AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22,
1995
1933 Act File No. 33-69460
1940 Act File No. 811-8046
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 9 [X]
(Check appropriate box or boxes)
BERGER INVESTMENT PORTFOLIO TRUST
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(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
----------------------
Rodney L. Linafelter, 210 University Boulevard, Suite 900, Denver, CO 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[X] 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.
Registrant has registered an indefinite number of shares of beneficial
interest under the Securities Act of 1933 pursuant to Rule 24f-2(a) and
filed its Rule 24f-2 Notice on November 21, 1995, for the fiscal year ended
September 30, 1995.
<PAGE>
BERGER INVESTMENT PORTFOLIO TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
<TABLE>
<CAPTION>
Item No. and Caption in Form N-1A Number of Section
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<S> <C>
A. Prospectus
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1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Sections 2, 3, 4 and 15
5. Management of the Fund Sections 5, 6 and 7
5A. Management's Discussion of Fund Performance Will be in Annual Report
6. Capital Stock and Other Securities Sections 14, 15 and 16
7. Purchase of Securities Being Offered Sections 7, 8, 9, 10, 12
and 13
8. Redemption or Repurchase Section 11
9. Pending Legal Proceedings Not Applicable
B. Statement of Additional Information
-----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Holders of Securities Sections 3 and 14
16. Investment Advisory and Other Services Sections 3, 4, 5 and 14
17. Brokerage Allocation and Other Practices Sections 1, 5 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing of Securities Sections 7, 8, 10, 11 and
Being Offered 12
20. Tax Status Section 9
21. Underwriters Not Applicable
22. Calculations of Performance Data Section 13
23. Financial Statements Not Applicable
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR
SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 22, 1995
PROSPECTUS
The Berger New Generation Fund (the "Fund"), a series of
the Berger Investment Portfolio Trust, is a "no-load" mutual fund.
The investment objective of the Fund is capital appreciation. The
Fund seeks to achieve this objective by investing primarily in equity
securities (including common and preferred stocks, convertible debt
securities and other securities having equity features) of companies
which develop, manufacture, sell or provide new or innovative
products, services or methods of doing business which the Fund's
adviser believes have the potential to significantly change the
direction or dynamics of the industries in which they operate or to
substantially affect the way businesses or consumers conduct their
affairs.
This Prospectus sets forth concise information about the
Fund that a prospective investor should consider before investing.
Investors are advised to retain this Prospectus for future reference.
Additional information about the Fund has been filed with the
Securities and Exchange Commission. A copy of the Statement of
Additional Information, which is incorporated in its entirety by
reference, is available upon request without charge by writing to the
Fund at P. O. Box 5005, Denver, CO 80217, or by calling
1-800-333-1001. A separate prospectus is also available upon
request for the Berger 100 Fund, the Berger Growth and Income Fund and
the Berger Small Company Growth Fund.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL
SECURITIES IN ANY STATE TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER IN SUCH STATE.
The date of this Prospectus and the Statement of Additional
Information referred to above is MARCH __, 1996 .<PAGE>
Table of Contents
Section Page
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1. Fee Tables. . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Introduction. . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Investment Objectives and Policies and Risk Factors . . . . . 2
4. Portfolio Turnover. . . . . . . . . . . . . . . . . . . . . . 8
5. Management and Investment Advice. . . . . . . . . . . . . . . 8
6. Expenses of the Fund. . . . . . . . . . . . . . . . . . . . . 10
7. Policies of the Fund to Promote Sales of Fund Shares. . . . . 11
8. How to Purchase Shares in the Fund. . . . . . . . . . . . . . 12
9. How the Net Asset Value Is Determined . . . . . . . . . . . . 14
10. Open Account System and Share Certificates. . . . . . . . . . 14
11. How To Redeem or Sell Fund Shares . . . . . . . . . . . . . . 14
12. Exchange Privilege and Systematic Withdrawal Plan . . . . . . 17
13. Tax-Sheltered Retirement Plans. . . . . . . . . . . . . . . . 18
14. Income Dividends, Capital Gains Distributions and
Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . 19
15. Additional Information. . . . . . . . . . . . . . . . . . . . 20
16. Performance . . . . . . . . . . . . . . . . . . . . . . . . . 21
<PAGE>
1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load Imposed on Purchases 0%
Maximum Sales Load Imposed on Reinvested Dividends 0%
Deferred Sales Load 0%
Redemption Fees 0%
Exchange Fee 0%
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
Total
Fund
Operating
Management Expenses
Fee Other (After
(After Waiver) 12b-1 Fee Expenses* Waiver)
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Berger New .74%** .25% .91%** 1.90%**
Generation Fund
* Other Expenses primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees.
**Based on estimated expenses for the Fund's first year of operations.
EXAMPLES
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of each
time period:
1 Year 3 Years
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Berger New Generation Fund $19* $60*
* Based on estimated expenses for the Fund's first year of operations,
after waiver.
THE EXPENSES SET FORTH IN THE PRECEDING TABLES SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL
EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. THE ASSUMED 5%
ANNUAL RETURN IS HYPOTHETICAL AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY BE GREATER
OR LESS THAN THE ASSUMED AMOUNT.
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As a result of the 12b-1 fee paid by the Fund ,
over time long-term shareholders in the Fund may pay more than
the economic equivalent of the maximum front end sales charge
permitted for mutual funds by the National Association of Securities
Dealers, Inc. The management fee is higher than that
paid by most other mutual funds.
The purpose of the preceding tables is to assist the
investor in understanding the various costs and expenses that an
investor in the Fund will bear directly or indirectly.
The Fund's investment adviser, Berger Associates, Inc. ("Berger
Associates"), has agreed to waive its advisory fee to the
extent that the Fund's normal operating expenses in any fiscal
year, including the management fee and the 12b-1 fee,
but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1.90% of the Fund's average
daily net assets for that fiscal year. The tables are based
on the Fund's estimated expenses for its first year of operations and
include the effect of the foregoing fee waiver arrangement. Absent
the waiver, the Fund's Management Fee would be 0.90% and Total Fund
Operating Expenses would be estimated to be 2.06%. The Fund's
expenses are described in greater detail under "Management and
Investment Advice", "Expenses of the Fund ", and "Policies of
the Fund to Promote Sales of Fund Shares".
2. INTRODUCTION
The Berger New Generation Fund is a mutual fund or,
to use the technical name, an open-end, diversified, management
investment company . The Fund is a "no-load"
fund , meaning that a buyer pays no commissions or sales load
when buying shares of the Fund , although the Fund pays
certain costs of distributing its shares. See "Policies of the
Fund to Promote Sales of Fund Shares". This Prospectus
describes the securities offered by the Fund. Currently, the Fund
is one of two outstanding series of the Berger Investment
Portfolio Trust, a Delaware business trust , although other
series may be added in the future.
3. INVESTMENT OBJECTIVES AND POLICIES AND RISK FACTORS
Since the shares of the Fund primarily
represent an investment in common stocks, investors should understand
that the net asset value of the Fund will reflect changes in
the market value of the securities held in the Fund's
portfolio, and the value of a Fund share will therefore go up and
down.
The investment objective of the Berger New
Generation Fund is capital appreciation. The Fund seeks
to achieve this objective by investing primarily in equity securities
(including common and preferred stocks, convertible debt securities
and other securities having equity features) of companies which
develop, manufacture, sell or provide new or innovative products,
services or methods of doing business which the Fund's adviser
believes have the potential to significantly change the direction or
dynamics of the industries in which they operate or to substantially
affect the way businesses or consumers conduct their affairs. The
Fund may also invest in equity securities of other types of companies,
government securities, short-term investments or other securities as
described on the following pages, if its adviser believes these are
likely to be the best suited at that time to achieve the Fund's
objective. Because income is
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not an objective of the Fund, any income produced will be a by-product
of the effort to achieve the Fund's objective of capital
appreciation.
In selecting its portfolio securities, the Fund
places primary emphasis on companies which it believes
have favorable growth prospects. Because the Fund seeks to
invest in growth companies of the type described in the preceding
paragraph, the Fund's portfolio is expected to be weighted toward, but
not limited to, companies in business sectors that are characterized
by rapid change, current examples of which are information and
communications technology; electronics; healthcare, pharmaceuticals
and biotechnology; media and entertainment; and environmental
services. The portfolio is also expected to be weighted toward
companies with small- to mid-sized market capitalizations, although
the Fund is free to invest in companies with larger market
capitalizations as well. Market capitalization is defined as
total current market value of a company's outstanding common stock.
Investments in companies in rapidly changing industries
may involve greater risks and price volatility than those in more
stable industries due to the intense competition for market share and
the fact that those companies may be developing or marketing new
products or services for which markets are not yet established and may
never become established. In addition, products or services in such
industries may be subject to rapid obsolescence and may require
regulatory approvals prior to their use. Moreover, investments in
companies with small- to mid-sized capitalizations may involve greater
risks and price volatility than investments in larger, more mature
companies. See below under "Securities of Smaller Companies".
Because the portfolio of the Berger New Generation Fund
is expected to be weighted toward companies in business sectors
characterized by rapid change, the Fund will frequently concentrate
its investments in a relatively small number of industries. Those
business sectors characterized by rapid change will vary over time.
Although the Fund will not invest more than 25% of its total assets in
the securities of companies in any one industry, industry
concentration may cause the net asset value of the Fund's shares to be
more volatile than if the Fund's investments were spread over many
different industries. Additionally, certain economic factors or
specific events may exert a disproportionate impact upon the prices of
securities of companies within a particular industry relative to their
impact on the prices of companies in other industries.
While many of the companies in the Fund's
portfolio may present above average risk, management believes they
may have the potential to achieve long-term earnings growth rates
substantially in excess of the growth of earnings of other companies.
For this reason, the Berger New Generation Fund is not
intended as a complete or balanced investment vehicle but
rather as an investment for persons who are in a financial position to
assume greater risk and share price volatility over time.
Realizing the full potential of investing in the type of
companies sought by the Fund frequently takes time. As a
result, the Berger New Generation Fund should be considered as
a long-term investment vehicle.
* * *
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In general, investment decisions for the Fund are
based on an approach which seeks out successful companies because they
are believed to be more apt to become profitable investments. To
evaluate a prospective investment, the investment adviser analyzes
information from various sources, including industry economic trends,
earnings expectations and fundamental securities valuation factors to
identify companies which in management's opinion are more likely to
have predictable, above average earnings growth, regardless of
size or geographic location. The adviser also takes
into account a company's management and its innovations in products
and services in evaluating its prospects for continued or future
earnings growth.
The investment objective of the Berger New
Generation Fund is considered fundamental, meaning that it
cannot be changed without a shareholders' vote. There can be
no assurance that the Fund's investment objective will
be realized. In addition, the Fund may increase its
investment in government securities and other short-term interest-
bearing securities without limit when the adviser believes market
conditions warrant a temporary defensive position, during which period
it may be more difficult for the Fund to achieve its investment
objective. Following is additional information about some of the
other specific types of securities in which the Fund may
invest.
FOREIGN SECURITIES. The Fund may invest in both
domestic and foreign securities. Investments in foreign securities
involve some risks that are different from the risks of investing in
securities of U.S. issuers, such as the risk of fluctuations in the
value of the currencies in which they are denominated, the risk of
adverse political and economic developments and, with respect to
certain countries, the possibility of expropriation, confiscatory
taxation or limitations on the removal of funds or other assets of the
Fund . Securities of some foreign companies, particularly those
of developing countries, are less liquid and more volatile than
securities of comparable domestic companies. A developing country
generally is considered to be in the initial stages of its
industrialization cycle. Investing in the securities of developing
countries may involve exposure to economic structures that are less
diverse and mature, and to political systems that can be expected to
have less stability than developed countries. There also may be less
publicly available information about foreign issuers than domestic
issuers, and foreign issuers generally are not subject to the uniform
accounting, auditing and financial reporting standards and practices
applicable to domestic issuers. Delays may be encountered in settling
certain foreign securities transactions and the Fund will incur
costs in converting foreign currencies into U.S. dollars. The
Fund will consider the political and economic conditions in a
country, the prospect for changes in the value of its currency and the
liquidity of an investment in that country's securities markets in
selecting investments in foreign securities.
CONVERTIBLE SECURITIES. The Fund may purchase
securities which are convertible into common stock when management of
the Fund believes they offer the potential for a higher total
return than nonconvertible securities. While fixed income securities
generally have a priority claim on a corporation's assets over that of
common stock, some of the convertible securities which the Fund
may hold are high-yield/high-risk securities that are subject to
special risks, including the risk of default in interest or principal
payments which could result in a loss of income to the Fund or
a decline in the market value of the securities. Convertible
securities often display a degree of market price volatility that is
comparable to common stocks. The credit risk associated with
convertible securities generally is reflected by their being rated
below
-4-<PAGE>
investment grade by organizations such as Moody's Investors Service,
Inc. and Standard & Poor's Corporation. The Fund has no pre-
established minimum quality standards for convertible securities and
may invest in convertible securities of any quality, including lower
rated or unrated securities. However, under normal circumstances, the
Fund will not invest in any security in default at the
time of purchase or in any nonconvertible debt securities rated below
investment grade, and the Fund will invest less than 20% of the
market value of its assets at the time of purchase in convertible
securities rated below investment grade. For a further discussion of
debt security ratings, see Appendix A to the Statement of Additional
Information.
SECURITIES OF SMALLER COMPANIES. The Fund may invest in,
and the portfolio of the Fund will be weighted toward, securities of
companies with small- or mid-sized market capitalizations. Market
capitalization is defined as total current market value of a company's
outstanding common stock. Investments in companies with smaller
market capitalizations may involve greater risks and price volatility
(that is, more abrupt or erratic price movements) than investments in
larger, more mature companies since smaller companies may be at an
earlier stage of development and may have limited product lines,
reduced market liquidity for their shares, limited financial resources
or less depth in management than larger or more established companies.
Smaller companies also may be less significant factors within their
industries and may have difficulty withstanding competition from
larger companies. While smaller companies may be subject to these
additional risks, they may also realize more substantial growth than
larger or more established companies.
UNSEASONED ISSUERS. The Fund may invest to a limited
degree in securities of unseasoned issuers. Unseasoned issuers are
companies with a record of less than three years' continuous
operation, even including the operations of any predecessors and
parents. Unseasoned issuers by their nature have only a limited
operating history which can be used for evaluating the company's
growth prospects. As a result, investment decisions for these
securities may place a greater emphasis on current or planned product
lines and the reputation and experience of the company's management
and less emphasis on fundamental valuation factors than would be the
case for more mature growth companies. In addition, many unseasoned
issuers may also be small companies and involve the risks and price
volatility associated with smaller companies. The Fund may invest up
to 15% of its total assets in securities of unseasoned
issuers.
REPURCHASE AGREEMENTS. The Fund is authorized to
invest in repurchase agreements. A repurchase agreement is a means of
investing cash for a short period. In a repurchase agreement, a
seller (typically a U.S. commercial bank or recognized U.S. securities
dealer) sells securities to the Fund and agrees to repurchase the
securities at the Fund's cost plus interest within a specified period
(normally one day). In these transactions, the securities purchased
by the Fund will have a total value equal to, or in excess of, the
value of the repurchase agreement, and will be held by the Fund's
custodian bank until repurchased. These transactions must be fully
collateralized at all times by debt securities (generally a security
issued or guaranteed by the U.S. Government or an agency thereof, a
banker's acceptance or a certificate of deposit), but involve some
credit risk to the Fund if the other party defaults on its obligation
and the Fund is delayed or prevented from liquidating the collateral.
Repurchase
-5-<PAGE>
agreements maturing in more than seven days will be considered
illiquid for purposes of the restriction on the Fund's
investment in illiquid and restricted securities.
LENDING PORTFOLIO SECURITIES. The Fund may lend its
portfolio securities to qualified institutional investors such as
brokers, dealers or other financial organizations. This practice
permits the Fund to earn income, which, in turn, can be invested in
additional securities to pursue the Fund's investment objective.
Loans of securities by the Fund will be collateralized by cash,
letters of credit, or securities issued or guaranteed by the U.S.
Government or its agencies. The collateral will equal at least 100%
of the current market value of the loaned securities, marked-to-market
on a daily basis. The Fund bears a risk of loss in the event that the
other party to a securities lending transaction defaults on its
obligations and the Fund is delayed in or prevented from exercising
its rights to dispose of the collateral, including the risk of a
possible decline in the value of the collateral securities during the
period in which the Fund seeks to assert these rights, the risk of
incurring expenses associated with asserting these rights and the risk
of losing all or a part of the income from the transaction. The Fund
will not lend any security if, as a result of such loan, the aggregate
value of securities then on loan would exceed 33-1/3% of the market
value of the Fund's total assets.
FINANCIAL FUTURES, FORWARDS AND OPTIONS. The Fund is
authorized to make limited investments in certain types of futures,
forwards and options, but only for the purpose of hedging, that is,
protecting against the risk of market movements that may adversely
affect the value of the Fund's securities or the price of
securities that the Fund is considering purchasing. Although a
hedging transaction may, for example, partially protect the
Fund from a decline in the value of a particular security or its
portfolio generally, the cost of the transaction will reduce the
potential return on the security or the portfolio. Following is a
summary of the futures, forwards and options in which the Fund
may invest, provided that no more than 5% of the Fund's net
assets at the time of purchase may be invested in initial margins for
financial futures transactions and premiums for options.
Financial futures and forwards are contracts on financial
instruments (such as securities, securities indices and foreign
currencies) that obligate the holder to take or make future delivery
of a specified quantity of the underlying financial instrument.
Futures are generally exchange traded and settled with cash, while
forwards are privately negotiated and contemplate actual delivery of
the underlying financial instrument (usually a foreign currency). An
option gives the holder the right, but not the obligation, to purchase
or sell something (such as a security) at a specified price at any
time until the expiration date. An option on a securities index is
similar, except that upon exercise, settlement is made in cash rather
than in specific securities. The Fund may only write call
options (that is, issue options that obligate the Fund to deliver if
the option is exercised by the holder) that are "covered" and only up
to 25% of the Fund's total assets. A call option is considered
"covered" if the Fund already owns the security on which the
option is written or, in the case of an option written on a securities
index, if the Fund owns a portfolio of securities believed
likely to substantially replicate movement of the index.
Investments in futures and forwards by the Fund
involve the potential for a loss that may exceed the amount of initial
margin the Fund would be permitted to invest in the
-6-<PAGE>
contracts under its investment limitations, or in the case of a call
option written by the Fund, may exceed the premium received for
the option. However, the Fund will be permitted to make such
investments for hedging purposes only, and only if the aggregate
amount of its obligations under these investments does not exceed the
total market value of the assets the Fund is attempting to hedge, such
as a portion or all of its exposure to equity securities or its
holding in a specific foreign currency. To ensure that the
Fund will be able to meet its obligations under its futures and
forward contracts and its obligations under options written by
the Fund, the Fund will be required to place high-grade
liquid assets in a segregated account with its custodian bank or to
set aside portfolio securities to "cover" its position in these
investments. Assets segregated or set aside generally may not be
disposed of so long as the Fund maintains the positions requiring
segregation or cover, which could diminish the Fund's return due to
the opportunity losses of foregoing other potential investments with
such assets.
The principal risks of the Fund investing in 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, forwards or options at any particular time, and possible
exchange-imposed price fluctuation limits, either of which may make it
difficult or impossible to close a position when so desired; (d) the
need for additional information and skills beyond those required for
the management of a portfolio of traditional securities; and
(e) possible need to defer closing out certain futures or options
contracts in order to continue to qualify for beneficial tax treatment
afforded "regulated investment companies" under the Internal Revenue
Code of 1986, as amended. In addition, when the Fund enters
into an over-the-counter contract with a counterparty, the Fund will
assume counterparty credit risk, that is, the risk that the
counterparty will fail to perform its obligations, in which case the
Fund could be worse off than if the contract had not been entered
into. Additional detail concerning the Fund's investment in
futures, forwards and options and the risks of such investments can be
found in the Statement of Additional Information.
ILLIQUID SECURITIES. The Fund is authorized to
invest in securities which are illiquid because they are subject to
restrictions on their resale ("restricted securities") or because,
based upon their nature or the market for such securities, they are
not readily marketable. However, the Fund may not
purchase any security, the purchase of which would cause the Fund to
invest more than 15% of its net assets, measured at the time of
purchase, in illiquid securities. Repurchase agreements maturing in
more than seven days will be considered as illiquid for purposes of
this restriction. Certain restricted securities, such as Rule 144A
securities, may be treated as liquid under this restriction if a
determination is made that such securities are readily marketable.
Investments in illiquid securities involve certain risks to the extent
that the Fund may be unable to dispose of such a security at
the time desired or at a reasonable price or, in some cases, may be
unable to dispose of it at all. In addition, in order to resell a
restricted security, the Fund might have to incur the
potentially substantial expense and delay associated with effecting
registration.
-7-<PAGE>
INVESTMENT RESTRICTIONS
In addition to its investment objective, the Fund has
adopted a number of restrictions on its investments and other
activities that may not be changed without shareholder approval. For
example, with respect to 75% of its total assets, the Fund
may not purchase securities of any issuer (except U.S. Government
securities) if, immediately after and as a result of such purchase,
the value of the Fund's holdings in the securities of that
issuer exceeds 5% of the value of its total assets or it owns more
than 10% of the outstanding voting securities or of any class of
securities of such issuer.
Further, the Fund may not borrow money, except borrowing
undertaken from banks for temporary or emergency purposes in amounts
not to exceed 25% of the market value of its assets (including the
amount borrowed) and may not make loans (except that the
Fund may enter into repurchase agreements and may lend
portfolio securities in accordance with its investment
policies). The Fund may not invest in any one industry
more than 25% of the value of its assets at the time of investment,
nor invest in commodities, except, only for the purpose of hedging, in
certain futures, forwards and options as specified in greater detail
above and in the Statement of Additional Information.
Also, the Fund does not currently intend to
make short sales of securities, except short sales of securities which
the Fund owns or has the right to acquire at no additional cost (i.e.,
short sales "against the box"), and does not intend to purchase or
sell securities on a when-issued or delayed delivery basis if as a
result, more than 5% of its assets are invested in such securities,
although these restrictions may be changed without shareholder
approval. For more detail about the Fund's investment
restrictions, see the Statement of Additional Information.
4. PORTFOLIO TURNOVER
In pursuit of the Fund's investment objective,
management continuously reviews its investments and makes portfolio
changes whenever changes in the market, industry trends or the outlook
for the growth of any portfolio security indicate to management that
the objective could be better achieved by investment in another
security, regardless of portfolio turnover. In addition, portfolio
turnover may increase as a result of large amounts of purchases and
redemptions of shares of the Fund due to economic, market or other
factors that are not within the control of management. As a
result, the annual portfolio turnover rate
of the
Fund is
expected at times to exceed 100%. An annual turnover rate
of 100% or more would be higher than that of most other funds.
Increased portfolio turnover would necessarily result in
correspondingly higher brokerage costs for the Fund and may
result in the acceleration of net taxable gains.
5. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Fund are responsible for
major decisions relating to the Fund's policies and objectives.
They also oversee the operation of the Fund by its officers and
review the investment performance of the Fund on a regular
basis.
-8-<PAGE>
The investment adviser to the Fund is Berger
Associates, 210 University Boulevard, Suite 900, Denver, CO 80206.
Berger Associates furnishes continuous advice and recommendations to
the Fund regarding securities to be purchased and sold by the
Fund. Berger Associates, therefore, formulates a continuing program
for management of the assets of the Fund consistent with the
investment objectives and policies established by the trustees
of the Fund. Berger Associates also provides office space for
the Fund and pays the salaries, fees and expenses of all Fund
officers and trustees of the Fund who are interested
persons of Berger Associates. Berger Associates serves as investment
adviser to mutual funds, pension and profit-sharing plans, and
institutional and private investors.
Rodney L. Linafelter, Vice President and Chief Investment
Officer of Berger Associates, is the President and a trustee of
Berger Investment Portfolio Trust, of which the Berger New Generation
Fund is a series. Mr. Linafelter is also President, portfolio manager
and a director of the Berger 100 Fund and the Berger Growth and
Income Fund. As Chief Investment Officer of Berger Associates,
Mr. Linafelter has management responsibilities with respect to all
investment activities of the Berger Funds.
Mr. Linafelter joined Berger Associates in January 1990,
where he has served as a portfolio manager for the Berger 100 Fund and
the Berger Growth and Income Fund, as well as for retirement plans and
institutional and private investors. From April 1986 to December
1989, Mr. Linafelter was employed as a Financial Consultant
(registered representative) with Merrill Lynch, Pierce, Fenner &
Smith, Inc., providing investment advice to institutions and
individuals.
William R. Keithler is the President and portfolio manager
of the Berger New Generation Fund and as such is
primarily responsible for the investments of the Fund, including the
day-to-day investment decisions for the Fund. Mr. Keithler is also
President and portfolio manager of the Berger Small Company Growth
Fund, another series of the Berger Investment Portfolio Trust.
Mr. Keithler joined Berger Associates as Vice President-Investment
Management in December 1993. Previously, he was employed by INVESCO
Trust Company, Denver, Colorado, as Senior Vice President (January
1993 to December 1993), Vice President (January 1991 to January 1993)
and Portfolio Manager (January 1988 to January 1991). During his
seven years with INVESCO, Mr. Keithler was portfolio manager of
several mutual funds, most recently INVESCO Dynamics Fund and INVESCO
Emerging Growth Fund. From 1982 to 1986, Mr. Keithler was Vice
President and portfolio manager with First Trust St. Paul, in
St. Paul, Minnesota.
William M.B. Berger is a director (Chairman of the Board) of
Berger Associates, and a director of the Berger 100 Fund and the
Berger Growth and Income Fund and a trustee of the Berger Investment
Portfolio Trust. Although he is no longer involved in making
investment decisions for the Berger Funds, he was founder of
Berger Associates and its President from 1973 until 1994, and he was a
principal shareholder and executive officer of predecessor investment
advisory firms which served as investment advisors to mutual funds and
other investors from 1960. From 1950 to 1960, he was an investment
officer in the trust department of The Colorado National Bank of
Denver in charge of common stock investments.
-9-<PAGE>
Under the Investment Advisory Agreement for the
Berger New Generation Fund, Berger Associates is compensated for
its investment advisory services to the Fund by the payment of
a fee at the annual rate of .9 of 1% (0.90%) of the average daily net
assets of the Fund.
Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 80% of the outstanding shares of Berger Associates.
KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation services and financial asset management.
KCSI also owns approximately 41% of the outstanding shares of DST
Systems, Inc. ("DST"), a publicly traded information and transaction
processing company which acts as the Fund's sub-transfer agent.
6. EXPENSES OF THE FUND
The Fund has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent to calculate
the daily net asset value of the Fund and to perform certain
accounting and recordkeeping functions required by the Fund. In
addition, IFTC also serves as the Fund's custodian, transfer
agent and dividend disbursing agent. IFTC has engaged DST as sub-
agent to provide transfer agency and dividend disbursing services for
the Fund . As noted above, approximately 41% of the outstanding
shares of DST are owned by KCSI.
For custodian, recordkeeping and pricing services,
the Fund pays fees to IFTC based on a percentage of its assets,
subject to certain minimums. The Fund also pays a monthly fee
based primarily on the number of accounts maintained on behalf of the
Fund for transfer agency and dividend disbursing services, which fees
are paid by the Fund to IFTC and in turn passed through to DST
as sub-agent. In addition, the Fund reimburses IFTC and DST
for certain out-of-pocket expenses.
The Fund and Berger Associates have entered into
arrangements with certain organizations (broker-dealers, recordkeepers
and administrators) to provide subtransfer agency, recordkeeping,
shareholder communications, subaccounting and/or other services to
investors purchasing shares of the Fund through investment
programs or pension plans established or serviced by those
organizations. The Fund and/or Berger Associates may pay fees
to these organizations for their services. Any such fees paid by
the Fund will be for services that otherwise would be provided
or paid for by the Fund if all the investors who own Fund shares
through the organization were registered record holders of shares in
the Fund.
The trustees of the Fund have authorized
Berger Associates to place portfolio transactions on an agency basis
through DST Securities, Inc. ("DSTS") , a wholly-owned broker-
dealer subsidiary of DST . When transactions for the Fund are
effected through DSTS, the portion of the commissions received by it
is credited against, and thereby reduces , certain
operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commissions is retained by DSTS.
In addition, under a separate Administrative Services
Agreement with the Fund , Berger Associates performs certain
administrative and recordkeeping services not otherwise
-10-<PAGE>
performed by IFTC, including the preparation of financial statements
and reports to be filed with regulatory authorities. The Fund
pays Berger Associates a fee at the annual rate of one-
hundredth of one percent (0.01%) of its average daily net assets for
such services.
The Fund also incurs other expenses, including
accounting, administrative and legal expenses. Berger Associates has
agreed to waive its advisory fee to the extent that the Fund's
normal operating expenses in any fiscal year, including the management
fee and the 12b-1 fee, but excluding brokerage
commissions, interest, taxes and extraordinary expenses, exceed
1.90% of the Fund's average daily net assets for that fiscal
year.
7. POLICIES OF THE FUND TO PROMOTE SALES OF FUND SHARES
The Fund has adopted a 12b-1 plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940, which
permits the Fund to pay certain costs for the distribution of
its own shares. The Plan provides for the payment to Berger
Associates of a 12b-1 fee of .25 of 1% (0.25%) per annum of the
Fund's average daily net assets to finance activities primarily
intended to result in the sale of Fund shares. The expenses paid by
Berger Associates may include, but are not limited to, payments made
to and expenses of persons (including employees of Berger Associates)
who are engaged in, or provide support services in connection with,
the distribution of Fund shares, such as answering routine telephone
inquiries and processing shareholder requests for information;
compensation (including incentive compensation and/or continuing
compensation based on the amount of customer assets maintained in
the Fund) paid to securities dealers, financial institutions
and other organizations which render distribution and administrative
services in connection with the distribution of the Fund's
shares; costs related to the formulation and implementation of
marketing and promotional activities, including direct mail promotions
and television, radio, newspaper, magazine and other mass media
advertising; costs of printing and distributing prospectuses and
reports to prospective shareholders of the Fund ; costs involved
in preparing, printing and distributing sales literature for the
Fund ; costs involved in obtaining whatever information,
analyses and reports with respect to market and promotional activities
on behalf of the Fund that Berger Associates deems advisable;
and such other costs as may from time to time be agreed upon by the
Fund . Such payments are to be made by the Fund to
Berger Associates with respect to each fiscal year of the Fund without
regard to the actual distribution expenses incurred by Berger
Associates in such year; that is, if the distribution expenditures
incurred by Berger Associates are less than the total of such payments
in such year, the difference is not to be reimbursed to the
Fund by Berger Associates, and if the distribution expenditures
incurred by Berger Associates are more than the total of such
payments, the excess is not to be reimbursed to Berger Associates by
the Fund. From time to time the Fund may engage in activities
which jointly promote the sale of the shares of all or other Berger
Funds , which costs are not readily identifiable as related to any
one fund. In such cases, Berger Associates allocates the cost of the
activity among the funds involved on the basis of their respective net
assets.
-11-<PAGE>
The current 12b-1 Plan will continue in effect until
the end of April 1996, and from year to year thereafter if approved at
least annually by the Fund's trustees and those
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 Plan may not be amended to increase
materially the amount to be spent on distribution of shares of the
Fund without shareholder approval.
The trustees of the Fund have authorized
Berger Associates to consider sales of shares of the Fund by a broker-
dealer or the recommendations of a broker-dealer to its customers that
they purchase Fund shares as a factor in the selection of broker-
dealers to execute portfolio transactions for the Fund. In placing
portfolio business with such broker-dealers, Berger Associates will
seek the best execution of each transaction, and all such brokerage
placement must be consistent with the Rules of Fair Practice of the
NASD.
8. HOW TO PURCHASE SHARES IN THE FUND
(i) Minimum Initial Investment -- $500.00. To purchase
-------------------------------------
shares in the Fund , simply complete the application form
enclosed with this Prospectus. Then mail it with a check payable to
"Berger Funds" to the Fund in care of DST Systems, Inc., the
Fund's sub-transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
The price at which the purchase will be effected is based on the next
calculation of net asset value after the order is received by DST
Systems, Inc. A confirmation indicating the details of the
transaction will be sent to you promptly. Unless you specify full
shares only, the purchase will be made in full and fractional shares
calculated to three decimal places.
Alternatively, investors may establish an Automatic
Investment Plan (see (iii) below), in which case the $500 minimum
initial investment will be waived, subject to initial and subsequent
monthly investment minimums of $50.
In addition, Fund shares may be purchased through certain
broker-dealers that have established mutual fund programs and certain
other organizations connected with pension and retirement plans.
These broker-dealers and other organizations may charge investors a
fee for their services, may require different minimum initial and
subsequent investments than the Fund and may impose other
charges or restrictions different from those applicable to
shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's
total return on an investment in Fund shares. No such charge will be
paid by an investor who purchases the Fund shares directly from the
Fund as described above.
-12-<PAGE>
The Fund will, at its discretion, accept
orders transmitted by broker-dealers although not accompanied by
payment for the shares being purchased. Payment must be received from
the broker-dealer within three business days after acceptance of the
order.
(ii) Minimum Subsequent Investments -- $50.00.
----------------------------------------
Shareholders may, at any time, purchase additional shares subject to a
minimum investment of $50.00. A check made payable to "Berger Funds"
in the amount to be invested, should be sent to Berger Funds, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141. Please be
sure to give your name and account number. You will receive a
confirmation of every transaction.
(iii) Automatic Investment Plan. By completing the
-------------------------
Automatic Investment Plan section of the application, you may
authorize the Fund to debit your bank account for the
periodic purchase of Fund shares on or about the 5th or 20th day of
each month. Automatic investments are subject to the minimum
investment of $50.00 per month and are unrestricted as to the
permitted maximum. You will receive confirmation of automatic
investments after the end of each calendar quarter.
(iv) Investment by Telephone. The Fund will, at
-----------------------
its discretion, accept purchase orders from existing
shareholders by telephone, although not accompanied by payment for the
shares being purchased. To receive the net asset value for a specific
day, a telephone purchase request must be received before the close of
the New York Stock Exchange on that day. Payment for shares ordered
in this way must be received by the Fund's transfer agent
within three business days after acceptance of the order. In order to
make sure that payment is received on time, shareholders are
encouraged to remit payment by wire or electronic funds transfer, or
by overnight delivery. If payment is not received on time, the
Fund may cancel the order and redeem shares held in the shareholder's
account to compensate the Fund for any decline in the value of the
purchased shares. Telephone purchase orders may not exceed four times
the value of an account on the date the order is placed (shares
previously purchased by telephone are included in computing such value
only if payment has been received). See "How to Redeem or Sell Fund
Shares - Redemptions by Telephone" for procedures for telephone
transactions.
(v) Payment and Terms of Offering. Payment for shares
-----------------------------
purchased should be made by check or money order drawn on a United
States bank and made payable to the Berger Funds. Checks not made
payable to the Berger Funds, the account registrant, transfer agent or
retirement account custodian will not be accepted. Alternatively,
payment for shares purchased may be made by wire or electronic funds
transfer from the investor's bank to DST Systems, Inc. after ordering
shares by telephone. Please call 1-800-551-5849 for current wire or
electronic funds transfer instructions. The Fund will not
accept purchases by cash or credit card or checks drawn on foreign
banks unless provision is made for payment through a U.S. bank in U.S.
dollars.
The Fund reserves the right in its sole
discretion to withdraw all or any part of the offering made by this
Prospectus or to reject purchase orders, when in the judgment of
management, such withdrawal or rejection is in the best interest of
the Fund. The Fund also reserves the right at
any time to waive the minimum investment requirements applicable to
initial
-13-<PAGE>
or subsequent investments or to increase the minimums following
notice. No application to purchase shares is binding on the
Fund until accepted in writing.
9. HOW THE NET ASSET VALUE IS DETERMINED
The price of the Fund's shares is based on the net
asset value of the Fund, which is determined at the close of
the regular trading session of the New York Stock Exchange (normally
4:00 p.m., New York time) each day that the Exchange is open.
The per share net asset value of the Fund is
determined by dividing the total value of its securities and other
assets, less liabilities, by the total number of shares outstanding.
In determining net asset value, securities are valued at market value
or, if market quotations are not readily available, at their fair
value determined in good faith pursuant to consistently applied
procedures established by the trustees. Money market
instruments maturing within 60 days are valued at amortized cost,
which approximates market value.
Since the Fund does not impose any front end
sales load or redemption fee, both the purchase price and the
redemption price of a Fund share are the same and will be equal to the
next calculated net asset value of a share of the Fund.
10. OPEN ACCOUNT SYSTEM AND SHARE CERTIFICATES
Unless otherwise directed, all investor accounts are
maintained on a book-entry basis. Share certificates will not
be issued unless requested by the shareholder. Shares purchased by
dividend reinvestment or under an Automatic Investment Plan, and
shares redeemed under a Systematic Withdrawal Plan, will be confirmed
after the end of each calendar quarter. Following any other
investment or redemption, the investor will receive a printed
confirmation indicating the dollar amount of the transaction, the per
share price of the transaction and the number of shares purchased or
redeemed.
11. HOW TO REDEEM OR SELL FUND SHARES
(i) Share Redemptions by Mail. The Fund will buy
-------------------------
back (redeem), at current net asset value, all shares of the Fund
offered for redemption. The redemption price of shares tendered for
redemption will be the net asset value next determined after receipt
by the Fund's transfer agent of all required documents. Shareholders
may redeem all or part of their shares in the Fund by sending a
written request to the Berger Funds, c/o DST Systems, Inc., P.O. Box
419958, Kansas City, MO 64141. The written request for redemption
must be signed by each registered owner exactly as the shares are
registered and must clearly identify the account and the number of
shares or the dollar amount to be redeemed. If a share
certificate has been issued, the certificate, properly endorsed by the
registered owner, must be submitted with the written redemption
request.
The signatures of the redeeming shareholders must be
guaranteed by a national or state bank, a member firm of a domestic
stock exchange or the NASD, a credit union, a federal savings and loan
association or another eligible guarantor institution if the
redemption:
-14-<PAGE>
exceeds $100,000; is being made payable other than exactly as
registered; is being mailed to an address which has been changed
within 30 days of the redemption request; or is being mailed to an
address other than the one on record. A notary public is not an
acceptable guarantor. The Fund also reserves the right
to require a signature guarantee under other circumstances. The
signature guarantees must appear, together with the signatures of the
registered owners , (i) on the written request for redemption
which clearly identifies the account and the number of shares to be
redeemed, (ii) on a separate instrument of assignment ("stock power")
which may be obtained from a bank or broker, or (iii) on any
share certificates tendered for redemption. The use of
signature guarantees is intended to protect the shareholder and the
Fund from a possibly fraudulent application for redemption.
Additional documents are required for redemptions by
corporations, executors, administrators, trustees and guardians. If
there is doubt as to what additional documents are required, please
write the Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141, or call DST at 1-800-551-5849.
(ii) Redemptions by Telephone. All shareholders have
------------------------
Telephone Transaction Privileges to authorize purchases, exchanges or
redemptions unless they specifically decline this service on the
account application or by writing to the Berger Funds, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141. The telephone
redemption option is not available for shares held in retirement
accounts sponsored by the Fund . Redemption requests may be
made by telephoning DST Systems, Inc., at 1-800-551-5849. To receive
the net asset value for a specific day, a telephone redemption request
must be received before the close of the New York Stock Exchange on
that day. As discussed above, the signature of a redeeming
shareholder must be signature guaranteed, and therefore shares may not
be redeemed by telephone, if the redemption: exceeds $100,000; is
being made payable other than exactly as registered; is being mailed
to an address which has been changed within 30 days of the redemption
request; is being mailed to an address other than the one on record;
or the shares are represented by share certificates issued to
the shareholder.
All telephone transactions are recorded and written
confirmations indicating the details of all telephone transactions
will promptly be sent to the shareholder of record. Prior to
accepting a telephone transaction, the Fund and its
transfer agent may require the shareholder placing the order to
provide certain identifying information. A shareholder electing to
communicate instructions by telephone may be giving up some level of
security that would otherwise be present were the shareholder to
request a transaction in writing. Neither the Fund nor
its transfer agent or investment adviser assume responsibility
for the authenticity of instructions communicated by telephone which
are reasonably believed to be genuine and which comply with the
foregoing procedures. The Fund , and/or its transfer
agent, may be liable for losses resulting from unauthorized or
fraudulent telephone instructions in the event these procedures are
not followed.
In times of extreme economic or market conditions, redeeming
shares by telephone may be difficult. The Fund may terminate
or modify the procedures concerning the telephone redemption and wire
transfer services at any time, although shareholders of the
Fund will be given at least 60 days' prior notice of any
termination or material modification. Berger
-15-<PAGE>
Associates may, at its own risk, waive certain of the redemption
requirements described in the preceding paragraphs.
(iii) Payment for Redeemed Shares. Payment for shares
---------------------------
redeemed upon written request will be made by check and generally will
be mailed within three business days after receipt by the transfer
agent of the properly executed redemption request and any outstanding
certificates for the shares to be redeemed. Payment for shares
redeemed by telephone will be made by check payable to the account
name(s) and address exactly as registered, and generally will be
mailed within three business days following the date of the request
for redemption.
A shareholder may request that payment for redeemed shares
of the Fund be made by wire or electronic funds transfer.
Shareholders may elect to use these services on the account
application or by providing the Fund with a signature
guaranteed letter requesting these services and designating the bank
to receive all wire or electronic funds transfers. A shareholder may
change the predesignated bank of record by providing the Fund
with written, signature guaranteed instructions. Wire and electronic
funds transfers are subject to a $1,000 minimum and a $100,000 maximum
limitation. Redemption proceeds paid by wire transfer will be
transmitted to the shareholder's predesignated bank account on the
next business day after receipt of the shareholder's redemption
request. There is a $10 fee for each wire payment for shares redeemed
by the Fund . Redemption proceeds paid by electronic funds
transfer will be electronically transmitted to the shareholder's
predesignated bank account on the second business day after receipt of
the shareholder's redemption request. There is no fee for electronic
funds transfer of proceeds from the redemption of Fund shares.
A shareholder may also request that payment for redeemed
shares of a Cash Account Trust portfolio be made by wire or electronic
funds transfer and should review the Cash Account Trust portfolio
prospectus for procedures and charges applicable to redemptions by
wire and electronic funds transfers. See below under "Section 12.
Exchange Privilege and Systematic Withdrawal Plan" for more
information concerning the Cash Account Trust portfolios.
Shareholders may encounter delays in redeeming shares
purchased by check (other than cashier's or certified checks),
electronic funds transfer or through the Automatic Investment Program
if the redemption request is made within 15 days after the date of
purchase. In those situations, the redemption check will be mailed
within 15 days after the transfer agent's receipt of the purchase
instrument, provided that it has not been dishonored or cancelled
during that time. The foregoing policy is to ensure that all payments
for the shares being redeemed have been honored. In addition to the
foregoing restrictions, no redemption payment can be made for shares
which have been purchased by telephone order until full payment for
the shares has been received. In any event, valid redemption requests
concerning shares for which full payment has been made will be priced
at the net asset value next determined after receipt of the request.
(iv) Redemptions by the Fund. As a means of reducing its
-----------------------
expenses, the Fund is authorized to redeem involuntarily
all shares held in accounts with a value of less than $500 that
are not actively participating in a monthly Automatic Investment Plan.
Such redemptions will be permitted only when the account is reduced
below the minimum value by redemption,
-16-<PAGE>
and not by declines in per share net asset value. As a result,
accounts established with the applicable minimum investment might be
subject to redemption after only a small redemption has been made by
the shareholder. At least 60 days' written notice will be given to a
shareholder before such an account is redeemed. During that time, the
shareholder may add sufficient funds to the account or subscribe to a
monthly Automatic Investment Plan. If neither of these conditions
is met, the shares will be redeemed at the per share net
asset value next determined after the 60th day following the
notice . A check for the proceeds will be sent to the
shareholder unless a share certificate has been issued, in
which case payment will be made upon surrender of the certificate.
12. EXCHANGE PRIVILEGE AND SYSTEMATIC WITHDRAWAL PLAN
(i) Exchanges. By telephoning DST Systems, Inc., at
---------
1-800-551-5849, or writing DST at P. O. Box 419958, Kansas City, MO
64141, any shareholder may exchange, without charge, any or all of his
shares in the Fund for shares of any of the Berger
100 Fund, the Berger Growth and Income Fund or the Berger Small
Company Growth Fund , or for shares of the Money Market Portfolio,
the Government Securities Portfolio or the Tax-Exempt Portfolio of the
Cash Account Trust (the "CAT Portfolios"), separately managed,
unaffiliated money market funds. Exchanges may be made only if the
Berger Fund or CAT Portfolio with which you wish to exchange
your shares is registered in your state of residence. The exchange
privilege with the CAT Portfolios does not constitute an offering or
recommendation of the shares of any such CAT Portfolio by the
Fund or Berger Associates. Berger Associates is compensated for
administrative services it performs with respect to the CAT
Portfolios.
It is your responsibility to obtain and read a prospectus of
the Berger Fund or CAT Portfolio into which you are exchanging.
By giving exchange instructions, a shareholder will be deemed to have
acknowledged receipt of the prospectus for the Berger Fund or
CAT Portfolio being purchased. You may make up to four exchanges out
of the Fund during the calendar year. This limit helps keep
the Fund's net asset base stable and reduces the Fund's
administrative expenses. There currently is no limit on exchanges out
of the three CAT Portfolios. In times of extreme economic or market
conditions, exchanging Fund or CAT Portfolio shares by telephone may
be difficult. See "How to Redeem or Sell Fund Shares - Redemptions by
Telephone" for procedures for telephone transactions.
Redemptions of shares in connection with exchanges into or
out of the Fund are made at the net asset value per share next
determined after the exchange request is received. To receive a
specific day's price, your letter or call must be received before that
day's close of the New York Stock Exchange. A day or more delay may
be experienced prior to the investment of the redemption proceeds into
a CAT Portfolio. Each exchange represents the sale of shares from one
fund and the purchase of shares in another, which may produce a gain
or loss for Federal income tax purposes.
All exchanges out of the Fund into a CAT Portfolio
are subject to the minimum and subsequent investment requirements of
the CAT Portfolio into which shares are being exchanged. Exchanges
will be accepted only if the registration of the two accounts is
identical.
-17-<PAGE>
Neither the Fund nor the CAT Portfolios, or their transfer
agents or advisers assume responsibility for the authenticity of
exchange instructions communicated by telephone or in writing which
are believed to be genuine. See "How to Redeem or Sell Fund Shares -
Redemptions by Telephone" for procedures for telephone transactions.
All shareholders have Telephone Transaction Privileges to authorize
exchanges unless they specifically decline this service on the account
application or by writing to the Berger Funds, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141.
(ii) Systematic Withdrawal Plan. A shareholder who owns
--------------------------
shares of the Fund worth at least $5,000 at the current net
asset value may establish a Systematic Withdrawal account from which a
fixed sum, minimum of $50, will be paid to the shareholder monthly,
quarterly, semiannually or annually. You will receive confirmation of
systematic withdrawals after the end of each calendar quarter.
For more information regarding the Systematic Withdrawal
Plan and forms to open such accounts, please write to the
Berger Funds, c/o DST Systems, Inc., P. O. Box 419958, Kansas City, MO
64141, or call 1-800-551-5849.
13. TAX-SHELTERED RETIREMENT PLANS
The Fund offers several tax-qualified retirement
plans for adoption by individuals and employers. Participants in
these plans can accumulate shares of the Fund on a tax-deferred
basis.
The Fund offers both a profit-sharing plan and a
money purchase pension plan for employers and self-employed persons.
Contributions to these plans are tax-deductible and earnings are
tax-exempt until distributed. Under the profit-sharing plan, the
employer or self-employed person can adjust their contributions from
year to year. Under the money purchase pension plan, the employer or
self-employed person must commit to a contribution each year. When
these plans are adopted by self-employed persons, they are commonly
referred to as Keogh or HR 10 plans.
The Fund also offers an Individual Retirement
Account ("IRA"). Individuals who have compensation, but who are
either not covered by existing qualified retirement plans and do not
have spouses covered by such plans, or do not have incomes which
exceed certain amounts, may contribute tax-deductible dollars to an
IRA. Individuals who are covered by existing retirement plans or have
spouses covered by such plans, and whose incomes exceed the applicable
amounts, are not permitted to deduct their IRA contributions for
Federal income tax purposes. However, whether an individual's
contributions are deductible or not, the earnings on his or her IRA
are not taxed until the account is distributed.
The Fund also offers a 403(b) Custodial
Account. Employees of certain tax-exempt organizations and public
schools may contribute tax-deductible dollars to these accounts, on
which earnings are tax-exempt until distributed.
-18-<PAGE>
In order to receive the necessary materials to create a
profit-sharing or money purchase pension plan account, an IRA account
or a 403(b) Custodial Account, please write to the Fund , c/o
Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217, or call
1-800-333-1001.
14. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX
TREATMENT
The Fund intends to declare dividends representing
the Fund's net investment income annually, normally in December.
It is also the present policy of the Fund to distribute
annually all of its net realized capital gains.
The Fund is treated as a separate entity for tax
purposes and has elected and intends to maintain its qualification to
be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended. If it so
qualifies and meets certain minimum distribution
requirements, the Fund will not be liable for Federal income
tax on the amount of its earnings that are distributed. If
the Fund distributes annually less than 98% of its income and
gain, it will be subject to a nondeductible excise tax equal to 4% of
the shortfall.
All dividends or capital gains distributions paid by
the Fund will be automatically reinvested in shares of
the Fund at the net asset value on the ex-dividend date unless
an investor specifically requests that either dividends or
distributions, or both, be paid in cash. The election to receive
dividends or distributions in cash or to reinvest them in Fund shares
may be changed by calling the Berger Funds at 1-800-551-5849 or by
written request to the Berger Funds, c/o DST Systems, Inc., P.O. Box
419958, Kansas City, MO 64141, and must be received at least ten days
prior to the record date of any dividend or capital gains
distribution.
The Fund will inform its shareholders of the amount
and nature of such income or gains resulting from their investment in
the Fund. Dividends paid by the Fund from net investment
income and distributions from net short-term capital gains in excess
of any net long-term capital losses, whether received in cash or
reinvested, generally will be taxable as ordinary income.
Distributions received from the Fund designated as long-term
capital gains (net of capital losses), whether received in cash or
reinvested, will be taxable as long-term capital gains without regard
to the length of time a shareholder has owned shares in the Fund. Any
loss on the sale or exchange of the Fund's shares held for six
months or less will be treated as a long-term capital loss to the
extent of any long-term capital gain distribution received on the
shares. A portion of the dividends (but not capital gains
distributions) paid by the Fund may be eligible for the
dividends received deduction for corporate shareholders to the extent
that the Fund's income consists of dividends paid by United States
corporations. If a shareholder is not subject to Federal income tax,
the shareholder will not generally be taxed on amounts distributed by
the Fund.
Dividends and interest received by the Fund on
foreign securities may give rise to withholding and other taxes
imposed by foreign countries. It is expected that foreign taxes paid
by the Fund will be treated as an expense of the
Fund . Tax conventions between certain countries and the United
States may reduce or eliminate such taxes.
-19-<PAGE>
At certain levels of taxable income, the Internal Revenue
Code provides a preferential tax rate for long-term capital gains.
Long-term capital gains of taxpayers other than corporations are taxed
at a 28% maximum rate, whereas ordinary income is taxed at a 39.6%
maximum rate. Capital losses continue to be deductible only against
capital gains plus (in the case of taxpayers other than corporations)
$3,000 of ordinary income annually ($1,500 for married individuals
filing separately).
The foregoing is only a brief summary of the Federal income
tax considerations affecting the Fund and its
shareholders. Accordingly, potential investors should consult their
tax advisors with specific reference to their own tax situation.
15. ADDITIONAL INFORMATION
The Berger Investment Portfolio Trust is a
Delaware business trust organized on August 23, 1993. The
Berger New Generation Fund was established on December 21,
1995, as the second series or portfolio under the Trust . The
Trust is authorized to issue an unlimited number of shares of
beneficial interest in series or portfolios. Currently, the series
comprising Berger Small Company Growth Fund and Berger New
Generation Fund are the only portfolios established under
the Trust, although others may be added in the future. Shares of the
Fund are fully paid and nonassessable when issued. Each share has a
par value of $.01. All shares issued by the Fund participate equally
in dividends and other distributions by the Fund, and in the residual
assets of the Fund in the event of its liquidation.
Shareholders of the Berger Small Company Growth Fund
and the Berger New Generation Fund generally vote
separately on matters relating to those respective funds, although
they vote together and with the holders of any other series of the
Trust issued in the future in the election of trustees of the Trust
and on all matters relating to the Trust as a whole. Each full share
of the Fund has one vote. Shares of the Fund have
noncumulative voting rights, which means that the holders of more than
50% of the shares voting for the election of trustees can elect
100% of the trustees if they choose to do so and, in such
event, the holders of the remaining less than 50% of the shares voting
for the election of trustees will not be able to elect any
person or persons as trustees. The Fund is not required
to hold annual shareholder meetings unless required by the Investment
Company Act of 1940 or other applicable law or unless called by the
trustees.
If shareholders owning at least 10% of the outstanding
shares of the Berger Investment Portfolio Trust so request, a
special shareholders' meeting will be held for the purpose of
considering the removal of a trustee of the Trust .
Special meetings will be held for other purposes if the holders of at
least 25% of the outstanding shares of the Trust so request.
Subject to certain limitations, the Trust will facilitate
appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a
trustee.
The Fund's transfer agent and dividend disbursing
agent is Investors Fiduciary Trust Company ("IFTC"), 127 West 10th
Street, Kansas City, MO 64105. IFTC has engaged DST Systems, Inc., as
sub-agent to provide transfer agency and dividend disbursing services
for
-20-<PAGE>
the Fund . Accordingly, the address and telephone number for
DST Systems, Inc., set forth in this Prospectus should be used for
correspondence with the Fund's transfer agent.
16. PERFORMANCE
From time to time in advertisements, the Fund may
discuss its performance ratings as published by recognized
mutual fund statistical services, such as Lipper Analytical Services,
Inc., CDA Investment Technologies, Inc., or Morningstar, Inc., or by
publications of general interest such as The Wall Street Journal,
-----------------------
Investor's Daily, Barron's, Financial World or Kiplinger's Personal
- ---------------- -------- --------------- --------------------
Finance Magazine. In addition, the Fund may compare its
- ----------------
performance to that of recognized broad-based securities market
indices, including the Standard & Poor's 500 Stock Index, the Dow
Jones Industrial Average, the Russell 2000 Stock Index , the
Standard & Poor's 600 Small Cap Index or the Nasdaq Composite
Index, or more narrowly-based indices which reflect the market sectors
in which the Fund invests.
The total return of the Fund is calculated for any
specified period of time by assuming the purchase of shares of the
Fund at the net asset value at the beginning of the period. Each
dividend or other distribution paid by the Fund is assumed to have
been reinvested at the net asset value on the reinvestment date. The
total number of shares then owned as a result of this process is
valued at the net asset value at the end of the period. The
percentage increase is determined by subtracting the initial value of
the investment from the ending value and dividing the remainder by the
initial value.
The Fund's total return reflects the Fund's
performance over a stated period of time. An average annual total
return reflects the hypothetical annually compounded return that would
have produced the same total return if the Fund's performance had been
constant over the entire period. Total return figures are based on
the overall change in value of a hypothetical investment in the
Fund. Because average annual total returns for more than one year
tend to smooth out variations in the Fund's return, investors
should recognize that such figures are not the same as actual year-by-
year results.
Any performance figures for the Fund are based upon
historical results and do not assure future performance. The
investment return and principal value of an investment will fluctuate
so that an investor's shares, when redeemed, may be worth more or less
than their original cost.
Shareholders with questions should write to the Berger
Funds, c/o Berger Associates, Inc., P.O. Box 5005, Denver, CO 80217,
or call 1-303-329-0200 or 1-800-333-1001.
-21-
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE
REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS STATEMENT OF
ADDITIONAL INFORMATION DOES NOT CONSTITUTE A PROSPECTUS.
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED
DECEMBER 22, 1995
STATEMENT OF ADDITIONAL INFORMATION
BERGER NEW GENERATION FUND
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information about the Berger
New Generation Fund (the "Fund"), a series of the Berger Investment
Portfolio Trust (the "Trust"), is not a prospectus. It should be
read in conjunction with the Prospectus describing the Fund ,
dated March __, 1996, which may be obtained by writing the
Fund at P.O. Box 5005, Denver, Colorado 80217, or calling
1-800-333-1001. The Fund is a no-load mutual fund.
The investment objective of the Berger New
Generation Fund is capital appreciation. The Fund seeks to
achieve this objective by investing primarily in equity securities
(including common and preferred stocks, convertible debt securities
and other securities having equity features) of companies which
develop, manufacture, sell or provide new or innovative products,
services or methods of doing business which the Fund's adviser
believes have the potential to significantly change the direction or
dynamics of the industries in which they operate or to substantially
affect the way businesses or consumers conduct their affairs. Income
is not an objective of the Fund and any income produced will be a by-
product of the effort to achieve the Fund's objective of capital
appreciation.
March __, 1996<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
Cross-References to
Related Disclosures
Table of Contents in Prospectus
----------------- -------------------
Introduction Section 2
1. Portfolio Policies of the Fund Section 2, 3, 4
2. Investment Restrictions Section 3
3. Management of the Fund Section 5
4. Investment Adviser Section 5
5. Expenses of the Fund Section 6, 7
6. Brokerage Policy Section 6, 7
7. How to Purchase Shares in Section 8
the Fund
8. How the Net Asset Value is Section 9
Determined
9. Income Dividends, Capital Gains Section 14
Distributions and Tax Treatment
10. Suspension of Redemption Rights Section 11
11. Tax-Sheltered Retirement Plans Section 13
12. Special Purchase and Exchange Plans Section 12
13. Performance Information Section 16
14. Additional Information Section 15
Financial Statements Not Applicable
-i-<PAGE>
INTRODUCTION
------------
The Berger New Generation Fund is a mutual
fund , or open-end, diversified, management investment
company. The investment objective of the Fund is
capital appreciation.
1. Portfolio Policies of the Fund
------------------------------
The Prospectus discusses the investment objective of
the Fund and the policies to be employed to achieve that
objective. This section contains supplemental information concerning
the types of securities and other instruments in which the Fund
may invest, the investment policies and portfolio strategies that the
Fund may utilize and certain risks attendant to those
investments, policies and strategies.
ILLIQUID AND RESTRICTED SECURITIES. The Fund is
authorized to invest in securities which are illiquid because they are
subject to restrictions on their resale ("restricted securities") or
because, based upon their nature or the market for such securities,
they are not readily marketable. However, the Fund will
not purchase any such security, the purchase of which would
cause the Fund to invest more than 15% of its net assets, measured at
the time of purchase, in illiquid securities. Repurchase agreements
maturing in more than seven days will be considered as illiquid for
purposes of this restriction. Pursuant to authority delegated from
the trustees, the Fund's adviser will determine whether
securities issued in offerings made pursuant to SEC Rule 144A under
the Securities Act of 1933 should be treated as illiquid investments
considering, among other things, the following factors: (1) the
frequency of trades and quotes for the security; (2) the number of
dealers wanting to purchase or sell the security and the number of
other potential purchasers; (3) dealer undertakings to make a market
in the security; and (4) the nature of the security and the
marketplace trades (e.g., the time needed to dispose of the security,
the method of soliciting offers, and the mechanics of the transfer).
Investments in illiquid securities involve certain risks to the extent
that the Fund may be unable to dispose of such a security at the time
desired or at a reasonable price or, in some cases, may be unable to
dispose of it at all. In addition, in order to resell a restricted
security, the Fund might have to incur the potentially
substantial expense and delay associated with effecting registration.
REPURCHASE AGREEMENTS. As discussed in the Prospectus,
the 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 the Fund
acquires a debt security (generally a security issued or guaranteed by
the U.S. government or an agency thereof, a banker's acceptance or a
certificate of deposit) from a commercial bank, broker or dealer,
subject to resale to the seller at an agreed upon price and date
(normally, the next business day). A repurchase agreement may be
-1-<PAGE>
considered a loan collateralized by securities. The resale price
reflects an agreed upon interest rate effective for the period the
instrument is held by the Fund and is unrelated to the interest
rate on the underlying instrument. In these transactions, the
securities acquired by the Fund (including accrued interest
earned thereon) must have a total value equal to or in excess of the
value of the repurchase agreement and are held by the Fund's custodian
bank until repurchased. In addition, the trustees will
establish guidelines and standards for review by the investment
adviser of the creditworthiness of any bank, broker or dealer party to
a repurchase agreement with the Fund. The Fund will
not enter into a repurchase agreement maturing in more than
seven days if as a result more than 15% of the Fund's total assets
would be invested in such repurchase agreements and other illiquid
securities.
The use of repurchase agreements involves certain risks.
For example, if the other party to the agreement defaults on its
obligation to repurchase the underlying security at a time when the
value of the security has declined, the 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 the Fund not
within the control of the Fund and therefore the realization by the
Fund on such collateral may automatically be stayed. Finally, it is
possible that the Fund may not be able to substantiate its
interest in the underlying security and may be deemed an unsecured
creditor of the other party to the agreement. While management of the
Fund acknowledges these risks, it is expected that they can be
controlled through careful monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERED SECURITIES. The
Fund may purchase and sell securities on a when-issued or delayed
delivery basis. However, the Fund does not currently
intend to purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total
assets taken at market value at the time of purchase would be invested
in such securities. When-issued or delayed delivery transactions
arise when securities (normally, equity obligations of issuers
eligible for investment by the Fund) are purchased or sold by
the Fund with payment and delivery taking place in the future in order
to secure what is considered to be an advantageous price or yield.
However, the yield on a comparable security available when delivery
takes place may vary from the yield on the security at the time that
the when-issued or delayed delivery transaction was entered into. Any
failure to consummate a when-issued or delayed delivery transaction
may result in the 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
the Fund until it receives delivery or payment from the other
party to the transaction.
-2-<PAGE>
When the Fund purchases securities on a when-issued
basis, it will maintain in a segregated account with its custodian
cash, U.S. government securities or other high-grade debt obligations
readily convertible into cash having an aggregate value equal to the
amount of such purchase commitments, until payment is made. If
necessary, additional assets will be placed in the account daily so
that the value of the account will equal or exceed the amount of the
Fund's purchase commitments.
LENDING OF SECURITIES. As discussed in the Prospectus, the
Fund may lend its securities to qualified institutional
investors who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to
deliver securities, or completing arbitrage operations. By lending
its securities, the Fund will be attempting to generate income
through the receipt of interest on the loan which, in turn, can be
invested in additional securities to pursue the Fund's investment
objective. Any gain or loss in the market price of the securities
loaned that might occur during the term of the loan would be for the
account of the Fund. The Fund may lend its portfolio securities to
qualified brokers, dealers, banks or other financial institutions, so
long as the terms, the structure and the aggregate amount of such
loans are not inconsistent with the Investment Company Act of 1940, or
the Rules and Regulations or interpretations of the Securities and
Exchange Commission (the "Commission") thereunder, which currently
require that (a) the borrower pledge and maintain with the Fund
collateral consisting of cash, an irrevocable letter of credit or
securities issued or guaranteed by the United States government having
a value at all times not less than 100% of the value of the securities
loaned, (b) the borrower add to such collateral whenever the price of
the securities loaned rises (i.e., the borrower "marks to the market"
on a daily basis), (c) the loan be made subject to termination by the
Fund at any time and (d) the Fund receive reasonable interest on the
loan, which interest may include the Fund's investing cash collateral
in interest bearing short-term investments, and (e) the Fund receive
all dividends and distributions on the loaned securities and any
increase in the market value of the loaned securities.
The Fund bears a risk of loss in the event that the
other party to a securities lending transaction defaults on its
obligations and the Fund is delayed in or prevented from exercising
its rights to dispose of the collateral, including the risk of a
possible decline in the value of the collateral securities during the
period in which the Fund seeks to assert these rights, the risk of
incurring expenses associated with asserting these rights and the risk
of losing all or a part of the income from the transaction. The Fund
will not lend its portfolio securities if, as a result, the aggregate
value of such loans would exceed 33-1/3% of the value of the Fund's
total assets. Loan arrangements made by the Fund will comply with all
other applicable regulatory requirements, including the rules of the
New York Stock Exchange, which rules presently require the borrower,
after notice, to
-3-<PAGE>
redeliver the securities within the normal settlement time of three
business days. All relevant facts and circumstances, including
creditworthiness of the broker, dealer or institution, will be
considered in making decisions with respect to the lending of
securities, subject to review by the Fund's trustees.
SHORT SALES. The Fund currently only intends to
engage in short sales if, at the time of the short sale, the Fund owns
or has the right to acquire an equivalent kind and amount of the
security being sold short at no additional cost (i.e., short sales
"against the box").
In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those
securities until delivery occurs. To make delivery to the purchaser,
the executing broker borrows the securities being sold short on behalf
of the seller. While the short position is maintained, the seller
collateralizes its obligation to deliver the securities sold short in
an amount equal to the proceeds of the short sale plus an additional
margin amount established by the Board of Governors of the Federal
Reserve. If the 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.
The Fund may make a short sale, as described above,
when it wants to sell the security it owns at a current attractive
price, but also wishes to defer recognition of gain or loss for
federal income tax purposes and for purposes of satisfying certain
tests applicable to regulated investment companies under the Internal
Revenue Code. In such a case, any future losses in the Fund's long
position should be reduced by a gain in the short position. The
extent to which such gains or losses are reduced would depend upon the
amount of the security sold short relative to the amount the Fund
owns. There will be certain additional transaction costs associated
with short sales, but the Fund will endeavor to offset these costs
with income from the investment of the cash proceeds of short sales.
FINANCIAL FUTURES, FORWARDS AND OPTIONS. As described in
the Prospectus, the Fund is authorized to make limited
investment in certain types of futures, forwards and options, but only
for the purpose of hedging, that is, protecting against market risk
due to market movements that may adversely affect the value of
the Fund's securities or the price of securities that
the Fund is considering purchasing. The utilization of
futures, forwards and options is also subject to policies and
procedures which may be established by the trustees from time
to time. A hedging transaction may partially protect the Fund
from a decline in the value of a particular security or its portfolio
generally, although the cost of the transaction will reduce the
potential return on the security
-4-<PAGE>
or the portfolio. Following is additional information concerning the
futures, forwards and options in which the Fund may invest,
provided that no more than 5% of the Fund's net assets at the time of
purchase may be invested in initial margins for financial futures
transactions and premiums for options. In addition, the Fund
may only write call options that are covered and only up to 25% of the
Fund's total assets. The following information should be read in
conjunction with the information concerning the Fund's
investment in futures, forwards and options and the risks of such
investments contained in the Prospectus.
Futures Contracts. Financial futures contracts are
-----------------
contracts on financial instruments (such as securities and foreign
currencies) and securities indices that obligate the long or short
holder, if the contract is held to its specified delivery date, to
take or make delivery of a specified quantity of the underlying
financial instrument, or the cash value of a securities index.
Although futures contracts by their terms call for the delivery or
acquisition of the underlying instruments or a cash payment based on
the value of the underlying instruments, in most cases the contractual
obligation is offset before the delivery date by buying (in the case
of an obligation to sell) or selling (in the case of an obligation to
buy) an identical futures contract. Such a transaction cancels the
original obligation to make or take delivery of the instruments.
The Fund may enter into contracts for the purchase or
sale for future delivery of financial instruments, such as securities
and foreign currencies, or contracts based on financial indices
including indices of U.S. Government securities, foreign government
securities or equity securities. U.S. futures contracts are traded on
exchanges which have been designated "contract markets" by the
Commodity Futures Trading Commission ("CFTC") and must be executed
through a futures commission merchant (an "FCM"), or brokerage firm,
which is a member of the relevant contract market. Through their
clearing corporations, the exchanges guarantee performance of the
contracts as between the clearing members of the exchange.
Both the buyer and seller are required to deposit "initial
margin" for the benefit of the FCM when a futures contract is entered
into. Initial margin deposits are equal to a percentage of the
contract's value, as set by the exchange on which the contract is
traded, and may be maintained in cash or certain high-grade liquid
assets. If the value of either party's position declines, that party
will be required to make additional "variation margin" payments to the
other party to settle the change in value on a daily basis. Initial
and variation margin payments are similar to good faith deposits or
performance bonds or party-to-party payments resulting from daily
changes in the value of the contract, unlike margin extended by a
securities broker, and would be returned or credited to the
Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Unlike margin extended
by a securities broker, initial and
-5-<PAGE>
variation margin payments do not constitute purchasing securities on
margin for purposes of the Fund's investment limitations. The
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 the 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. The Fund will attempt to minimize
the risk by careful monitoring of the creditworthiness of the FCMs
with which the Fund does business and by depositing margin payments in
a segregated account with the Fund's custodian for the benefit of the
FCM when practical or otherwise required by law.
The Fund intends to comply with guidelines of
eligibility for exclusion from the definition of the term "commodity
pool operator" with the CFTC and the National Futures Association,
which regulate trading in the futures markets. Accordingly, the Fund
will not enter into any futures contract or option on a futures
contract if, as a result, the aggregate initial margin and premiums
required to establish such positions would exceed 5% of the Fund's net
assets.
Although the Fund would hold cash and liquid assets
in a segregated account with a value sufficient to cover the Fund's
open futures obligations, the segregated assets would be available to
the Fund immediately upon closing out the futures position, while
settlement of securities transactions could take several days.
However, because the Fund's cash that may otherwise be invested would
be held uninvested or invested in high-grade liquid assets so long as
the futures position remains open, the Fund's return could be
diminished due to the opportunity losses of foregoing other potential
investments.
The acquisition or sale of a futures contract may occur, for
example, when the 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. The 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 an investment technique allows the
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
-6-<PAGE>
anticipatory hedge. Since the fluctuations in the value of futures
contracts should be similar to those of equity securities, the
Fund could take advantage of the potential rise in the value of equity
securities without buying them until the market has stabilized. At
that time, the futures contracts could be liquidated and the Fund
could buy equity securities on the cash market.
To the extent the Fund enters into futures contracts
for this purpose, the assets in the segregated asset account
maintained to cover the Fund's obligations with respect to the futures
contracts will consist of high-grade liquid assets from its portfolio
in an amount equal to the difference between the amount of the Fund's
obligation under the contract and the aggregate value of the initial
and variation margin payments made by the Fund with respect to the
futures contracts.
The ordinary spreads between prices in the cash and futures
markets, due to differences in the nature of those markets, are
subject to distortions. First, all participants in the futures market
are subject to initial margin and variation margin requirements.
Rather than meeting additional variation margin requirements,
investors may close out futures contracts through offsetting
transactions which could distort the normal price relationship between
the cash and futures markets. Second, the liquidity of the futures
market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants
decide to make or take delivery, liquidity in the futures market could
be reduced and prices in the futures market distorted. Third, from
the point of view of speculators, the margin deposit requirements in
the futures market are less than margin requirements in the securities
market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the
possibility of the foregoing distortions, a correct forecast of
general price trends by the Fund still may not result in a
successful use of futures.
Futures contracts entail risks. Although the Fund
believes that use of such contracts will benefit the Fund, if the
Fund's investment judgment is incorrect, the Fund's overall
performance could be worse than if the Fund had not entered into
futures contracts. For example, if the Fund has hedged against the
effects of a possible decrease in prices of securities held in the
Fund's portfolio and prices increase instead, the Fund will lose part
or all of the benefit of the increased value of these securities
because of offsetting losses in the Fund's futures positions. In
addition, if the Fund has insufficient cash, it may have to sell
securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at
increased prices which reflect the rising market and may occur at a
time when the sales are disadvantageous to the Fund. Although the
buyer of an option cannot lose more than the amount of the premium
plus related transaction costs, a buyer or seller of futures contracts
could lose amounts substantially in excess of any
-7-<PAGE>
initial margin deposits made, due to the potential for adverse price
movements resulting in additional variation margin being required by
such positions. However, the Fund intends to monitor its
investments closely and will attempt to close its positions when the
risk of loss to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the
value of their underlying instruments. Because there are a limited
number of types of futures contracts, it is possible that the
standardized futures contracts available to the Fund will not
match exactly the Fund's current or potential investments. The
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 the 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 the 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.
The Fund may buy or sell futures contracts with a greater or
lesser value than the securities it wishes to hedge or is considering
purchasing in order to attempt to compensate for differences in
historical volatility between the futures contract and the securities,
although this may not be successful in all cases. If price changes in
the 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
the 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
-8-<PAGE>
fluctuation limits or otherwise, the 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, the
Fund's access to other assets held to cover its futures positions also
could be impaired.
Options on Futures Contracts. The Fund may buy and
----------------------------
write options on futures contracts for hedging purposes. An option on
a futures contract gives the 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, the Fund may buy a call option on a futures
contract to hedge against a market advance, and the 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, the
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 the 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, the 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, the 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 the Fund assumes when it buys an
option on a futures contract is the premium paid for the option plus
related transaction costs. In addition to the correlation risks
discussed above, the purchase of an option also entails the risk that
changes in the value of the underlying futures contract will not be
fully reflected in the value of the options bought.
Forward Foreign Currency Exchange Contracts. A forward
-------------------------------------------
contract is an agreement between two parties in which one party is
-9-<PAGE>
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
Fund currently intends that the only forward contracts
or commitments that it might enter into for hedging purposes
are forward foreign currency exchange contracts, although the
Fund may enter into additional forms of forward contracts or
commitments in the future if they become available and advisable in
light of the Fund's objectives and investment policies.
Forward contracts generally are negotiated in an interbank market
conducted directly between traders (usually large commercial banks)
and their customers. Unlike futures contracts, which are standardized
contracts, forward contracts can be specifically drawn to meet the
needs of the parties that enter into them. The parties to a forward
contract may agree to offset or terminate the contract before its
maturity, or may hold the contract to maturity and complete the
contemplated exchange.
The following discussion summarizes the Fund's
principal uses of forward foreign currency exchange contracts
("forward currency contracts"). The 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).
The Fund will exchange foreign currencies for U.S. dollars and
for other foreign currencies in the normal course of business and may
buy and sell currencies through forward currency contracts in order to
fix a price for securities it has agreed to buy or sell ("transaction
hedge"). The Fund also may hedge some or all of its
investments denominated in foreign currency against a decline in the
value of that currency relative to the U.S. dollar by entering into
forward currency contracts to sell an amount of that currency
approximating the value of some or all of its portfolio securities
denominated in that currency ("position hedge") or by participating in
futures contracts (or options on such futures) with respect to the
currency. The Fund also may enter into a forward currency
contract with respect to a currency where the Fund is considering the
purchase or sale of investments denominated in that currency but has
not yet selected the specific investments ("anticipatory hedge"). In
any of these circumstances the Fund may, alternatively, enter
into a forward currency contract to purchase or sell one foreign
currency for a second currency that is expected to perform more
favorably relative to the U.S. dollar if the portfolio manager
believes there is a reasonable degree of correlation between movements
in the two currencies ("cross-hedge").
These types of hedging minimize the effect of currency
appreciation as well as depreciation, but do not eliminate
fluctuations in the underlying U.S. dollar equivalent value of the
proceeds of or rates of return on the 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
-10-<PAGE>
equivalent value of the foreign currency denominated asset that is the
subject of the hedge generally will not be precise. Shifting
the Fund's currency exposure from one foreign currency to
another limits the Fund's opportunity to profit from increases
in the value of the original currency and involves a risk of increased
losses to the Fund if its portfolio manager's projection of
future exchange rates is inaccurate. Cross-hedges may result in
losses if the currency used to hedge does not perform similarly to the
currency in which hedged securities are denominated. Unforeseen
changes in currency prices may result in poorer overall performance
for the Fund than if it had not entered into such contracts.
Also, with regard to the Fund's use of cross-hedges, there can
be no assurance that historical correlations between the movement of
certain foreign currencies relative to the U.S. dollar will continue.
Thus, at any time poor correlation may exist between movements in the
exchange rates of the foreign currencies underlying the Fund's
cross-hedges and the movements in the exchange rates of the foreign
currencies in which the Fund's assets that are the subject of such
cross-hedges are denominated.
The 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 the Fund is not able to cover its
forward currency positions with underlying portfolio securities, the
Fund's custodian will segregate cash or high-grade liquid
assets having a value equal to the aggregate amount of the
Fund's commitments under forward contracts entered into. If the value
of the securities used to cover a position or the value of segregated
assets declines, the Fund must find alternative cover or segregate
additional cash or high-grade liquid assets on a daily basis so that
the value of the covered and segregated assets will be equal to the
amount of the 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 Fund's ability to utilize
forward contracts may be restricted. The 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 the 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, the Fund
intends to monitor its investments closely and will attempt to
renegotiate or close its
-11-<PAGE>
positions when the risk of loss to the Fund becomes unacceptably
high.
Options on Securities and Securities Indices. The
--------------------------------------------
Fund may buy or sell put or call options and write covered call
options on securities that are traded on United States or foreign
securities exchanges or over-the-counter. Buying an option involves
the risk that, during the option period, the price of the underlying
security will not increase (in the case of a call) to above the
exercise price, or will not decrease (in the case of a put) to below
the exercise price, in which case the option will expire without being
exercised and the holder would lose the amount of the premium.
Writing a call option involves the risk of an increase in the market
value of the underlying security, in which case the option could be
exercised and the underlying security would then be sold by the
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
the 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 the 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 the Fund holds a call on the same
security and in the same principal amount as the call written and the
exercise price of the call held (i) is equal to or less than the
exercise price of the call written or (ii) is greater than the
exercise price of the call written if the difference is maintained by
the Fund in cash and high-grade liquid assets in a segregated account
with its custodian.
The writer of a call option may have no control when the
underlying securities must be sold. Whether or not an option expires
unexercised, the writer retains the amount of the premium. This
amount, of course, may, in the case of a covered call option, 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
-12-<PAGE>
clearing corporation. If the 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.
The 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 the
Fund would have to exercise the options in order to realize any
profit. If the 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.
-13-<PAGE>
In addition, when the 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.
The 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 the 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. The 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 the 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 the 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 Fund will generally invest may be imperfect, the
Fund expects , 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 the Fund from a decline in the value of a
particular security or its portfolio generally, the cost of a put will
reduce the potential return on the security or the portfolio.
PORTFOLIO TURNOVER. The annual portfolio turnover
rate of the Berger New Generation Fund is expected at times
to exceed 100%. A 100% annual turnover rate results, for example,
if the equivalent of all of the securities in the Fund's portfolio are
replaced in a period of one year. A 100% turnover rate is higher than
the turnover rate experienced by most mutual funds .
Investment changes will be made whenever management deems them
appropriate even if this results in a higher portfolio turnover rate.
In addition, portfolio turnover may increase as a result of
-14-<PAGE>
large amounts of purchases and redemptions of shares of the Fund due
to economic, market or other factors that are not within the control
of management.
A high portfolio turnover rate increases the brokerage
expenses of the Fund. A high turnover rate has no direct
relationship to the tax liability of the Fund, although sales
of certain stocks will lead to realization of gains, and, possibly,
increased taxable distributions. The Fund's brokerage policy is
discussed further under Section 6 Brokerage Policy, and additional
information concerning income taxes is located under Section 9 Income
Dividends, Capital Gains Distributions and Tax Treatment.
2. Investment Restrictions
-----------------------
The Fund has adopted certain fundamental restrictions
on its investments and other activities, and none of these
restrictions may be changed without the approval of (i) 67% or more of
the voting securities of the Fund present at a meeting of shareholders
thereof if the holders of more than 50% of the outstanding voting
securities are present or represented by proxy, or (ii) more than 50%
of the outstanding voting securities of the Fund.
The following fundamental restrictions apply to the
Berger New Generation Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets,
purchase the securities of any one issuer (except U.S. government
securities) if immediately after and as a result of such purchase
(a) the value of the holdings of the Fund in the securities of such
issuer exceeds 5% of the value of the Fund's total assets or (b) the
Fund owns more than 10% of the outstanding voting securities of such
issuer.
2. Invest in any one industry (other than U.S. government
securities) more than 25% of the value of its total assets at the time
of such investment.
3. Borrow money, except from banks for temporary or
emergency purposes in amounts not to exceed 25% of the Fund's total
assets (including the amount borrowed) taken at market value, nor
pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness and then only if such pledging, mortgaging or
hypothecating does not exceed 25% of the Fund's total assets taken at
market value. When borrowings exceed 5% of the Fund's total assets,
the Fund will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a security), issue senior securities (except to the
extent permitted under the Investment Company Act of 1940), invest in
real estate (although it may purchase shares of a real estate
investment trust), or invest in commodities or
-15-<PAGE>
commodity contracts except financial futures transactions, futures
contracts on securities and securities indices and options on such
futures, forward foreign currency exchange contracts, forward
commitments or securities index put or call options.
5. Make loans, except that the Fund may enter into
repurchase agreements and may lend portfolio securities in accordance
with the Fund's investment policies. The Fund does not, for this
purpose, consider the purchase of all or a portion of an issue of
publicly distributed bonds, bank loan participation agreements, bank
certificates of deposit, bankers' acceptances, debentures or other
securities, whether or not the purchase is made upon the original
issuance of the securities, to be the making of a loan.
In applying the industry concentration investment
restriction (no. 2 above), the Fund uses the industry groups used in
the Data Monitor Portfolio Monitoring System of William O'Neil & Co.
Incorporated. Further, in implementing that restriction, the Fund
intends not to invest in any one industry 25% or more of the value of
its total assets at the time of such investment.
The trustees have adopted additional non-fundamental
investment restrictions for the Fund. These limitations may be
changed by the trustees without a shareholder vote. The non-
fundamental investment restrictions include the following:
1. The Fund may not purchase securities of any company
which, including its predecessors and parents, has a record of less
than three years' continuous operation, if such purchase would cause
the Fund's investments in all such companies taken at cost to exceed
15% of the value of the Fund's total assets.
2. The Fund may not purchase securities on margin from a
broker or dealer, except that the Fund may obtain such short-term
credits as may be necessary for the clearance of transactions, and may
not make short sales of securities, except that the Fund may make
short sales if, at the time of the short sale, the Fund owns or has
the right to acquire an equivalent kind and amount of the security
being sold short at no additional cost (i.e., short sales "against the
box"). This limitation shall not prohibit or restrict the Fund from
entering into futures, forwards and options contracts or from making
margin payments and other deposits in connection therewith.
3. The Fund may not purchase the securities of any other
investment company, except by purchase in the open market involving no
commission or profit to a sponsor or dealer (other than the customary
broker's commission).
4. The Fund may not invest in companies for the purposes
of exercising control of management.
-16-<PAGE>
5. The Fund may not purchase any security, including any
repurchase agreement maturing in more than seven days, which is not
readily marketable, if more than 15% of the net assets of the Fund,
taken at market value at the time of purchase would be invested in
such securities.
6. Only for the purpose of hedging, the Fund may purchase
and sell financial futures, forward foreign currency exchange
contracts and put and call options, but no more than 5% of the Fund's
total net assets at the time of purchase may be invested in initial
margins for financial futures transactions and premiums for options.
The Fund may only write call options that are covered and only up to
25% of the Fund's total assets.
7. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
8. The Fund may not purchase or sell any interest in an
oil, gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
9. The Fund's investments in warrants valued at the lower
of cost or market may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange.
3. Management of the Fund
----------------------
The trustees and executive officers of the
Fund are listed below, together with information which includes
their principal occupations during the past five years and other
principal business affiliations.
* RODNEY L. LINAFELTER, 210 University Boulevard, Suite 900,
Denver, CO 80206, age 36. President since November 1994
(formerly, Vice President from October 1990 to November 1994), a
Portfolio Manager since October 1990 and a Director since October
1994 of Berger 100 Fund and Berger Growth and Income Fund.
Trustee and President of Berger Investment Portfolio Trust since
its inception in August 1993. President and Portfolio Manager of
Berger IPT - 100 Fund and Berger IPT - Growth and Income Fund and
a Trustee of Berger Institutional Products Trust since its
inception in October 1995. Vice President (since December 1990)
and Chief Investment Officer (since October 1994), Director
(since
____________________
* Interested person (as defined in the Investment Company Act of
1940) of the Fund and of Berger Associates.
-17-<PAGE>
January 1992) and, formerly, Portfolio Manager (January 1990 to
December 1990), with Berger Associates. Formerly (April 1986 to
December 1989), Financial Consultant (registered representative)
with Merrill Lynch, Pierce, Fenner & Smith, Inc.
* WILLIAM R. KEITHLER, 210 University Boulevard, Suite 900,
Denver, CO 80206, age 43. President since November 1994
(formerly, Vice President from December 1993 to November 1994)
and Portfolio Manager of the Berger Small Company Growth Fund.
President and Portfolio Manager of the Berger New Generation
Fund since its inception in December 1995. President and
Portfolio Manager of the Berger IPT - Small Company Growth Fund
of the Berger Institutional Products Trust since its inception in
October 1995. Since December 1993, Vice President-Investment
Management of Berger Associates. Formerly, Senior Vice President
(January 1993 to December 1993), Vice President (January 1991 to
January 1993) and Portfolio Manager (January 1988 to January
1991) of INVESCO Trust Company (investment management).
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110,
age 67. President, Baldwin Financial Counseling. Formerly
(1978-1990), Vice President and Denver Office Manager of Merrill
Lynch Capital Markets. Director of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust and Berger Institutional Products Trust.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900,
Denver, CO 80206, age 70. Director and, formerly, President
(1974-1994) of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust since its inception
in August 1993 (Chairman of the Trustees through November 1994).
Trustee of Berger Institutional Products Trust since its
inception in October 1995. Chairman (since 1994) and a Director
(since 1973) and, formerly, President (1973-1994) of Berger
Associates.
LOUIS R. BINDNER, 1075 South Fox, Denver, CO 80223, age 70.
President, Climate Engineering, Inc. (building environmental
systems). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust and
Berger Institutional Products Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age
50. President, Cattanach & Associates, Ltd. (investment
consulting firm). Formerly (1981-1988), Executive Vice
President, Captiva Corporation, Denver, Colorado (private
investment management firm). Ph.D. in Finance (Arizona State
____________________
* Interested person (as defined in the Investment Company Act of
1940) of the Fund and of Berger Associates.
-18-<PAGE>
University); Chartered Financial Analyst (CFA). Director of
Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust and Berger Institutional
Products Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age
68. Associate, University College, University of Denver.
Formerly, President of the Colorado State Board of Land
Commissioners (1989-1995), and Vice President and Economist
(1983-1988) and Consulting Economist (1989) for First Interstate
Bank of Denver. Ph.D. in Economics (Harvard University).
Director of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust and Berger
Institutional Products Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL
60602, age 50. Since 1991, Director, Chairman, President and
Chief Executive Officer of Catalyst Institute (international
public policy research organization focused primarily on
financial markets and institutions) and Catalyst Consulting
(international financial institutions business consulting firm).
Formerly (1988-1991), Director, President and Chief Executive
Officer of Kessler Asher Group (brokerage, clearing and trading
firm). Director of Berger 100 Fund and Berger Growth and Income
Fund. Trustee of Berger Investment Portfolio Trust and Berger
Institutional Products Trust.
HARRY T. LEWIS, JR., 370 17th Street, Suite 5150, Denver, CO
80202, age 63 . Self-employed as a private investor.
Formerly (1981-1988), Senior Vice President, Rocky Mountain
Region, of Dain Bosworth Incorporated and member of that firm's
Management Committee. Director of Berger 100 Fund and Berger
Growth and Income Fund. Trustee of Berger Investment Portfolio
Trust and Berger Institutional Products Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman,
MT 59717, age 59 . Since 1994, Dean, and since 1989, a
member of the Finance faculty, of the College of Business,
Montana State University. Self-employed as a financial and
management consultant, and in real estate development. Formerly
(1976-1989), Chairman and Chief Executive Officer of Royal Gold,
Inc. (mining). Chairman of the Board of Berger 100 Fund and
Berger Growth and Income Fund. Chairman of the Trustees of
Berger Investment Portfolio Trust and Berger Institutional
Products Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135,
age 67. President, Sinclaire Cattle Co., and private investor.
Director of Berger 100 Fund and Berger Growth and Income Fund.
Trustee of Berger Investment Portfolio Trust and Berger
Institutional Products Trust.
-19-<PAGE>
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 40. Vice President, Secretary and Treasurer of
Berger 100 Fund and Berger Growth and Income Fund since October
1991, of Berger Investment Portfolio Trust since its inception in
August 1993 and of Berger Institutional Products Trust since its
inception in October 1995. Also, Vice President-Finance and
Administration, Secretary and Treasurer of Berger Associates
since September 1991. Formerly, Financial Consultant (registered
representative) with Neidiger Tucker Bruner, Inc. (broker-dealer)
(October 1989 to September 1991) and Financial Consultant with
Merrill Lynch, Pierce, Fenner & Smith, Inc. (October 1985 to
October 1989).
____________________
* Interested person (as defined in the Investment Company Act of
1940) of the Fund and of Berger Associates.
TRUSTEE COMPENSATION
Officers of the Fund receive no compensation
from the Fund. However, trustees of the Fund who are not
interested persons of Berger Associates are compensated for their
services according to a fee schedule, allocated among the
Berger Funds, which includes an annual fee component and a per
meeting fee component. Neither the officers of the Fund nor
the trustees receive any form of pension or retirement benefit
compensation from the Fund .
Set forth below is information regarding compensation
(including reimbursement of expenses) paid or accrued during the
fiscal year ended September 30, 1995, for each trustee of the
Berger Investment Portfolio Trust and for all the Berger Funds .
-20-<PAGE>
<TABLE>
<CAPTION>
NAME AND POSITION AGGREGATE COMPENSATION FROM
WITH BERGER FUNDS
=====================================================================================
BERGER ALL
INVESTMENT BERGER
PORTFOLIO FUNDS
TRUST<F1>
=====================================================================================
<S> <C> <C>
Rodney L.
Linafelter<F2><F3><F4> $ 0 $ 0
Dennis E. Baldwin<F3> $ 5,834 $46,617
William M.B. Berger<F3><F4> $ 0 $ 0
Louis R. Bindner<F3> $ 4,868 $39,687
Katherine A. Cattanach<F3> $ 5,626 $45,000
Lucy Black Creighton<F3> $ 4,685 $38,132
Paul R. Knapp<F3> $ 6,410 $50,976
Harry T. Lewis<F3> $ 5,421 $43,500
Michael Owen<F3> $ 7,275 $57,544
William Sinclaire<F3> $ 4,700 $38,247
<FN>
<F1> Those trustees who are not interested persons of Berger Associates received as a group trustees' compensation
(including reimbursement of expenses) from Berger Investment Portfolio Trust (relating to the Berger Small Company
Growth Fund) of approximately $44,819 during the fiscal year ended September 30, 1995. Since the Berger New
Generation Fund was only recently established, the trustees of the Berger Investment Portfolio Trust did not receive
any compensation relating to that Fund during the fiscal year ended September 30, 1995.
<F2> President of Berger 100 Fund, Berger Growth and Income Fund and Berger Investment Portfolio Trust.
<F3> Director of Berger 100 Fund and Berger Growth and Income Fund. Trustee of Berger Investment Portfolio Trust
and Berger Institutional Products Trust.
<F4> Interested person of Berger Associates.
</FN>
</TABLE>
Commencing in January 1996, trustees may elect to
defer receipt of all or a portion of their fees (both the annual and
per meeting components) pursuant to a fee deferral plan adopted by
the Berger Investment Portfolio Trust. The Fund's
obligation to make payments of deferred fees under the plan is a
general obligation of the Fund.
As of December 31 , 1995, the officers and
trustees of the Trust as a group owned of record or
beneficially no shares of the Berger New Generation
Fund.
-21-<PAGE>
4. Investment Adviser
------------------
Berger Associates is the investment adviser to the
Fund. Rodney L. Linafelter, Vice President and Chief Investment
Officer and a director of Berger Associates, is also President,
portfolio manager and a director of both the Berger 100 Fund and the
Berger Growth and Income Fund, and President and a Trustee of the
Berger Investment Portfolio Trust. William R. Keithler, Vice
President-Investment Management of Berger Associates, is also
President and portfolio manager of the Berger New Generation Fund
and the Berger Small Company Growth Fund. Kevin R. Fay, Vice
President-Finance and Administration, Secretary and Treasurer of
Berger Associates, also serves as Vice President, Secretary and
Treasurer of the Berger Funds.
Berger Associates serves as investment adviser to other
mutual funds, pension and profit-sharing plans, and other
institutional and private investors. At times, Berger Associates may
recommend purchases and sales of the same investment securities for
the Fund, other Berger Funds, and for one or more other
investment accounts. In such cases, it will be the practice of Berger
Associates to allocate the purchase and sale transactions among the
participating Berger Funds and the accounts in such manner as it deems
equitable. In making such allocation, the main factors to be
considered are the respective investment objectives of the Berger
Funds and the accounts, the relative size of portfolio holdings of the
same or comparable securities, the current availability of cash for
investment by each of the Berger Funds and each account, the size of
investment commitments generally held by each Berger Fund and each
account, and the opinions of the persons responsible for recommending
investments to the Berger Funds and the accounts.
The officers of Berger Associates are Gerard M. Lavin,
President, 210 University Blvd., Suite 900, Denver, CO 80206;
Rodney L. Linafelter, Vice President and Chief Investment Officer;
William R. Keithler, Vice President-Investment Management; Craig D.
Cloyed, Vice President and Chief Marketing Officer; and Kevin R. Fay,
Vice President-Finance and Administration, Secretary and Treasurer.
The directors of Berger Associates are Mr. Lavin, Landon H. Rowland,
114 West 11th Street, Kansas City, MO 64105, and Mr. Linafelter and
William M.B. Berger (both of whom also serve as directors of the
Berger 100 Fund and the Berger Growth and Income Fund and as trustees
of the Berger Investment Portfolio Trust).
Berger Associates permits its directors, officers and
employees to purchase and sell securities for their own accounts in
accordance with a Berger Associates policy regarding personal
investing. The policy requires all directors, officers and employees
of Berger Associates to conduct their personal securities transactions
in a manner which does not operate adversely to the interests of the
Fund or Berger Associates' other advisory clients. Directors
and officers of Berger Associates (including those who also serve as
trustees of the Fund ), investment personnel and other
-22-<PAGE>
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 Fund .
In addition to the pre-clearance requirements described
above, the policy subjects directors and officers of Berger Associates
(including those who also serve as trustees of the
Fund ), investment personnel and other access persons to various
trading restrictions and reporting obligations. All reportable
transactions are reviewed for compliance with Berger Associates'
policy. Those persons also may be required under certain
circumstances to forfeit their profits made from personal trading.
The policy is administered by Berger Associates and the provisions of
the policy are subject to interpretation by and exceptions authorized
by its board of directors.
The Investment Advisory Agreement between
Berger Associates and the Berger New Generation Fund came into effect
immediately prior to the date of this Statement of Additional
Information. The Agreement will continue in effect until the last
day of April, 1997 , and thereafter from year to year if such
continuation is specifically approved at least annually by the
trustees or by vote of a majority of the outstanding shares of
the Fund and in either case by vote of a majority of the
trustees who are not "interested persons" (as that term is
defined in the 1940 Act) of the Fund or Berger Associates. Each
Agreement is subject to termination by the Fund or Berger Associates
on 60 days' written notice, and terminates automatically in the event
of its assignment.
Kansas City Southern Industries, Inc. ("KCSI") owns
approximately 80% of the outstanding shares of Berger Associates.
KCSI is a publicly traded holding company whose primary subsidiaries
are engaged in transportation services and financial asset management.
KCSI also owns approximately 41% of the outstanding shares of DST
Systems, Inc. ("DST"), a publicly traded information and transaction
processing company which acts as the Fund's sub-transfer agent.
5. Expenses of the Fund
--------------------
Under the Investment Advisory Agreement for the
Berger New Generation Fund, Berger Associates is compensated
for its investment advisory services to the Fund by the payment of a
fee at the annual rate of .9 of 1% (0.90%) of the average daily net
assets of the Fund. The fee is accrued daily and payable
monthly. This fee is higher than that paid by most other mutual
funds.
-23-<PAGE>
The Fund pays all of its expenses not assumed by
Berger Associates, including, but not limited to, investment adviser
fees, custodian and transfer agent fees, legal and accounting
expenses, administrative and record keeping expenses, interest
charges, federal and state taxes, costs of share certificates,
expenses of shareholders' meetings, compensation of trustees
who are not interested persons of Berger Associates, expenses of
printing and distributing reports to shareholders and federal and
state administrative agencies, and all expenses incurred in connection
with the execution of its portfolio transactions, including brokerage
commissions on purchases and sales of portfolio securities, which are
considered a cost of securities of the Fund. The Fund
also pays all expenses incurred in complying with all federal and
state laws and the laws of any foreign country applicable to the
issue, offer or sale of shares of the Fund, including, but not limited
to, all costs involved in preparing and printing prospectuses of the
Fund.
The Fund has adopted a 12b-1 plan (the "Plan")
pursuant to Rule 12b-1 under the Investment Company Act of 1940, which
provides for the payment to Berger Associates of a 12b-1 fee of .25 of
1% (0.25%) per annum of the Fund's average daily net assets to finance
activities primarily intended to result in the sale of Fund shares.
The expenses paid by Berger Associates include the costs of preparing,
printing and mailing prospectuses to other than existing shareholders,
as well as promotional expenses directed at increasing the sale of
Fund shares. The 12b-1 Plan for the Berger New
Generation Fund came into effect immediately prior to
the date of this Statement of Additional Information . A further
discussion of the Plan is contained in Section 7 of the
Prospectus, and is incorporated herein by this reference.
The Fund has appointed Investors Fiduciary Trust
Company ("IFTC") as its recordkeeping and pricing agent. In addition,
IFTC also serves as the Fund's custodian, transfer agent and
dividend disbursing agent. IFTC has engaged DST as sub-agent to
provide transfer agency and dividend disbursing services for the
Fund . As noted in the previous section, approximately 41% of
the outstanding shares of DST are owned by KCSI. The addresses and
telephone numbers for DST set forth in the Prospectus and this
Statement of Additional Information should be used for correspondence
with the transfer agent.
As recordkeeping and pricing agent, IFTC calculates the
daily net asset value of the Fund and performs certain
accounting and recordkeeping functions required by the Fund .
The Fund pays IFTC a monthly base fee of $500 , plus an
asset-based fee at an annual rate of $.10 per $1,000 of the Fund's
assets (minimum monthly asset fee of $750 ), plus an additional $.10
per $1,000 of the Fund's assets invested in foreign securities .
IFTC is also reimbursed for certain out-of-pocket expenses.
IFTC, as custodian, and its subcustodians have custody and
provide for the safekeeping of the Fund's securities and cash,
-24-<PAGE>
and receive and remit the income thereon as directed by the management
of the Fund . The custodian and subcustodians do not perform
any managerial or policy-making functions for the Fund . For
its services as custodian, IFTC receives a fee, payable monthly, at an
annual rate ranging from $.05 to $.10 per $1,000 of assets under
custody invested in domestic securities , based on the assets of
all funds in the Berger Funds complex , and $.50 to $4.50
per $1,000 of Fund assets under custody invested in foreign
securities . IFTC also receives certain transaction fees
and is reimbursed for out-of-pocket expenses.
As transfer agent and dividend disbursing agent, IFTC
(through DST, as sub-agent) maintains all shareholder accounts of
record; assists in mailing all reports, proxies and other information
to the Fund's shareholders; calculates the amount of, and
delivers to the Fund's shareholders, proceeds representing all
dividends and distributions; and performs other related services. For
these services, IFTC receives a fee from the Fund at an annual
rate of $15.05 per open Fund shareholder account, subject to scheduled
increases, plus certain transaction fees and fees for closed accounts,
and is reimbursed for out-of-pocket expenses, which fees in turn are
passed through to DST as sub-agent. All of IFTC's fees are subject
to reduction pursuant to an agreed formula for certain earnings
credits on the cash balances of the Fund.
The trustees of the Fund have authorized Berger
Associates to place portfolio transactions on an agency basis through
DST Securities, Inc. ("DSTS"), a wholly-owned broker-dealer subsidiary
of DST. When transactions for the Fund are effected through DSTS, the
portion of the commissions received by it is credited against, and
thereby reduces, certain operating expenses that the Fund would
otherwise be obligated to pay. No portion of the commissions is
retained by DSTS.
The Fund and Berger Associates have entered into
arrangements with certain organizations (broker-dealers, recordkeepers
and administrators) to provide subtransfer agency, recordkeeping,
shareholder communications, subaccounting and/or other services to
investors purchasing shares of the Fund through investment
programs or pension plans established or serviced by those
organizations. The Fund and/or Berger Associates may pay fees
to these organizations for their services. Any such fees paid by
the Fund will be for services that otherwise would be provided
or paid for by the Fund if all the investors who own Fund shares
through the organization were registered record holders of shares in
the Fund.
In addition, under a separate Administrative Services
Agreement with respect to the Fund, Berger Associates performs
certain administrative and recordkeeping services not otherwise
performed by IFTC, including the preparation of financial statements
and reports to be filed with the Securities and Exchange Commission
and state regulatory authorities. The Fund pays Berger
Associates a fee at an annual rate of one-hundredth of one
percent
-25-<PAGE>
(0.01%) of its average daily net assets for such services. This
fee is in addition to the investment advisory fee paid
under the Investment Advisory Agreement. The administrative services
fee may be changed by the trustees without shareholder
approval.
Berger Associates has agreed to waive its advisory fee
to the extent that the Fund's normal operating expenses
in any fiscal year, including the management fee and the
12b-1 fee, but excluding brokerage commissions, interest, taxes
and extraordinary expenses, exceed 1.90% of the Fund's
average daily net assets for that fiscal year.
6. Brokerage Policy
----------------
Although the Fund retains full control over its own
investment policies, under the terms of its Investment Advisory
Agreement, Berger Associates is directed to place the portfolio
transactions of the Fund. Berger Associates is required to report on
the placement of brokerage business to the trustees of
the Fund every quarter, indicating the brokers with whom Fund
portfolio business was placed and the basis for such placement.
The Investment Advisory Agreement that the Fund has
with Berger Associates authorizes and directs Berger Associates to
place portfolio transactions for the Fund only with brokers and
dealers who render satisfactory service in the execution of orders at
the most favorable prices and at reasonable commission rates.
However, each Agreement specifically authorizes Berger Associates to
place such transactions with a broker with whom it has negotiated a
commission that is in excess of the commission another broker or
dealer would have charged for effecting that transaction if Berger
Associates determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker viewed in terms of either that
particular transaction or the overall responsibilities of Berger
Associates.
In accordance with this provision of the Agreement, Berger
Associates places portfolio brokerage business of the Fund with
brokers who provide useful research services to Berger Associates.
Such research services typically consist of studies made by investment
analysts or economists relating either to the past record of and
future outlook for companies and the industries in which they operate,
or to national and worldwide economic conditions, monetary conditions
and trends in investors' sentiment, and the relationship of these
factors to the securities market. In addition, such analysts may be
available for regular consultation so that Berger Associates may be
apprised of current developments in the above-mentioned
factors.
The research services received from brokers are often
helpful to Berger Associates in performing its investment advisory
responsibilities to the Fund , but they are not essential, and
the availability of such services from brokers does not reduce the
-26-<PAGE>
responsibility of Berger Associates' advisory personnel to analyze and
evaluate the securities in which the Fund invests . The
research services obtained as a result of the Fund's brokerage
business also will be useful to Berger Associates in making investment
decisions for its other advisory accounts, and, conversely,
information obtained by reason of placement of brokerage business of
such other accounts may be used by Berger Associates in rendering
investment advice to the Fund . Although such research services
may be deemed to be of value to Berger Associates, they are not
expected to decrease the expenses that Berger Associates would
otherwise incur in performing its investment advisory services for the
Fund nor will the advisory fee that is received
by Berger Associates from the Fund be reduced as a result of
the availability of such research services from brokers.
Although investment decisions for the Fund are made
independently from those for other investment advisory clients of
Berger Associates, the same investment decision may be made for both
the Fund and one or more other advisory clients, including
other mutual funds advised by Berger Associates. If the Fund
and other clients of Berger Associates should purchase or sell the
same class of securities on the same day, the orders for such
transactions may be combined in order to seek the best combination of
net price and execution for each. In such event, the amount and net
price of the transactions would be allocated in a manner considered
equitable to the Fund and each such other client.
The trustees of the Fund have authorized
Berger Associates to place portfolio transactions on an agency basis
through DSTS, a wholly-owned broker-dealer subsidiary of DST. When
transactions for the Fund are effected through DSTS, the
portion of the commissions received by DSTS is credited
against, and thereby reduces , certain operating expenses that
the Fund would otherwise be obligated to pay. No portion of the
commissions is retained by DSTS.
7. How To Purchase Shares In the Funds
-----------------------------------
Minimum Initial Investment $500.00
Minimum Subsequent Investment $ 50.00
To purchase shares in the Fund , simply complete the
application form enclosed with the Prospectus. Then mail it with a
check payable to "Berger Funds" to the Fund in care of DST
Systems, Inc., the Fund's sub-transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
-27-<PAGE>
If a shareholder is adding to an existing account, shares
may also be purchased by placing an order by telephone call to the
Fund at 1-800-551-5849, and remitting payment to DST Systems,
Inc. In order to make sure that payment for telephone purchases is
received on time, shareholders are encouraged to remit payment by wire
or electronic funds transfer, or by overnight delivery.
Alternatively, investors may establish an Automatic
Investment Plan, in which case the $500 minimum initial investment
will be waived, subject to initial and subsequent monthly investment
minimums of $50.
In addition, Fund shares may be purchased through certain
broker-dealers that have established mutual fund programs and certain
other organizations connected with pension and retirement plans.
These broker-dealers and other organizations may charge investors a
fee for their services, may require different minimum initial and
subsequent investments than the Fund and may impose other
charges or restrictions different from those applicable to
shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's
total return on an investment in Fund shares. No such charge will be
paid by an investor who purchases the Fund shares directly from the
Fund as described above.
8. How The Net Asset Value Is Determined
-------------------------------------
The net asset value of the Fund is determined once
daily, at the close of the regular trading session of the New York
Stock Exchange ("NYSE") (normally 4:00 p.m., New York time, Monday
through Friday) each day that the NYSE is open. The NYSE is closed
and the net asset value of the Fund is not determined on
weekends and on New Year's Day, Presidents' Day, Good Friday, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day
each year. The per share net asset value of the Fund is
determined by dividing the total value of its securities and other
assets, less liabilities, by the total number of shares outstanding.
In determining net asset value, securities listed or traded
primarily on national exchanges, The Nasdaq Stock Market and foreign
exchanges are valued at the last sale price on such markets, or, if
such a price is lacking for the trading period immediately preceding
the time of determination, such securities are valued at the mean of
their current bid and asked prices. Securities that are traded in the
over-the-counter market are valued at the mean between their current
bid and asked prices. Foreign securities and currencies are converted
to U.S. dollars using the exchange rate in effect shortly before the
close of the NYSE. The market value of individual securities held by
the 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
-28-<PAGE>
value. Securities and assets for which quotations are not readily
available are valued at fair values determined in good faith pursuant
to consistently applied procedures established by the trustees.
9. Income Dividends, Capital Gains
Distributions and Tax Treatment
-------------------------------
It is the policy of the Fund to meet the
requirements of Subchapter M of the Internal Revenue Code and to
distribute to its investors all or substantially all of its taxable
income as defined in the Code. If the Fund meets the
Subchapter M requirements, it is not liable for federal income
taxes to the extent its earnings are distributed.
Qualification as a regulated investment company under the Internal
Revenue Code does not, however, involve any federal supervision of
management or of the investment practices or policies of the
Fund . If the Fund distributes annually less than 98% of
its income and gain, it will be subject to a nondeductible excise tax
equal to 4% of the shortfall.
Advice as to the tax status of each year's dividends and
distributions will be mailed annually to the shareholders of
the Fund. Dividends paid by the Fund from net
investment income and distributions from the Fund's net short-
term capital gains in excess of any net long-term capital losses,
whether received in cash or reinvested, generally will be taxable as
ordinary income. Distributions received from the Fund
designated as long-term capital gains (net of capital losses), whether
received in cash or reinvested, will be taxable as long-term capital
gains without regard to the length of time a shareholder has owned
shares in the Fund. Any loss on the sale or exchange of the
Fund's shares held for six months or less will be treated as a long-
term capital loss to the extent of any long-term capital gain
distribution received on the shares. A portion of the dividends (but
not capital gains distributions) paid by the Fund may be
eligible for the dividends received deduction for corporate
shareholders to the extent that the Fund's income consists of
dividends paid by United States corporations. If a shareholder is not
subject to federal income tax, the shareholder will not generally be
taxed on amounts distributed by the Fund.
Dividends and interest received by the Fund on
foreign securities may give rise to withholding and other taxes
imposed by foreign countries. It is expected that foreign taxes paid
by the Fund will be treated as expenses of the Fund .
Tax conventions between certain countries and the United States may
reduce or eliminate such taxes.
At certain levels of taxable income, the Internal Revenue
Code provides a preferential tax rate for long-term capital gains.
Long-term capital gains of taxpayers other than corporations are taxed
at a 28 percent maximum rate, whereas ordinary income is taxed at a
39.6 percent maximum rate. Capital losses continue to be deductible
only against capital gains plus (in the case of
-29-<PAGE>
taxpayers other than corporations) $3,000 of ordinary income annually
($1,500 for married individuals filing separately).
10. Suspension of Redemption Rights
-------------------------------
The right of redemption may be suspended for any period
during which the New York Stock Exchange is closed or the Securities
and Exchange Commission determines that trading on the Exchange is
restricted, or when there is an emergency as determined by the
Securities and Exchange Commission as a result of which it is not
reasonably practicable for the 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 the Fund.
The Fund intends to redeem its shares only for cash,
although it retains the right to redeem its shares in kind under
unusual circumstances, in order to protect the interests of the
remaining shareholders, by the delivery of securities selected from
its assets at its discretion. The Fund is , however,
governed by Rule 18f-1 under the Investment Company Act of 1940
pursuant to which the Fund is obligated to redeem shares solely in
cash up to the lesser of $250,000 or 1% of the net assets of the Fund
during any 90-day period for any one shareholder. Should redemptions
by any shareholder during any 90-day period exceed such limitation,
the Fund will have the option of redeeming the excess in cash or in
kind. If shares are redeemed in kind, the redeeming shareholder might
incur brokerage costs in converting the assets to cash. The method of
valuing securities used to make redemption in kind will be the same as
the method of valuing portfolio securities described under Section 8.
11. Tax-Sheltered Retirement Plans
------------------------------
The Fund offers a Profit-Sharing Plan, a Money
Purchase Pension Plan, an Individual Retirement Account and a 403(b)
Custodial Account for adoption by employers and individuals who wish
to participate in such Plans by accumulating shares of the Fund
with tax-deductible dollars.
Profit-Sharing and Money Purchase Pension Plans
- -----------------------------------------------
Employers, self-employed individuals and partnerships may
make tax-deductible contributions to the tax-qualified retirement
plans offered by the Fund . All income and capital gains in the
Plans are tax free until withdrawn. The amounts that are deductible
depend upon the type of Plan or Plans adopted.
If you, as an employer, self-employed person or
partnership, adopt the Profit-Sharing Plan, you may vary the amount of
your contributions from year to year and may elect to make no
contribution at all for some years. If you adopt the Money Purchase
Pension Plan, you must commit yourself to make a contribution each
year according to a formula in the Plan that is
-30-<PAGE>
based upon your and your employees' compensation or earned income. By
adopting both the Profit-Sharing and the Money Purchase Pension Plan,
you can increase the amount of contributions that you may deduct in
any one year.
If you wish to purchase shares of the Fund in
conjunction with one or both of these tax-qualified plans, you may use
an Internal Revenue Service approved prototype Trust Agreement and
Retirement Plan available from the Fund . IFTC serves as
trustee of the Plan, for which it charges an annual trustee's fee of
$12 for each Berger 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 Berger Funds or the Cash Account Trust Money Market
Portfolios, which are then held by the trustee under the terms of the
Plans to create a retirement fund in accordance with the tax code.
Distributions from the Profit-Sharing and Money Purchase
Pension Plans generally may not be made without penalty until the
participant reaches age 59 1/2 and must begin no later than April 1 of
the calendar year following the year in which the participant attains
age 70 1/2. Except for required distributions after age 70 1/2,
periodic distributions over more than 10 years and the distribution of
any after-tax contributions, distributions are subject to 20% federal
income tax withholding unless those distributions are rolled directly
to another qualified plan or an individual retirement account (IRA).
Participants may not be able to receive distributions immediately upon
request because of certain requirements under federal tax law. Since
distributions which do not satisfy these requirements can result in
adverse tax consequences, consultation with an attorney or tax advisor
regarding the Plans is recommended.
In order to receive the necessary materials to create a
Profit-Sharing or Money Purchase Pension Plan, please write to the
Fund , c/o Berger Associates, Inc., P.O. Box 5005, Denver,
Colorado 80217, or call 1-800-333-1001.
Individual Retirement Account (IRA)
- -----------------------------------
If you are an individual with compensation or earned
income, whether or not you are actively participating in an existing
qualified retirement plan, you can provide for your own retirement by
adopting an IRA. Under an IRA, you can contribute each year up to the
lesser of 100% of your compensation or $2,000. If you have a non-
employed spouse (or if your spouse elects to be treated as having no
compensation), you may make contributions totaling up to $2,250 to two
IRAs. If neither you nor your spouse are covered by an existing
qualified retirement plan, or if your income does not exceed certain
amounts, the amounts contributed to your IRA can be deducted for
federal income tax purposes whether or not your deductions are
itemized. If you or your spouse are covered by an existing qualified
retirement plan, and your income exceeds the applicable amounts, your
IRA contributions are not
-31-<PAGE>
deductible for federal income tax purposes. However, whether your
contributions are deductible or not, the income and capital gains on
your IRA are not taxed until the account is distributed.
If you wish to create an IRA to invest in shares of
the Fund, you may use the Fund's IRA custodial agreement form
which is an adaptation of the form provided by the Internal Revenue
Service. Under the IRA custodial agreement, IFTC will serve as
custodian, for which it will charge an annual custodian fee of $12 per
Berger Fund or Cash Account Trust Money Market Portfolio in
which the IRA is invested.
Distributions from an IRA generally may not be made without
penalty until you reach age 59 1/2 and must begin no later than
April 1 of the calendar year following the year in which you
attain age 70 1/2. Since distributions which do not satisfy these
requirements can result in adverse tax consequences, consultation with
an attorney or tax advisor is recommended.
In order to receive the necessary materials to create an
IRA account, please write to the Fund , c/o Berger Associates,
Inc., P.O. Box 5005, Denver, Colorado 80217, or call 1-800-333-1001.
403(b) Custodial Accounts
- -------------------------
If you are employed by a public school system or certain
tax-exempt organizations such as private schools, colleges,
universities, hospitals, religious and charitable or other nonprofit
organizations, you may establish a 403(b) Custodial Account. Your
employer must participate in the establishment of the account.
Your employer will automatically deduct the amount you
designate from your gross salary and contribute it to your 403(b)
Custodial Account. The amount which you may contribute annually under
a salary reduction agreement is generally the lesser of $9,500 or your
exclusion allowance, which is based upon a specified formula. There
is a $50 minimum investment in the 403(b) Custodial Account.
Contributions made to the account reduce the amount of your current
income subject to federal income tax. Federal income tax is not paid
on your contribution until you begin making withdrawals. In addition,
all income and capital gains in the account are tax-free until
withdrawn.
Withdrawals from your 403(b) Custodial Agreement may begin
as soon as you reach age 59-1/2 and must begin no later than April 1
of the year following the calendar year in which you attain age
70 1/2. Except for required distributions after age 70 1/2 and
periodic distributions over more than 10 years, distributions are
subject to 20% federal income tax withholding unless those
distributions are rolled directly to another 403(b) account or annuity
or an individual retirement account (IRA). You may not be able to
receive distributions immediately upon request because of certain
notice requirements under federal tax law. Since
-32-<PAGE>
distributions which do not satisfy these requirements can result in
adverse tax consequences, consultation with an attorney or tax advisor
regarding the 403(b) Custodial Account is recommended.
Individuals who wish to purchase shares of the Fund
in conjunction with a 403(b) Custodial Account may use a Custodian
Account Agreement and related forms available from the Fund .
IFTC serves as custodian of the 403(b) Custodial Account, for which it
charges an annual custodian fee of $12 per Berger Fund in which
the participant's account is invested.
In order to receive the necessary materials to create a
403(b) Custodial Account, please write to the Fund , c/o Berger
Associates, Inc., P.O. Box 5005, Denver, Colorado 80217, or call
1-800-333-1001.
12. Exchange Privilege and Systematic Withdrawal Plan
-------------------------------------------------
A shareholder who owns shares of the Fund worth at
least $5,000 at the current net asset value may establish a Systematic
Withdrawal account from which a fixed sum will be paid to the
shareholder at regular intervals by the Fund .
To establish a Systematic Withdrawal account, the share-
holder deposits Fund shares with the Fund and appoints the Fund as
agent to redeem shares in the shareholder's account in order to make
monthly, quarterly, semi-annual or annual withdrawal payments to the
shareholder of a fixed amount. The minimum withdrawal payment is
$50.00. These payments generally will be made on the 25th day of each
month.
Withdrawal payments are not yield or income on the
shareholder's investment, since portions of each payment will 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 the Fund for shares of the Berger
100 Fund, the Berger Growth and Income Fund or the Berger Small
Company Growth Fund or for shares of the Money Market Portfolio,
the Government Securities Portfolio or the Tax-Exempt Portfolio of the
-33-<PAGE>
Cash Account Trust ("CAT Portfolios"), separately managed,
unaffiliated money market funds, without charge, after receiving a
current prospectus of the other Berger Fund or CAT Portfolio.
The exchange privilege with the CAT Portfolios does not constitute an
offering or recommendation of the shares of any such CAT Portfolio by
the Fund or Berger Associates. Exchanges into or out of the
Fund are made at the net asset value per share next determined
after the exchange request is received. Each exchange represents the
sale of shares from one fund and the purchase of shares in another,
which may produce a gain or loss for federal income tax purposes. An
exchange of shares may be made by written request directed to DST
Systems, Inc., or simply by telephoning the Berger Funds at 1-800-
551-5849. This privilege is revocable by the Fund , and is not
available in any state in which the shares of the Berger Fund
or CAT Portfolio being acquired in the exchange are not registered for
sale. Shareholders automatically have telephone privileges to
authorize exchanges unless they specifically decline this service in
the account application or in writing.
13. Performance Information
-----------------------
The Prospectus contains a brief description of how total
return is calculated.
Quotations of average annual total return for the
Fund will be expressed in terms of the average annual
compounded rate of return of a hypothetical investment in the Fund
over periods of 1, 5 and 10 years , or for the life of the Fund, if
shorter . These are the rates of return that would equate the
initial amount invested to the ending redeemable value. These rates
of return are calculated pursuant to the following formula:
P(1 + T)n = ERV (where P = a hypothetical initial payment of $1,000,
T = the average annual total return, n = the number of years and
ERV = the ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period). All total return figures
reflect the deduction of a proportional share of Fund expenses on an
annual basis, and assume that all dividends and distributions are
reinvested when paid.
14. Additional Information
----------------------
The Berger Investment Portfolio Trust is a
Delaware business trust organized on August 23, 1993. The Berger New
Generation Fund was established on December 21, 1995, as the second
series or portfolio under the Berger Investment Portfolio Trust.
Since the Berger New Generation Fund was only recently established, it
has no operating history.
The Trust is authorized to issue an unlimited number of
shares of beneficial interest in series or portfolios. Currently, the
series comprising the Berger Small Company Growth Fund
and the Berger New Generation Fund are the only portfolios
established under the Trust, although others may be added in
the future.
-34-<PAGE>
Under Delaware law, shareholders of the Trust will enjoy
the same limitations on personal liability as extended to stockholders
of a Delaware corporation. Further, the Trust Instrument of the Trust
provides that no shareholder shall be personally liable for the debts,
liabilities, obligations and expenses incurred by, contracted for or
otherwise existing with respect to, the Trust or any particular series
(fund) of the Trust. However, the principles of law governing the
limitations of liability of beneficiaries of a business trust have not
been authoritatively established as to business trusts organized under
the laws of one jurisdiction but operating or owning property in other
jurisdictions. In states that have adopted legislation containing
provisions comparable to the Delaware Business Trust Act, it is
believed that the limitation of liability of beneficial owners
provided by Delaware law should be respected. In those jurisdictions
that have not adopted similar legislative provisions, it is possible
that a court might hold that the shareholders of the Trust are not
entitled to the limitations of liability set forth in Delaware law or
the Trust Instrument and, accordingly, that they may be personally
liable for the obligations of the Trust.
In order to protect shareholders from such potential
liability, the Trust Instrument requires that every written obligation
of the Trust or any series thereof contain a statement to the effect
that such obligation may only be enforced against the assets of the
Trust or such series. The Trust Instrument also provides for
indemnification from the assets of the relevant series for all losses
and expenses incurred by any shareholder by reason of being or having
been a shareholder, and that the Trust shall, upon request, assume the
defense of any such claim made against such shareholder for any act or
obligation of the relevant series and satisfy any judgment thereon
from the assets of that series.
As a result, the risk of a Berger New Generation
Fund shareholder incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund itself would
be unable to meet its obligations. The Trust believes that, in view
of the above, the risk of personal liability to shareholders of the
Fund is remote. The trustees intend to conduct the operations of the
Trust and the Fund so as to avoid, to the extent possible, liability
of shareholders for liabilities of the Trust or the Fund.
Shares of the Fund have no preemptive rights, and
since the Fund has only one class of securities there are no
sinking funds or arrearage provisions which may affect the rights of
the Fund shares. Fund shares have no conversion or subscription
rights. Shares of the Fund may be transferred by endorsement,
or other customary methods, but the Fund is not
bound to recognize any transfer until it is recorded on its books.
As of December 22 , 1995, no person owned,
beneficially or of record, more than 5% of the outstanding shares of
the Fund
.
-35-<PAGE>
Davis, Graham & Stubbs, L.L.C., 370 Seventeenth Street,
Denver, Colorado, has passed on legal matters relating to this
offering as counsel for the Fund.
Price Waterhouse LLP, 950 Seventeenth Street, Denver,
Colorado, has been appointed to act as independent
accountants for the Fund for the fiscal year ended
September 30, 1996 .
The Berger Investment Portfolio Trust has
filed with the Securities and Exchange Commission, Washington, D.C., a
Registration Statement under the Securities Act of 1933, as amended,
with respect to the securities of the Berger New Generation
Fund , of which this Statement of Additional Information is a part.
If further information is desired with respect to the Fund or
its securities, reference is made to the Registration
Statement and the exhibits filed as a part thereof.
-36-<PAGE>
APPENDIX A
HIGH-YIELD/HIGH RISK CONVERTIBLE BONDS
The Fund may purchase securities which are
convertible into common stock when the Fund's management
believes they offer the potential for a higher total return than
nonconvertible securities. While fixed income securities generally
have a priority claim on a corporation's assets over that of common
stock, some of the convertible securities which the Fund may
hold are high-yield/high-risk securities that are subject to special
risks, including the risk of default in interest or principal payments
which could result in a loss of income to the Fund or a decline
in the market value of the securities. Convertible securities often
display a degree of market price volatility that is comparable to
common stocks.
Specifically, corporate debt securities which are below
investment grade (securities rated Ba or lower by Moody's or BB or
lower by Standard & Poor's) and unrated securities which the
Fund may purchase and hold are subject to a higher risk of non-payment
of principal or interest, or both, than higher grade debt securities.
Generally speaking, the lower the quality of a debt security (which
may be reflected in its Moody's and/or Standard & Poor's ratings), the
higher the yield it will provide, but the greater the risk that
interest or principal payments will not be made when due. Thus, the
lower the grade of a security, the more speculative characteristics it
generally has. Information about the ratings of Moody's and Standard
& Poor's, and the investment risks associated with the various
ratings, is set forth below.
The market prices of these lower grade convertible
securities are generally less sensitive to interest rate changes than
higher-rated investments, but more sensitive to economic changes or
individual corporate developments. Periods of economic uncertainty
and change can be expected to result in volatility of prices of these
securities. Lower rated securities also may have less liquid markets
than higher rated securities, and their liquidity as well as their
value may be adversely affected by poor economic conditions. Adverse
publicity and investor perceptions as well as new or proposed laws may
also have a negative impact on the market for high-yield/high-risk
bonds.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and
Standard & Poor's are a generally accepted measurement of credit risk.
However, they are subject to certain limitations. Ratings are
generally based upon historical events and do not necessarily reflect
the future. In addition, there is a period of time between the
issuance of a rating and the update of the rating, during which time a
published rating may be inaccurate.
-37-<PAGE>
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is
secure. While the various protective elements are likely to change,
such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high
quality by all standards. Together with the Aaa group they comprise
what are generally known as high grade bonds. They are rated lower
than the best bonds because margins of protection may not be as large
as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A-Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade obligations.
Factors giving security to principal and interest are considered
adequate but elements may be present which suggest a susceptibility to
impairment sometime in the future.
Baa-Bonds which are rated Baa are considered as medium
grade obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate for
the present but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such
bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
Ba-Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured. Often
the protection of interest and principal payments may be very moderate
and thereby not well safeguarded during good and bad times over the
future. Uncertainty of position characterizes bonds of this class.
B-Bonds which are rated B generally lack characteristics of
the desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over any
long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such
issues may be in default or there may be present elements of danger
with respect to principal or interest.
Ca-Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or
have other marked shortcomings.
-38-<PAGE>
C-Bonds which are rated C are the lowest rated class of
bonds and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in
each generic rating classification from Aa through B in its corporate
bond rating system. The modifier 1 indicates that the security ranks
in the higher end of its generic rating category; the modifier 2
indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic category.
KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is
extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only in
small degree.
A-Debt rated A has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB-Debt rated BBB is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic conditions,
or changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for debt in this category
than in higher rated categories.
BB, B, CCC, CC and C-Debt rated BB, B, CCC, CC and C is
regarded, on balance, as predominantly speculative with respect to
capacity to pay interest and repay principal in accordance with the
terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt
will likely have some quality and protective characteristics, these
are out-weighed by the large uncertainties or major risk exposures to
adverse conditions.
C1-The rating C1 is reserved for income bonds on which no
interest is being paid.
D-Debt rated D is in default, and payment of interest
and/or repayment of principal is in arrears.
Plus (+) or Minus (-)-The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative
standing within the major rating categories.
-39-<PAGE>
PART C. OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits:
---------------------------------
(a) Financial Statements.
--------------------
In Part A of the Registration Statement (Prospectus):
None.
In Part B of the Registration Statement (Statement of
Additional Information):
None.
In Part C of the Registration Statement:
None.
(b) Exhibits.
--------
(1) Exhibit 1. Trust Instrument
(1) Exhibit 2. Bylaws
Exhibit 3. Not Applicable
Exhibit 4. Not Applicable
(3) Exhibit 5.1 Form of Investment Advisory Agreement
for Berger Small Company Growth Fund
* Exhibit 5.2 Form of Investment Advisory Agreement
for Berger New Generation Fund
Exhibit 6. Not Applicable
Exhibit 7. Not Applicable
(6) Exhibit 8. Form of Custody Agreement
* Exhibit 9.1 New Account Application
(1) Exhibit 9.2.1 Form of Administrative Services
Agreement for Berger Small Company
Growth Fund
* Exhibit 9.2.2 Form of Administrative Services
Agreement for Berger New Generation Fund
(2) Exhibit 9.3 Form of Recordkeeping and Pricing Agent
Agreement
(2) Exhibit 9.4 Form of Agency Agreement
(4) Exhibit 9.5.1 Services Agreement between Berger
Associates, Inc., Charles Schwab & Co.,
Inc. and Berger Investment Portfolio
Trust on behalf of Berger Small Company
Growth Fund, effective February 1, 1994
* Exhibit 9.5.2 Amendment to Services Agreement between
Berger Associates, Inc., Charles Schwab
& Co., Inc. and Berger Investment
Portfolio Trust to
C-1<PAGE>
include Berger New Generation Fund,
effective ____________, 1996
(3) Exhibit 10. Opinion and consent of Davis, Graham &
Stubbs, L.L.C.
(6) Exhibit 11.1 Consent of Price Waterhouse LLP
(6) Exhibit 11.2 Consent of Smith, Brock & Gwinn
Exhibit 12. Not Applicable
(3) Exhibit 13. Investment Letter from Initial
Stockholder (for purchase of shares of
Berger Small Company Growth Fund)
(5) Exhibit 14.1 Form 5305-A Individual Retirement
Custodial Account and Related Documents
(2) Exhibit 14.2 Investment Company Institute Prototype
Money Purchase Pension and Profit
Sharing Plan Basic Document #01 and
Related Documents
(2) Exhibit 14.3 403(b)(7) Plan Custodial Account
Agreement and Related Documents
(2) Exhibit 15.1 Rule 12b-1 Plan for Berger Small Company
Growth Fund
* Exhibit 15.2 Rule 12b-1 Plan for Berger New
Generation Fund
(4) Exhibit 16. Schedule for Computation of Performance
Data
(6) Exhibit 17.1 Financial Data Schedule for Berger Small
Company Growth Fund
** Exhibit 17.2 Financial Data Schedule for Berger New
Generation Fund
Exhibit 18. Not Applicable
___________________
* To be filed by amendment.
** Not required to be filed until financial statements for Fund are
required.
(1) Previously filed on September 23, 1993, with Registrant's
original Registration Statement on Form N-1A and incorporated
herein by reference.
(2) Previously filed on November 30, 1993, with Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(3) Previously filed on December 28, 1993, with Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(4) Previously filed on June 28, 1994, with Post-Effective Amendment
No. 1 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference.
(5) Previously filed on April 27, 1995, with Post-Effective Amendment
No. 5 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference.
(6) Previously filed on November 27, 1995, with Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
C-2<PAGE>
Item 25. Persons Controlled by or Under Common Control With
--------------------------------------------------
Registrant
----------
None.
Item 26. Number of Holders of Securities
-------------------------------
The number of record holders of shares of beneficial
interest in the Registrant as of November 30, 1995, was
as follows:
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Shares of Beneficial 87,135
Interest in Berger Small
Company Growth Fund
Shares of Beneficial 0
Interest in Berger New
Generation Fund
Item 27. Indemnification
---------------
Article IX, Section 2 of the Trust Instrument for Berger
Investment Portfolio Trust (the "Trust"), of which the Fund is one
series, provides for indemnification of certain persons acting on
behalf of the Trust to the fullest extent permitted by the law. In
general, trustees, officers, employees and agents will be indemnified
against liability and against all expenses incurred by them in
connection with any claim, action, suit or proceeding (or settlement
thereof) in which they become involved by virtue of their Trust
office, unless their conduct is determined to constitute willful
misfeasance, bad faith, gross negligence or reckless disregard of
their duties, or unless it has been determined that they have not
acted in good faith in the reasonable belief that their actions were
in or not opposed to the best interests of the Trust. The Trust also
may advance money for these expenses, provided that the trustees,
officers, employees or agents undertake to repay the Trust if their
conduct is later determined to preclude indemnification. The Trust
has the power to purchase insurance on behalf of its trustees,
officers, employees and agents, whether or not it would be permitted
or required to indemnify them for any such liability under the Trust
Instrument or applicable law, and the Trust has purchased and
maintains an insurance policy covering such persons against certain
liabilities incurred in their official capacities.
Item 28. Business and Other Connections of Investment Adviser
----------------------------------------------------
The business of Berger Associates, Inc., the investment
adviser of the Registrant, is described in the Prospectus in
C-3<PAGE>
Section 5 and in the Statement of Additional Information in
Section 4 which are included in this Registration Statement.
William M.B. Berger, Rodney L. Linafelter, William R.
Keithler and Kevin R. Fay have no business, profession, vocation or
employment of a substantial nature other than their positions with the
investment adviser, and have had no prior business, profession,
vocation or employment of a substantial nature within the preceding
two years other than as shown in Section 3 of the Statement of
Additional Information.
Gerard M. Lavin, President and a director of Berger
Associates, is also President and a trustee of the Berger
Institutional Products Trust, and serves as an officer of DST Systems,
Inc., 1055 Broadway, 9th Floor, Kansas City, MO 64105 (provider of
information and transaction processing and recordkeeping services for
various mutual funds), and as a director of First of Michigan Capital
Corp. (holding company) and First of Michigan Corp. (broker-dealer),
100 Renaissance Center, Detroit, MI 48243. From February 1992 to
March 1995, Mr. Lavin served as President and CEO of Investors
Fiduciary Trust Company.
Craig D. Cloyed, Vice President and Chief Marketing Officer
of Berger Associates, was formerly (September 1989 to August 1995)
Senior Vice President of INVESCO Funds Group (mutual funds).
Landon H. Rowland, a director of Berger Associates, also
serves as President, Chief Executive Officer and a director of Kansas
City Southern Industries, Inc., 114 W. 11th Street, Kansas City, MO
64105 (a publicly traded holding company whose primary subsidiaries
are engaged in transportation and financial asset management, and
which owns approximately 41% of the outstanding shares of DST
Systems, Inc., a publicly traded information and transaction
processing company). Mr. Rowland also serves as Chairman of the Board
and a director of The Kansas City Southern Railway Company, and until
September 1995, served as Chairman of the Board and a director of DST
Systems, Inc.
Item 29. Principal Underwriters
----------------------
Not applicable.
Item 30. Location of Accounts and Records
--------------------------------
The accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated
thereunder are maintained as follows:
(a) Shareholder records are maintained by the Registrant's
sub-transfer agent, DST Systems, Inc., P.O.
Box 419958, Kansas City, MO 64141;
C-4<PAGE>
(b) Accounting records relating to cash and other money
balances; asset, liability, reserve, capital, income
and expense accounts; portfolio securities; purchases
and sales; and brokerage commissions are maintained by
the Registrant's Recordkeeping and Pricing Agent,
Investors Fiduciary Trust Company ("IFTC"), 127 West
10th Street, Kansas City, Missouri 64105. Other
records of the Registrant relating to purchases and
sales; the Trust Instrument, minute books and other
trust records; brokerage orders; performance
information and other records are maintained at the
offices of the Registrant at 210 University Boulevard,
Suite 900, Denver, Colorado 80206.
Item 31. Management Services
-------------------
The Registrant has no management-related service contract
which is not discussed in Parts A and B of this form. See Section 6
of the Prospectus and Section 5 of the Statement of Additional
Information for a discussion of the Recordkeeping and Pricing Agent
Agreement entered into between the Registrant and IFTC and the
Administrative Services Agreements entered into between the
Registrant and Berger Associates, Inc., investment adviser to the
Registrant.
Item 32. Undertakings
------------
(a) Registrant hereby undertakes to file a post-
effective amendment, containing reasonably current financial
statements relating to the Berger New Generation Fund (which need not
be certified) within four to six months of the later of the effective
date of this amendment to Registrant's 1933 Act Registration Statement
or commencement of operations of such Fund.
(b) The Registrant undertakes to furnish each person to
whom a prospectus is delivered with a copy of Registrant's latest
annual report to shareholders, upon request and without charge.
(c) Registrant undertakes to comply with the following
policy with respect to calling meetings of shareholders for the
purpose of voting upon the removal of any Trustee of the Registrant
and facilitating shareholder communications related to such meetings:
1. The Trustees will promptly call a meeting of
shareholders for the purpose of voting upon the removal of any Trustee
of the Registrant when requested in writing to do so by the record
holders of at least 10% of the outstanding shares of the Registrant.
2. Whenever ten or more shareholders of record who have
been shareholders of the Registrant for at least six months, and who
hold in the aggregate either shares having a net asset
C-5<PAGE>
value of at least $25,000 or at least 1% of the outstanding shares of
the Registrant, whichever is less, apply to the Trustees in writing
stating that they wish to communicate with other shareholders with a
view to obtaining signatures to request such a meeting, and deliver to
the Trustees a form of communication and request which they wish to
transmit, the Trustees within 5 business days after receipt of such
application either will (i) give such applicants access to a list of
the names and addresses of all shareholders of record of the
Registrant, or (ii) inform such applicants of the approximate number
of shareholders of record and the approximate cost of mailing the
proposed communication and form of request.
3. If the Trustees elect to follow the course specified
in clause (ii), above, the Trustees, upon the written request of such
applicants accompanied by tender of the material to be mailed and the
reasonable expenses of the mailing, will, with reasonable promptness,
mail such material to all shareholders of record, unless within 5
business days after such tender the Trustees shall mail to such
applicants and file with the Securities and Exchange Commission (the
"Commission"), together with a copy of the material requested to be
mailed, a written statement signed by at least a majority of the
Trustees to the effect that in their opinion either such material
contains untrue statements of fact or omits to state facts necessary
to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such
opinion.
4. If the Commission enters an order either refusing to
sustain any of the Trustees' objections or declaring that any
objections previously sustained by the Commission have been resolved
by the applicants, the Trustees will cause the Registrant to mail
copies of such material to all shareholders of record with reasonable
promptness after the entry of such order and the renewal of such
tender.
C-6<PAGE>
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 the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Denver, and State of Colorado, on the 22nd day of December ,
1995.
BERGER INVESTMENT PORTFOLIO TRUST
---------------------------------
(Registrant)
By /s/ Rodney L. Linafelter
--------------------------------------
Name: Rodney L. Linafelter
---------------------------------
Title: President
--------------------------------
Pursuant to the requirements of the Securities Act of 1933,
this amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Rodney L. Linafelter President (Principal December 22, 1995
- --------------------------- Executive Officer)
Rodney L. Linafelter and Director
/s/ Kevin R. Fay Vice President, December 22, 1995
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
/s/ Dennis E. Baldwin Trustee December 22, 1995
- ---------------------------
Dennis E. Baldwin*
/s/ William M.B. Berger Trustee December 22, 1995
- ---------------------------
William M.B. Berger*
/s/ Louis R. Bindner Trustee December 22, 1995
- ---------------------------
Louis R. Bindner*
/s/ Katherine A. Cattanach Trustee December 22, 1995
- ---------------------------
Katherine A. Cattanach*
/s/ Lucy Black Creighton Trustee December 22, 1995
- ---------------------------
Lucy Black Creighton*
C-7<PAGE>
/s/ Paul R. Knapp Trustee December 22, 1995
- ---------------------------
Paul R. Knapp*
/s/ Harry T. Lewis, Jr. Trustee December 22, 1995
- ---------------------------
Harry T. Lewis, Jr.*
/s/ Michael Owen Trustee December 22, 1995
- ---------------------------
Michael Owen*
/s/ William Sinclaire Trustee December 22, 1995
- ---------------------------
William Sinclaire*
/s/ Rodney L. Linafelter
- ---------------------------
*By Rodney L. Linafelter,
Attorney-in-Fact
C-8<PAGE>
EXHIBIT INDEX
N-1A EDGAR
Exhibit Exhibit
No. No. Name of Exhibit
_____________ __________ __________________________
(1) Exhibit 1 Trust Instrument
(1) Exhibit 2 Bylaws
Exhibit 3 Not applicable
Exhibit 4 Not applicable
(3) Exhibit 5.1 Form of Investment Advisory
Agreement for Berger Small Company
Growth Fund
* Exhibit 5.2 EX-99.B5.2 Form of Investment Advisory
Agreement for Berger New Generation
Fund
Exhibit 6 Not applicable
Exhibit 7 Not applicable
(6) Exhibit 8 Form of Custody Agreement
* Exhibit 9.1 EX-99.B9.1 New Account Application
(1) Exhibit 9.2.1 Form of Administrative Services
Agreement for Berger Small Company
Growth Fund
* Exhibit 9.2.2 EX-99.B9.2.2 Form of Administrative Services
Agreement for Berger New Generation
Fund
(2) Exhibit 9.3 Form of Recordkeeping and Pricing
Agent Agreement
(2) Exhibit 9.4 Form of Agency Agreement
(4) Exhibit 9.5.1 EX-99.B9.5.1 Services Agreement between Berger
Associates, Inc., Charles Schwab &
Co., Inc. and Berger Investment
Portfolio Trust on behalf of Berger
Small Company Growth Fund,
effective February 1, 1994
* Exhibit 9.5.2 EX-99.B9.5.2 Amendment to Services Agreement
between Berger Associates, Inc.,
Charles Schwab & Co., Inc. and
Berger Investment Portfolio Trust
to include Berger New Generation
Fund, effective ____________, 1996
(3) Exhibit 10 Opinion and consent of Davis,
Graham & Stubbs, L.L.C.
(6) Exhibit 11.1 EX-99.B11.1 Consent of Price Waterhouse LLP
(6) Exhibit 11.2 EX-99.B11.2 Consent of Smith, Brock & Gwinn
Exhibit 12 Not applicable
(3) Exhibit 13 Investment Letter from Initial
Stockholder
(5) Exhibit 14.1 Form 5305-A Individual Retirement
Custodial Account and Related
Documents
(2) Exhibit 14.2 Investment Company Institute
Prototype Money Purchase Pension
and Profit Sharing Plan Basic
Document #01 and Related Documents
(2) Exhibit 14.3 403(b)(7) Plan Custodial Account
Agreement and Related Documents
(2) Exhibit 15.1 Rule 12b-1 Plan for Berger Small
Company Growth Fund
* Exhibit 15.2 EX-99.B15.2 Rule 12b-1 Plan for Berger New
Generation Fund
(4) Exhibit 16 Schedule for Computation of
Performance Data
(6) Exhibit 17.1 EX-27.SCG Financial Data Schedule for Berger
Small Company Growth Fund
** Exhibit 17.2 EX-27.NGF Financial Data Schedule for Berger
New Generation Fund
Exhibit 18 Not Applicable
___________________________
* To be filed by amendment.
** Not required to be filed until financial statements for Fund are
required.
(1) Previously filed on September 23, 1993, with Registrant's
original Registration Statement on Form N-1A and incorporated
herein by reference.
(2) Previously filed on November 30, 1993, with Pre-Effective
Amendment No. 1 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(3) Previously filed on December 28, 1993, with Pre-Effective
Amendment No. 2 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
(4) Previously filed on June 28, 1994, with Post-Effective Amendment
No. 1 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference.
(5) Previously filed on April 27, 1995, with Post-Effective Amendment
No. 5 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference.
(6) Previously filed on November 27, 1995, with Post-Effective
Amendment No. 6 to the Registrant's Registration Statement on
Form N-1A and incorporated herein by reference.
