from writing
the option or the price received from a sale transaction is less than the
premium paid to buy the option. Because increases in the market price of a call
option will generally reflect increases in the market price of the underlying
security, any loss resulting from the repurchase of a call option is likely to
be offset in whole or in part by appreciation of the underlying security owned
by the Fund.
An option position may be closed out only where there exists a secondary
market for an option of the same series. If a secondary market does not exist,
it might not be possible to effect closing transactions in particular options
with the result that a Fund would have to exercise the options in order to
realize any profit. If a Fund is unable to effect a closing purchase transaction
in a secondary market, it will not be able to sell the underlying security until
the option expires or the Fund delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market may include the following:
(i) there may be insufficient trading interest in certain options, (ii)
restrictions may be imposed by a national securities exchange on which the
option is traded ("Exchange") on opening or closing transactions or both, (iii)
trading halts, suspensions or other restrictions may be imposed with respect to
particular classes or series of options or underlying securities, (iv) unusual
or unforeseen circumstances may interrupt normal operations on an Exchange, (v)
the facilities of an Exchange or of the Options Clearing Corporation ("OCC") may
not at all times be adequate to handle current trading volume, or (vi) one or
more Exchanges could, for economic or other reasons, decide or be compelled at
some future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on 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 utilizing put
options 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 the 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.
MORTGAGE-BACKED AND ASSET-BACKED SECURITIES. The Berger Balanced Fund may
invest in certain mortgage-backed and asset-backed securities. Mortgage-backed
securities are securities that directly or indirectly represent a participation
in, or are secured by and payable from, mortgage loans secured by real property.
Asset-backed securities are similar, except that they are backed by assets other
than mortgages, such as motor vehicle installment sales contracts, installment
loan contracts, leases of various types of real and personal property and
receivables from revolving credit agreements (credit cards).
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The primary risk of any mortgage-backed or asset-backed security is the
uncertainty of the timing of cash flows from the assets underlying the
securities. See the subheading "Special Risks of Mortgage-Backed Securities"
below for more information about prepayment and extension risks. Also, see the
subheading "Asset-Backed Securities" below for more information about
asset-backed securities.
There are currently three basic types of mortgage-backed securities: (i)
those issued or guaranteed by the United States Government or one of its
agencies or instrumentalities, such as the Government National Mortgage
Association (GNMA), the Federal National Mortgage Association (FNMA) and the
Federal Home Loan Mortgage Corporation (FHLMC); (ii) those issued by private
issuers that represent an interest in or are collateralized by mortgage-backed
securities issued or guaranteed by the United States Government or one of its
agencies or instrumentalities; and (iii) those issued by private issuers that
represent an interest in or are collateralized by whole mortgage loans or
mortgage-backed securities without a government guarantee but usually having
some form of private credit enhancement.
U.S. Government Mortgage-Backed Securities. The Fund may invest in
mortgage-backed securities issued or guaranteed by GNMA, FNMA and FHLMC. GNMA
certificates are backed by the "full faith and credit" of the United States.
FNMA and FHLMC certificates are not backed by the full faith and credit of the
United States, but the issuing agency or instrumentality has the right to
borrow, to meet its obligations, from an existing line of credit with the U.S.
Treasury. The U.S. Treasury has no legal obligation to provide such line of
credit and may choose not to do so. Each of GNMA, FNMA and FHLMC guarantee
timely distribution of interest to certificate holders. GNMA and FNMA also
guarantee timely distribution of scheduled principal payments. FHLMC generally
guarantees only the ultimate collection of principal of the underlying mortgage
loans.
Collateralized Mortgage Obligations and Multiclass Pass-Through Securities.
The Berger Balanced Fund may also invest in collateralized mortgage obligations
(CMOs). CMOs are debt obligations collateralized by mortgage loans or mortgage
pass-through securities. Typically, CMOs are collateralized by GNMA, FNMA or
FHLMC certificates, but also may be collateralized by whole loans or private
mortgage pass-through securities (such collateral is referred to in this section
as Mortgage Assets). Multiclass pass-through securities are equity interests in
a trust composed of Mortgage Assets. Payments of principal of and interest on
the Mortgage Assets, and any reinvestment income thereon, provide the funds to
pay debt service on the CMOs or make scheduled distributions on the multiclass
pass-through securities. CMOs may be issued by agencies or instrumentalities of
the U. S. Government, or by private originators of, or investors in, mortgage
loans, including savings and loan associations, mortgage banks, commercial
banks, investment banks and special purpose subsidiaries of the foregoing. The
Fund may invest in CMOs issued by private entities only if the CMOs are rated at
least investment grade (at least BBB by S&P or Baa by Moody's) or, if unrated,
are determined to be of comparable quality.
In a CMO, a series of bonds or certificates is issued in multiple classes.
Each class of CMOs, often referred to as a "tranche," is issued at a specific
fixed or floating coupon rate and has a stated maturity or final distribution
date. Interest is paid or accrues on all classes of the CMOs on a monthly,
quarterly or semiannual basis. Certain CMOs may have variable or floating
interest rates. The principal of and interest on the Mortgage Assets may be
allocated among the several classes of a CMO series in a number of different
ways.
Generally, the purpose of the allocation of the cash flow of a CMO to the
various classes is to obtain a more predictable cash flow to the individual
tranches than exists with the underlying collateral of the CMO. As a general
rule, the more predictable the cash flow is on a CMO tranche, the lower the
anticipated yield will be on that tranche at the time of issuance relative to
prevailing market yields on mortgage-backed securities. As part of the process
of creating more predictable cash flows on most of the tranches in a series of
CMOs, one or more tranches generally must be created that absorb most of the
volatility in the cash flows on the underlying mortgage loans. The yields on
these tranches may be higher than prevailing market yields on mortgage-backed
securities with similar maturities. As a result of the uncertainty of the cash
flows of these tranches, the market prices of and yield on these tranches
generally are more volatile.
The Fund also may invest in parallel pay CMOs and Planned Amortization
Class CMOs (PAC Bonds). Parallel pay CMOs are structured to provide payments of
principal on each payment date to more than one class. These simultaneous
payments are taken into account in calculating the stated maturity date or final
distribution date of each class, which, as with other CMO structures, must be
retired by its stated maturity date or final distribution date but may be
retired earlier. PAC Bonds generally require payments of a specified amount of
principal on each payment date. PAC Bonds always are parallel pay CMOs with the
required principal payment on such securities having the highest priority after
interest has been paid to all classes.
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The Fund may not invest in "stripped" mortgage-backed securities
(interest-only securities (IOs) or principal-only securities (POs)) or in
mortgage-backed securities known as "inverse floaters."
Adjustable Rate Mortgages. The Berger Balanced Fund may also invest in
adjustable rate mortgage securities (ARMs), which are pass-through mortgage
securities collateralized by mortgages with adjustable rather than fixed rates.
ARMs, like fixed rate mortgages, have a specified maturity date, and the
principal amount of the mortgage is repaid over the life of the mortgage. Unlike
fixed rate mortgages, the interest rate on ARMs is adjusted at regular intervals
based on a specified, published interest rate "index" such as a Treasury rate
index. The new rate is determined by adding a specific interest amount, the
"margin," to the interest rate of the index. Investment in ARM securities allows
the Fund to participate in changing interest rate levels through regular
adjustments in the coupons of the underlying mortgages, resulting in more
variable current income and lower price volatility than longer-term fixed rate
mortgage securities. ARM securities are a less effective means of locking in
long-term rates than fixed rate mortgages since the income from adjustable rate
mortgages will increase during periods of rising interest rates and decline
during periods of falling rates.
Private Mortgage Pass-Through Securities. Private mortgage pass-through
securities are structured similarly to the GNMA, FNMA and FHLMC mortgage
pass-through securities and are issued by originators of and investors in
mortgage loans, including depository institutions, mortgage banks, investment
banks and special purpose subsidiaries of the foregoing. These securities
usually are backed by a pool of conventional fixed rate or adjustable rate
mortgage loans. Since private mortgage pass-through securities typically are not
guaranteed by an entity having the credit status of GNMA, FNMA and FHLMC, these
securities generally are structured with one or more types of credit enhancement
to make them more secure, which may be through guarantees, insurance policies or
letters of credit obtained by the issuer or sponsor from third parties, through
various means of structuring the transaction or through a combination of those
approaches. The Fund may invest in private mortgage pass-through securities only
if they are rated AA/Aa (S&P/Moody's) or above.
Special Risks of Mortgage-Backed Securities. Mortgage-backed securities
have certain different characteristics than traditional debt securities. As a
result of the risks associated with these securities, the Fund could realize a
loss by investing in them, regardless of their rating or their credit
enhancement features.
Among the major differences between mortgage-backed securities and
traditional debt securities are that on mortgage-backed securities, interest and
principal payments are made more frequently, usually monthly, and principal may
be prepaid at any time because the underlying mortgage loans or other assets
generally may be prepaid at any time, usually without penalty. Changes in the
rate of prepayments will generally affect the yield to maturity of the security.
Moreover, when the holder of the security attempts to reinvest prepayments of
principal and interest, it may receive a rate of interest which is higher or
lower than the rate on the mortgage-backed securities originally held. To the
extent that mortgage-backed securities are purchased at a premium, mortgage
foreclosures and principal prepayments may result in a loss to the extent of the
premium paid. If such securities are bought at a discount, both scheduled
payments of principal and unscheduled prepayments will increase current and
total returns and will accelerate the recognition of income which, when
distributed to shareholders, will be taxable as ordinary income.
Mortgage-backed securities, like all fixed-income securities, generally
decrease in value as a result of increases in interest rates. In addition,
although generally the value of fixed-income securities increases during periods
of falling interest rates and decreases during periods of rising interest rates,
as a result of prepayments and other factors, this is not always the case with
respect to mortgage-backed securities.
Although the extent of prepayments on a pool of mortgage loans depends on
various economic and other factors, as a general rule, prepayments on fixed rate
mortgage loans will increase during a period of falling interest rates and
decrease during a period of rising interest rates. Accordingly, during a period
of declining rates, the Fund is likely to have greater amounts to reinvest as a
result of prepayments and is likely to have to reinvest those amounts at lower
interest rates than during a period of rising interest rates. Mortgage-backed
securities generally decrease in value as a result of increases in interest
rates and may benefit less than other fixed-income securities from declining
interest rates because of the risk of prepayment.
The Fund may invest in mortgage derivative securities, such as CMOs, the
average life of which is determined using mathematical models that incorporate
prepayment assumptions and other factors that involve estimates of future
economic and market conditions. These estimates may vary from actual future
results, particularly during periods of extreme market volatility. In addition,
under certain market conditions, the average weighted life of mortgage
derivative securities may not accurately reflect the price volatility of such
securities. For example, in periods of supply and demand imbalances in the
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market for such securities and/or in periods of sharp interest rate movements,
the prices of mortgage derivative securities may fluctuate to a greater extent
than would be expected from interest rate movements alone.
The Fund's investments in mortgage derivative securities also subject the
Fund to extension risk. Extension risk is the possibility that rising interest
rates may cause prepayments to occur at a slower than expected rate. This
particular risk may effectively change a security which was considered short or
intermediate-term at the time of purchase into a long-term security. Long-term
securities generally fluctuate more widely in response to changes in interest
rates than short or intermediate-term securities.
In addition, CMOs and other mortgage-backed securities issued by private
entities are not U.S. government securities and are not guaranteed by any
government agency, although the pool of securities underlying a privately issued
mortgage-backed security may be subject to a guarantee. Therefore, if the
collateral securing a privately issued mortgage-backed security held by the
Fund, in addition to any third party credit support or guarantees, is
insufficient to make payment, the Fund could sustain a loss on its investment in
that security. However, as stated above, the Fund will invest in CMOs and other
mortgage-backed securities issued by private entities only if they are rated
AA/Aa (S&P/Moody's) or above.
Asset-Backed Securities. The Berger Balanced Fund may also invest in
asset-backed securities. Asset-backed securities are securities that represent
direct or indirect participation in, or are secured by and payable from, assets
other than mortgage-backed assets, such as motor vehicle installment sales
contracts, installment loan contracts, leases of various types of real and
personal property and receivables from revolving credit agreements (credit
cards). Asset-backed securities have yield characteristics similar to those of
mortgage-backed securities and are subject to many of the same risks. See the
subheading "Special Risks of Mortgage-Backed Securities" above for a discussion
of those risks. In addition, asset-backed securities involve certain risks that
are not posed by mortgage-backed securities, since asset-backed securities do
not usually contain the complete benefit of a security interest in the related
collateral. For example, credit card receivables generally are unsecured and the
debtors are entitled to the protection of a number of state and federal consumer
credit laws, including the bankruptcy laws, some of which may reduce the ability
to obtain full payment. In the case of automobile receivables, due to various
legal and economic factors, proceeds for repossessed collateral may not always
be sufficient to support payments on these securities.
New instruments and variations of existing mortgage-backed securities and
asset-backed securities continue to be developed. The Fund may invest in any
such instruments or variations as may be developed, to the extent consistent
with its investment objective and policies and applicable legal requirements.
TEMPORARY DEFENSIVE MEASURES. Each of the Funds (except the Berger
Information Technology Fund and the Berger International Fund) may increase its
investment in government securities, and other short-term, interest-bearing
securities without regard to the Fund's otherwise applicable percentage limits,
policies or its normal investment emphasis, when its advisor or sub-advisor
believes market conditions warrant a temporary defensive position. Taking larger
positions in such short-term investments may serve as a means of preserving
capital in unfavorable market conditions. When in a defensive position, a Fund
could miss the opportunity to participate in any stock or bond market advances
that occur during those periods, which the Fund might have been able to
participate in if it had remained more fully invested.
NON-DIVERSIFICATION. The Berger Select Fund is classified as a
"non-diversified" Fund under the Investment Company Act of 1940, which means
that the Fund is not limited by that Act in the proportion of its assets that it
may invest in the securities of a single issuer. The Fund's net asset value may
be more volatile than that of a more-widely diversified fund because the Fund
invests more of its assets in a smaller number of issuers. Consequently, the
Fund may be more vulnerable to any single economic, political or regulatory
occurrence, and the gains or losses on a single stock will have a greater impact
on the Fund's net asset value.
However, the Fund intends to conduct its operations so as to qualify to be
taxed as a "regulated investment company" under the Internal Revenue Code, which
will generally relieve the Fund of any liability for federal income tax to the
extent its earnings are distributed to shareholders. See Section 9--Income
Dividends, Capital Gains Distributions and Tax Treatment below. To qualify as a
regulated investment company, among other requirements, the Fund will limit its
investments
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so that, at the close of each quarter of the taxable year, (i) not more than 25%
of the market value of the Fund's total assets will be invested in securities of
a single issuer, and (ii) with respect to 50% of the market value of its total
assets, not more than 5% of the market value of its total assets will be
invested in the securities of a single issuer and the Fund will not own more
than 10% of the outstanding voting securities of a single issuer. These
limitations do not apply to U.S. government securities.
PORTFOLIO TURNOVER. The portfolio turnover rates of each of the Funds are
shown in the Financial Highlights tables included in the Prospectus. The annual
portfolio turnover rates of some 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. 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 for all the Funds may increase as a result of large
amounts of purchases and redemptions of shares of the Funds due to economic,
market or other factors that are not within the control of management.
Higher portfolio turnover will necessarily result in correspondingly higher
brokerage costs for the Funds. The existence of a high portfolio turnover rate
has no direct relationship to the tax liability of a Fund, although sales of
certain stocks will lead to realization of gains, and, possibly, increased
taxable distributions to shareholders. The Funds' brokerage policy is discussed
further below under Section 6--Brokerage Policy, and additional information
concerning income taxes is located under Section 9--Income Dividends, Capital
Gains Distributions and Tax Treatment.
The variation in the portfolio turnover rate for the Berger Select Fund's
two most recently completed fiscal years is due to the increased size of the
Fund and a portfolio manager change.
2. INVESTMENT RESTRICTIONS
As indicated in the Prospectus, the investment objective of each of the
Funds is as follows:
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<TABLE>
<CAPTION>
FUND INVESTMENT OBJECTIVE
---------------------------------------------- --------------------------------------------
<S> <C>
Berger Information Technology Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger New Generation Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Select Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Small Company Growth Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Mid Cap Growth Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Mid Cap Value Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Growth Fund Long-term capital appreciation
---------------------------------------------- --------------------------------------------
Berger International Fund Long-term capital appreciation
---------------------------------------------- --------------------------------------------
Berger Large Cap Growth Fund Capital appreciation
---------------------------------------------- --------------------------------------------
Berger Balanced Fund Capital appreciation and current income
---------------------------------------------- --------------------------------------------
</TABLE>
The investment objective of the Berger Information Technology Fund, the
Berger New Generation Fund, the Berger Select Fund, the Berger Small Company
Growth Fund, the Berger Mid Cap Growth Fund, the Berger Mid Cap Value Fund, the
Berger Growth Fund, the Berger International Fund and the Berger Balanced Fund,
and the primary investment objective of the Berger Large Cap Growthand Fund, are
considered fundamental, meaning that they cannot be changed without a
shareholders' vote.
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<PAGE> 70
There can be no assurance that any of the Funds' investment objectives will be
realized.
Effective January 2001, the Trustees of the Berger Growth and Income Fund
approved a change in the name and non-fundamental investment strategies of the
Fund from that of a Growth and Income Fund to a Large Cap Growth Fund, and in
doing so eliminated the Fund's secondary investment objective.
Each Fund has also adopted certain investment policies, strategies,
guidelines and procedures in pursuing its objective. These may be changed
without a shareholder vote. The principal policies and strategies used by the
Funds are described in the Prospectus.
In addition, each Fund has adopted certain fundamental and non-fundamental
restrictions on its investments and other activities, which are listed below.
Fundamental restrictions may not 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. Non-fundamental restrictions may be changed in the
future by action of the directors or trustees without shareholder vote.
BERGER INFORMATION TECHNOLOGY FUND, BERGER NEW GENERATION FUND, BERGER SELECT
FUND, BERGER SMALL COMPANY GROWTH FUND(R), BERGER MID CAP GROWTH FUND, THE
BERGER MID CAP VALUE FUND AND BERGER BALANCED FUND
Except as noted, the following fundamental restrictions apply to each of
the Berger Information Technology Fund, the Berger New Generation Fund, the
Berger Select Fund, the Berger Small Company Growth Fund, the Berger Mid Cap
Growth Fund, the Berger Mid Cap Value Fund and the Berger Balanced Fund. The
Fund may not:
1. (Does not apply to the Berger Select Fund) With respect to 75% of the
Fund's total assets, purchase the securities of any one issuer (except U.S.
government securities) if immediately after and as a result of such purchase (a)
the value of the holdings of the Fund in the securities of such issuer exceeds
5% of the value of the Fund's total assets or (b) the Fund owns more than 10% of
the outstanding voting securities of such issuer.
2. Invest in any one industry (other than U.S. government securities) 25%
or more (more than 25%, in the case of the Berger Small Company Growth Fund) of
the value of its total assets at the time of such investment.
3. Borrow money, except from banks for temporary or emergency purposes in
amounts not to exceed 25% of the Fund's total assets (including the amount
borrowed) taken at market value, nor pledge, mortgage or hypothecate its assets,
except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the Fund may be
deemed an underwriter under the Securities Act of 1933 in disposing of a
security), issue senior securities (except to the extent permitted under the
Investment Company Act of 1940), invest in real estate (although it may purchase
shares of a real estate investment trust), or invest in commodities or commodity
contracts except financial futures transactions, futures contracts on securities
and securities indices and options on such futures, forward foreign currency
exchange contracts, forward commitments or securities index put or call options.
5. Make loans, except that the Fund may enter into repurchase agreements
and may lend portfolio securities in accordance with the Fund's investment
policies. The Fund does not, for this purpose, consider the purchase of all or a
portion of an issue of publicly distributed bonds, bank loan participation
agreements, bank certificates of deposit, bankers' acceptances, debentures or
other securities, whether or not the purchase is made upon the original issuance
of the securities, to be the making of a loan.
In applying the industry concentration investment restriction (no. 2
above), each Fund uses the industry groups used in the Data Monitor Portfolio
Monitoring System of William O'Neil & Co. Incorporated. Further, in implementing
that
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<PAGE> 71
restriction, the Berger Small Company Growth Fund intends not to invest in any
one industry 25% or more of the value of its total assets at the time of such
investment.
The trustees have adopted additional non-fundamental investment
restrictions for the Berger Information Technology Fund, the Berger New
Generation Fund, the Berger Select Fund, the Berger Small Company Growth Fund,
the Berger Mid Cap Growth Fund, the Berger Mid Cap Value Fund and the Berger
Balanced 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 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.
2. 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).
3. The Fund may not invest in companies for the purposes of exercising
control of management.
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. Only for the purpose of hedging, the Fund may purchase and sell
financial futures, forward foreign currency exchange contracts and put and call
options, but no more than 5% of the Fund's net assets at the time of purchase
may be invested in initial margins for financial futures transactions and
premiums for options. The Fund may only write call options that are covered and
only up to 25% of the Fund's total assets.
6. 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.
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<PAGE> 72
BERGER GROWTH FUND(SM) AND BERGER LARGE CAP GROWTH FUND(R)
The following fundamental restrictions apply to each of the Berger Growth
Fund and the Berger Large Cap Growthand Fund. The Fund may not:
1. Purchase the securities of any one issuer (except U.S. Government
securities) if immediately after and as a result of such purchase (a) the value
of the holdings of the Fund in the securities of such issuer exceeds 5% of the
value of the Fund's total assets or (b) the Fund owns more than 10% of the
outstanding voting securities or of any class of securities of such issuer.
2. Purchase securities of any company with a record of less than three
years' continuous operation (including that of predecessors) if such purchase
would cause the Fund's investments in all such companies taken at cost to exceed
5% of the value of the Fund's total assets.
3. Invest in any one industry more than 25% of the value of its total
assets at the time of such investment.
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
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<PAGE> 73
restriction, each Fund intends not to invest in any one industry 25% or more of
the value of its total assets at the time of such investment.
The directors have adopted additional non-fundamental
investment restrictions for the Berger Growth Fund and the Berger Large Cap
Growthand 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 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 any security, including any
repurchase agreement maturing in more than seven days, which is not readily
marketable, if more than 15% of the net assets of the Fund, taken at market
value at the time of purchase would be invested in such securities.
4. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term 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.
BERGER INTERNATIONAL FUND
The Fund has adopted the investment policy that it may,
notwithstanding any other fundamental or non-fundamental investment policy or
restriction, invest all of its investable assets in the securities of another
open-end investment company or series thereof with substantially the same
investment objective, policies and limitations as the Fund. This arrangement is
commonly referred to as a master/feeder.
All other fundamental and non-fundamental investment policies
and restrictions of the Berger International Fund and the Berger International
Portfolio (the "Portfolio") are identical. Therefore, although the following
investment restrictions refer to the Portfolio, they apply equally to the Fund.
The Portfolio has adopted certain fundamental restrictions on
its investments and other activities, and none of these restrictions may be
changed without the approval of (i) 67% or more of the voting securities of the
Portfolio present at a meeting of shareholders thereof if the holders of more
than 50% of the outstanding voting securities are present or represented by
proxy, or (ii) more than 50% of the outstanding voting securities of the
Portfolio. Whenever the Fund is requested to vote on a change in the investment
restrictions of the Portfolio, the Fund will hold a meeting of its shareholders
and will cast its votes as instructed by the shareholders.
The following fundamental restrictions apply to the Portfolio.
The Portfolio may not:
1. With respect to 75% of the Portfolio's total assets,
purchase the securities of any one issuer (except U.S. government securities) if
immediately after and as a result of such purchase (a) the value of the holdings
of the Portfolio in the securities of such issuer exceeds 5% of the value of the
Portfolio's total assets or (b) the Portfolio owns more than 10% of the
outstanding voting securities of such issuer.
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Portfolio's total assets (including
the amount borrowed) taken at market value, nor pledge, mortgage or hypothecate
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<PAGE> 74
its assets, except to secure permitted indebtedness and then only if such
pledging, mortgaging or hypothecating does not exceed 25% of the Portfolio's
total assets taken at market value. When borrowings exceed 5% of the Portfolio's
total assets, the Portfolio will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the
Portfolio may be deemed an underwriter under the Securities Act of 1933 in
disposing of a security), issue senior securities (except to the extent
permitted under the Investment Company Act of 1940), invest in real estate
(although it may purchase shares of a real estate investment trust), or invest
in commodities or commodity contracts except financial futures transactions,
futures contracts on securities and securities indices and options on such
futures, forward foreign currency exchange contracts, forward commitments or
securities index put or call options.
5. Make loans, except that the Portfolio may enter into
repurchase agreements and may lend portfolio securities in accordance with the
Portfolio's investment policies. The Portfolio does not, for this purpose,
consider the purchase of all or a portion of an issue of publicly distributed
bonds, bank loan participation agreements, bank certificates of deposit,
bankers' acceptances, debentures or other securities, whether or not the
purchase is made upon the original issuance of the securities, to be the making
of a loan.
In applying the industry concentration investment restriction
(no. 2 above), the Portfolio uses the industry groups designated by the
Financial Times World Index Service.
The trustees have adopted additional non-fundamental
investment restrictions for the Portfolio. These limitations may be changed by
the trustees without a shareholder vote. The non-fundamental investment
restrictions include the following:
1. The Portfolio may not purchase securities on margin from a
broker or dealer, except that the Portfolio may obtain such short-term credits
as may be necessary for the clearance of transactions, and may not make short
sales of securities. This limitation shall not prohibit or restrict the
Portfolio from entering into futures, forwards and options contracts or from
making margin payments and other deposits in connection therewith.
2. The Portfolio may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary broker's
commission).
3. The Portfolio may not invest in companies for the purposes
of exercising control of management.
4. The Portfolio may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not readily
marketable, if more than 15% of the net assets of the Portfolio, taken at market
value at the time of purchase would be invested in such securities.
5. The Portfolio may not enter into any futures, forwards or
options, except that only for the purpose of hedging, the Portfolio may enter
into forward foreign currency exchange contracts with stated contract values of
up to the value of the Portfolio's assets.
6. The Portfolio may not purchase or sell securities on a
when-issued or delayed delivery basis, if as a result more than 5% of its net
assets taken at market value at the time of purchase would be invested in such
securities.
3. MANAGEMENT OF THE FUNDS
Each Fund is supervised by a board of directors or trustees
who are responsible for major decisions about the Funds' policies and overall
Fund oversight. Each Fund's board hires the companies that run day-to-day Fund
operations, such as the investment advisor, administrator, transfer agent and
custodian.
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<PAGE> 75
The directors or trustees and executive officers of each of
the Funds are listed below, together with information which includes their
principal occupations during the past five years and other principal business
affiliations.
MICHAEL OWEN, c/o Zayed University, Post Office Box 19282, Dubai, United
Arab Emirates DOB: 1937. Dean, since _______ 2000, of Zayed
University. Formerly self-employed as a financial and management
consultant, and in real estate development from June 1999 to _____
2000. From 1993 to June 1999, Dean, and from 1989 to 1993, a member
of the Finance faculty, of the College of Business, Montana State
University. Formerly (1976-1989), Chairman and Chief Executive
Officer of Royal Gold, Inc. (mining). Chairman of the Board of Berger
Growth Fund and Berger Large Cap Growthand Fund. Chairman of the
Trustees of Berger Investment Portfolio Trust, Berger Institutional
Products Trust, Berger Worldwide Funds Trust, Berger Worldwide
Portfolios Trust and Berger Omni Investment Trust.
* JACK R. THOMPSON, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1949. President and a director since May 1999 (Executive Vice
President from February 1999 to May 1999) of Berger Growth Fund and
Berger Large Cap Growthand Fund. President and a trustee since May
1999 (Executive Vice President from February 1999 to May 1999) of
Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger Worldwide Funds Trust, Berger Worldwide Portfolios
Trust and Berger Omni Investment Trust. President and Director since
June, 1999 (Executive Vice President from February 1999 to June 1999)
of Berger LLC. Audit Committee Member of the Public Employees'
Retirement Association of Colorado (pension plan) since November
1997. Self-employed as a consultant from July 1995 through February
1999. Director of Wasatch Advisors (investment management) from
February 1997 to February 1999. Director of Janus Capital Corporation
(investment management) from June 1984 through June 1995, and
Executive Vice President of the Corporation from April 1989 through
June 1995. Treasurer of Janus Capital Corporation from November 1983
through October 1989. Trustee of the Janus Investment Funds from
December 1990 through June 1995, and Senior Vice President of the
Trust from May 1993 through June 1995. President and a director of
Janus Service Corporation (transfer agent) from January 1987 through
June 1995. President and a director of Fillmore Agency, Inc.
(advertising agency), from January 1990 through June 1995. Executive
Vice President and a director of Janus Capital International, Ltd.
(investment advisor) from September 1994 through June 1995. President
and a director of Janus Distributors, Inc. (broker/dealer), from May
1991 through June 1995. Director of IDEX Management, Inc. (investment
management), from January 1985 through June 1995. Trustee and Senior
Vice President of the of the Janus Aspen Funds from May 1993 through
June 1995.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, DOB: 1928.
President, Baldwin Financial Counseling. Formerly (1978-1990), Vice
President and Denver Office Manager of Merrill Lynch Capital Markets.
Director of Berger Growth Fund and Berger Large Cap Growth Fund.
Trustee of Berger Investment Portfolio Trust, Berger Institutional
Products Trust, Berger Worldwide Funds Trust, Berger Worldwide
Portfolios Trust and Berger Omni Investment Trust.
KATHERINE A. CATTANACH, 672 South Gaylord, Denver, CO 80209, DOB: 1945.
Managing Principal, Sovereign Financial Services, Inc. (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 Growth Fund and Berger
Large Cap Growthand Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger Worldwide Funds
Trust, Berger Worldwide Portfolios Trust and Berger Omni Investment
Trust.
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<PAGE> 76
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1900, Chicago, IL 60602,
DOB: 1945. Since October 2000, Executive Officer of DST Systems, Inc.
Director (since February 1998) and a Vice President (February 1998 -
November 1998) of West Side Investments, Inc. (investments), a
wholly-owned subsidiary of DST Systems, Inc. Formerly, President,
Chief Executive Officer and a director (September 1997 - October
2000) of DST Catalyst, Inc. (international financial markets
consulting, software and computer services company, an 81% owned
subsidiary of DST Systems, Inc.) Previously (1991 - October 2000),
Chairman, President, Chief Executive Officer and a director of
Catalyst Institute (international public policy research organization
focused primarily on financial markets and institutions); also (1991
- September 1997), Chairman, President, Chief Executive Officer and a
director of Catalyst Consulting (international financial institutions
business consulting firm). Prior thereto (1988-1991), President,
Chief Executive Officer and a director of Kessler Asher Group
(brokerage, clearing and trading firm). Director of Berger Growth
Fund and Berger Large Cap Growthand Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products Trust,
Berger Worldwide Funds Trust, Berger Worldwide Portfolios Trust and
Berger Omni Investment Trust.
HARRY T. LEWIS, JR., 1600 Broadway, Suite 2400, Denver, CO 80202, DOB:
1933. 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 J.D. Edwards & Co. (computer software company) since 1995.
Director of Berger Growth Fund and Berger Large Cap Growthand Fund.
Trustee of Berger Investment Portfolio Trust, Berger Institutional
Products Trust, Berger Worldwide Funds Trust, Berger Worldwide
Portfolios Trust and Berger Omni Investment Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, DOB: 1928.
President, Santa Clara LLC (privately owned agriculture company).
Director of Berger Growth Fund and Berger Large Cap Growthand Fund.
Trustee of Berger Investment Portfolio Trust, Berger Institutional
Products Trust, Berger Worldwide Funds Trust, Berger Worldwide
Portfolios Trust and Berger Omni Investment Trust.
* JAY W. TRACEY, CFA, 210 University Boulevard, Suite 900, Denver, CO
80206, DOB: 1954. Executive Vice President of the Berger Funds (since
August, 2000). Executive Vice President and Chief Investment Officer
of Berger LLC (since June 2000). Interim co-portfolio manager since
June 2000 of the Berger Small Company Growth Fund and the Berger Mid
Cap Growth Fund (since June 2000); portfolio manager of the Berger
Growth Fund (since August 2000); co-portfolio manager since June 2000
of the Berger Select Fund (since June 2000). Formerly, Vice President
and Portfolio Manager at OppenheimerFunds, Inc (September 1994 to May
2000) and Managing Director of Buckingham Capital Management
(February 1994 to September 1994) .
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<PAGE> 77
* MARK S. SUNDERHUSE, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1961. Vice President (since February 1999) and portfolio manager
(since January 1999) of the Berger New Generation Fund. Vice
President and co-portfolio manager since May 1999 of the Berger
Select Fund. Interim co-portfolio manager since June 2000 of the
Berger Small Company Growth Fund and the Berger Mid Cap Growth Fund.
Interim co-portfolio manager (January 2000 to May 2000) of the Berger
Balanced Fund. Senior Vice PresidentExecutive Vice President (since
June 2000), portfolio manager (since January 1999) and Senior Vice
President (from January 1998 to June 2000) with Berger LLC. Formerly,
Senior Vice President and Assistant Portfolio Manager with Crestone
Capital Management, Inc. (from January 1991 through January 1998);
Investment Officer with United Bank of Denver (from April 1989
through January 1991); and officer and registered representative with
Boettcher & Company, Inc. (investment banking) (from May 1985 through
April 1989).
* STEVEN L. FOSSEL, CFA, 210 University Boulevard, Suite 900, Denver, CO
80206, DOB: 1968. Vice President and portfolio manager of Berger LLC
(since June 2000); senior equity analyst with Berger LLC (from March
1998 to June 2000). Portfolio manager since June 2000 of the Berger
Balanced Fund, co-portfolio manager since June 2000 of the Berger
Select Fund. Formerly, Analyst and Assistant Portfolio Manager with
Salomon Brothers Asset Management (from August 1992 to February
1998).
JANICE M. TEAGUE, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1954. Vice President (since November 1998) and Assistant
Secretary (since February 2000 and previously from September 1996 to
November 1998) and Secretary (November 1998 through January 2000) of
the Berger Funds. Vice President (since October 1997), Secretary
(since November 1998) and Assistant Secretary (September 1996 through
November 1998) with Berger LLC. Vice President and Secretary with
Berger Distributors LLC, since August 1998. Formerly, self-employed
as a business consultant from June 1995 through September 1996,
Secretary of the Janus Funds from January 1990 to May 1995 and
Assistant Secretary of Janus Capital Corporation from October 1989 to
May 1995.
* DAVID J. SCHULTZ, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1950. Vice President and Treasurer (since November 1998) and
Assistant Treasurer (September 1996 to November 1998) of the Berger
Funds. Vice President (since February 1997) and Controller (since
August 1994) with Berger LLC. Chief Financial Officer and Treasurer
(since May 1996), Assistant Secretary (since August 1998) and
Secretary (May 1996 to August 1998) with Berger Distributors LLC.
Formerly, Partner with Smith, Brock & Gwinn (accounting firm) from
January 1984 to August 1994.
* ANTHONY R. BOSCH, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1965. Vice President of the Berger Funds (since February 2000).
Vice President (since June 1999) with Berger LLC. Formerly, Assistant
Vice President of Federated Investors, Inc. from December 1996
through May 1999, and Attorney with the U.S. Securities and Exchange
Commission (from June 1990 through December 1996).
* BRIAN S. FERRIE, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1958. Vice President of the Berger Funds since November 1998.
Vice President (since February 1997) and Chief Compliance Officer
(since August 1994) with Berger LLC. Chief Compliance Officer with
Berger Distributors LLC, since May 1996. Formerly, Compliance Officer
with United Services Advisor, Inc., from January 1988 to July 1994,
and Director of Internal Audit of United Services Funds from January
1987 to July 1994.
* JOHN PAGANELLI, 210 University Boulevard, Suite 900, Denver, CO 80206,
DOB: 1967. Assistant Treasurer of the Berger Funds since November
1998. Vice President (since November 1998) and Manager of Accounting
(January 1997 through November 1998) with Berger LLC. Formerly,
Manager of Accounting (December 1994 through October 1996) and Senior
Accountant (November 1991 through December 1994) with Palmeri Fund
Administrators, Inc.
* SUE VREELAND, 210 University Boulevard, Suite 900, Denver, CO 80206, DOB:
1948. Secretary of the Berger Funds (since February 2000). Assistant
Secretary of Berger LLC and Berger Distributors LLC since June 1999.
Formerly, Assistant Secretary of the Janus Funds from March 1994 to
May 1999, Assistant Secretary of Janus Distributors, Inc. from June
1995 to May 1997 and Manager of Fund Administration for Janus Capital
Corporation from February 1992 to May 1999.
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<PAGE> 78
----------
* Interested person (as defined in the Investment Company Act of 1940) of one or
more of the Funds and/or of the Funds' advisors or sub-advisors.
The directors or trustees of the Funds have adopted a
director/trustee retirement age of 75 years.
DIRECTOR/TRUSTEE COMPENSATION
The officers of the Funds received no compensation from the
Funds during the fiscal year ended September 30, 2000. However, directors and
trustees of the Funds who are not "interested persons" of the Funds or their
advisors or sub-advisors are compensated for their services according to a fee
schedule, allocated among the Funds. Neither the officers of the Funds nor the
directors or trustees receive any form of pension or retirement benefit
compensation from the Funds.
The following table sets forth information regarding compensation paid or
accrued during the fiscal year ended September 30, 2000, for each director or
trustee of the Funds:
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<PAGE> 79
<TABLE>
<CAPTION>
NAME AND POSITION
WITH BERGER FUNDS AGGREGATE COMPENSATION FROM
========================================================================================================================
BERGER
BERGER BERGER SMALL BERGER BERGER
INFORMATION NEW BERGER COMPANY MID CAP MID CAP BERGER
TECHNOLOGY GENERATION SELECT GROWTH GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Dennis E. $ 49 $ 2,441 $ 1,340 $ 8,432 $ 3,075 $ 147 $ 319
Baldwin(4)
Dennis E.
Baldwin(3) $_________ $_________ $_________ $_________ $_________ $_________ $_________
Louis Bindner(7) $_________ $_________ $_________ $_________ $_________ $_________ $_________
Katherine A. $ 49 $ 2,441 $ 1,340 $ 8,432 $ 5,747 $ 147 $ 319
Cattanach(4)
Katherine A. $_________ $_________ $_________ $_________ $_________ $_________ $_________
Cattanach(3)
<CAPTION>
NAME AND POSITION
WITH BERGER FUNDS AGGREGATE COMPENSATION FROM
============================================================================================
BERGER
LARGE
BERGER CAP BERGER ALL ALL
INTERNATIONAL GROWTH BALANCED BERGER BERGER
FUND(1) FUND FUND FUNDS(2) FUNDS(3)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Dennis E. $ 19,673 $ 2,966 $ 7,639 $ 1,175 $ 47,600
Baldwin(4)
Dennis E. $_________ $_________ $_________ $_________ $_________
Baldwin(3)
Louis Bindner(7) $_________ $_________ $_________ $_________ $_________
Katherine A. $ 19,673 $ 2,966 $ 4,968 $ 1,175 $ 47,600
Cattanach(4)
Katherine A. $_________ $_________ $_________ $_________ $_________
Cattanach(3)
</TABLE>
-27-
<PAGE> 80
<TABLE>
<CAPTION>
NAME AND POSITION
WITH BERGER FUNDS AGGREGATE COMPENSATION FROM
========================================================================================================================
BERGER
BERGER BERGER SMALL BERGER BERGER
INFORMATION NEW BERGER COMPANY MID CAP MID CAP BERGER
TECHNOLOGY GENERATION SELECT GROWTH GROWTH VALUE GROWTH
FUND FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Paul R. Knapp(3) $_________ $_________ $_________ $_________ $_________ $_________ $_________
Harry T. Lewis(3) $_________ $_________ $_________ $_________ $_________ $_________ $_________
Michael Owen(3) $_________ $_________ $_________ $_________ $_________ $_________ $_________
William $_________ $_________ $_________ $_________ $_________ $_________ $_________
Sinclaire(3)
Jack R. Thompson $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
(4),(5),(6),(7)
Jack R. Thompson
(3),(4),(5),(6) $_________ $_________ $_________ $_________ $_________ $_________ $_________
<CAPTION>
NAME AND POSITION
WITH BERGER FUNDS AGGREGATE COMPENSATION FROM
============================================================================================
BERGER
LARGE
BERGER CAP BERGER ALL ALL
INTERNATIONAL GROWTH BALANCED BERGER BERGER
FUND(1) FUND FUND FUNDS(2) FUNDS(3)
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Paul R. Knapp(3) $_________ $_________ $_________ $_________ $_________
Harry T. Lewis(3) $_________ $_________ $_________ $_________ $_________
Michael Owen(3) $_________ $_________ $_________ $_________ $_________
William $_________ $_________ $_________ $_________ $_________
Sinclaire(3)
Jack R. Thompson
(4),(5),(6),(7) $ 0 $ 0 $ 0 $ 0 $ 0
Jack R. Thompson
(3),(4),(5),(6) $_________ $_________ $_________ $_________ $_________
</TABLE>
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<PAGE> 81
NOTES TO TABLE
(1) Comprised of the portion of the trustee compensation paid by Berger
Worldwide Portfolios to its trustees and allocated to the Fund.
(2) Includes the Berger Growth Fund, the Berger Large Cap Growthand Fund, the
Berger Investment Portfolio Trust (including the Berger Small Company Growth
Fund, the Berger New Generation Fund, the Berger Balanced Fund, the Berger
Select Fund, the Berger Mid Cap Value Fund, the Berger Mid Cap Growth Fund and
the Berger Information Technology Fund), the Berger Institutional Products Trust
(four series), the Berger Worldwide Funds Trust (three series, including the
Berger International Fund), the Berger Worldwide Portfolios Trust (one series)
and the Berger Omni Investment Trust (one series). Aggregate compensation
figures do not include first-year estimates for any Fund in existence for less
than one year. Of the aggregate amounts shown for each director/trustee, the
following amounts were deferred under applicable deferred compensation plans:
Dennis E. Baldwin $_____; Katherine A. Cattanach $______; Michael Owen $_____;
William Sinclaire $______.
(3) Director of Berger Growth Fund and Berger Large Cap Growthand Fund and
trustee of Berger Investment Portfolio Trust, Berger Institutional Products
Trust, Berger Worldwide Portfolios Trust, Berger Worldwide Funds Trust and
Berger Omni Investment Trust.
(4) Interested person of Berger LLC.
(5) Trustee of Berger Worldwide Funds Trust and Berger Worldwide Portfolios
Trust.
(6) President of Berger Growth Fund, Berger Large Cap Growthand Fund, Berger
Investment Portfolio Trust, Berger Institutional Products Trust, Berger
Worldwide Portfolios Trust, Berger Worldwide Funds Trust and Berger Omni
Investment Trust.
(7) Resigned as Director and Trustee effective November 17, 2000.
Directors or trustees may elect to defer receipt of all or a
portion of their fees pursuant to a fee deferral plan adopted by each of the
Funds. Under the plan, deferred fees are credited to an account and adjusted
thereafter to reflect the investment experience of whichever of the Berger Funds
(or approved money market funds) is designated by the director or trustee for
this purpose. Pursuant to an SEC exemptive order, the Funds are permitted to
purchase shares of the designated funds in order to offset their obligation to
the directors/trustees participating in the plan. Purchases made pursuant to the
plan are excepted from any otherwise applicable investment restriction limiting
the purchase of securities of any other investment company. A Fund's obligation
to make payments of deferred fees under the plan is a general obligation of the
Fund.
As of December 29, 2000, the officers and directors/trustees
of the Funds as a group owned of record or beneficially an aggregate of less
than 1% of the outstanding shares of each of the Funds.
4. INVESTMENT ADVISORS AND SUB-ADVISORS
BERGER LLC - INVESTMENT ADVISOR
Berger LLC ("Berger LLC"), 210 University Boulevard, Suite
900, Denver, CO 80206, is the investment advisor to all the Berger Funds. Berger
LLC is responsible for managing the investment operations of these Funds and the
composition of their investment portfolios. Berger LLC also acts as each Funds'
administrator and is responsible for such functions as monitoring compliance
with all applicable federal and state laws.
Berger LLC is a Nevada Limited Liability Company, and has been
in the investment advisory business for 26 years. It serves as investment
advisor or sub-advisor to mutual funds and institutional investors and had
assets under management of approximately $____ billion as of December 31, 2000.
Berger LLC is a subsidiary of Stilwell Management Inc. ("Stilwell"), which owns
more than 80% of Berger LLC, and is an indirect subsidiary of Stilwell Financial
Inc. ("Stilwell Financial"). Stilwell also owns approximately 32% of the
outstanding shares of DST Systems, Inc. ("DST"), a publicly traded information
and transaction processing company which acts as the Funds' transfer agent. DST,
in turn, owns 100% of DST Securities, a registered broker-dealer, which executes
portfolio trades for the Funds.
Stilwell Financial was previously a wholly-owned subsidiary of
Kansas City Southern Industries, Inc. ("KCSI"). On July 12, 2000, KCSI completed
a separation of its transportation and financial services segments through a
dividend of stock of Stilwell Financial. On
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<PAGE> 82
that date, KCSI shareholders received two shares of Stilwell Financial for every
KCSI share held as of June 28, 2000. The separation resulted in no change in the
management or control of the Funds or the Advisor to the Funds.
BBOI WORLDWIDE LLC - INVESTMENT ADVISOR
Prior to May 12, 2000, BBOI Worldwide LLC ("BBOI Worldwide"),
210 University Blvd., Suite 700, Denver, CO 80206, a joint venture between
Berger LLC and Bank of Ireland Asset Management (U.S.) Limited (BIAM), served as
advisor and administrator to the Portfolio. Effective May 12, 2000, the Berger
International Portfolio entered into a new advisory agreement with Berger LLC
replacing BBOI Worldwide LLC as the Fund's investment advisor and administrator,
and BBOI was subsequently dissolved. Berger LLC is responsible for overseeing,
evaluating and monitoring the investment advisory services provided byBerger
BIAM as sub-advisor.
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED - SUB-ADVISOR
As permitted in its Investment Advisory Agreement with the
Berger International Portfolio, Berger LLC has delegated day-to-day investment
management responsibility for the Portfolio to BIAM. As sub-advisor, BIAM
manages the investments in the Portfolio and determines what securities and
other investments will be purchased, retained, sold or loaned, consistent with
the investment objective and policies established by the trustees. BIAM's main
offices are at 26 Fitzwilliam Place, Dublin 2, Ireland. BIAM maintains a
representative office at 75 Holly Hill Lane, Greenwich, CT 06830. BIAM is an
indirect wholly-owned subsidiary of Bank of Ireland, a publicly traded,
diversified financial services group with business operations worldwide. Bank of
Ireland provides investment management services through a network of related
companies, including BIAM which serves primarily institutional clients in the
United States and Canada. Bank of Ireland and its affiliates managed assets for
clients worldwide in excess of $_____ billion as of September 30, 2000.
Bank of Ireland or its affiliates may have deposit, loan or other
commercial or investment banking relationships with the issuers of securities
which may be purchased by the Portfolio, including outstanding loans to such
issuers which could be repaid in whole or in part with the proceeds of
securities purchased by the Portfolio. Federal law prohibits BIAM, in making
investment decisions, from using material non-public information in its
possession or in the possession of any of its affiliates. In addition, in making
investment decisions for the Portfolio, BIAM will not take into consideration
whether an issuer of securities proposed for purchase or sale by the Portfolio
is a customer of Bank of Ireland or its affiliates.
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<PAGE> 83
PERKINS, WOLF, MCDONNELL & COMPANY - SUB-ADVISOR
Perkins, Wolf, McDonnell & Company ("PWM"), 53 West Jackson
Boulevard, Suite 818, Chicago, Illinois 60604, has been engaged as the
investment sub-advisor for the Berger Mid Cap Value Fund. PWM was organized in
1980 under the name Mac-Per-Wolf Co. to operate as a securities broker-dealer.
In September 1983, it changed its name to Perkins, Wolf, McDonnell & Company.
PWM is a member of the National Association of Securities Dealers, Inc. (the
"NASD") and, in 1984, became registered as an investment advisor with the SEC.
PWM has been the investment sub-adviser to the Berger Mid Cap
Value Fund since it commenced operations in August 1998.
Thomas M. Perkins has been the lead investment manager for the
Berger Mid Cap Value Fund.Fund since its inception in August 1998. As lead
manager, Tom Perkins is responsible for the daily decisions on security
selection for the Fund's portfolio. Robert H. Perkins, brother of Thomas
Perkins, has also served as investment manager of the Berger Mid Cap Value Fund
since its inception. Robert Perkins has been an investment manager since 1970
and serves as President and a director of PWM. Thomas Perkins has been an
investment manager since 1974 and joined PWM as a portfolio manager in 1998.
Robert Perkins owns 49% of PWM. Gregory E. Wolf owns 20% of PWM and serves as
its Treasurer and a director.
BAY ISLE FINANCIAL CORPORATION - SUB-ADVISOR
Bay Isle Financial Corporation ("Bay Isle"), 160 Sansome
Street, 17th Floor, San Francisco, CA 94104, is the investment sub-advisor for
the Berger Information Technology Fund. Bay Isle has been in the investment
advisory business since 1986. Bay Isle serves as investment advisor or
sub-advisor to mutual funds, institutional investors and individual separate
accounts.
Bay Isle served as investment advisor to the Berger
Information Technology Fund (originally known as the Information Tech 100(R)
Fund) from its inception in April 1997 until July 1999, when the
InformationTech(R) 100 Fund was reorganized into the Information Technology Fund
with shareholder approval. At that time, Bay Isle became the investment
sub-advisor to the Fund under a Sub-Advisory Agreement between Berger LLC as
advisor and Bay Isle as sub-advisor. As sub-advisor, Bay Isle provides
day-to-day management of the Fund's investment operations.
William F. K. Schaff is primarily responsible for the
day-to-day investment decisions for the Berger Information Technology Fund. Mr.
Schaff is a co-founder and controlling person of Bay Isle and serves as its
Chief Investment Officer and a director. Mr. Schaff has been managing accounts
of Bay Isle clients since 1987. Gary G. Pollock is also a co-founder and
controlling person of Bay Isle and serves as its President and a director.
In addition to its other activities, Bay Isle maintains the
InformationWeek(R) 100 Index, an unmanaged index of the stocks of 100 companies
in the information technology industries. InformationWeek(R) is a registered
trademark of CMP Media, which is not affiliated with Bay Isle or the Fund. Mr.
Schaff also writes articles on investments for InformationWeek magazine, a
publication of CMP Media covering information technology-related topics. CMP
Media compensates Bay Isle for managing the Index and for Mr. Schaff's articles.
INVESTMENT ADVISORY AGREEMENTS
Under the Investment Advisory Agreements between each Fund and
its advisor, the advisor is generally responsible for furnishing continuous
advice and making investment decisions as to the acquisition, holding or
disposition of securities or other assets which each Fund may own or contemplate
acquiring from time to time. Each Investment Advisory Agreement provides that
the investment advisor shall not be liable for any error of judgment or mistake
of law or for any loss arising out of any investment or for any act or omission
taken with respect to the Fund, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties thereunder and except to the extent
otherwise provided by law.
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<PAGE> 84
Under each Investment Advisory Agreement in effect, the
advisor is compensated for its services by the payment of a fee at an annual
rate, calculated as a percentage of the average daily net assets of the Fund.
The following schedule reflects the advisory fees charged to
the Funds for the fiscal year ended September 30, 2000:
<TABLE>
<CAPTION>
FUND ADVISOR INVESTMENT ADVISORY FEE
---- ------- -----------------------
<S> <C> <C>
Berger Information Technology Fund Berger LLC(1) 0.__%(1)
Berger New Generation Fund Berger LLC 0.__%(2)
Berger Select Fund Berger LLC 0.__%
Berger Small Company Growth Fund Berger LLC 0.__%(3)
Berger Mid Cap Growth Fund Berger LLC 0.__%(2)
Berger Mid Cap Value Fund Berger LLC(4) 0.__%(4)
Berger Growth Fund Berger LLC 0.__%(3)
Berger International Fund(6) Berger LLC(5) 0.__%(5)
Berger Large Cap Growth Fund(7) Berger LLC 0.__%(3)
Berger Balanced Fund Berger LLC 0.__%(2)
</TABLE>
(1) Fund is sub-advised by Bay Isle. See text preceding and following table.
Under a written contract, the Fund's investment advisor waives its fee or
reimburses the Fund for expenses to the extent that, at any time during the
life of the Fund, the annual operating expenses for the Investor Shares
class of the Fund in any fiscal year, including the investment advisory fee
and the 12b-1 fee, but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 2.00% of the Fund's average daily net assets
attributable to the Investor Shares for that fiscal year. The contract also
provides that the advisor will waive an additional amount of its fees or
reimburse an additional amount of expenses to the extent necessary to keep
its fee waiver and reimbursement for the Investor Shares class
proportionate to its fee waiver and reimbursement for the Fund's other
outstanding share class. The contract may not be terminated or amended
except by a vote of the Fund's Board of Trustees. The investment advisory
fee is allocated among the Investor Shares and the other class of the Fund
on the basis of net assets attributable to each such class.
(2) Under a written contract, the Fund's investment advisor waives its fee to
the extent that, at any time during the life of the Fund, the Fund's annual
operating expenses (or, if applicable, for the Investor Shares class of the
Fund) in any fiscal year, including the investment advisory fee and the
12b-1 fee, but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1.90% in the case of the Investor Shares
class of the Berger New
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<PAGE> 85
Generation Fund, 2.00% in the case of the Berger Mid Cap Growth Fund, and
1.50% in the case of the Berger Balanced Fund, of the average daily net
assets of the Fund (or applicable class) for that fiscal year. The
advisor's contract with the Berger Mid Cap Growth Fund and the Berger
Balanced Fund may not be terminated or amended except by a vote of the
Fund's Board of Trustees. The agreement with the Berger New Generation Fund
may be terminated by the advisor upon 90 days' prior written notice to the
Fund. For the Berger New Generation Fund, the investment advisory fee is
allocated among the Investor Shares and the other class of the Fund on the
basis of net assets attributable to each such class.
(3) Under a written agreement, the Fund's investment advisor waives its fee to
the extent that the annual operating expenses for the Investor Shares class
of the Fund in any fiscal year, including the investment advisory fee, but
excluding the 12b-1 fee, brokerage commissions, interest, taxes and
extraordinary expenses, exceed 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 attributable to the
Investor Shares for that fiscal year. The agreement may be terminated by
the advisor upon 90 days' prior written notice to the Fund. The investment
advisory fee is allocated among the Investor Shares and the other class of
the Fund on the basis of net assets attributable to each such class.
(4) Fund is sub-advised by PWM. See text preceding and following table.
(5) International Fund bears its pro rata portion of the fee paid by the Berger
International Portfolio to Berger LLC as the advisor. The Portfolio is
sub-advised by BIAM. See text preceding and following table. Under a
written contract, the Portfolio's investment advisor waives its investment
advisory fee to the extent that, at any time during the life of the
Portfolio, the Portfolio's annual operating expenses in any fiscal year,
including the investment advisory fee and custodian fees, but excluding
brokerage commissions, interest, taxes and extraordinary expenses, exceed
1.00% of the Portfolio's average daily net assets for that fiscal year. The
contract may not be terminated or amended except by a vote of the
Portfolio's Board of Trustees. Any such reduction in the advisory fee paid
by the Portfolio will also reduce the pro rata share of the advisory fee
borne indirectly by the InternationalBerger International Fund.
(6) Effective May 12, 2000, the Berger/BIAM International Fund was renamed
Berger International Fund.
(7) Effective January 29, 2001, the Berger Growth and Income Fund was renamed
Berger Large Cap Growth Fund.
Investment advisory fees are charged to the Berger Funds according to the
following schedule:
<TABLE>
<CAPTION>
Fund Average Daily Net Assets Annual Rate
---- ------------------------ -----------
<S> <C> <C>
Berger Select Fund First $500 million .75%
Berger Mid Cap Growth Fund Next $500 million .70%
Berger Mid Cap Value Fund Over $1 billion .65%
Berger Growth Fund
Berger Large Cap Growth Fund
Berger Information Technology Fund First $500 million .85%
Berger New Generation Fund Next $500 million .80%
Berger Small Company Growth Fund Over $1 billion .75%
Berger Balanced Fund First $1 billion .70%
Over $1 billion .65%
Berger International Portfolio First $500 million .85%
Next $500 million .80%
Over $1 billion .75%
</TABLE>
Each Fund's current Investment Advisory Agreement will
continue in effect until the last day of April 2001, 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 the advisor. Each Agreement is subject to termination by the Fund or the
advisor on 60 days' written notice, and terminates automatically in the event of
its assignment.
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<PAGE> 86
Under the Sub-Advisory Agreement between the advisors and the
sub-advisors for the Berger International Portfolio, the Berger Mid Cap Value
Fund and the Berger Information Technology Fund, the sub-advisor is responsible
for day-to-day investment management. The sub-advisor manages the investments
and determines what securities and other investments will be acquired, held or
disposed of, consistent with the investment objective and policies established
by the trustees. Each Sub-Advisory Agreement provides that the sub-advisor shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties thereunder and except to the extent otherwise provided by law.
No fees are paid directly to the sub-advisors by the Funds. As
the sub-advisor of the Berger Mid Cap Value Fund, PWM receives from the advisor
a fee at the annual rate of 0.375% of the first $500 million of average daily
net assets of the Fund, 0.35% of the next $500 million and 0.325% of any amount
in excess of $1 billion. sub- BIAM, as the sub-advisor of the Berger
International Portfolio, receives from the advisor a fee at the annual rate of
0.45% of the average daily net assets of the Portfolio. During certain periods,
BIAM may voluntarily waive all or a portion of its fee under the Sub-Advisory
Agreement, which will not affect the fee paid by the Portfolio to the advisor.
Bay Isle, as the sub-advisor of the Berger Information Technology Fund, receives
from the advisor a fee at the annual rate of 0.425% for the first $500 million
of the Fund's average daily net Fund.assets, 0.40% of the next $500 million and
0.375% of any amount in excess of $1 billion.
The Sub-Advisory Agreements will continue in effect until
April 2001 or 2002, and thereafter from year to year if such continuation is
specifically approved at least annually by the trustees or by vote of a majority
of the outstanding shares of the Fund and in either case by vote of a majority
of the trustees of the Fund who are not "interested persons" (as that term is
defined in the Investment Company Act of 1940) of the Fund or the advisor or the
sub-advisor. The Sub-Advisory Agreements are subject to termination by the Fund
or the sub-advisor on 60 days' written notice, and terminate automatically in
the event of their assignment and in the event of termination of the related
Investment Advisory Agreement.
OTHER ARRANGEMENTS BETWEEN BERGER LLC AND PWM
Berger LLC and PWM entered into an Agreement, dated November
18, 1996, as amended January 27, 1997, April 8, 1998 and November 17, 1999 (the
"November 18 Agreement"), under which, among other things, PWM agreed that, so
long as Berger LLC acts as the advisor to the Berger Mid Cap Value Fund, and PWM
provides sub-advisory or other services in connection with the Fund, PWM will
not manage or provide advisory services to any registered investment company
that is in direct competition with the Fund.
OTHER ARRANGEMENTS BETWEEN BERGER LLC AND BAY ISLE
Berger LLC and Bay Isle have formed a joint venture to provide
asset management services to certain private accounts. In connection with the
formation of that joint venture, Berger LLC purchased from Bay Isle owners
William F. K. Schaff and Gary G. Pollock the right that, if either Mr. Schaff or
Mr. Pollock ever desires to sell any of his Bay Isle shares in the future, they
will together first offer to sell shares to Berger LLC aggregating at least 80%
of the total outstanding shares of Bay Isle at an agreed price. If Berger LLC
elects to purchase the Bay Isle shares offered, the parties have agreed to use
their best efforts to have 5-year employment agreements entered into between Bay
Isle and Messrs. Schaff and Pollock. Consummation of any such purchase of Bay
Isle shares by Berger LLC would be subject to a number of conditions, including
any required approval
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<PAGE> 87
by Fund shareholders under the Investment Company Act of 1940. Bay Isle and
Messrs. Schaff and Pollock are also compensated by Berger LLC for providing
administrative or consulting services relating to their joint venture private
account business.
TRADE ALLOCATIONS
While investment decisions for the Funds are made
independently by the advisor or sub-advisor, the same investment decision may be
made for a Fund and one or more accounts advised by the advisor or sub-advisor.
In this circumstance, should purchase and sell orders of the same class of
security be in effect on the same day, the orders for such transactions may be
combined by the advisor or sub-advisor in order to seek the best combination of
net price and execution for each. Client orders partially filled will, as a
general matter, be allocated pro rata in proportion to each client's original
order, although exceptions may be made to avoid, among other things, odd lots
and de minimis allocations. Execution prices for a combined order will be
averaged so that each participating client receives the average price paid or
received. While in some cases, this policy might adversely affect the price paid
or received by a Fund or other participating accounts, or the size of the
position obtained or liquidated, the advisor or sub-advisor will aggregate
orders if it believes that coordination of orders and the ability to participate
in volume transactions will result in the best overall combination of net price
and execution.
RESTRICTIONS ON PERSONAL TRADING
Berger LLC, the Berger Funds and Berger Distributors LLC each
permits its directors, officers and employees to purchase and sell securities
for their own accounts in accordance with a policy regarding personal investing
in Ethics.each of the Codes of Ethics for Berger LLC, the Berger Funds and
Berger Distributors LLC. The policy requires all covered persons to conduct
their personal securities transactions in a manner which does not operate
adversely to the interests of the Funds or Berger LLC's other advisory clients.
Directors and officers of Berger LLC and Berger Distributors LLC, 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
for Berger LLC and Berger Distributors LLC, the policy subjects directors and
officers of Berger LLC, the Berger Funds and Berger Distributors LLC, investment
personnel and other access persons to various trading restrictions and reporting
obligations. All reportable transactions are reviewed for compliance with the
policy. The policy is administered by Berger LLC and the provisions of the
policy are subject to interpretation by and exceptions authorized by its board
of directors.
PWM has adopted a Code of Ethics that is substantially similar
to the Code adopted by Berger LLC.
BIAM has adopted a Code of Ethics that restricts its officers,
employees and other staff from personal trading in specified circumstances,
including among others prohibiting participation in initial public offerings,
prohibiting dealing in a security for the seven days before and after any trade
in that security on behalf of clients, prohibiting trading in a security while
an order is pending for any client on that same security, and requiring profits
from short-term trading in securities (purchase and sale within a 60-day period)
to be forfeited. In addition, staff of BIAM must report all of their personal
holdings in securities annually and must disclose their holdings in any private
company if an investment in that same company is being considered for clients.
Staff of BIAM are required to pre-clear all transactions in securities not
otherwise exempt under the Code of Ethics and must instruct their broker to
provide BIAM with duplicate confirmations of all such personal trades.
Bay Isle permits its officers, directors, employees and
consultants to purchase and sell securities for their own accounts and accounts
of related persons in accordance with provisions governing personal securities
trading in Bay Isle's code of ethics and related internal policies. Employees
must wait 3 days between the time a new recommendation or opinion change is made
and the time the employee may trade in those securities in their own or related
accounts, or alternatively may ask that
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<PAGE> 88
their transaction be added to a "block" trade that will be made for a group of
clients. Any employee trade not included in a "block" trade made must be
pre-cleared if the trade exceeds certain specified volume limits. Volume limits
are set with the intent of requiring prior approval of any trade that could
potentially cause changes in the market price of the security in question. In
addition, no employee may sell (or buy) any security which he or she has bought
(or sold) within the past 5 trading days unless a loss is realized on closing
the position. No employee, officer or director of Bay Isle may acquire any
security in an initial public offering or in a private placement without prior
written approval from Bay Isle's President. Any Bay Isle employee who is an
"access person" of the Fund will also be subject to the provisions of Berger
LLC's Code of Ethics, if those provisions are more restrictive than the
provisions of Bay Isle's own code. Each employee must acknowledge quarterly that
they are in compliance with the Bay Isle Code of Ethics and related policies.
5. EXPENSES OF THE FUNDS
ALL FUNDS EXCEPT THE BERGER INTERNATIONAL FUND
In addition to paying an investment advisory fee to its
advisor, each Fund (other than the Berger International Fund) pays all of its
expenses not assumed by its advisor, including, but not limited to, custodian
and transfer agent fees, legal and accounting expenses, administrative and
record keeping expenses, interest charges, federal and state taxes, expenses of
shareholders' meetings, compensation of directors or trustees who are not
interested persons of Berger LLC, expenses of printing and distributing reports
to shareholders and federal and state administrative agencies, and all expenses
incurred in connection with the execution of its portfolio transactions,
including brokerage commissions on purchases and sales of portfolio securities,
which are considered a cost of securities of each Fund. Each Fund also pays all
expenses incurred in complying with all federal and state laws and the laws of
any foreign country applicable to the issue, offer or sale of shares of the
Fund, including, but not limited to, all costs involved in preparing and
printing prospectuses for shareholders of the Fund.
Under a separate Administrative Services Agreement with
respect to each of such Funds, Berger LLC performs certain administrative and
recordkeeping services not otherwise performed by the Fund's custodian and
recordkeeper, including the preparation of financial statements and reports to
be filed with the Securities and Exchange Commission and state regulatory
authorities. For the fiscal year ended September 30, 2000, Berger LLC did not
charge an administrative fee to the Funds. The administrative services fees may
be changed by the directors or trustees without shareholder approval.
The following tables show the total dollar amounts of advisory
fees and administrative services fees paid by each of such Funds for the periods
indicated and the amount of such fees waived on account of excess expenses under
applicable expense limitations. Except where noted, these amounts were paid to
Berger LLC.
Berger Information Technology Fund
<TABLE>
<CAPTION>
Advisory Fee
Investment Administrative Waiver and Expense
Fiscal Year Ended(1) Advisory Fee(2) Service Fee(3) Reimbursement(4) TOTAL
------------------------- ----------------------- ----------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
Sept. 30, 2000 $ ________ $ ________ $ ________ $ _______
Sept. 30, 1999 $ 97,000 $ 11,000 $ (47,000) $ 61,000
Feb. 28, 1999(5) $ 68,000 $ 30,000 $ (84,000) $ 14,000
</TABLE>
(1) The Fund's fiscal year changed from February 28 to September 30 as part of a
reorganization effective July 1999.
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<PAGE> 89
(2) Under the advisory agreement in effect prior to the reorganization
referenced in note (1), the Fund's predecessor paid an advisory fee at an annual
rate of 0.95% of its average daily net assets to Bay Isle. As part of the
reorganization, the investment advisory fee of 0.90% payable to Berger LLC came
into effect. Effective October 1, 1999, the investment advisory fee charged to
the Fund was reduced to 0.85% of the first $500 million of average net assets;
0.80% on the next $500 million of average net assets; and 0.75% of average net
assets exceeding $1 billion.
(3) Under the administrative service agreement in effect prior to the
reorganization referenced in note (1), the Fund's predecessor paid to a third
party administrator an administrative services fee at the annual rate of 0.20%
of average net assets, subject to a $30,000 annual minimum. As part of the
reorganization, the administrative service fee of 0.01% payable to Berger LLC
came into effect. Effective October 1, 1999, Berger LLC eliminated the 0.01%
administrative fee charged to the Funds.
(4) Prior to the reorganization referenced in note (1), the Fund's prior advisor
had voluntarily agreed to reduce its fees and/or pay expenses of the Fund to
ensure that the Fund's expenses did not exceed 1.50%. During 1998, in addition
to waiving its entire advisory fee and reimbursing the Fund for the entire
administrative service fee, the Fund's prior advisor reimbursed the Fund for
$59,000 of additional expenses in order to meet the applicable expense
limitation. As part of the reorganization, the current expense limitation
arrangements came into effect with Berger LLC, which are described in note (2)
to the table appearing above under the heading "Investment Advisory Agreements."
(5) The Fund was the accounting survivor in the reorganization referenced in
note (1). Accordingly, this covers the period April 8, 1997 (commencement of
operations of the predecessor) to February 28, 1998, of the Fund's predecessor.
Berger New Generation Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------- ------------ -------------- ------------ ----------
<S> <C> <C> <C> <C>
2000 $___________ $_____________ $ 0 $_________
1999 $ 1,714,000 $ 19,000 $ 0 $1,733,000
1998 $ 1,229,000 $ 14,000 $ 0 $1,243,000
</TABLE>
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<PAGE> 90
Berger Select Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee TOTAL
September 30, Advisory Fee Service Fee Waiver
------------------------- ----------------------- ----------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
2000 $_________ $________ $ 0 $_______
1999 $ 740,000 $ 10,000 $ 0 $750,000
1998* $ 143,000 $ 2,000 $ 0 $145,000
</TABLE>
* Covers period from December 31, 1997 (commencement of operations) through the
end of the Fund's first fiscal year on September 30, 1998.
Berger Small Company Growth Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
------------------------- ----------------------- ----------------------- ---------------------- -----------------------
<S> <C> <C> <C> <C>
2000 $_________ $________ $ 0 $_________
1999 $5,582,000 $ 62,000 $ 0 $5,644,000
1998 $6,984,000 $ 78,000 $ 0 $7,062,000
</TABLE>
Berger Mid Cap Growth Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------- ------------ --------------- ------------ ----------
<S> <C> <C> <C> <C>
2000 $________ $________ $ 0 $_________
1999 $ 88,000 $ 1,000 $ 0 $ 89,000
1998* $ 20,000 $ 0 $(12,000) $ 8,000
</TABLE>
* Covers period from December 31, 1997 (commencement of operations) through the
end of the Fund's first fiscal year on September 30, 1998.
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<PAGE> 91
Berger Mid Cap Value Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------- ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C>
2000 $________ $_________ $ 0 $__________
1999 $ 176,000 $ 2,000 $ 0 $ 178,000
1998* $ 20,000 $ 0 $ 0 $ 20,000
</TABLE>
* Covers period from August 12, 1998 (commencement of operations) through the
end of the Fund's first fiscal year on September 30, 1998.
Berger Growth Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------- ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C>
2000 $__________ $_______ $ 0 $__________
1999 $10,835,000 $144,000 $ 0 $10,979,000
1998 $12,939,000 $173,000 $ 0 $13,112,000
</TABLE>
Berger Large Cap Growth Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------------- ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C>
2000 $_________ $_______ $ 0 $_________
1999 $2,740,000 $ 37,000 $ 0 $2,777,000
1998 $2,539,000 $ 34,000 $ 0 $2,573,000
</TABLE>
Berger Balanced Fund
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Administrative Advisory Fee
September 30, Advisory Fee Service Fee Waiver TOTAL
----------------------- ------------ -------------- ------------ ----------
<S> <C> <C> <C> <C>
2000 $_________ $_______ $ 0 $_________
1999 $ 616,000 $ 9,000 $ 0 $ 625,000
1998 $ 168,000 $ 2,000 $(16,000) $ 154,000
</TABLE>
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<PAGE> 92
Each Fund has appointed State Street Bank and Trust Company
("State Street"), 801 Pennsylvania, Kansas City, MO 64105, as its recordkeeping
and pricing agent. In addition, State Street also serves as the Funds'
custodian,custodian. Each of the Funds has appointed DST Systems, Inc. ("DST"),
P.O. Box 219958, Kansas City, MO 64121, as its transfer agent and dividend
disbursing agent. Approximately 32% of the outstanding shares of DST are owned
by Stilwell.
As recordkeeping and pricing agent, State Street calculates
the daily net asset value of each Fund and performs certain accounting and
recordkeeping functions required by the Funds. The Funds pay State Street a
monthly base fee plus an asset-based fee. State Street is also reimbursed for
certain out-of-pocket expenses.
State Street, 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, State Street receives an
asset-based fee plus certain transaction fees and out-of-pocket expenses.
As transfer agent and dividend disbursing agent, DST 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, DST
receives a fee from the Funds at an annual rate of $14.00 per open Fund
shareholder account, subject to preset volume discounts, plus certain
transaction fees and fees for closed accounts, and is reimbursed for
out-of-pocket expenses.
All of State Street's and DST's fees are subject to reduction
pursuant to an agreed formula for certain earnings credits on the cash balances
of the Funds. Earnings credits received by each Fund can be found on the Fund's
Statement of Operations in the Annual Report incorporated by reference into this
Statement of Additional Information.
BERGER INTERNATIONAL FUND
The Berger International Fund is allocated and bears
indirectly its pro rata share of the aggregate annual operating expenses of the
Berger International Portfolio, since all of the investable assets of the Fund
are invested in the Portfolio.
Expenses of the Portfolio include, among others, its pro rata
share of the expenses of Berger Worldwide Portfolios Trust, of which the
Portfolio is a series, such as: expenses of registering the Trust with
securities authorities; the compensation of its independent trustees; expenses
of preparing reports to investors and to governmental offices and commissions;
expenses of meetings of investors and trustees of the Trust; legal fees; and
insurance premiums of the Trust. Expenses of the Portfolio also include, among
others, the fees payable to the advisor under the Investment Advisory Agreement;
expenses connected with the execution of portfolio transactions, including
brokerage commissions on purchases and sales of portfolio securities (which are
considered a cost of securities of the Portfolio); custodian fees; auditors'
fees; interest and taxes imposed on the Portfolio; transfer agent, recordkeeping
and pricing agent fees; and such other non-recurring and extraordinary items as
may arise from time to time.
Expenses of the Berger International Fund include, among
others, its pro rata share of the expenses of the Berger Worldwide Funds Trust,
of which the Fund is a series, such as: expenses of registering the Trust with
securities authorities; expenses of meetings of the shareholders of the Trust;
and legal fees. Expenses of the Fund also include, among others, registration
and filing fees incurred in registering shares of the Fund with securities
authorities; 12b-1 fees; taxes imposed on the Fund; the fee payable to the
Advisor under the Administrative Services Agreement; and such other
non-recurring and extraordinary items as may arise from time to time.
-40-
<PAGE> 93
SERVICE ARRANGEMENTS FOR THE FUND. Under an Administrative
Services Agreement with the Berger International Fund, Berger LLC serves as the
administrator of the Fund. In this capacity, it is responsible for administering
and managing all aspects of the Fund's day-to-day operations, subject to the
oversight of the trustees of the Fund.
Berger is responsible, at its expense, for furnishing (or
procuring other parties to furnish) all administrative services reasonably
necessary for the operation of the Fund, including recordkeeping and pricing
services, custodian services, transfer agency and dividend disbursing services,
tax and audit services, insurance, printing and mailing to shareholders of
prospectuses and other required communications, and certain other administrative
and recordkeeping services, such as coordinating matters relating to the
operations of the Fund, monitoring the Fund's status as a "regulated investment
company" under the Internal Revenue Code, coordinating registration of
sufficient Fund shares under federal and state securities laws, arranging for
and supervising the preparation of registration statements, tax returns, proxy
materials, financial statements and reports for filing with regulatory
authorities and distribution to shareholders of the Fund. Under the
Administrative Services Agreement, the Fund pays Berger a fee at an annual rate
equal to the lesser of (i) 0.45% of its average daily net assets, or (ii)
Berger's annual cost to provide or procure these services (including the fees of
any services providers whose services are procured by Berger), plus an
additional 0.02% of the Fund's average daily net assets. The trustees of the
Fund regularly review amounts paid to and expenditures incurred pursuant to the
Administrative Services Agreement. In addition, in the event that Berger's
duties under the Administrative Services Agreement are delegated to another
party, Berger may take into account, in calculating the cost of such services,
only the costs incurred by such other party in discharging the delegated duties.
Prior to May 12, 2000 BBOI Worldwide served as the Fund's administrator, in
which capacity it was responsible for providing these services.
Also prior to May 12, 2000, under a Sub-Administration
Agreement then in effect between BBOI Worldwide and Berger LLC, Berger was
delegated the responsibility to perform certain of the administrative and
recordkeeping services required under the Administrative Services Agreement and
to procure, at BBOI Worldwide's expense, third parties to provide the services
not provided by Berger LLC. Under the Sub-Administration Agreement, Berger LLC
was paid a fee of 0.25% of the Fund's average daily net assets for its services.
During certain periods, Berger LLC voluntarily waived all or a portion of its
fee, which did not affect the fee paid by the Fund to BBOI Worldwide.
State Street has been appointed to provide recordkeeping and
pricing services to the Fund, including calculating the daily net asset value of
the Fund, and to perform certain accounting and recordkeeping functions that it
requires. In addition, State Street has been appointed to serve as the Fund's
custodian, and DST has been appointed to
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<PAGE> 94
serve as the Fund's transfer agent and dividend disbursing agent. The fees of
State Street and DST are all paid by Berger LLC. Approximately 32% of the
outstanding shares of DST are owned by Stilwell.
SERVICE ARRANGEMENTS FOR THE PORTFOLIO. Under the Investment
Advisory Agreement between Berger LLC and the Berger International Portfolio, in
addition to providing investment advisory services, Berger is responsible for
providing or arranging for all managerial and administrative services necessary
for the operations of the Portfolio. Berger is responsible for providing certain
of these services at its own expense, such as compliance monitoring and
preparing investor communications, which have been delegated to Berger LLC as
part of the Sub-Administration Agreement discussed above. Other services are
procured from third party service providers at the Portfolio's own expense, such
as custody, recordkeeping and pricing services. Prior to May 12, 2000, BBOI
Worldwide served as the Fund's administrator, in which capacity it was
responsible for providing these services.
The Portfolio has appointed State Street as recordkeeping and
pricing agent to calculate the daily net asset value of the Portfolio and to
perform certain accounting and recordkeeping functions required by the
Portfolio. In addition, the Portfolio has appointed State Street as its
custodian. The Portfolio has appointed DST to serve as its transfer agent. For
custodian, recordkeeping and pricing services, the Portfolio pays fees directly
to State Street based on a percentage of its net assets, subject to certain
minimums, and reimburses State Street for certain out-of-pocket expenses.
The following table shows the total dollar amounts of advisory
fees paid by the Portfolio to Berger LLC or BBOI Worldwide for the periods
indicated and the amount of such fees waived on account of excess expenses under
applicable expense limitations. The investment advisory fee is paid by the
Portfolio and is borne indirectly pro rata by the Fund and the other mutual
funds invested in the Portfolio.
Berger International Portfolio
<TABLE>
<CAPTION>
Fiscal Year Ended Investment Advisory Fee TOTAL
September 30, Advisory Fee Waiver
------------------ ------------ ------------ ----------
<S> <C> <C> <C>
2000 $_________ $_______ $_________
1999 $2,010,000 $(17,000) $1,993,000
1998 $1,531,000 $(61,000) $1,470,000
</TABLE>
Administrative Service Fee In addition, the Fund paid Berger
LLC or BBOI Worldwide the following amounts for its services under the
Administrative Services Agreement.
Berger International Fund
<TABLE>
<CAPTION>
Fiscal Year Ended September 30, Administrative Services Fee
------------------------------- ---------------------------
<S> <C>
2000 $____________
1999 $ 87,000
1998 $ 85,000
</TABLE>
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<PAGE> 95
As noted above with respect to the other Berger Funds, all of
State Street's fees are subject to reduction pursuant to an agreed formula for
certain earnings credits on the cash balances maintained with it as custodian.
Earnings credits received by the Portfolio can be found on the Portfolio's
Statement of Operations in the Annual Report incorporated by reference into this
Statement of Additional Information.
12b-1 PLANS
Each of the Funds 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 LLC of a 12b-1 fee of 0.25% per annum of the Fund's average
daily net assets to finance activities primarily intended to result in the sale
of Fund shares. The Plans are intended to benefit the Funds by attracting new
assets into the Funds and thereby affording potential cost reductions due to
economies of scale.
The expenses paid by Berger LLC may include, but are not limited to:
o payments made to, and costs incurred by, a Fund's principal underwriter
in connection with the distribution of Fund shares, including payments
made to and expenses of officers and registered representatives of the
Distributor;
o payments made to and expenses of other persons (including employees of
Berger LLC) 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;
o 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 Fund shares, including services to
holders of Fund shares and prospective investors;
o 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;
o costs of printing and distributing prospectuses and reports to
prospective shareholders of Fund shares;
o costs involved in preparing, printing and distributing sales literature
for Fund shares;
o costs involved in obtaining whatever information, analyses and reports
with respect to market and promotional activities on behalf of a Fund
relating to Fund shares that Berger LLC deems advisable;
o and such other costs relating to Fund shares as the Fund may from time
to time reasonably deem necessary or appropriate in order to finance
activities primarily intended to result in the sale of Fund shares.
Such 12b-1 fee payments are to be made by each Fund to Berger
LLC with respect to each fiscal year of the Fund without regard to the actual
distribution expenses incurred by Berger LLC in such year; that is, if the
distribution expenditures incurred by Berger LLC are less than the total of such
payments in such year, the difference is not to be reimbursed to the Fund by
Berger LLC, and if the distribution expenditures incurred by Berger LLC are more
than the total of such payments, the excess is not to be reimbursed to Berger
LLC by the Fund.
From time to time a Fund may engage in activities which
jointly promote the sale of Fund shares and other funds that are or may in the
future be advised or administered by Berger LLC, which costs are not readily
identifiable as related to any one fund. In such cases, a Fund's 12b-1 fees may
be used to finance the joint promotion of the shares of that Fund, along with
the shares of the other fund. Berger LLC allocates the cost of such joint
promotional activity among the funds involved on the basis of their respective
net assets, unless otherwise directed by the directors or trustees.
The current 12b-1 Plans will continue in effect until the end
of April 2001, 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. The Plans may not be amended to increase
materially the amount to be spent on distribution of Fund shares without
shareholder approval.
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<PAGE> 96
Following are the payments made to Berger LLC pursuant to the
Plans for the fiscal year ended September 30, 2000:
<TABLE>
<CAPTION>
FUND 12B-1 PAYMENT
---- -------------
<S> <C>
Berger Information Technology Fund(1) $____________
Berger New Generation Fund(1) $____________
Berger Select Fund $____________
Berger Small Company Growth Fund(1) $____________
Berger Mid Cap Growth Fund $____________
Berger Mid Cap Value Fund $____________
Berger Growth Fund $____________
Berger International Fund $____________
Berger Large Cap Growth Fund $____________
Berger Balanced Fund $____________
</TABLE>
(1) The Berger Information Technology Fund, the Berger New Generation Fund, and
the Berger Small Company Growth Fund have adopted a 12b-1 Plan only with respect
to the Investor Shares class of shares, which is the class of shares of those
Funds covered by this SAI.
OTHER EXPENSE INFORMATION
The directors or trustees of each of the Funds have authorized
portfolio transactions to be placed on an agency basis through DST Securities,
Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary of DST. When transactions
are effected through DSTS, the commission received by DSTS is credited against,
and thereby reduces, certain operating expenses that the Fund would otherwise be
obligated to pay. No portion of the commission is retained by DSTS. See Section
6--Brokerage Policy for further information concerning the expenses reduced as a
result of these arrangements. DSTS may be considered an affiliate of Berger LLC
due to the ownership interest of Stilwell in both DST and Berger LLC.
The Funds and/or their advisors have entered into arrangements
with certain brokerage firms and other companies(such as recordkeepers and
administrators) to provide administrative services (such as sub-transfer agency,
recordkeeping, shareholder communications, sub-accounting and/or other services)
to investors purchasing shares of the Funds through those firms or companies. A
Fund's advisor or a Fund (if approved by its directors or trustees) may pay fees
to these companies for their services. These companies may also be appointed as
agents for or authorized by the Funds to accept on their behalf purchase and
redemption requests that are received in good order. Subject to Fund approval,
certain of these companies may be authorized to designate other entities to
accept purchase and redemption orders on behalf of the Funds.
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<PAGE> 97
The Fund's advisor may also enter into arrangements with
organizations that solicit clients for the advisor, which may include clients
who purchase shares of the Funds. While the specific terms of each arrangement
may differ, generally, the fee paid by the advisor under such arrangements is
based on the value of the referred client's assets managed by the advisor. None
of the fees paid to such organizations will be borne by the Funds.
DISTRIBUTOR
The distributor (principal underwriter) of each Fund's shares
is Berger Distributors LLC (the "Distributor"), 210 University Boulevard, Suite
900, Denver, CO 80206. The Distributor may be reimbursed by Berger LLC for its
costs in distributing the Funds' shares.
6. BROKERAGE POLICY
Although each Fund retains full control over its own
investment policies, under the terms of its Investment Advisory Agreement, the
advisor is directed to place the portfolio transactions of the Fund. Where
applicable, the advisor may delegate placement of brokerage to a Fund's
sub-advisor. A report on the placement of brokerage business is given 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:
BROKERAGE COMMISSIONS
<TABLE>
<CAPTION>
FOR THE YEAR/PERIOD ENDED SEPTEMBER 30,
---------------------------------------
2000 1998 1999
---- ---- ----
<S> <C> <C> <C>
BERGER INFORMATION TECHNOLOGY FUND $___________ $ 4,000(1) $ 10,000(1)
BERGER NEW GENERATION FUND $___________ $ 349,000 $ 340,000
BERGER SELECT FUND $___________ $ 972,000 $ 536,000(2)
BERGER SMALL COMPANY GROWTH FUND $___________ $ 807,000 $ 890,000
BERGER MID CAP GROWTH FUND $___________ $ 27,000 $ 15,000(2)
BERGER MID CAP VALUE FUND $___________ $ 129,000 $ 33,000(3)
</TABLE>
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<PAGE> 98
<TABLE>
<CAPTION>
FOR THE YEAR/PERIOD ENDED SEPTEMBER 30,
---------------------------------------
2000 1998 1999
---- ---- ----
<S> <C> <C>
BERGER GROWTH FUND $___________ $ 6,010,000 $ 9,258,000
BERGER INTERNATIONAL FUND(4) $___________ $ 155,000 $ 225,000
BERGER LARGE CAP GROWTH FUND $___________ $ 805,000 $ 2,397,000
BERGER BALANCED FUND $___________ $ 291,000 $ 207,000
</TABLE>
(1) The Fund's fiscal year changed from February 28 to September 30 as part of a
reorganization effective July 1999. Accordingly, the brokerage commissions shown
for 1997 were paid by the Fund's predecessor during the period April 8, 1997
(commencement of operations of the predecessor) to February 28, 1998, and the
brokerage commissions shown for 1998 were paid by the Fund's predecessor during
its fiscal year ended February 28, 1999. Brokerage commissions shown for 1999
were paid by the Fund for the period from March 1, 1999 through September 30,
1999.
(2) Covers period from December 31, 1997 (commencement of operations) through
the end of the Fund's first fiscal year on September 30, 1998.
(3) Covers period from August 12, 1998 (commencement of operations) through the
end of the Fund's first fiscal year on September 30, 1998.
The Investment Advisory Agreement each Fund has with its
advisor authorizes and directs the advisor to place portfolio transactions for
the Fund only with brokers and dealers who render satisfactory service in the
execution of orders at the most favorable prices and at reasonable commission
rates. Where applicable, the Sub-Advisory Agreement for each sub-advised Fund
similarly directs the sub-advisor. However, each Agreement specifically
authorizes the advisor or sub-advisor to place such transactions with a broker
with whom it has negotiated a commission that is in excess of the commission
another broker or dealer would have charged for effecting that transaction if
the advisor or sub-advisor determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either that particular
transaction or the overall responsibilities of the advisor or sub-advisor.
Accordingly, the advisor or sub-advisor does not have an obligation to seek the
lowest available commission.
In accordance with this provision of the Agreement, portfolio
brokerage business of each Fund may be placed with brokers who provide useful
brokerage and research services to the advisor or, where applicable, the
sub-advisor. The Fund's advisor or sub-advisor may consider the value of
research provided as a factor in the choice of brokers. "Research" includes
computerized on-line stock quotation systems and related data feeds from stock
exchanges, computerized trade order entry, execution and confirmation systems,
fundamental and technical analysis data and software, computerized stock market
and business news services, economic research, account performance data and
computer hardware used for the receipt of electronic research services and
broker and other third-party equity research, such as publications or writings
which furnish advice as to the value of securities and advisability of
investing, and analyses and reports concerning issuers, industries,
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<PAGE> 99
securities, market trends, and portfolio strategies. Research may be provided
orally, in print, or electronically. These include a service used by the
independent directors or trustees of the Funds in reviewing the Investment
Advisory Agreements.
In some cases, a product or services termed "research" may
serve other functions unrelated to the making of investment decisions. When a
product has such a mixed use, the advisor or sub-advisor will make a good faith
allocation of the cost of the product according to the use made of it. The
portion of the product that assists the advisor or sub-advisor in the investment
decision-making process may be paid for with a Fund's commission dollars. The
advisor or sub-advisor pays for the portion of the product that is not
"research" with its own funds. Accordingly, the decision whether and how to
allocate the costs of such a product presents a conflict of interest for the
advisor or sub-advisor.
The Funds' advisors and sub-advisors do not enter into formal
agreements with any brokers regarding the placement of securities transactions
because of any such brokerage or research services that they provide. An advisor
or sub-advisor may, however, make arrangements with and maintain internal
procedures for allocating transactions to brokers who provide such services to
encourage them to provide services expected to be useful to the advisor's or
sub-advisor's clients, including the Funds. Brokers may suggest a level of
business they would like to receive in return for the brokerage and research
they provide. The advisor or sub-advisor then determines whether to continue
receiving the research and brokerage provided and the approximate amount of
commissions it is willing to pay to continue the brokerage and research
arrangement with each broker. The actual amount of commissions a broker may
receive may be more or less than a broker's suggested allocations, depending on
the advisor's or sub-advisor's level of business, market conditions and other
relevant factors. Even under these arrangements, however, the placement of all
Fund transactions, must be consistent with the Funds' brokerage placement and
execution policies, and must be directed to a broker who renders satisfactory
service in the execution of orders at the most favorable prices and at
reasonable commission rates.
During the fiscal year ended September 30, 2000, of the
brokerage commissions paid by the Funds, the following amounts were paid to
brokers who provided to the Funds selected brokerage or research services
prepared by the broker or subscribed or paid for by the broker on behalf of the
Funds:
<TABLE>
<CAPTION>
FUND AMOUNT OF TRANSACTIONS AMOUNT OF COMMISSIONS
---- ---------------------- ---------------------
<S> <C> <C>
Berger Information Technology Fund $_______ $__________
Berger New Generation Fund $_______ $__________
Berger Select Fund $_______ $__________
Berger Small Company Growth Fund $_______ $__________
Berger Mid Cap Growth Fund $_______ $__________
Berger Mid Cap Value Fund $_______ $__________
</TABLE>
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<PAGE> 100
<TABLE>
<CAPTION>
FUND AMOUNT OF TRANSACTIONS AMOUNT OF COMMISSIONS
---- ---------------------- ---------------------
<S> <C> <C>
Berger Growth Fund $_______ $__________
Berger International Fund $_______ $__________
Berger Large Cap Growth Fund $_______ $__________
Berger Balanced Fund $_______ $__________
</TABLE>
These brokerage and research services received from brokers
are often helpful to the advisor or sub-advisor in performing its investment
advisory responsibilities to the Funds, and the availability of such services
from brokers does not reduce the responsibility of the advisor's or
sub-advisor's advisory personnel to analyze and evaluate the securities in which
the Funds invest. The brokerage and research services obtained as a result of
the Funds' brokerage business also will be useful to the advisor or sub-advisor
in making investment decisions for its other advisory accounts, and, conversely,
information obtained by reason of placement of brokerage business of such other
accounts may be used by the advisor or sub-advisor in rendering investment
advice to the Funds. Although such brokerage and research services may be deemed
to be of value to the advisor or sub-advisor, they are not expected to decrease
the expenses that the advisor or sub-advisor would otherwise incur in performing
its investment advisory services for the Funds nor will the advisory fees that
are received by the advisor or sub-advisor from the Funds be reduced as a result
of the availability of such brokerage and research services from brokers.
The directors or trustees of each of the Funds have authorized
portfolio transactions to be placed on an agency basis through DSTS, a
wholly-owned broker-dealer subsidiary of DST. When transactions are effected
through DSTS, the commission received by DSTS is credited against, and thereby
reduces, certain operating expenses that the Fund would otherwise be obligated
to pay. No portion of the commission is retained by DSTS. DSTS may be considered
an affiliate of Berger LLC due to the ownership interest of Stillwell in both
DST and Berger LLC.
Included in the brokerage commissions paid by the Funds during
the last three fiscal years, as stated in the preceding Brokerage Commissions
table, are the following amounts paid to DSTS, which served to reduce each
Fund's out-of-pocket expenses as follows:
DSTS COMMISSIONS AND RELATED EXPENSE REDUCTIONS
<TABLE>
<CAPTION>
Reduction
DSTS Reduction DSTS Reduction DSTS in
Commissions in Expenses Commissions in Expenses Commissions Expenses
Paid FYE Paid FYE Paid FYE
FYE 9/30/00 9/30/00(1) FYE 9/30/99 9/30/99(1) FYE 9/30/98 9/30/98(1)
----------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Berger Information Technology $_________ $_________ $ 0(2) $ 0 $ 0(2) $ 0
Fund
Berger New Generation Fund $_________ $_________ $ 6,000(3) $ 4,500 $ 2,000 $ 1,500
Berger Select Fund $_________ $_________ $ 61,000(4) $ 46,000 $ 9,000(5) $ 7,000(5)
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Berger Small Company Growth $_________ $_________ $ 6,000(6) $ 4,500 $ 0 $ 0
Fund
Berger Mid Cap Growth Fund $ 0 $ 0 $ 0 $ 0 $ 0(7) $ 0(7)
Berger Mid Cap Value Fund $ 0 $ 0 $ 0 $ 0 $ 0(8) $ 0(8)
Berger Growth Fund $_________ $_________ $ 399,000(9) $ 299,000 $ 390,000 $ 293,000
Berger International Fund $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Berger Large Cap Growth Fund $_________ $_________ $ 32,000(10) $ 24,000 $ 28,000 $ 21,000
Berger Balanced Fund $_________ $_________ $ 1,500(11) $ 1,000 $ 0 $ 0
</TABLE>
(1) No portion of the commission is retained by DSTS. Difference between
commissions paid through DSTS and reduction in expenses constitute commissions
paid to an unaffiliated clearing broker.
(2) The Fund's fiscal year changed from February 28 to September 30 as part of a
reorganization effective July 2, 1999. Accordingly, the amounts shown for FYE
9/30/97 were paid by the Fund's predecessor during the period April 8, 1997
(commencement of operations of the predecessor) to February 28, 1998, and the
amounts shown for FYE 9/30/98 were paid by the Fund's predecessor during its
fiscal year ended February 28, 1999. Amounts shown for FYE 9/30/99 cover the
period for March 1, 1999 to September 30, 1999.
(3) Constitutes 2% of the aggregate brokerage commissions paid by the Berger New
Generation Fund and less than 1% of the aggregate dollar amount of transactions
placed by the Berger New Generation Fund.
(4) Constitutes 6% of the aggregate brokerage commissions paid by the Berger
Select Fund and less than 1% of the aggregate dollar amount of transactions
placed by the Berger Select Fund.
(5) Covers the period from December 31, 1997 (commencement of operations)
through September 30, 1998.
(6) Constitutes 1% of the aggregate brokerage commissions paid by Berger Small
Company Growth Fund and less than 1% of the aggregate dollar amount of
transaction placed by Berger Small Company Growth Fund.
(7) Covers the period from December 31, 1997 (commencement of operations)
through September 30, 1998.
(8) Covers the period from August 12, 1998 (commencement of operations) through
September 30, 1998.
(9) Constitutes 7% of the aggregate brokerage commissions paid by the Berger
Growth Fund and less than 1% of the aggregate dollar amount of transactions
placed by the Berger Growth Fund.
(10) Constitutes 4% of the aggregate brokerage commissions paid by the Berger
Large Cap Growth Fund and less than 1% of the aggregate dollar amount of
transactions placed by the Berger Large Cap Growth Fund.
(11) Constitutes less than 1% of the aggregate brokerage commissions paid by the
Berger Balanced Fund and less than 1% of the aggregate dollar amount of
transactions placed by Berger Balanced Fund.
Each Fund's advisor or sub-advisor places securities orders
with a limited number of major institutional brokerage firms chosen for the
reliability and quality of execution; commission rates; quality of research
coverage of major U.S. companies, the U.S. economy and the securities markets;
promptness; back office capabilities; capital strength and financial
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stability; prior performance in serving the advisor and its clients; and
knowledge of other buyers and sellers. The advisor or sub-advisor selects the
broker for each order based on the factors above, as well as the size,
difficulty and other characteristics of the order. The directors or trustees of
the Funds have also authorized sales of shares of the Funds by a broker-dealer
and the recommendations of a broker-dealer to its customers that they purchase
Fund shares to be considered as factors in the selection of broker-dealers to
execute portfolio transactions for the Funds. In addition, the advisor or
sub-advisor may also consider payments made by brokers to a Fund or to other
persons on behalf of a Fund for services provided to the Fund for which it would
otherwise be obligated to pay, such as transfer agency fees. In placing
portfolio business with any such broker or dealer, the advisor will seek the
best execution of each transaction.
During the fiscal year ended September 30, 1999, Berger Large
Cap Growth Fund, Berger Balanced Fund and Berger Mid Cap Value Fund acquired
securities of the Funds' regular broker dealers. As of September 30, 2000, these
Funds owned the following securities of its regular broker-dealers with the
following values:
<TABLE>
<CAPTION>
FUND BROKER/DEALER VALUE SECURITY
---- ------------- ----- --------
<S> <C> <C> <C>
Berger Large Cap Growth Fund Morgan Stanley Dean Witter & Co. $________ Common Stock
The Goldman Sachs Group, Inc. ________ Common Stock
Berger Balanced Fund Morgan Stanley Dean Witter & Co. ________ Common Stock
Merrill Lynch & Co. ________ Bonds
Bear Stearns ________ Bonds
Berger Mid Cap Value Fund Merrill Lynch & Co. ________ Common Stock
</TABLE>
7. HOW TO PURCHASE AND REDEEM SHARES IN THE FUNDS
<TABLE>
<S> <C>
MINIMUM INITIAL INVESTMENTS:
Regular investment $2,000
Low Minimum Investment Plan $ 100
MINIMUM SUBSEQUENT INVESTMENTS:
Regular investment $ 50
Regular automatic investment $ 50
Low Minimum Investment Plan
(required monthly automatic investments) $ 100
</TABLE>
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 following address:
Berger Funds
P.O. Box 219958
Kansas City, MO 64121
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 or via on-line access, and remitting payment to DST Systems, Inc.
Payment for shares ordered on-line must be made by electronic funds transfer. In
order to make sure that payment for telephone purchases is received on time,
shareholders are encouraged to remit payment by electronic funds transfer.
Shareholders may also remit payment for telephone purchases by wire or by
overnight delivery.
In addition, Fund shares may be purchased through certain
broker-dealers that have established mutual fund programs and certain other
organizations connected with pension and retirement plans. These broker-dealers
and other organizations may charge investors a transaction or other fee for
their services, may require different minimum initial and
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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 apply to an investor who purchases Fund shares directly from a Fund
as described above.
Procedures for purchasing, selling (redeeming) and exchanging
Fund shares by telephone and on-line are described in the Prospectus. The Funds
may terminate or modify those procedures and related requirements at any time,
although shareholders of the Funds will be given notice of any termination or
material modification. Berger LLC may, at its own risk, waive certain of those
procedures and related requirements.
As described in the Prospectus, the Berger Information
Technology Fund will deduct a 1% redemption fee from a shareholder's redemption
proceeds if the shareholder redeems shares of that Fund held less than 6 months.
Because an exchange involves a redemption of shares followed by a purchase, this
redemption fee will also apply to exchanges of Fund shares held less than 6
months. This fee is intended to discourage investors from short-term trading of
Fund shares and to offset the cost to the Fund of excess brokerage and other
costs incurred as a result of such trading. This fee will not be charged to
retirement plan accounts (such as 401(k)s and 403(b)s) or in the case of
redemptions resulting from the death of the shareholder. This fee will also not
be charged on the redemption of shares obtained through the reinvestment of
dividends paid on Fund shares. If some but not all of the shares in an account
are redeemed, shares are treated as redeemed in an order determined by and
applied uniformly to all accounts by the Fund's sub-transfer agent.
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 (the
"Exchange") (normally 4:00 p.m., Eastern time, Monday through Friday) each day
that the Exchange is open. The Exchange is closed and the net asset value of the
Funds is not determined on weekends and on New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day each year. The per share net asset value
of each Fund is determined by dividing the total value of its securities and
other assets, less liabilities, by the total number of shares outstanding.
For those Funds offering classes of shares, net asset value is
calculated by class, and since the Investor Shares and each other class of those
Funds has its own expenses, the per share net asset value of those Funds will
vary by class.
Since the Berger International Fund invests all of its
investable assets in the Berger International Portfolio, the value of the Fund's
investable assets will be equal to the value of its beneficial interest in the
Portfolio. The value of securities held in the Portfolio are determined as
described below for the Funds.
In determining net asset value for each of the Funds,
securities listed or traded primarily on national exchanges, The Nasdaq Stock
Market and foreign exchanges are valued at the last sale price on such markets,
or, if such a price is lacking for the trading period immediately preceding the
time of determination, such securities are valued at the mean of their current
bid and asked prices. Securities that are traded in the over-the-counter market
are valued at the mean between their current bid and asked prices. The market
value of individual securities held by each Fund will be determined by using
prices provided by pricing services which provide market prices to other mutual
funds or, as needed, by obtaining market quotations from independent
broker/dealers. Short-term money market securities maturing within 60 days are
valued on the amortized cost basis, which approximates market value. All assets
and liabilities initially expressed in terms of non-U.S. dollar currencies are
translated into U.S. dollars at the prevailing market rates as quoted by one or
more banks or dealers shortly before the close of the Exchange. Securities and
assets for which quotations are not readily available or are not representative
of market value may be valued at their fair value determined in good faith
pursuant to consistently applied procedures established by the directors or
trustees. Examples would be when events occur that materially affect the value
of a security at a time when the security is not trading or when the securities
are illiquid.
Generally, trading in foreign securities markets is
substantially completed each day at various times prior to the close of the
Exchange. The values of foreign securities used in computing the net asset value
of the shares of a Fund are determined as of the earlier of such market close or
the closing time of the Exchange. Occasionally, events affecting the value of
such securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net
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<PAGE> 104
asset value. If during such periods, events occur which materially affect the
value of such securities, the securities may be valued at their fair value as
determined in good faith pursuant to consistently applied procedures established
by the directors or trustees.
A Fund's securities may be listed primarily on foreign
exchanges or over-the-counter dealer markets which may trade on days when the
Exchange is closed (such as a customary U.S. holiday) and on which the Fund's
net asset value is not calculated. As a result, the net asset value of a Fund
may be significantly affected by such trading on days when shareholders cannot
purchase or redeem shares of the Fund.
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<PAGE> 105
9. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
This discussion summarizes certain U.S. federal income tax
issues relating to the Funds. As a summary, it is not an exhaustive discussion
of all possible tax ramifications. Accordingly, shareholders are urged to
consult with their tax advisors with respect to their particular tax
consequences.
TAX STATUS OF THE FUNDS. If a Fund meets certain investment
and distribution requirements, it will be treated as a "regulated investment
company" (a "RIC") under the Internal Revenue Code and will not be subject to
federal income tax on earnings that it distributes in a timely manner to
shareholders. It also may be subject to an excise tax on undistributed income if
it does not meet certain timing requirements for distributions. Each of the
Funds intends to qualify as a RIC annually and to make timely distributions in
order to avoid income and excise tax liabilities.
TAX ON FUND DISTRIBUTIONS. With certain exceptions provided by
law, the Funds will report annually to the Internal Revenue Service and to each
shareholder information about the tax treatment of the shareholder's
distributions. Dividends paid by a Fund, whether received in cash or reinvested
in additional Fund shares, will be treated as ordinary income to the
shareholders. Distributions of net capital gain, whether received in cash or
reinvested in Fund shares, will be taxable to the shareholders, but the rate of
tax will vary depending upon the Fund's holding periods in the assets whose sale
resulted in the capital gain. Dividends and distributions that are declared in
October, November or December but not distributed until the following January
will be considered to be received by the shareholders on December 31.
In general, net capital gains from assets held by a Fund for
more than 12 months will be subject to a maximum tax rate of 20% and net capital
gains from assets held for 12 months or less will be taxed as ordinary income.
Distributions will be subject to these capital gains rates, regardless of how
long a shareholder has held Fund shares. Assets contributed to a Fund in an
in-kind purchase of Fund shares may generate more gain upon their sale than if
the assets had been purchased by the Fund with cash contributed to the Fund in a
cash purchase of Fund shares.
If a Fund's distributions for a taxable year exceeds its tax
earnings and profits available for distribution, all or a portion of its
distributions may be treated as a return of capital. To the extent a
distribution is treated as a return of capital, a shareholder's basis in his or
her Fund shares will be reduced by that amount.
If a shareholder has elected to receive dividends and/or
capital gain distributions in cash and the U.S. Postal Service is unable to
deliver checks to the shareholder's address of record, or if a shareholder's
checks remain uncashed for six months, the Funds reserve the right to reinvest
the amount distributed in shares of the applicable Fund at the NAV next computed
after the check is cancelled, and to convert the shareholder's distribution
option from receiving cash to having all dividend and other distributions
reinvested in additional shares. In addition, no interest will accrue on amounts
represented by uncashed distribution or redemption checks.
Additionally, the Funds reserve the right to reinvest
distributions of less than $10 in shares of the applicable Fund at the NAV next
computed.
TAX ON REDEMPTIONS OF FUND SHARES. Shareholders may be subject
to tax on the redemption of their Fund shares. In general, redemptions may give
rise to a capital gain or loss, the treatment of which will depend on the
shareholder's holding period in the Fund shares. Tax laws may prevent the
deduction of a loss on the sale of Fund shares if the shareholder reinvests in
the Fund shortly before or after the sale giving rise to the loss. Any loss on
the redemption or other sale or exchange of Fund 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.
INCOME FROM FOREIGN SOURCES. Dividends and interest received
by the Funds on foreign securities may give rise to withholding and other taxes
imposed by foreign countries, although these taxes may be reduced by applicable
tax treaties. Foreign taxes will generally be treated as expenses of the Funds,
unless a Fund has more than 50% of its assets invested in foreign corporate
securities at the end of the Fund's taxable year. In that case, for the Funds
that make an election, shareholders of the Fund may be able to deduct (as an
itemized deduction) or claim a foreign tax credit for their share of foreign
taxes, subject to limitations prescribed in the tax law.
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<PAGE> 106
If a Fund invests in a foreign corporation that is a passive
foreign investment company (a "PFIC"), special rules apply that may affect the
tax treatment of gains from the sale of the stock and may cause a Fund to incur
IRS tax and interest charges. However, the Fund may be eligible to elect one of
two alternative tax treatments with respect to PFIC shares which would avoid
these taxes and charges, but also may affect, among other things, the amount and
character of gain or loss and the timing of the recognition of income with
respect to PFIC shares. Accordingly, the amounts, character and timing of income
distributed to shareholders of a Fund holding PFIC shares may differ
substantially as compared to a fund that did not invest in PFIC shares.
INCOME FROM CERTAIN TRANSACTIONS. Some or all of the Funds'
investments may include transactions that are subject to special tax rules.
Transactions involving foreign currencies may give rise to a gain or loss that
could affect a Fund's ability to make ordinary dividend distributions.
Investment in certain financial instruments, such as options, futures contracts
and forward contracts, may require annual recognition of unrealized gains and
losses. Transactions that are treated as "straddles" may affect the character
and/or timing of other gains and losses of the Fund. If a Fund enters into a
transaction (such as a "short sale against the box") that reduces the risk of
loss on an appreciated financial position that it already holds, the entry into
the transaction may constitute a constructive sale and require immediate
recognition of gain.
BACKUP WITHHOLDING. In general, if a shareholder is subject to
backup withholding, a Fund will be required to withhold federal income tax at a
rate of 31% from distributions to that shareholder. These payments are
creditable against the shareholder's federal income tax liability.
FOREIGN SHAREHOLDERS. Foreign shareholders of a Fund generally
will be subject to a 30% U.S. withholding tax on dividends paid by a Fund from
ordinary income and short-term capital gain, although the rate may be reduced by
a tax treaty. If a foreign shareholder dies while owning Fund shares, those
shares may be subject to U.S. estate taxes.
TAX STATUS OF THE BERGER INTERNATIONAL PORTFOLIO. The Berger
International Portfolio, in which the Berger International Fund invests all of
its investable assets, has in previous years been classified as a partnership
for U.S. federal income tax purposes, and it intends to retain that
classification. The Berger International Fund is treated for various federal tax
purposes as owning an allocable share of the Portfolio's assets and will be
allocated a share of the Portfolio's income, gain and loss.
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 is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder
generally will incur brokerage costs in converting the assets to cash. The
redeeming shareholder may have difficulty selling the securities and recovering
the amount of the redemption if the securities are illiquid. 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 several tax-qualified retirement plans for
individuals, businesses and non-profit organizations, including a Profit-Sharing
Plan, a Money Purchase Pension Plan, an Individual Retirement Account (IRA), a
Roth IRA and a 403(b) Custodial Account for adoption by employers and
individuals who wish to participate in such Plans. For information on
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<PAGE> 107
other types of retirement plans offered by the Funds, please call 1-800-333-1001
or write to the Funds c/o Berger LLC, P.O. Box 5005, Denver, CO 80217.
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 accumulated 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 employees' compensation or your 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. State Street serves as trustee of the Plan, for which it charges an
annual trustee's fee 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. A participant
who is not a 5% owner of the employer may postpone such distributions to April 1
of the calendar year following the year of retirement. This exception does not
apply to distributions from an individual retirement account (IRA). 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 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. You should also
consult with your tax advisor regarding state tax law implications of
participation in the Plans.
In order to receive the necessary materials to create a
Profit-Sharing or Money Purchase Pension Plan, please write to the Berger Funds,
c/o Berger LLC, P.O. Box 5005, Denver, Colorado 80217, or call 1-800-333-1001.
Trustees for 401(k) or other existing plans interested in utilizing Fund shares
as an investment or investment alternative in their plans should contact the
Berger Funds at 1-800-333-1001.
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
If you are an individual with compensation or earned income,
whether or not you are actively participating in an existing qualified
retirement plan, you can provide for your own retirement by adopting an IRA.
Under an IRA, you can contribute each year up to the lesser of 100% of your
compensation or $2,000. If you are married and you file a joint return, you and
your spouse together may make contributions totaling up to $4,000 to two IRAs
(with no more than $2,000 being contributed to either account) if your joint
income is $4,000 or more, even if one spouse has no earned income. If neither
you nor your spouse are active participants in 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, the deductibility of your IRA contributions will be
phased out for federal income tax purposes if your income exceeds specified
amounts, although the income level at which your IRA contributions will no
longer be deductible is higher if only your spouse (but not you) is an active
participant. However, whether your contributions are deductible or not, the
income and capital gains accumulated in 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,
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State Street will serve as custodian, for which it will charge an annual
custodian fee for each 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. You
should also consult with your tax advisor about state taxation of your account.
In order to receive the necessary materials to create an IRA
account, please write to the Berger Funds, c/o Berger LLC, P.O. Box 5005,
Denver, Colorado 80217, or call 1-800-333-1001.
ROTH IRA
If you are an individual with compensation or earned income,
you may contribute up to the lesser of $2,000 or 100% of your compensation to a
Roth IRA, as long as your income does not exceed a specified income level
($95,000 for single individuals, $150,000 for married individuals filing
jointly). A Roth IRA is similar in many respects to a traditional IRA, as
described above. However, the maximum amount you may contribute to a Roth IRA is
phased out between that income level and a maximum income amount ($110,000 and
$160,000, respectively), and you may not make any contribution at all to a Roth
IRA if your income exceeds the maximum income amount. Also, you can make
contributions to a Roth IRA even after you reach age 70-1/2, and you are not
required to take distributions from a Roth IRA prior to your death.
Contributions to a Roth IRA are not deductible for federal
income tax purposes. However, the income and capital gains accumulated in a Roth
IRA are not taxed while held in the IRA, and distributions can be taken tax-free
if the Roth IRA has been established for a minimum of five years and the
distribution is after age 59-1/2, for a first time home purchase, or upon death
or disability.
An individual with an income of less than $100,000 who is not
married filing separately can roll his or her existing IRA into a Roth IRA.
However, the individual must pay taxes on the fair market value of the existing
IRA on the date of the rollover. Please consult your tax advisor concerning Roth
IRA rollovers. [Add language re where to write?]
403(b) CUSTODIAL ACCOUNTS
If you are employed by a public school system or certain
federally tax-exempt 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.
If your employer participates, it will automatically deduct
the amount you designate from your gross salary and contribute it to your 403(b)
Custodial Account. The amount which you may contribute annually under a salary
reduction agreement is generally the lesser of $9,500 or your exclusion
allowance, which is based upon a specified formula, and other Internal Revenue
Code limits apply. 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 accumulated 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 later of the calendar year in which you attain age 70-1/2 or the
calendar year in which you retire. 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. You should also consult with your tax advisor
about state taxation of your account.
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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. State Street serves as
custodian of the 403(b) Custodial Account, for which it charges an annual
custodian fee for each Fund or Cash Account Trust Money Market Portfolio 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 Berger Funds, c/o Berger LLC, 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 shareholder
deposits Fund shares with the Fund and appoints the Fund as agent to redeem
shares in the shareholder's account in order to make monthly, quarterly,
semi-annual or annual withdrawal payments to the shareholder of a fixed amount.
The minimum withdrawal payment is $50.00. These payments generally will be made
on the 25th day of the month.
Withdrawal payments are not yield or income on the
shareholder's investment, since portions of each payment will normally consist
of a return of the shareholder's investment. Depending on the size of the
disbursements requested and the fluctuation in value of the Fund'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 available Berger 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 LLC. Berger LLC is compensated for administrative services it performs
with respect to the CAT Portfolios.
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 income tax purposes. In
addition, exchanges out of the Berger Information Technology Fund will be
subject to a redemption fee of 1% if shares are exchanged within 6 months of
purchase.
An exchange of shares may be made by written request directed
to DST Systems, Inc., via on-line access, or simply by telephoning the Berger
Funds at 1-800-551-5849. This privilege may be terminated or amended 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 eligible for sale.
Shareholders automatically have telephone and on-line privileges to authorize
exchanges unless they specifically decline this service in the account
application or in writing.
13. PERFORMANCE INFORMATION
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., Morningstar, Inc., or Value Line Investment Survey or by publications of
general interest such as The Wall Street Journal, Investor's Business Daily,
Money, 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
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500 Stock Index, the Dow Jones Industrial Average, the Wilshire 5000 Index, the
Russell 2000 Stock Index, the Standard & Poor's 400 Mid-Cap Index, the Standard
& Poor's 600 Small Cap Index, Morgan Stanley Capital International EAFE (Europe,
Australasia, Far East) Index, the Dow Jones World Index, the Standard &
Poor's/BARRA Value Index, the Nasdaq Composite Index, the Lehman Brothers
Intermediate Term Government/Corporate Bond Index or the InformationWeek 100
Index, or more narrowly-based or blended 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.
All 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.
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, 3, 5 and 10 years, or for
the life of the Fund, if shorter. These are the rates of return that would
equate the initial amount invested to the ending redeemable value. These rates
of return are calculated pursuant to the following formula: P(1 + T)(n) = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of a proportional share of Fund expenses on
an annual basis, and assume that all dividends and distributions are reinvested
when paid.
PREDECESSOR PERFORMANCE QUOTATIONS
BERGER INTERNATIONAL FUND. The Berger International Portfolio
(in which all the investable assets of the Berger International Fund are
invested) commenced operations upon the transfer to the Portfolio of assets held
in a pooled trust (the "Pool") maintained by Citizens Bank New Hampshire, for
which BIAM had provided day-to-day portfolio management as sub-advisor since the
inception of the Pool. At that time, BIAM's bank holding company parent
indirectly owned a 23.5% interest in the parent of Citizens Bank New Hampshire.
The investment objective, policies, limitations, guidelines and strategies of
the Pool were materially equivalent to those of the Berger International Fund
and the Portfolio. Assets from the Pool were transferred on October 11, 1996, to
a separate "feeder" fund investing in the Portfolio which, in turn, transferred
those assets to the Portfolio in exchange for an interest in the Portfolio. As a
result of this transaction, the investment holdings in the Portfolio were the
same as the investment holdings in the portfolio of the Pool immediately prior
to the transfer, except for the seed capital provided by Berger LLC.
The Pool was not a registered investment company since it was
exempt from registration under the Investment Company Act of 1940 (the "1940
Act"). Since, in a practical sense, the Pool constitutes the "predecessor" of
the Portfolio, the Fund calculates its performance for periods commencing prior
to the transfer of the Pool's assets to the Portfolio by including the Pool's
total return, adjusted at that time to reflect any increase in fees and expenses
applicable in operating the Fund, including the Fund's pro rata share of the
aggregate annual operating expenses, net of fee waivers, of the Portfolio. Those
fees and expenses included 12b-1 fees.
Performance data quoted for the Berger International Fund for
periods prior to October 1996 include the performance of the Pool and include
periods before the Fund's and the Portfolio's registration statements became
effective. As noted above, the Pool was not registered under the 1940 Act and
thus was not subject to certain investment restrictions that are imposed on the
Fund and the Portfolio by the 1940 Act. If the Pool had been registered under
the 1940 Act, the Pool's performance might have been adversely affected.
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BERGER INFORMATION TECHNOLOGY FUND. The Berger Information
Technology Fund is the accounting survivor and successor of a fund previously
known as the InformationTech 100(R) Fund, which was reorganized into the Fund
effective July 2, 1999. As part of the reorganization, all of the then-existing
shares of the predecessor fund were exchanged for Institutional Shares of the
Fund, and the Fund commenced offering the Investor Shares covered in this
Statement of Additional Information.
The Fund quotes its historical performance track record for
both of its classes of shares based on its predecessor's only shares outstanding
prior to the reorganization. Accordingly, performance data for the Investor
Shares for periods prior to the date of the reorganization do not reflect the
0.25% per year 12b-1 fee currently borne by the Investor Shares. Total return of
the Investor Shares and other classes of shares of the Fund will be calculated
separately. Because each class of shares is subject to different expenses, the
performance of each class for the same period will differ.
AVERAGE ANNUAL TOTAL RETURNS
The average annual total return for each of the Funds for
various periods ending September 30, 2000, are shown on the following table:
<TABLE>
<CAPTION>
FUND 1-YEAR 3-YEAR 5-YEAR 10-YEAR LIFE OF FUND
---- ------ ------ ------ ------- ------------
<S> <C> <C> <C> <C> <C>
Berger Information Technology _____% N/A N/A N/A _____%
Fund - Investor Shares(1)
(since 4/8/97)
Berger New Generation Fund - _____% _____% N/A N/A _____%
Investor Shares
(since 3/29/96)
Berger Select Fund _____% N/A N/A N/A _____%
(since 12/31/97)
Berger Small Company Growth Fund _____% _____% _____% N/A _____%
- Investor Shares (since 12/30/93)
Berger Mid Cap Growth Fund _____% N/A N/A N/A _____%
(since 12/31/97)
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C>
Berger Mid Cap Value Fund _____% N/A N/A N/A _____%
(since 8/12/98)
Berger Growth Fund _____% _____% _____% _____% _____%
(since 9/30/74)(4)
Berger International Fund(5) _____% _____% _____% _____% _____%
(since 7/31/89)
Berger Large Cap Growth Fund _____% _____% _____% _____% _____%
(since 9/30/74)(4)
Berger Balanced Fund _____% N/A N/A N/A _____%
(since 9/30/97)
</TABLE>
(1) Performance data for the Investor Shares include periods prior to the Fund's
adoption of share classes as part of its reorganization on July 2, 1999, and
therefore, for those periods, do not reflect the 0.25% per year 12b-1 fee which
has been paid by the Investor Shares since the inception of the class on that
date.
(2) Performance data for the Investor Shares include periods prior to the Fund's
adoption of class designations on February 14, 1997, and therefore, for those
periods, do not reflect the 0.25% per year 12b-1 fee applicable to the Investor
Shares, which came into effect on that date.
(3) Covers the period from October 21, 1987 (date of the Fund's first public
offering) through September 30, 1999.
(4) Life of Fund covers the period from September 30, 1974 (immediately prior to
Berger LLC assuming the duties as the investment advisor for those Funds)
through September 30, 1999. Since the 12b-1 fees for the Berger Growth Fund and
the Berger Large Cap Growth Fund did not take effect until June 19, 1990, the
performance figures on the table do not reflect the deduction of the 12b-1 fees
for the full length of the 10-year and longer periods.
(5) Data for the Berger International Fund covering periods prior to October 11,
1996, reflect the performance of the pool of assets transferred on that date
into the Berger International Portfolio in which all of the Fund's assets are
invested, adjusted at that time to reflect any increase in expenses expected in
operating the Fund, including the Fund's pro rata share of the aggregate annual
operating expenses, of the Portfolio net of fee waivers.
14. ADDITIONAL INFORMATION
FUND ORGANIZATION
BERGER GROWTH FUND AND BERGER LARGE CAP GROWTH FUND. The
Berger Growth Fund and Berger Large Cap Growth 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(SM)",
"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 and were
registered as service marks in December 1991. In 1990, the shareholders of the
Berger Large Cap Growth 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. The name
"Berger Growth and Income Fund(R)" was registered as a service mark in August
1998. In January 2000, The One Hundred Fund, Inc. and the Berger One Hundred and
One Fund, Inc. formally changed their corporate names to the "Berger Growth
Fund, Inc." and the "Berger Growth and Income Fund, Inc." respectively and the
name "Berger Growth Fund(SM)" was adopted as a trade name.
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<PAGE> 113
In January 2001, the Berger Growth and Income Fund formally changed its
corporate name to the "Berger Large Cap Growth Fund, Inc." and the name "Berger
Growth Fund(SM)" was adopted as a trade name.
Each of the Berger Growth Fund and the Berger Large Cap Growth
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 Growth Fund and 100,000,000 shares are authorized for issue by the Berger
Large Cap Growth 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.
BERGER SMALL COMPANY GROWTH FUND, BERGER NEW GENERATION FUND,
BERGER BALANCED FUND, BERGER SELECT FUND, BERGER MID CAP GROWTH FUND, BERGER MID
CAP VALUE FUND AND BERGER INFORMATION TECHNOLOGY FUND. The Berger Small Company
Growth Fund is a separate series established on August 23, 1993, under the
Berger Investment Portfolio Trust, a Delaware business trust established under
the Delaware Business Trust Act. The name "Berger Small Company Growth Fund(R)"
was registered as a service mark in September 1995. The Berger Small Company
Growth Fund had no class designations until July 6, 1999, when all of the
then-existing shares were designated as Investor Shares, which are covered in
this Statement of Additional Information, and the Fund commenced offering a
separate class known as Institutional Shares covered in a separate Prospectus
and Statement of Additional Information.
The Berger New Generation Fund was the second series created
under the Berger Investment Portfolio Trust, established on December 21, 1995.
The name "Berger New Generation Fund(R)" was registered as a service mark in
December 1996. The Berger Balanced Fund was the third series created under the
Berger Investment Portfolio Trust, established on August 22, 1997. The name
"Berger Balanced Fund(R)" was registered as a service mark in September 1998.
The Berger New Generation Fund had no class designations until July 6, 1999,
when all of the then-existing shares were designated as Investor Shares, which
are covered in this Statement of Additional Information, and the Fund commenced
offering a separate class known as Institutional Shares covered in a separate
Prospectus and Statement of Additional Information.
The Berger Select Fund and the Berger Mid Cap Growth Fund were
the fourth and fifth series created under the Trust, established on November 13,
1997. The Berger Mid Cap Value Fund was the sixth series created under the
Berger Investment Portfolio Trust, established on May 21, 1998.
The Berger Information Technology Fund was the seventh series
created under the Berger Investment Portfolio Trust, established on February 18,
1999. The Fund is the successor to the fund formerly known as the
InformationTech 100(R) Fund. The InformationTech 100(R) Fund commenced
operations on April 8, 1997, as a separate series of the Advisors Series Trust,
a Delaware business trust. The InformationTech 100(R) Fund was then reorganized
into the Fund in a transaction that became effective in July 1999. As part of
the reorganization, all of the then-existing shares of the predecessor fund were
exchanged for Institutional Shares of the Fund, and the Fund commenced offering
the Investor Shares covered in this Statement of Additional Information.
The Trust is authorized to issue an unlimited number of shares
of beneficial interest in series or portfolios. Currently, the Funds named above
are the only series established under the Trust, although others may be added in
the future. The Trust is also authorized to establish multiple classes of shares
representing differing interests in an existing or new series. Shares of the
Funds are fully paid and nonassessable when issued. Each share has a par value
of $.01. All shares issued by each 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.
BERGER INTERNATIONAL FUND. The Berger Worldwide Funds Trust is
a Delaware business trust organized on May 31, 1996, under the name Berger/BIAM
Worldwide Funds Trust. In May, 2000, the Trust changed its name to Berger
Worldwide Funds Trust. The Berger International Fund was established on May 31,
1996, as a series of the Trust. The Fund was originally named the Berger/BIAM
International Fund and changed its name in May 2000 to the Berger International
Fund. The Trust is authorized to issue an unlimited number of shares of
beneficial interest in series or portfolios. Currently, the series comprising
the Fund is one of three series established under the Trust, although others may
be added in the future. The Trust is also authorized to establish multiple
classes of shares representing differing interests in an existing or new series.
Shares of the Fund are fully paid and non-assessable when issued. Each share has
a
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<PAGE> 114
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.
Berger Worldwide Portfolios Trust is also a Delaware business
trust organized on May 31, 1996, under the name Berger/BIAM Worldwide Portfolios
Trust. In May 2000, the Trust changed its name to Berger Worldwide Portfolios
Trust. The Berger International Portfolio (in which all of the investable assets
of the Berger International Fund are invested) was established on May 31, 1996,
as a series of that Trust. The Portfolio was originally named the Berger/BIAM
International Portfolio and changed its name in May 2000 to the Berger
International Portfolio. Like the Berger International Fund, the Portfolio is a
diversified, open-end management investment company. The Portfolio commenced
operations upon the transfer to the Portfolio of assets held in a pooled trust.
See "Performance Information -- Predecessor Performance Data -- Berger
International Fund" in Section 13 above for additional information on the asset
transfer. The Berger Worldwide Portfolios Trust is authorized to sell unlimited
interests in series or portfolios. Interests may be divided into classes.
Currently, the series comprising the Portfolio is the only series established
under that Trust, although others may be added in the future.
Each investor in the Portfolio, including the Fund, is
entitled to a vote in proportion to the amount of its investment in the
Portfolio. Whenever the Fund is requested to vote as an investor in the
Portfolio on matters pertaining to the Portfolio (other than a vote by the Fund
to continue the operation of the Portfolio upon the withdrawal of another
investor in the Portfolio), the Fund will hold a meeting of its shareholders and
will cast all of its votes as an investor in the Portfolio in the same
proportion as directed by the votes of the Fund's shareholders. Fund
shareholders who do not vote will not affect the votes cast by the Fund at the
meeting of the Portfolio investors. The percentage of the votes representing the
Fund's shareholders who do not vote will be voted by the Fund in the same
proportion as the Fund's shareholders who do, in fact, vote.
DELAWARE BUSINESS TRUST INFORMATION. Under Delaware law,
shareholders of the Funds organized as series of Delaware Business Trusts will
enjoy the same limitations on personal liability as extended to stockholders of
a Delaware corporation. Further, the Trust Instruments of those Trusts 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 Trusts or any particular series (fund) of the Trusts. However,
the principles of law governing the limitations of liability of beneficiaries of
a business trust have not been authoritatively established as to business trusts
organized under the laws of one jurisdiction but operating or owning property in
other jurisdictions. In states that have adopted legislation containing
provisions comparable to the Delaware Business Trust Act, it is believed that
the limitation of liability of beneficial owners provided by Delaware law should
be respected. In those jurisdictions that have not adopted similar legislative
provisions, it is possible that a court might hold that the
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shareholders of the Trusts are not entitled to the limitations of liability set
forth in Delaware law or the Trust Instruments and, accordingly, that they may
be personally liable for the obligations of the Trusts.
In order to protect shareholders from such potential
liability, the Trust Instruments require that every written obligation of the
Trusts or any series thereof contain a statement to the effect that such
obligation may only be enforced against the assets of the Trusts or such series.
The Trust Instruments 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 Trusts shall, upon
request, assume the defense of any such claim made against such shareholder for
any act or obligation of the relevant series and satisfy any judgment thereon
from the assets of that series.
As a result, the risk of a shareholder of the Funds in those
Trusts 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 Trusts believe that the risk of personal liability to
shareholders of the Fund is therefore remote. The trustees intend to conduct the
operations of the Trusts and the Funds so as to avoid, to the extent possible,
liability of shareholders for liabilities of the Trusts or the Funds.
CORPORATE GOVERNANCE AND OTHER INFORMATION PERTAINING TO ALL
FUNDS. 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 Growth Fund, the Berger Large Cap Growth Fund
or any of the Trusts so request, a special shareholders' meeting of that Fund or
Trust will be held for the purpose of considering the removal of a director or
trustee, 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 any of those Funds or
Trusts so request. Subject to certain limitations, the Funds/Trusts will
facilitate appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a director or trustee.
Shareholders of the Funds and, where applicable, the other
series/classes of the same business trust, generally vote separately on matters
relating to those respective series/classes, although they vote together and
with the holders of any other series/classes of the same business trust in the
election of trustees of the trust and on all matters relating to the trust as a
whole. Each full share of each Fund has one vote.
Shares of the Funds have non-cumulative 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.
Shares of the Funds have no preemptive rights. There are no
sinking funds or arrearage provisions which may affect the rights of the Fund
shares. Fund shares have no subscription rights or conversion rights, except
that shareholders of any class of the Berger Information Technology Fund may
convert their shares into shares of any other class of the Fund in the event and
only in the event the shareholder ceases to be eligible to purchase or hold
shares of the original class, or becomes eligible to purchase shares of a
different class, by reason of a change in the shareholder's status under the
conditions of eligibility in effect for such class at that time. 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.
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Under governing corporate law, each Fund may enter into a
variety of corporate transactions, such as reorganizations, conversions, mergers
and asset transfers, or may be liquidated. Any such transaction would be subject
to a determination from the directors or trustees that the transaction was in
the best interests of the Fund and its shareholders, and may require obtaining
shareholder approval.
MORE INFORMATION ON SPECIAL FUND STRUCTURES
MULTI-CLASS. All of the Funds are permitted to divide their
shares into classes. However, currently only the Berger Information Technology
Fund, the Berger New Generation Fund and the Berger Small Company Growth Fund
have divided their shares into classes and have two classes of shares
outstanding, the Investor Shares covered by this SAI and the Institutional
Shares offered through a separate Prospectus and SAI. These Funds implemented
their multi-class structure by adopting Rule 18f-3 Plans under the 1940 Act
permitting them to issue shares in classes. The Rule 18f-3 Plans govern such
matters as class features, dividends, voting, allocation of income and expenses
between classes, exchange and trustee monitoring of the Plan. Each class is
subject to such investment minimums and other conditions of eligibility as are
set forth in the relevant prospectus for the class, as it may be amended from
time to time. Institutional Shares are designed for institutional, individual
and other investors willing to maintain a higher minimum account balance,
currently set at $250,000. Information concerning Institutional Shares is
available from the Funds at 1-800-259-2820.
Subject to the relevant Declaration of Trust or Trust
Instrument and any other applicable provisions, the trustees of those Funds have
the authority to create additional classes, or change existing classes, from
time to time, in accordance with Rule 18f-3 under the Act.
MASTER/FEEDER. Unlike other mutual funds that directly acquire
and manage their own portfolios of securities, the Berger International Fund
(referred to as a feeder fund) seeks to achieve its investment objective by
investing all of its investable assets in the Berger International Portfolio
(referred to as a master fund). This two-tier structure is commonly known as a
master/feeder. The Fund has the same investment objective and policies as the
Portfolio. The Fund will invest only in the Portfolio, and the Fund's
shareholders will therefore acquire only an indirect interest in the investments
of the Portfolio. The master/feeder fund structure is still relatively new and
lacks a substantial history.
In addition to selling a beneficial interest to the Fund, the
Portfolio may sell beneficial interests to other mutual funds or institutional
investors (that is, other feeder funds). Such investors will invest in the
Portfolio on the same terms and conditions and will pay their proportionate
share of the Portfolio's expenses. However, the other investors investing in the
Portfolio are not required to issue their shares at the same public offering
price as the Fund due to potential differences in expense structures.
Accordingly, investors in the Fund should be aware that these differences may
result in differences in returns experienced by investors in the different funds
that invest in the Portfolio. Such differences in returns are common in this
type of mutual fund structure and are also present in other mutual fund
structures. Information concerning other investors in the Portfolio (for
example, other feeder funds) is available from the Fund at 1-800-706-0539.
Currently, there are two other feeder funds that also invest all of their
investable assets in the Portfolio: the International Equity Fund (designed for
eligible trusts or bank trust departments) which has a minimum balance
requirement of $1,000,000, and the Berger International CORE Fund, which has a
minimum balance requirement of $250,000.
The investment objective of the Fund may not be changed
without the approval of the Fund's shareholders. The investment objective of the
Portfolio may not be changed without the approval of the investors in the
Portfolio, including the Fund. If the objective of the Portfolio changes and the
shareholders of the Fund do not approve a parallel change in the Fund's
investment objective, the trustees of the Trust will consider other
alternatives, including seeking an alternative investment vehicle or directly
retaining the Fund's own investment advisor.
Smaller funds investing in the Portfolio may be materially
affected by the actions of larger funds investing in the Portfolio. For example,
if a larger fund invests or withdraws from the Portfolio, the remaining funds
may experience lower or higher pro rata operating expenses. Lower returns could
possibly result from a large withdrawal. However, this possibility also exists
for traditionally structured funds which have large or institutional investors.
Also, a fund with a greater pro rata ownership in the Portfolio could have
effective voting control over the operations of the Portfolio.
Whenever the Fund is requested to vote as an investor in the
Portfolio on matters pertaining to the Portfolio (other than a vote by the Fund
to continue the operation of the Portfolio upon the withdrawal of another
investor in the Portfolio),
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the Fund will hold a meeting of its shareholders and will cast all of its votes
as an investor in the Portfolio in the same proportion as directed by the votes
of the Fund's shareholders. Fund shareholders who do not vote will not affect
the votes cast by the Fund at the meeting of the Portfolio investors. The
percentage of the votes representing the Fund's shareholders who do not vote
will be voted by the Fund in the same proportion as the Fund's shareholders who
do, in fact, vote.
The Fund may withdraw its investment in the Portfolio at any
time, if the trustees of the Trust determine that it is in the best interests of
the Fund to do so. Certain changes in the Portfolio's investment objective,
policies and limitations may require the Fund to withdraw its investment in the
Portfolio. Upon any such withdrawal, the trustees would consider what action
might be taken, including investing the Fund's assets in another pooled
investment entity having the same investment objective and policies as the Fund
or retaining an investment advisor to manage the Fund's assets in accordance
with the investment policies described above with respect to the Portfolio. Any
such withdrawal could result in a distribution in-kind of portfolio securities
(as opposed to a cash distribution) from the Portfolio. If securities are
distributed, the Fund could incur brokerage, tax or other charges in converting
the securities to cash. In addition, a distribution in-kind may adversely affect
the liquidity of the Fund.
The trustees of the Berger Worldwide Funds Trust and the
Berger Worldwide Portfolios Trust are the same individuals. A majority of the
trustees of each of those Trusts who are not "interested persons" (as defined in
the Investment Company Act of 1940) of either Trust have adopted written
procedures reasonably appropriate to deal with potential conflicts of interest
arising from the fact that the same individuals are trustees of both Trusts, up
to and including creating a new board of trustees for one or the other of the
Trusts.
PRINCIPAL SHAREHOLDERS
Insofar as the management of the Funds is aware, as of
December 29, 2000, no person owned, beneficially or of record, more than 5% of
the outstanding shares of any of the Funds, except for the following:
<TABLE>
<CAPTION>
OWNER FUND PERCENTAGE
----- ---- ----------
<S> <C> <C>
Charles Schwab & Co. Inc. ("Schwab") Berger Information Technology Fund (Investor Shares) 11.11%
101 Montgomery Street
San Francisco, CA 94104
Berger New Generation Fund (Investor Shares) 21.71%
Berger Select Fund 45.81%
Berger Small Company Growth Fund (Investor Shares) 24.80%
Berger Mid Cap Growth Fund 40.23%
Berger Mid Cap Value Fund 45.86%
Berger Growth Fund 20.99%
Berger International Fund 25.51%
Berger Large Cap Growth Fund 27.19%
Berger Balanced Fund 36.83%
</TABLE>
65
<PAGE> 118
<TABLE>
<S> <C> <C>
National Financial Services Corporation Berger New Generation Fund (Investor Shares) 13.90%
("Fidelity")
200 Liberty St.
One World Financial Center
New York, NY 10281-1003
Berger Select Fund 12.01%
Berger Small Company Growth Fund (Investor Shares) 7.68%
Berger Mid Cap Growth Fund 17.87%
Berger Large Cap Growth Fund 5.77%
Berger Balanced Fund 12.65%
Donaldson Lufkin & Jenrette Berger Balanced Fund 5.42%
("DLJ")
SEC Corp Pershing Division
P.O. Box 2052
Jersey City, NJ 07303
National Investor Services Corp. Berger Information Technology Fund (Investor Shares) 12.97%
55 Water Street, 32nd Floor
New York, NY 10041-3299
Berger New Generation Fund (Investor Shares) 5.32%
Berger Balanced Fund 6.11%
</TABLE>
Any person owning more than 25% of the outstanding securities
of a Fund may be deemed to control it. Schwab and Fidelity are believed to hold
their shares of the Funds as nominees for the benefit of their client.
In addition, Schwab owned of record 26.08%, and Fidelity owned
of record 8.52% of all the outstanding shares of the Berger Investment Portfolio
Trust, of which the Berger Information Technology Fund, Berger New Generation
Fund, Berger Select Fund, Berger Small Company Growth Fund, Berger Mid Cap
Growth Fund, Berger Mid Cap Value Fund and the Berger Balanced Fund are
outstanding series. Schwab also owned of record
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<PAGE> 119
18.37% of the outstanding shares of the Berger Worldwide Funds Trust, of which
the Berger International Fund is one of three outstanding series.
As of January 4, 2000, Schwab owned of record 57.28% of the
outstanding shares of the Berger Information Technology Fund, a series of the
Berger Investment Portfolio Trust, when Schwab's record ownership of the Fund's
Trust shares is added together with record ownership of Institutional Shares of
the Fund. In addition, Bay Isle has advised the Trust that, as January 4, 2000,
it had voting discretion over approximately 27.60% of that fund's outstanding
shares in accounts beneficially owned by various Bay Isle advisory clients. Bay
Isle may be deemed to beneficially own those shares as a result of its voting
discretion.
DISTRIBUTION
Berger Distributors LLC, as the Funds' Distributor, is the
principal underwriter of all the Funds' shares. The Distributor is a
wholly-owned subsidiary of Berger LLC. The Distributor is a registered
broker-dealer under the Securities Exchange Act of 1934 and is a member of the
National Association of Securities Dealers, Inc. The Distributor acts as the
agent of a Fund in connection with the sale of the Fund's shares in all states
in which the shares are eligible for sale and in which the Distributor is
qualified as a broker-dealer. David J. Schultz, Chief Financial Officer,
Assistant Secretary and Treasurer of the Distributor, is also Vice President and
Treasurer of the Funds. Janice M. Teague, Vice President and Secretary of the
Distributor, is also Vice President and Assistant Secretary of the Funds. Brian
Ferrie, Vice President and Chief Compliance Officer of the Distributor, is also
Vice President of the Funds. Sue Vreeland, Assistant Secretary of the
Distributor, is also Secretary of the Funds.
Each of the Funds and the Distributor are parties to a
Distribution Agreement that continues through April 2001 or 2002, 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 Investment Company Act of 1940) of the Fund or the Distributor. The
Distribution Agreement is subject to termination by the Fund or the Distributor
on 60 days' prior written notice, and terminates automatically in the event of
its assignment. Under the Distribution Agreement, the Distributor continuously
offers shares of the Funds and solicits orders to purchase Fund shares at net
asset value. The Distributor is not compensated for its services under the
Distribution Agreement, but may be reimbursed by Berger LLC for its costs in
distributing Fund shares.
OTHER INFORMATION
The Funds 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 Funds of which this
Statement of Additional Information is a part. If further information is desired
with respect to any of the Funds or such securities, reference is made to the
Registration Statements and the exhibits filed as a part thereof.
Davis, Graham & Stubbs LLP, 1550 Seventeenth Street, Suite
500, Denver, Colorado, acts as counsel to the Funds.
INDEPENDENT ACCOUNTANTS
[TO BE UPDATED]
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<PAGE> 120
FINANCIAL INFORMATION
A copy of the Annual Report referenced below is enclosed with
this SAI. Additional copies of that Report may be obtained upon request without
charge by calling the Funds at 1-800-333-1001.
Year-End Financial Statements
[TO BE UPDATED]
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<PAGE> 121
APPENDIX A
HIGH-YIELD/HIGH-RISK SECURITIES
Each of the Funds may invest in convertible securities of any quality,
including unrated securities or securities rated below investment grade (Ba or
lower by Moody's, BB or lower by S&P). However, a Fund will not purchase any
security in default at the time of purchase. None of the Funds will invest more
than 20% of the market value of its assets at the time of purchase in
convertible securities rated below investment grade.
Securities rated below investment grade are subject to greater risk
that adverse changes in the financial condition of their issuers or in general
economic conditions, or an unanticipated rise in interest rates, may impair the
ability of their issuers to make payments of interest and principal or
dividends. The market prices of lower grade 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. In the event of an
unanticipated default, a Fund will experience a reduction in its income and
could expect a decline in the market value of the securities affected. The
prices of these securities may be more volatile and the markets for them may be
less liquid than those for higher-rated securities.
Unrated securities, while not necessarily of lower quality than rated
securities, may not have as broad a market. Unrated securities will be included
in a Fund's percentage limits for investments rated below investment grade,
unless the Fund's advisor deems such securities to be the equivalent of
investment grade. If securities purchased by a Fund are downgraded following
purchase, or if other circumstances cause the Fund to exceed its percentage
limits on assets invested in securities rated below investment grade, the
director or trustees of the Fund, in consultation with the Fund's advisor, will
determine what action, if any, is appropriate in light of all relevant
circumstances.
Relying in part on ratings assigned by credit agencies in making
investments will not protect a Fund from the risk that the securities will
decline in value, since credit ratings represent evaluations of the safety of
principal, dividend and/or interest payments, and not the market values of such
securities. Moreover, such ratings may not be changed on a timely basis to
reflect subsequent events.
Although the market for high-yield debt securities has been in
existence for many years and from time to time has experienced economic
downturns, this market has involved a significant increase in the use of
high-yield debt securities to fund highly leverage corporate acquisitions and
restructurings. Past experience may not, therefore, provide an accurate
indication of future performance of the high-yield debt securities market,
particularly during periods of economic recession.
Expenses incurred in recovering an investment in a defaulted security
may adversely affect a Fund's net asset value. Moreover, the reduced liquidity
of the secondary market for such securities may adversely affect the market
price of, and the ability of a Fund to value, particular securities at certain
times, thereby making it difficult to make specific valuation determinations.
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.
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
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<PAGE> 122
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.
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 a small degree.
A-Debt rated A has a strong capacity to pay interest and repay
principal although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC AND C-Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB indicates
the lowest degree of speculation and C the highest degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are out-weighed by the large uncertainties or major risk exposures to adverse
conditions.
C1-The rating C1 is reserved for income bonds on which no interest is
being paid.
D-Debt rated D is in default, and payment of interest and/or repayment
of principal is in arrears.
PLUS (+) OR MINUS (-)-The ratings from "AA" to "CCC" may be modified by
the addition of a plus or minus sign to show relative standing within the major
rating categories.
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<PAGE> 123
FOR MORE INFORMATION:
Additional information about the Funds' investments is available in the Funds'
semi-annual and annual reports to shareholders. The Funds' annual report
contains a discussion of the market conditions and investment strategies that
affected the Funds' performance over the past year.
You may wish to read the Statement of Additional Information (SAI) for more
information on the Funds and the securities they invest in. The SAI is
incorporated into this prospectus by reference, which means that it is
considered to be part of the prospectus.
You can get free copies of the annual and semi-annual reports and the SAI,
request other information or get answers to your questions about the Funds by
calling or writing either a participating insurance company or the Funds at:
Berger Funds
P.O. Box 5005
Denver, CO 80217
(800) 259-2820
bergerfunds.com
Text-only versions of Fund documents can be viewed online or downloaded from the
EDGAR database on the SEC's web site at sec.gov.
You can also obtain copies by visiting the SEC's Public Reference Room in
Washington D.C. For information on the operation of the Public Reference Room,
call 1-202-942-8090. Copies of documents may also be obtained, after paying a
duplicating fee, by sending your request to the following e-mail address:
[email protected]. or by writing to the SEC's Public Reference Section,
Washington, DC 20549-6009.
INVESTMENT COMPANY ACT FILE NUMBER:
Berger Institutional Products Trust 811-07367
o Berger IPT - New Generation Fund
o Berger IPT - Small Company Growth Fund
o Berger IPT - Growth Fund
o Berger/BIAM IPT - International Fund
o Berger IPT - Growth and Income Fund
4/00IPT PROS
<PAGE> 124
BERGER GROWTH FUND
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
The Exhibit Index following the signature pages below is
incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
None.
ITEM 25. INDEMNIFICATION
Article XXVII, Section 7 of the Fund's Bylaws provides for
indemnification of certain persons acting on behalf of the Fund to the full
extent permitted by the Maryland General Corporation Law and the Investment
Company Act of 1940. In general, directors, officers and employees will be
indemnified against liability and against all expenses of litigation incurred by
them in connection with any claim, action, suit or proceeding (or settlement of
same) in which they become involved by virtue of their Fund office, unless their
conduct is determined to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties, or unless it has been
determined that they have not acted in good faith in the reasonable belief that
their actions were in or not opposed to the best interests of the Fund or, in
the case of criminal proceedings, unless they had reasonable cause to believe
that their conduct was unlawful. The Fund also may advance money for these
expenses, provided that the director, officer or employee undertakes to repay
the Fund if his conduct is later determined to preclude indemnification. The
Fund has the power to purchase insurance on behalf of its directors, officers,
employees and agents, whether or not it would be permitted or required to
indemnify them for any such liability under the Bylaws or applicable law, and
the Fund has purchased and maintains an insurance policy covering such persons
against certain liabilities incurred in their official capacities.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The business of Berger LLC, the investment adviser of the
Fund, is described in the Prospectus under the heading "Organization of the
Berger Funds Family -- Investment Managers" and in the Statement of Additional
Information in Section 4 which are included in this Registration Statement.
Information relating to the business and other connections of the officers and
directors of Berger Associates (current and for the past two years) is listed in
Schedules A and D of Berger LLC's Form ADV as filed with the Securities and
Exchange Commission (File No. 801-9451, dated August 23, 2000), which
information from such schedules is incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Investment companies for which the Fund's principal
underwriter also acts as principal underwriter, depositor or investment adviser:
Berger Growth Fund, Inc.
Berger Growth and Income Fund, Inc.
Berger Investment Portfolio Trust
--Berger Small Company Growth Fund
--Berger Information Technology Fund
--Berger New Generation Fund
C-1
<PAGE> 125
--Berger Balanced Fund
--Berger Select Fund
--Berger Mid Cap Growth Fund
--Berger Mid Cap Value Fund
Berger Omni Investment Trust
--Berger Small Cap Value Fund
Berger Institutional Products Trust
--Berger IPT
--Growth Fund
--Berger IPT - Growth and Income Fund
--Berger IPT - Small Company Growth Fund
--Berger IPT - International Fund
--Berger IPT - New Generation Fund
Berger Worldwide Funds Trust
--Berger International Fund
--International Equity Fund
--Berger International CORE Fund
(b) For Berger Distributors LLC:
<TABLE>
<CAPTION>
Positions and Positions and
Offices with Offices with
Name Underwriter Registrant
---- ------------- -------------
<S> <C> <C>
David G. Mertens President and CEO None
David J. Schultz Chief Financial Officer, Assistant Vice President and
Secretary and Treasurer Treasurer
Brian Ferrie Vice President and Chief Compliance Vice President
Officer
Janice M. Teague Vice President and Secretary Vice President and
Assistant Secretary
Sue Vreeland Assistant Secretary Secretary
</TABLE>
The principal business address of each of the persons in the
table above is 210 University Blvd., Suite 900, Denver, CO 80206.
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained as follows:
(a) Shareholder records are maintained by the Registrant's
transfer agent, DST Systems, Inc., P.O. Box 419958,
Kansas City, MO 64141;
C-2
<PAGE> 126
(b) Accounting records relating to cash and other money
balances; asset, liability, reserve, capital, income
and expense accounts; portfolio securities; purchases
and sales; and brokerage commissions are maintained by
the Registrant's Recordkeeping and Pricing Agent, State
Street Bank and Trust Company ("State Street"), 801
Pennsylvania, Kansas City, Missouri 64105. Other
records of the Registrant relating to purchases and
sales; the Trust Instrument, minute books and other
trust records; brokerage orders; performance
information and other records are maintained at the
offices of the Registrant at 210 University Boulevard,
Suite 900, Denver, Colorado 80206.
ITEM 29. MANAGEMENT SERVICES
The Registrant has no management-related service contract
which is not discussed in Parts A and B of this form.
ITEM 30. UNDERTAKINGS
Not applicable.
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<PAGE> 127
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant has duly caused this
Amendment to its Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City and County of Denver, and
State of Colorado, on the 15th day of November, 2000.
BERGER GROWTH FUND, INC.
(Registrant)
By /s/ Jack R. Thompson
---------------------------
Name: Jack R. Thompson
-------------------------
Title: President
------------------------
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack R. Thompson President (Principal November 15, 2000
------------------------------ Executive Officer)
Jack R. Thompson and Director
/s/ David J. Schultz Vice President and November 15, 2000
------------------------------
David J. Schultz Treasurer (Principal
Financial Officer)
/s/ John Paganelli Assistant Treasurer November 15, 2000
------------------------------ (Principal Accounting
John Paganelli Officer)
Dennis E. Baldwin Director November 15, 2000,
------------------------------
Dennis E. Baldwin *
Louis R. Bindner Director November 15, 2000
------------------------------
Louis R. Bindner *
</TABLE>
C-4
<PAGE> 128
<TABLE>
<S> <C> <C>
Katherine A. Cattanach Director November 15, 2000
------------------------------
Katherine A. Cattanach *
Paul R. Knapp Director November 15, 2000
------------------------------
Paul R. Knapp *
Harry T. Lewis, Jr. Director November 15, 2000
------------------------------
Harry T. Lewis, Jr. *
Michael Owen Director November 15, 2000
------------------------------
Michael Owen *
William Sinclaire Director November 15, 2000
------------------------------
William Sinclaire *
By: /s/ Jack R. Thompson
---------------------------
Jack R. Thompson
Attorney-in-fact
</TABLE>
C-5
<PAGE> 129
BERGER GROWTH FUND
EXHIBIT INDEX
<TABLE>
<CAPTION>
N-1A EDGAR
EXHIBIT EXHIBIT
NUMBER NUMBER NAME OF EXHIBIT
------- ------- -----------------
<S> <C> <C>
(3) Exhibit 23 (a)-1 Articles of Incorporation
(3/9/66)
(3) Exhibit 23(a)-2 Articles of Amendment
(10/11/66)
(3) Exhibit 23(a)-3 Articles Supplementary
(10/24/91)
(3) Exhibit 23(a)-4 Articles Supplementary
(7/93)
(3) Exhibit 23(b) Bylaws (as amended through
June 20, 1997)
(3) Exhibit 23(c) Not applicable
(3) Exhibit 23(d) Form of Investment
Advisory Agreement
*(5) Exhibit 23(d)-1 Form of Amendment to
Investment Advisory
Agremeement
(1) Exhibit 23(e) Form of Distribution
Agreement between the
Fund and Berger
Distributors, Inc.
Exhibit 23(f) Not applicable
(2) Exhibit 23(g) Form of Custody Agreement
(3) Exhibit 23(h)-1 Form of Amended and Restated
Administrative Services Agreement
*(5) Exhibit 23(h)-1a Form of Amendment to
Administrative Services Agreement
(3) Exhibit 23(h)-2 Form of Recordkeeping and Pricing Agent
Agreement
(3) Exhibit 23(h)-3 Form of Agency Agreement
Exhibit 23(i) Not applicable
* Exhibit 23(j) Consent of PricewaterhouseCoopers LLP
Exhibit 23(k) Not applicable
Exhibit 23(l) Not applicable
(3) Exhibit 23(m) Form of Rule 12b-1 Plan, as amended
Exhibit 23(o) Not Applicable
</TABLE>
---------
* To be filed with 485(b) filing.
Filed previously as indicated below and incorporated herein by reference:
(1) Filed as Exhibit 6 with Post-Effective Amendment No. 58 to Registrant's
Registration Statement on Form N-1A filed December 31, 1997.
(2) Filed as Exhibit 8 with Post-Effective Amendment No. 54 to Registrant's
Registration Statement on Form N-1A filed November 27, 1995.
<PAGE> 130
(3) Filed as Exhibit number listed with Post-Effective Amendment No. 59 to
Registrant's Registration Statement on Form N-1A filed November 25, 1998.
(4) Filed as Exhibit number listed with Post-Effective Amendment No. 60 to
Registrant's Registration Statement on Form N-1A filed January 28, 1999.
(5) Filed as Exhibit number listed with Post-Effective Amendment No. 62 to
Registrant's Registration Statement on Form N-1A filed January 28, 2000.
