AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 23,
1996
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. 8 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 10 [X]
(Check appropriate box or boxes)
BERGER INVESTMENT PORTFOLIO TRUST
- ---------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
- ---------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
----------------------
Rodney L. Linafelter, 210 University Boulevard, Suite 900, Denver, CO 80206
- ---------------------------------------------------------------------------
(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after
this post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check appropriate
box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on March 6, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
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
OF BERGER NEW GENERATION FUND
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
<TABLE>
<CAPTION>
Item No. and Caption in Form N-1A Number of Section
- -----------------------------------------------------------------------------------------
<S> <C>
A. Prospectus
----------
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Not Applicable
4. General Description of Registrant Sections 2, 3, 4 and 15
5. Management of the Fund Sections 5, 6 and 7
5A. Management's Discussion of Fund Performance Will be in Annual Report
6. Capital Stock and Other Securities Sections 14, 15 and 16
7. Purchase of Securities Being Offered Sections 7, 8, 9, 10, 12
and 13
8. Redemption or Repurchase Section 11
9. Pending Legal Proceedings Not Applicable
B. Statement of Additional Information
-----------------------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Sections 1 and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Holders of Securities Sections 3 and 14
16. Investment Advisory and Other Services Sections 3, 4, 5 and 14
17. Brokerage Allocation and Other Practices Sections 1, 5 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing of Securities 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>
PROSPECTUS
BERGER NEW GENERATION FUND
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
pursues 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 the Fund's advisor believes have the potential for
significant growth. In particular, the Fund's advisor seeks to
identify companies which develop, manufacture, sell or provide new
or innovative products, services or methods of doing business that
it believes have the potential to change the direction or
dynamics of the industries in which they operate or to
significantly influence 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 6, 1996.
<PAGE>
Table of Contents
Section Page
- ------- ----
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 . . . . . . . . . . . . 13
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)
- ----------------------------------------------------------------------
Berger New .74%** .25% .91%
1.90%**
Generation Fund
* Other Expenses primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees and are
based on estimated expenses for the Fund's first year of
operations.
** The Fund's investment advisor 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. Absent the waiver, the Fund's Management Fee
would be 0.90% and Total Fund Operating Expenses would be estimated
to be 2.06%.
EXAMPLES
You would pay the following expenses on a $1,000 investment,
assuming (1) 5% annual return, and (2) redemption at the end of each
time period:
1 Year 3 Years
- ---------------------------------------------------------------
Berger 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
-1-<PAGE>
CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH
MAY BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
As a result of the 12b-1 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 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 pursues 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 the Fund's advisor
believes have the potential for significant growth. In particular,
the Fund's advisor seeks to identify companies which develop,
manufacture, sell or provide new or innovative products, services or
methods of doing business that it believes have the potential
to change the direction or dynamics of the industries in which
they operate or to significantly influence 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 advisor believes these are likely to be
the best suited at that time to achieve the Fund's objective. Because
income is not an objective of the Fund, any income produced will be a
by-product of the effort to achieve the Fund's objective of capital
appreciation.
Because the Fund seeks to identify growth
companies of the type described in the preceding paragraph, the Fund's
portfolio is expected to be weighted toward, but not limited to,
-2-<PAGE>
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 focus
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 25% or more of its
total assets in the securities of companies in any one industry,
focusing on a relatively small number of industries 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.
* * *
In general, investment decisions for the Fund are based on
an approach which seeks out successful companies because they are
believed to be more apt to become profitable investments. To evaluate
a prospective investment, the investment advisor analyzes
information from various sources, including industry economic trends,
earnings expectations and fundamental securities valuation factors to
identify companies which in management's opinion are more likely to
have predictable, above average earnings growth, regardless of size or
geographic location.
-3-<PAGE>
The advisor also takes into account a company's management and
its innovations in products and services in evaluating its prospects
for continued or future earnings growth.
The investment objective of the Berger 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 advisor
believes market conditions warrant a temporary defensive position,
during which period it may be more difficult for the Fund to achieve
its investment objective. Following is additional information about
some of the other specific types of securities 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 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
-4-<PAGE>
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 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
-5-<PAGE>
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 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
-6-<PAGE>
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.
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%
-7-<PAGE>
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 25% or more 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% , but is not expected to exceed 175% . 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.
The investment advisor to the Fund is Berger
Associates, Inc. ("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
-8-<PAGE>
are interested persons of Berger Associates. Berger Associates serves
as investment advisor to mutual funds, pension and profit-
sharing plans, and institutional and private investors.
Rodney L. Linafelter, Vice President and Chief Investment
Officer of Berger Associates, is the 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.
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
-9-<PAGE>
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 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-
-10-<PAGE>
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.
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,
-11-<PAGE>
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 -- $1,000.00 . To
-------------------------------------
purchase shares in the Fund, simply complete the application form
enclosed with this Prospectus. Then mail it with a check payable to
"Berger Funds" to the Fund in care of DST Systems, Inc., the Fund's
sub-transfer agent, as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
A confirmation indicating the details of the transaction will
be sent to you promptly. Unless you specify full shares only, the
purchase will be made in full and fractional shares calculated to
three decimal places.
Alternatively, investors may establish an Automatic
Investment Plan (see (iii) below), in which case the $1,000
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.
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. The
price at which a purchase will be effected is based on the next
calculation of net asset value after the order is received by the
Fund's transfer agent, sub-transfer agent or any other authorized
agent of the Fund.
(ii) Minimum Subsequent Investments -- $50.00.
----------------------------------------
Shareholders may, at any time, purchase additional shares subject to a
minimum investment of $50.00. A check made payable to "Berger Funds"
in the amount to be invested, should be sent to 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.
-12-<PAGE>
(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 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.
-13-<PAGE>
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
of all required documents by the Fund's transfer agent, sub-
transfer agent or other authorized agent of the Fund. Shareholders
who purchased their shares directly from the Fund may redeem all
or part of their shares in the Fund by sending a written request to
the Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas City,
MO 64141. The written request for redemption must be signed by each
registered owner exactly as the shares are registered and must clearly
identify the account and the number of shares or the dollar amount to
be redeemed. If a share certificate has been issued, the certificate,
properly endorsed by the registered owner, must be submitted with the
written redemption request.
The signatures of the redeeming shareholders must be
guaranteed by a national or state bank, a member firm of a domestic
stock exchange or the NASD, a credit union, a federal savings and loan
association or another eligible guarantor institution if the
redemption: exceeds $100,000; is being made payable other than
exactly as registered; is being mailed to an address which has been
changed within 30 days of the redemption request; or is being mailed
to an address other than the one on record. A notary public is not an
acceptable guarantor. The 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
-14-<PAGE>
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 advisor assume responsibility for the authenticity
of instructions communicated by telephone which are reasonably
believed to be genuine and which comply with the foregoing procedures.
The Fund, and/or its transfer agent, may be liable for losses
resulting from unauthorized or fraudulent telephone instructions in
the event these procedures are not followed.
In times of extreme economic or market conditions, redeeming
shares by telephone may be difficult. The Fund may terminate or
modify the procedures concerning the telephone redemption and wire
transfer services at any time, although shareholders of the Fund will
be given at least 60 days' prior notice of any termination or material
modification. Berger Associates may, at its own risk, waive certain
of the redemption requirements described in the preceding paragraphs.
(iii) Payment for Redeemed Shares. Payment for shares
---------------------------
redeemed upon written request will be made by check and generally will
be mailed within three business days after receipt by the transfer
agent of the properly executed redemption request and any outstanding
certificates for the shares to be redeemed. Payment for shares
redeemed by telephone will be
-15-<PAGE>
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 $1,000 that are not
actively participating in a monthly Automatic Investment Plan. Such
redemptions will be permitted only when the account is reduced below
the minimum value by redemption, and not by declines in per share net
asset value. As a result, accounts established with the applicable
minimum investment might be subject to redemption after only a small
redemption has been made by the shareholder. At least 60 days'
written notice will be given to a shareholder before such an account
is redeemed. During that time, the shareholder may add sufficient
funds to the account or subscribe to a monthly Automatic Investment
Plan. If neither of these conditions is met, the shares will be
redeemed at the per share net asset value next determined after the
60th day following the notice. A check for the proceeds will be sent
to the
-16-<PAGE>
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.
Neither the Fund nor the CAT Portfolios, or their transfer agents or
advisors assume responsibility for the authenticity of exchange
instructions communicated by telephone or in writing which are
believed to be genuine. See "How to Redeem or Sell Fund Shares -
Redemptions by Telephone" for procedures for telephone transactions.
All shareholders have Telephone Transaction Privileges to authorize
exchanges unless they specifically decline this service on the account
application or by writing to the Berger Funds, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141.
-17-<PAGE>
(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.
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.
-18-<PAGE>
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.
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
-19-<PAGE>
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
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.
-20-<PAGE>
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 Business Daily, Barron's, Financial World or Kiplinger's
- ------------------------- -------- --------------- -----------
Personal Finance Magazine. In addition, the Fund may compare its
- -------------------------
performance to that of recognized broad-based securities market
indices, including the Standard & Poor's 500 Stock Index, the Dow
Jones Industrial Average, the Russell 2000 Stock Index, the Standard &
Poor's 600 Small Cap Index or the Nasdaq Composite Index, or more
narrowly-based indices which reflect the market sectors in which the
Fund invests.
The total return of the Fund is calculated for any specified
period of time by assuming the purchase of shares of the Fund at the
net asset value at the beginning of the period. Each dividend or
other distribution paid by the Fund is assumed to have been reinvested
at the net asset value on the reinvestment date. The total number of
shares then owned as a result of this process is valued at the net
asset value at the end of the period. The percentage increase is
determined by subtracting the initial value of the investment from the
ending value and dividing the remainder by the initial value.
The Fund's total return reflects the Fund's performance over
a stated period of time. An average annual total return reflects the
hypothetical annually compounded return that would have produced the
same total return if the Fund's performance had been constant over the
entire period. Total return figures are based on the overall change
in value of a hypothetical investment in the Fund. Because average
annual total returns for more than one year tend to smooth out
variations in the Fund's return, investors should recognize that such
figures are not the same as actual year-by-year results.
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>
BERGER NEW GENERATION FUND
STATEMENT OF ADDITIONAL INFORMATION
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 6, 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 pursues 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 the Fund's advisor
believes have the potential for significant growth. In particular,
the Fund's advisor seeks to identify companies which develop,
manufacture, sell or provide new or innovative products, services or
methods of doing business that it believes have the potential
to change the direction or dynamics of the industries in which
they operate or to significantly influence 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 6, 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 Advisor 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 advisor will determine whether securities issued in
offerings made pursuant to SEC Rule 144A under the Securities Act of
1933 should be treated as illiquid investments considering, among
other things, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wanting to purchase
or sell the security and the number of other potential purchasers;
(3) dealer undertakings to make a market in the security; and (4) the
nature of the security and the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers,
and the mechanics of the transfer). Investments in illiquid
securities involve certain risks to the extent that the Fund may be
unable to dispose of such a security at the time desired or at a
reasonable price or, in some cases, may be unable to dispose of it at
all. In addition, in order to resell a restricted security, 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 advisor 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%
but is not expected to exceed 175% . 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
-14-<PAGE>
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.
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) 25% or more of the value of its total
assets at the time of such investment.
3. Borrow money, except from banks for temporary or
emergency purposes in amounts not to exceed 25% of the Fund's total
assets (including the amount borrowed) taken at market value, nor
pledge, mortgage or hypothecate its assets, except to secure permitted
indebtedness and then only if such pledging, mortgaging or
hypothecating does not exceed 25% of the Fund's total assets taken at
market value. When borrowings exceed 5% of the Fund's total assets,
the Fund will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent
the Fund may be deemed an underwriter under the Securities Act of 1933
in disposing of a security), issue senior securities (except to the
extent permitted under the Investment Company Act of 1940), invest in
real estate (although it may purchase shares of a real estate
investment trust), or invest in commodities or
-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.
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.
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
-16-<PAGE>
Fund, taken at market value at the time of purchase would be invested
in such securities.
6. Only for the purpose of hedging, the Fund may purchase
and sell financial futures, forward foreign currency exchange
contracts and put and call options, but no more than 5% of the Fund's
total net assets at the time of purchase may be invested in initial
margins for financial futures transactions and premiums for options.
The Fund may only write call options that are covered and only up to
25% of the Fund's total assets.
7. The Fund may not purchase or sell securities on a when-
issued or delayed delivery basis, if as a result more than 5% of its
total assets taken at market value at the time of purchase would be
invested in such securities.
8. The Fund may not purchase or sell any interest in an
oil, gas or mineral development or exploration program, including
investments in oil, gas or other mineral leases, rights or royalty
contracts (except that the Fund may invest in the securities of
issuers engaged in the foregoing activities).
9. The Fund's investments in warrants valued at the lower
of cost or market may not exceed 5% of the value of the Fund's net
assets. Included within that amount, but not to exceed 2% of the
value of the Fund's net assets, may be warrants that are not listed on
the New York Stock Exchange or American Stock Exchange.
The Trust has undertaken to the State of Ohio that the
Fund will prohibit the purchase or retention by the Fund of the
securities of any issuer if the officers, directors or trustees of the
Fund, its advisors, or managers owning beneficially more than 1/2 of
1% of the securities of an issuer together own beneficially more than
5% of the securities of that issuer.
3. Management of the Fund
----------------------
The trustees and executive officers of the 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
-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
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.
-18-<PAGE>
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.
* 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
-19-<PAGE>
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 pursuant to a fee
deferral plan adopted by the Berger Investment Portfolio Trust.
Under the plan, deferred fees are credited to an account and
adjusted thereafter to reflect the investment experience of whichever
of the Berger Funds (or approved money market funds) is designated by
the trustees for this purpose. Pursuant to an SEC exemptive order,
the Trust is permitted to purchase shares of the designated funds in
order to offset its obligation to the trustees participating in the
plan, regardless of any otherwise applicable investment restriction
limiting the purchase of securities of any other investment company.
The Trust's obligation to make payments
-21-<PAGE>
of deferred fees under the plan is a general obligation of the
Trust .
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.
4. Investment Advisor
------------------
Berger Associates is the investment advisor 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 advisor to
other mutual funds, pension and profit-sharing plans, and other
institutional and private investors. At times, Berger Associates may
recommend purchases and sales of the same investment securities for
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
-22-<PAGE>
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 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.
The 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.
-23-<PAGE>
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.
The Fund pays all of its expenses not assumed by Berger
Associates, including, but not limited to, investment advisor
fees, custodian and transfer agent fees, legal and accounting
expenses, administrative and record keeping expenses, interest
charges, federal and state taxes, costs of share certificates,
expenses of shareholders' meetings, compensation of 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
-24-<PAGE>
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, 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
-25-<PAGE>
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 (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,
the 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
-26-<PAGE>
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 respon-
sibility 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 $1,000.00
Minimum Subsequent Investment $ 50.00
To purchase shares in the Fund, simply complete the
application form enclosed with the Prospectus. Then mail it with
-27-<PAGE>
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
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 $1,000 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.
-28-<PAGE>
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 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
-29-<PAGE>
between certain countries and the United States may reduce or
eliminate such taxes.
At certain levels of taxable income, the Internal Revenue
Code provides a preferential tax rate for long-term capital gains.
Long-term capital gains of taxpayers other than corporations are taxed
at a 28 percent maximum rate, whereas ordinary income is taxed at a
39.6 percent maximum rate. Capital losses continue to be deductible
only against capital gains plus (in the case of taxpayers other than
corporations) $3,000 of ordinary income annually ($1,500 for married
individuals filing separately).
10. Suspension of Redemption Rights
-------------------------------
The right of redemption may be suspended for any period
during which the New York Stock Exchange is closed or the Securities
and Exchange Commission determines that trading on the Exchange is
restricted, or when there is an emergency as determined by the
Securities and Exchange Commission as a result of which it is not
reasonably practicable for 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. For purposes of this threshold, each
underlying account holder whose shares are held of record in certain
omnibus accounts is treated as one shareholder. Should
redemptions by any shareholder during any 90-day period exceed such
limitation, the Fund will have the option of redeeming the excess in
cash or in kind. If shares are redeemed in kind, the redeeming
shareholder might incur brokerage costs in converting the assets to
cash. The method of valuing securities used to make
redemption s in kind will be the same as the method of valuing
portfolio securities described under Section 8. Shareholders have
the ability to request in writing a review of the valuation of in-kind
redemptions, which will be considered by the Trustees of the Fund
within 90 days of such written request.
11. Tax-Sheltered Retirement Plans
------------------------------
The Fund offers a Profit-Sharing Plan, a Money Purchase
Pension Plan, an Individual Retirement Account and a 403(b) Custodial
Account for adoption by employers and individuals who wish to
participate in such Plans by accumulating shares of the Fund with tax-
deductible dollars.
-30-<PAGE>
Profit-Sharing and Money Purchase Pension Plans
- -----------------------------------------------
Employers, self-employed individuals and partnerships may
make tax-deductible contributions to the tax-qualified retirement
plans offered by the Fund. All income and capital gains in the Plans
are tax free until withdrawn. The amounts that are deductible depend
upon the type of Plan or Plans adopted.
If you, as an employer, self-employed person or
partnership, adopt the Profit-Sharing Plan, you may vary the amount of
your contributions from year to year and may elect to make no
contribution at all for some years. If you adopt the Money Purchase
Pension Plan, you must commit yourself to make a contribution each
year according to a formula in the Plan that is based upon your and
your employees' compensation or earned income. By adopting both the
Profit-Sharing and the Money Purchase Pension Plan, you can increase
the amount of contributions that you may deduct in any one year.
If you wish to purchase shares of the Fund in conjunction
with one or both of these tax-qualified plans, you may use an Internal
Revenue Service approved prototype Trust Agreement and Retirement Plan
available from the Fund. IFTC serves as trustee of the Plan, for
which it charges an annual trustee's fee of $12 for each Berger 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.
-31-<PAGE>
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 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
-32-<PAGE>
Account. Contributions made to the account reduce the amount of your
current income subject to federal income tax. Federal income tax is
not paid on your contribution until you begin making withdrawals. In
addition, all income and capital gains in the account are tax-free
until withdrawn.
Withdrawals from your 403(b) Custodial Agreement may begin
as soon as you reach age 59-1/2 and must begin no later than April 1
of the year following the calendar year in which you attain age
70 1/2. Except for required distributions after age 70 1/2 and
periodic distributions over more than 10 years, distributions are
subject to 20% federal income tax withholding unless those
distributions are rolled directly to another 403(b) account or annuity
or an individual retirement account (IRA). You may not be able to
receive distributions immediately upon request because of certain
notice requirements under federal tax law. Since distributions which
do not satisfy these requirements can result in adverse tax
consequences, consultation with an attorney or tax advisor regarding
the 403(b) Custodial Account is recommended.
Individuals who wish to purchase shares of 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.
-33-<PAGE>
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 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.
-34-<PAGE>
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.
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
-35-<PAGE>
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 January 31, 1996 , no person owned,
beneficially or of record, more than 5% of the outstanding shares of
the Fund.
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.
--------
The Exhibit Index following the signature pages below is
incorporated herein by reference.
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 January 31, 1996, was as
follows:
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Shares of Beneficial 91,029
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
C-1<PAGE>
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 Advisor
----------------------------------------------------
The business of Berger Associates, Inc., the investment
advisor of the Registrant, is described in the Prospectus in
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 advisor , 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
C-2<PAGE>
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;
(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 advisor 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
C-3<PAGE>
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 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
C-4<PAGE>
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-5<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940, the Registrant certifies
that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities
Act of 1933 and 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 February, 1996.
BERGER INVESTMENT PORTFOLIO TRUST
---------------------------------
(Registrant)
By 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
--------- ----- ----
Rodney L. Linafelter President (Principal February 22, 1996
- --------------------------- Executive Officer)
Rodney L. Linafelter and Director
Kevin R. Fay Vice President, February 22, 1996
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
/s/ Dennis E. Baldwin Trustee February 22, 1996
- ---------------------------
Dennis E. Baldwin*
/s/ William M.B. Berger Trustee February 22, 1996
- ---------------------------
William M.B. Berger*
/s/ Louis R. Bindner Trustee February 22, 1996
- ---------------------------
Louis R. Bindner*
/s/ Katherine A. Cattanach Trustee February 22, 1996
- ---------------------------
Katherine A. Cattanach*
/s/ Lucy Black Creighton Trustee February 22, 1996
- ---------------------------
Lucy Black Creighton*
C-6<PAGE>
/s/ Paul R. Knapp Trustee February 22, 1996
- ---------------------------
Paul R. Knapp*
/s/ Harry T. Lewis, Jr. Trustee February 22, 1996
- ---------------------------
Harry T. Lewis, Jr.*
/s/ Michael Owen Trustee February 22, 1996
- ---------------------------
Michael Owen*
/s/ William Sinclaire Trustee February 22, 1996
- ---------------------------
William Sinclaire*
Rodney L. Linafelter
- ---------------------------
*By Rodney L. Linafelter,
Attorney-in-Fact
C-7<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 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
(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
(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
<PAGE>
(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 EX-27.NGF Financial Data Schedule for Berger
New Generation Fund
Exhibit 18 Not Applicable
___________________________
* Filed herewith.
** 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.
INVESTMENT ADVISORY AGREEMENT
BERGER NEW GENERATION FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made
this _____ day of _____________, 1996, between BERGER ASSOCIATES,
INC., a Delaware corporation ("Berger Associates"), and BERGER
INVESTMENT PORTFOLIO TRUST, a Delaware business trust (the "Trust")
with respect to BERGER NEW GENERATION FUND, a series of the Trust (the
"Fund").
W I T N E S S E T H:
-------------------
WHEREAS, the Trust is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has registered it shares for public
offering under the Securities Act of 1933, as amended (the "1933
Act"); and
WHEREAS, the Trust is authorized to create separate series
of shares, each with its own separate investment portfolio, one of
such series created by the Trust being the Fund; and
WHEREAS, the Trust and Berger Associates deem it mutually
advantageous that Berger Associates should assist the Trustees and
officers of the Trust in the management of the securities portfolio of
the Fund.
NOW, THEREFORE, the parties agree as follows:
1. Management Functions. In addition to the expenses
--------------------
which Berger Associates may incur in the performance of its investment
advisory functions under this Agreement, and the expenses which it may
expressly undertake to incur and pay under other agreements with the
Trust or otherwise, Berger Associates shall incur and pay the
following expenses relating to the Fund's operations without
reimbursement from the Fund:
(a) Reasonable compensation, fees and related expenses of
the Trust's officers and its Trustees (the "Trustees"),
except for such Trustees who are not interested persons
of Berger Associates;
(b) Rental of offices of the Trust; and
(c) All expenses of promoting the sale of shares of the
Fund, other than expenses incurred in complying with
federal and state laws and the law of any foreign
country or territory or other jurisdiction applicable
to the issue, offer or sale of shares of the Fund
including without limitation
-1-<PAGE>
registration fees and costs, the costs of preparing the
registration statement relating to the Fund and
amendments thereto, and the costs and expenses of
preparing, printing, and mailing prospectuses (and
statements of additional information) to persons other
than shareholders of the Fund.
2. Investment Advisory Functions. In its capacity as
-----------------------------
investment adviser to the Fund, Berger Associates shall have the
following responsibilities:
(a) To furnish continuous advice and recommendations to the
Fund as to the acquisition, holding or disposition of
any or all of the securities or other assets which the
Fund may own or contemplate acquiring from time to
time, giving due consideration to the investment
policies and restrictions and the other statements
concerning the Fund in the Trust's Trust Instrument,
Bylaws, and registration statements under the 1940 Act
and the 1933 Act, and to the provisions of the Internal
Revenue Code, as amended from time to time, applicable
to the Fund as a regulated investment company;
(b) To cause its officers to attend meetings and furnish
oral or written reports, as the Trust may reasonably
require, in order to keep the Trustees and appropriate
officers of the Trust fully informed as to the
condition of the investment portfolio of the Fund, the
investment recommendations of Berger Associates, and
the investment considerations which have given rise to
those recommendations; and
(c) To supervise the purchase and sale of securities as
directed by the appropriate officers of the Trust.
3. Obligations of Trust. The Trust shall have the
--------------------
following obligations under this Agreement:
(a) To keep Berger Associates continuously and fully
informed as to the composition of the investment
portfolio of the Fund and the nature of all of the
Fund's assets and liabilities from time to time;
(b) To furnish Berger Associates with a certified copy of
any financial statement or report prepared for the Fund
by certified or independent public accountants and with
copies of any financial statements or reports made to
the Fund's shareholders or to any governmental body or
securities exchange;
(c) To furnish Berger Associates with any further materials
or information which Berger Associates may reasonably
request to enable it to perform its function under this
Agreement; and
-2-<PAGE>
(d) To compensate Berger Associates for its services and
reimburse Berger Associates for its expenses incurred
hereunder in accordance with the provisions of
paragraph 4 hereof.
4. Compensation. The Trust shall pay to Berger Associates
------------
for its services under this Agreement a monthly fee, payable on the
last day of each month during which or part of which this Agreement is
in effect, of 1/12 of 0.90% of the average daily closing net asset
value of the Fund for such month. For the month during which this
Agreement becomes effective and the month during which it terminates,
however, there shall be an appropriate proration of the fee payable
for such month based on the number of calendar days of such month
during which this Agreement is effective.
5. Expenses Paid by the Trust. The Trust assumes and
--------------------------
shall pay all expenses incidental to its operations and business not
specifically assumed or agreed to be paid by Berger Associates
pursuant to Section 1 hereof, including, but not limited to,
investment adviser fees; any compensation, fees or reimbursements
which the Trust pays to its Trustees who are not interested persons of
Berger Associates; compensation of the Fund's custodian, transfer
agent, registrar and dividend disbursing agent; legal, accounting,
audit and printing expenses; administrative, clerical, recordkeeping
and bookkeeping expenses; brokerage commissions and all other expenses
in connection with execution of portfolio transactions (including any
appropriate commissions paid to Berger Associates or its affiliates
for effecting exchange listed, over-the-counter or other securities
transactions); interest; all federal, state and local taxes (including
stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the
purchasers thereof; expenses of local representation in Delaware;
expenses of shareholders' meetings and of preparing, printing and
distributing proxy statements, notices, and reports to shareholders;
expenses of preparing and filing reports and tax returns with federal
and state regulatory authorities; 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 the registration
or qualification of shares of the Fund for sale in any jurisdiction,
the costs of portfolio pricing services and systems for compliance
with blue sky laws, and all costs involved in preparing, printing and
mailing prospectuses and statements of additional information of the
Fund; and all fees, dues and other expenses incurred by the Trust in
connection with the membership of the Trust in any trade association
or other investment company organization. To the extent that Berger
Associates shall perform any of the above described administrative and
clerical functions, including transfer agency, registry, dividend
disbursing, recordkeeping, bookkeeping, accounting and blue sky
monitoring and registration functions, and the preparation of reports
and returns, the Trust shall pay to Berger Associates compensation
for, or reimburse Berger Associates for its expenses incurred in
connection with, such services as Berger Associates and the Trust
shall agree from time to time, any other provision of this Agreement
notwithstanding.
6. Treatment of Investment Advice. The Trust shall treat
------------------------------
the investment advice and recommendations of Berger Associates as
being advisory only, and shall retain full control over its own
investment policies. However,the Trustees may delegate to the
appropriate
-3-<PAGE>
officers of the Trust, or to a committee of the Trustees, the power to
authorize purchases, sales or other actions affecting the portfolio of
the Fund in the interim between meetings of the Trustees.
7. Brokerage Commissions. For purposes of this Agreement,
---------------------
brokerage commissions paid by the Fund upon the purchase or sale of
its portfolio securities shall be considered a cost of securities of
the Fund and shall be paid by the Fund. Berger Associates is
authorized and directed to place Fund portfolio transactions only with
brokers and dealers who render satisfactory service in the execution
of orders at the most favorable prices and at reasonable commission
rates, provided, however, that Berger Associates may pay a broker an
amount of commission for effecting a securities transaction in excess
of the amount of commission another broker 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. Berger Associates is also
authorized to consider sales of Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions. In placing
portfolio business with such broker-dealers, Berger Associates shall
seek the best execution of each transaction. Subject to the terms of
this Agreement and the applicable requirements and provisions of the
law, including the Investment Company Act of 1940 and the Securities
Exchange Act of 1934, as amended, and in the event that Berger
Associates or an affiliate is registered as a broker-dealer, Berger
Associates may select a broker with which it or the Fund is
affiliated. Berger Associates or such affiliated broker may effect or
execute Fund portfolio transactions, whether on a securities exchange
or in the over-the-counter market, and receive separate compensation
from the Fund therefor. Notwithstanding the foregoing, the Trust
shall retain the right to direct the placement of all portfolio
transactions, and the Trustees of the Trust may establish policies or
guidelines to be followed by Berger Associates in placing portfolio
transactions for the Trust pursuant to the foregoing provisions.
Berger Associates shall report on the placement of portfolio
transactions in the prior fiscal quarter at each quarterly meeting of
such Trustees.
8. Termination. This Agreement may be terminated at any
-----------
time, without penalty, by the Trustees of the Trust, or by the
shareholders of the Fund acting by vote of at least a majority of its
outstanding voting securities, provided in either case that sixty (60)
days' advance written notice of termination be given to Berger
Associates at its principal place of business. This Agreement may be
terminated by Berger Associates at any time, without penalty, by
giving sixty (60) days' advance written notice of termination to the
Trust, addressed to its principal place of business. The Trust agrees
that, consistent with the terms of the Trust's Trust Instrument, the
Trust shall cease to use the name "Berger" in connection with the Fund
as soon as reasonably practicable following any termination of this
Agreement if Berger Associates does not continue to provide investment
advice to the Fund after such termination.
9. Assignment. This Agreement shall terminate
----------
automatically in the event of any assignment of this Agreement.
-4-<PAGE>
10. Term. This Agreement shall continue in effect until
----
the last day of April, 1997, unless sooner terminated in accordance
with its terms, and shall continue in effect from year to year
thereafter only so long as such continuance is specifically approved
at least annually by the vote of a majority of the Trustees of the
Trust who are not parties hereto or interested persons of any such
party, cast in person at a meeting called for the purpose of voting on
the approval of the terms of such renewal, and by either the Trustees
of the Trust or the affirmative vote of a majority of the outstanding
voting securities of the Fund. The annual approvals provided for
herein shall be effective to continue this Agreement from year to year
if given within a period beginning not more than sixty (60) days prior
to the last day of April of each applicable year, notwithstanding the
fact that more than three hundred sixty-five (365) days may have
elapsed since the date on which such approval was last given.
11. Amendments. This Agreement may be amended by the
----------
parties only if such amendment is specifically approved (i) by a
majority of the Trustees, including a majority of the Trustees who are
not interested persons of Berger Associates and, if required by
applicable law, (ii) by the affirmative vote of a majority of the
outstanding voting securities of the Fund.
12. Allocation of Expenses. The Trustees shall determine
----------------------
the basis for making an appropriate allocation of the Trust's expenses
(other than those directly attributable to the Fund) between the Fund
and any other series of the Trust and between the Fund and other
investment companies managed by Berger Associates.
13. Limitation on Personal Liability. NOTICE IS HEREBY
--------------------------------
GIVEN that the Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a Certificate of Trust filed in the
office of the Secretary of State of the State of Delaware. All
parties to this Agreement acknowledge and agree that the Trust is a
series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with
respect to such series only, and not against the assets of the Trust
generally or against the assets held with respect to any other series
and further that no trustee, officer or holder of shares of beneficial
interest of the Trust shall be personally liable for any of the
foregoing.
14. Limitation of Liability of Berger Associates. Berger
--------------------------------------------
Associates shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or
omission taken with respect to the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and
duties hereunder and except to the extent otherwise provided by law.
As used in this Section 14, "Berger Associates" shall include any
affiliate of Berger Associates performing services for the Trust
contemplated hereunder and directors, officers and employees of Berger
Associates and such affiliates.
15. Activities of Berger Associates. The services of
-------------------------------
Berger Associates to the Trust hereunder are not to be deemed to be
exclusive, and Berger Associates and its affiliates are free to render
services to other parties. It is understood that trustees, officers
and
-5-<PAGE>
shareholders of the Trust are or may become interested in Berger
Associates as directors, officers and shareholders of Berger
Associates, that directors, officers, employees and shareholders of
Berger Associates are or may become similarly interested in the Trust,
and that Berger Associates may become interested in the Trust as a
shareholder or otherwise.
16. Certain Definitions. The terms "vote of a majority of
-------------------
the outstanding voting securities", "assignment" and "interested
persons" when used herein, shall have the respective meanings
specified in the 1940 Act, as now in effect or hereafter amended, and
the rules and regulations thereunder, subject to such orders,
exemptions and interpretations as may be issued by the Securities and
Exchange Commission under said Act and as may be then in effect.
IN WITNESS WHEREOF, the parties have caused their duly
authorized officers to execute this Investment Advisory Agreement as
of the date and year first above written.
BERGER ASSOCIATES, INC.
By______________________________________
Title:
BERGER INVESTMENT PORTFOLIO TRUST
By______________________________________
Title:
-6-
<PAGE>
[BERGER ASSOCIATES, INC. LETTERHEAD APPEARS HERE]
____________, 1996
Berger Investment Portfolio Trust
210 University Blvd., Suite 900
Denver, Colorado 80206
Gentlemen:
As you know, Section 4 of our Investment Advisory Agreement,
dated _______________, 1996, provides for compensation to Berger
Associates, Inc. ("Berger Associates") with respect to Berger New
Generation Fund (the "Fund"). This letter is to inform you that
Berger Associates will voluntarily waive a portion of its investment
advisory fee under the conditions set forth in this letter agreement
and hereby agrees to amend our Investment Advisory Agreement by the
addition of the following provision:
Berger Associates shall reduce the fee due from
the Fund under Section 4 of this Agreement in the
event and to the extent that the normal operating
expenses of the Fund (as defined below) exceed
either of the following expense limitations:
(1) in the event that the normal operating
expenses of the Fund, including amounts payable to
Berger Associates pursuant to Section 4 hereof,
for any fiscal year ending on a date on which this
Agreement is in effect exceed 1.90% of the Fund's
average daily net assets; provided, however, to
the extent permitted by law, there shall be
excluded from such expenses the amount of any
interest, taxes, brokerage commissions and
extraordinary expenses (including but not limited
to legal claims and liabilities and litigation
costs and any indemnification related thereto)
paid or payable by the Fund; and
(2) in the event that the normal operating
expenses of the Fund, including amounts payable to
Berger Associates pursuant to Section 4 hereof,
for any fiscal year ending on a date on which this
Agreement is in effect exceed the expense
limitations applicable to the Fund imposed by
applicable state securities laws or regulations
thereunder, as such limitations may be raised or
lowered from time to time; provided, however, to
the extent
<PAGE>
Berger Investment Portfolio Trust
______________, 1996
Page 2
permitted by law, there shall be excluded from
such expenses the amount of any asset-based sales
charge or distribution fees, interest, taxes,
brokerage commissions and extraordinary expenses
(including but not limited to legal claims and
liabilities and litigation costs and any
indemnification related thereto) paid or payable
by the Fund.
In either case, Berger Associates shall reduce its
advisory fee due from the Fund by the extent of
such excess and, if required pursuant to any laws
or regulations, will reimburse the Fund in the
amount of such excess. Whenever the expenses of
the Fund exceed a pro rata portion of the
applicable annual expense limitations, the
estimated amount of reimbursement under such
limitations shall be applicable as an offset
against the monthly payment of the fee due to
Berger Associates under this Agreement. In any
given month, whichever of the foregoing expense
limitations results in the largest reduction in
Berger Associates' fee shall be applicable.
This waiver shall terminate automatically upon the
termination of the Investment Advisory Agreement. In addition, this
waiver may be terminated by Berger Associates at any time provided
that Berger Associates provides at least 90 days' prior written notice
of the date of termination. Any such notice of termination shall
state the date this waiver shall terminate and copies of any such
notice shall be mailed to each Trustee of the Trust concurrently with
its delivery to the Trust. Berger Associates will also provide to the
Trust's independent Trustees at least 90 days' prior written notice of
any change in state law that increases the expense limitation set
forth in clause (2) above before such change shall become effective
for this letter agreement.
This waiver is applicable only to that series of the Trust
known as Berger New Generation Fund and shall not be applicable to any
other series of the Trust, whether now existing or hereafter created.
Very truly yours,
BERGER ASSOCIATES, INC.
By:_____________________________________
Title:_______________________________
ACCOUNT APPLICATION
THE
BERGER
FUNDS
THE BERGER 100 FUND
THE BERGER GROWTH AND INCOME FUND
THE BERGER SMALL COMPANY GROWTH FUND
THE BERGER NEW GENERATION FUND
<PAGE>
NEW ACCOUNT APPLICATION
Instructions and Registration Requirements
1. Select the appropriate registration. If you are opening an IRA
account please refer to the Berger Funds / CAT Portfolios IRA
booklet. It contains all the forms you need to start, transfer
or rollover to a Berger or CAT IRA. An IRA account cannot be
established without an IRA application.
Individual
Registration should be identical to your signature. Please
exclude titles such as Mr., Mrs., Dr., etc.
Joint Registrants
Registration for two or more persons will be "Joint Tenants with
Rights of Survivorship" specified. For joint registration both
parties must sign the application.
Custodians under Uniform Gift/Transfer to Minors Acts (UGMA/UTMA)
Only one minor and one custodian may be registered on a single
account. The application must be signed by the custodian. The
minor's social security number must be provided. The application
will not be accepted without the minor's social security number.
The state indicated must be that of the donor or person making
payment.
Trusts
Provide the name(s) of Trustee(s), name of trust, date of trust,
and the registration. If trustees are not provided, a
certificate of incumbency must accompany any redemption request.
The date of the trust agreement is required to establish an
account.
Corporations
The application must be signed by an authorized officer of the
corporation. Please include the full name of the corporation and
enclose a copy of your corporate resolution.
Partnerships
The application must be signed by a general partner, identified
as such. Include the words "a partnership" after the company
name to differentiate it from a corporation.
2. Please provide a mailing address.
3. Please provide your social security or taxpayer identification
number.
4. Please read the applicable prospectus and choose the Berger Fund
and/or Cash Account Trust (CAT) portfolio that fits your
investment objectives. CAT is a separately managed, unaffiliated
Money Market Fund. The exchange privilege with the CAT portfolios
does not constitute an offering or recommendation of the shares
of any such portfolio by the Berger Funds or their Advisor.
5. Signatures are required to process your application for
certification of your social security or taxpayer identification
number. By signing, you certify that statements in Sections 3
and 5 are correct. Your application will be returned if you fail
to provide a social security or taxpayer identification number or
fail to provide signatures of all registered owners.
6. Unless a box is checked in Section 6, all distributions will be
reinvested in additional shares.
7. The Automatic Monthly Investment may be selected by completing
Section 7. This allows you to authorize an automatic deduction
from your checking or savings account into your Berger or CAT
account. Please attach a voided, unsigned check for the bank
account to be debited.
8. Telephone Transaction Privileges are available on all accounts
unless specifically declined in Section 8. These privileges
allow you to authorize purchases (subject to stated minimums),
exchanges or redemptions from the Funds (maximum $100,000) or CAT
portfolios (maximum $50,000). Payment for purchases made by
telephone must be received within 3 business days. You may
transfer funds to your Berger Funds account by Electronic Funds
Transfer (EFT) from your checking or savings account. Redemption
proceeds will be mailed to the shareholder(s) address of record
or may be wired ($10 fee) or transferred by EFT to a pre-
designated bank account. To ensure accurate banking information
please attach a voided, unsigned check or for a savings account a
voided deposit slip.
In order to place a telephone transaction order we ask that you
provide the following information:
A) Exact Registration and Address of Shareholder(s)
B) Account Number(s)
C) Social Security Number
All telephone conversations are recorded and written confirmation
will be sent to you after each transaction. Shares held in
certificate form may not be redeemed or exchanged by telephone.
Neither the Funds, nor the CAT portfolios, or their transfer
agents or advisors assume responsibility for the authenticity of
telephone instructions.
9. As an investor in the Cash Account Trust portfolios, you are
entitled to checkwriting privileges. However, you must complete
Section 9 to receive checkwriting drafts. For institutional
accounts, please provide a certified copy of your corporate
resolution and a signature guarantee.
<PAGE>
PID #
___________________________________________________________________
1. ACCOUNT REGISTRATION
a.) Individual: Please print or type.
_________________________________________________________________
First Name Middle Name Last Name
b.) Joint Owner:
_________________________________________________________________
First Name Middle Name Last Name
___________________________________________________________________
c.) Gift to Minor:
Minor's Social Security Number must be indicated in Section 3.
________________________________________________ as custodian for
Custodian's Name (only one permitted)
_______________________________________________________ under the
Minor's Name (only one permitted)
___________________________ Uniform Gifts/Transfers to Minors Act
Donor's State of Residence
___________________________________________________________________
d.) A Trust (including Corporate Pension Plans)
_______________________________________________ as trustee(s) for
Name of Trustee(s)
_________________________________________________________________
Name of Trust
under agreement dated ___________________________________________
Date of Trust
___________________________________________________________________
e.) A Corporation, Partnership, or other entity:
Please include corporate resolution
_________________________________________________________________
Name of Corporation or other entity
[ ] Corporation [ ] Partnership [ ] Other______________________
Please Specify
___________________________________________________________________
2. MAILING ADDRESS
_________________________________________________________________
Street Address Apt./Suite #
_________________________________________________________________
City State Zip
_________________________________________________________________
Home Phone
_________________________________________________________________
Business Phone
___________________________________________________________________
3. SOCIAL SECURITY OR TAX ID NUMBER
Your application will be returned if Sections 3 and 5 are not
completed and signed.
_________________________________________________________________
Social Security Number or Employer Tax Identification Number
Check One:
[ ] U.S. Citizen
[ ] Resident Alien (must have U.S. Tax ID Number and
domestic address)
[ ] Non-Resident Alien of _______________________________________
Country of Tax Residency if Different
from Mailing Address
___________________________________________________________________
4. INVESTMENT SELECTION
Make check payable to: Berger Funds
Please make my investments in the fund(s) below.
Berger Funds
($500 minimum for the following Berger Funds or $50 minimum
with the establishment of an Automatic Monthly Investment Plan,
in which case Section 7 of the application must also be
completed.)
[ ] Berger 100 Fund $_______________
[ ] Berger Growth and Income Fund $_______________
[ ] Berger Small Company Growth Fund $_______________
($1000 minimum for the following Berger Fund or $50 minimum
with the establishment of an Automatic Monthly Investment Plan,
in which case Section 7 of the application must also be
completed.)
[ ] Berger New Generation Fund $_______________
Cash Account Trust (CAT) (Minimum investment of $1000)
[ ] Money Market Portfolio $_______________
[ ] Government Securities Portfolio $_______________
[ ] Tax-Exempt Portfolio $_______________
___________________________________________________________________
5. SIGNATURES
All of the undersigned have the authority and legal capacity to
purchase mutual fund shares, all are of legal age in their state
and believe each investment is suitable for themselves. All of
the undersigned have received and read the Prospectus for the
investment selected, agree to its terms and understand that by
signing below (a) their account will have exchange privileges
with other Berger Funds and the portfolios of the Cash Account
Trust ("CAT") and that all information provided in the above
sections will apply to any Fund or CAT portfolio into which their
shares may be exchanged; (b) they hereby ratify any instructions
given on this account and any account into which they exchange
related to the above sections and agree that neither the Funds,
CAT portfolios nor Berger Associates will be liable for any loss,
cost or expense for acting upon such instructions (by telephone
or writing) believed to be genuine and in accordance with the
procedures described in the Prospectus; and (c) their
responsibility is to read the Prospectus of any Fund or CAT
portfolio into which they exchange.
Under penalties of perjury, I certify:
(1) The number shown on this form is my correct social security
or taxpayer identification number and
(2) I am not subject to backup withholding because: (a) I am
exempt from backup withholding, or (b) I have not been notified
by the Internal Revenue Service (IRS) that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer
subject to backup withholding.
[ ] Check this box only if the IRS has notified you that you
----
are subject to backup withholding.
______________________________________________________________________
Signature of Owner, Trustee or Custodian Date
______________________________________________________________________
Signature of Joint Owner (if any) Date
Send this request to: Berger Funds, C/O DST Systems, Inc.
P.O. Box 419958, Kansas City, MO 64141-6958
<PAGE>
- ----------------------------------------------------------------------
___________________________________________________________________
6. DISTRIBUTION OPTIONS
All income dividends and capital gains distributions will be
reinvested unless noted below:
[ ] Pay all income in cash.
[ ] Pay all capital gains in cash.
___________________________________________________________________
7. AUTOMATIC MONTHLY INVESTMENT
Please enclose a voided, unsigned check for the bank account to
be debited (or deposit slip if debiting savings account.)
You may invest in any of the Berger Funds or the CAT portfolios
automatically each month by completing the following information,
attaching a voided unsigned check and returning it to the Berger
Funds (c/o DST Systems). You will receive a confirmation
quarterly of each transaction and the deduction from your bank
account will appear on your monthly bank statement.
Please invest the amount indicated in the following fund(s) on or
about the
[ ] 5th day of each month [ ] 20th day of each month
(20th will be selected if no box is checked)
Your first automatic monthly investment will occur no sooner
than two weeks after the receipt of your application.
This bank account is a
[ ] Checking account [ ] Savings Account
Berger Funds (minimum $50 per Fund)
[ ] Berger 100 Fund $__________
[ ] Berger Growth and Income Fund $__________
[ ] Berger Small Company Growth Fund $__________
[ ] Berger New Generation Fund $__________
Cash Account Trust (CAT) (minimum $100 per fund)
[ ] Money Market Portfolio $__________
[ ] Government Securities Portfolio $__________
[ ] Tax-Exempt Portfolio $__________
As a convenience to me, you are hereby requested and authorized
to pay and charge to my account debits drawn on my account as
indicated above.
This authority is to remain in effect until revoked by me in
writing or by telephone instructions. Until you actually receive
such notice, I agree you shall be fully protected in honoring
any such debit. I further agree that if any such debit be
dishonored, whether with or without cause and whether
intentionally or inadvertently, you shall be under no liability
whatsoever.
_________________________________________________________________
Signature
_________________________________________________________________
Signature (if joint account)
___________________________________________________________________
8. TELEPHONE TRANSACTION PRIVILEGES
Unless declined below, your account will be established with the
following Telephone Transaction Privileges: Purchases, Exchanged
and Redemptions, subject to stated minimums and maximums (see
Instruction 8).
Please attach a voided, unsigned check (or deposit slip if
savings account) for your pre-designated bank account to ensure
accurate banking information for the use of EFT or wires.
[ ] I decline the use of Telephone Transaction Privileges.
___________________________________________________________________
9. CHECKWRITING PRIVILEGES
CASH ACCOUNT TRUST PORTFOLIOS ONLY
Institutional accounts please provide a certified copy of your
corporate resolution and signature guarantee.
_________________________________________________________________
Registered Name of Account
_________________________________________________________________
Fund Number/Account Number (to be Assigned)
[ ] Check here if only one signature is required on checks.
[ ] Check here if both signatures are required on checks.
If neither box is checked, all checks will require both
signatures.
The undersigned agrees to be subject to the instructions and
rules as now in effect, and as amended from time to time, of the
Funds that pertain to the use of redemption checks.
_________________________________________________________________
First Name Middle Last Name
_________________________________________________________________
Signature
_________________________________________________________________
First Name Middle Last Name
_________________________________________________________________
Signature
SIGNATURE GUARANTEE (CAT only)
Required on all accounts except for individual and joint
accounts. Signature guarantee must be provided by a commercial
bank, trust company, member of national securities exchange, or
savings and loan association.
AFFIX SIGNATURE GUARANTEE STAMP
_________________________________________________________________
Signature Guaranteed By
_________________________________________________________________
Authorized Signature
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement") is
entered into effective as of the _______ day of __________________,
1996, by and between Berger Associates, Inc. ("Berger Associates"),
and Berger Investment Portfolio Trust (the "Trust"), with respect to
Berger New Generation Fund, a series of the Trust (the "Fund").
RECITALS
A. The Trust is a Delaware business trust and an open-end,
management investment company registered under the Investment Company
Act of 1940.
B. The Fund is a series of the Trust for which Berger
Associates acts as investment adviser.
C. The parties desire that in addition to its duties as
investment adviser, Berger Associates provide certain administrative
and record keeping services to the Trust with respect to the Fund, on
the terms and conditions set forth herein.
AGREEMENT
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Berger Associates shall perform all administrative and
record keeping services (excluding transfer agent, dividend disbursing
agent and related shareholder services) for the Fund not otherwise
provided for and described in the Recordkeeping and Pricing Agent
Agreement between the Trust and Investors Fiduciary Trust Company,
dated November 7, 1995, including the preparation of financial
statements and reports to be filed with the Securities and Exchange
Commission and state regulatory authorities, and the maintenance and
preservation of all such statements and reports, and any supporting
documentation as may be required by the Investment Company Act of 1940
and other applicable federal and state laws and regulations.
2. The Trust shall pay to Berger Associates a monthly fee
for performing such services, payable on the last day of each month
during all or part of which this Agreement is in effect, of one-
twelfth (1/12) of one one-hundredth of one percent (.01%) of the
average daily closing net assets of the Fund for such month.
3. In performing the services described in Section 1,
Berger Associates shall at all times comply with the applicable
provisions of the Investment Company Act of 1940 and any other federal
or state securities laws.
4. This Agreement shall continue until terminated at the
end of any month by either party upon at least 60 days' notice in
writing to the other party. This Agreement may not be assigned by
either party without the written consent of the other party.
<PAGE>
5. NOTICE IS HEREBY GIVEN that the Trust is a business
trust organized under the Delaware Business Trust Act pursuant to a
Certificate of Trust filed in the office of the Secretary of State of
the State of Delaware. All parties to this Agreement acknowledge and
agree that the Trust is a series trust and all debts, liabilities,
obligations and expenses incurred, contracted for or otherwise
existing with respect to a particular series shall be enforceable
against the assets held with respect to such series only, and not
against the assets of the Trust generally or against the assets held
with respect to any other series and further that no trustee, officer
or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
6. This Agreement may be amended by the parties, provided
that all such amendments shall be subject to the approval of the
Trustees of the Trust.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement effective as of the date first set forth above.
BERGER INVESTMENT PORTFOLIO TRUST
By:________________________________
Rodney L. Linafelter
Title: President
BERGER ASSOCIATES, INC.
By:________________________________
Gerard M. Lavin
Title: President
2
RULE 12b-1 PLAN OF
BERGER NEW GENERATION FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
1. The Plan. Berger Investment Portfolio Trust, a
--------
Delaware business trust (the "Trust"), hereby adopts this Rule 12b-1
Plan (the "Plan") pursuant to the terms of Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"), with respect
to the shares of the Trust's series known as Berger New Generation
Fund (the "Fund"). In accordance with the terms of this Plan, the
Trust may act as the distributor of shares of the Fund.
2. Authorized Payments. During each fiscal year of the
-------------------
Fund, the Trust is hereby authorized to pay out of the assets of the
Fund on a monthly basis, an amount computed at a rate of twenty-five
one-hundredths of one percent (.25%) of the average daily net assets
of the Fund during such fiscal year to Berger Associates, Inc.
("Berger Associates") to finance activities primarily intended to
result in the sale of the Fund's shares, which shall include, but not
be 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 prospective
investor requests for information; compensation 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 shall be made by the Trust 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; i.e., distribution expenditures incurred by
----
Berger Associates which are less than the total of such payments in
such year shall not be reimbursed to the Trust by Berger Associates,
and distribution expenditures incurred by Berger Associates which are
more than the total of such payments shall not be reimbursed to Berger
Associates by the Trust.
3. Trustee Approval. This Plan shall not take effect
----------------
until it has been approved, together with any related agreements, by
votes of a majority of both (a) the Trustees of the Trust and
(b) those Trustees of the Trust who are not "interested persons" of
the Trust and the Fund (as defined in the Act) and have no direct or
indirect financial interest in the operation of this Plan or any
agreements related to it (the "Rule 12b-1 Trustees"), cast in person
at a meeting (or meetings) called for the purpose of voting on this
Plan and such related agreements.
4. Annual Reapproval. Unless sooner terminated pursuant
-----------------
to paragraph 5, this Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner
provided for approval of this Plan in paragraph 3.
<PAGE>
5. Termination of Plan. This Plan may be terminated at
-------------------
any time by a vote of a majority of the Rule 12b-1 Trustees, or by
vote of a majority of the Fund's outstanding shares.
6. Amendments. This Plan may not be amended to increase
----------
materially the amount of distribution expenses provided for in
paragraph 2 hereof without shareholder approval as provided in Rule
12b-1 under the Act (or any successor provision), and no material
amendment to the Plan shall be made unless approved in the manner
provided for approval in paragraph 3 hereof.
7. Quarterly Reports. Any person authorized to direct the
-----------------
disposition of monies paid or payable by the Fund pursuant to this
Plan or any related agreements shall provide to the Trustees of the
Trust, and the Trustees shall review at least quarterly, a written
report of the amounts so expended and the purposes for which such
expenditures were made. Unless directed otherwise by the Trustees
with respect to a particular expenditure or type of expenditure, any
expenditure made by Berger Associates which jointly promotes the sale
of shares of the Fund and the sale of shares of other investment
companies for which Berger Associates serves as investment adviser,
and which expenditures are not readily identifiable as related to the
Fund or one or more of such other investment companies, shall be
allocated to the Fund and such other investment companies on a basis
such that the Fund will be allocated only its proportional share of
such expenditures based upon the relative net assets of the Fund as
compared to the net assets of all such other investment companies thus
promoted.
8. Selection and Nomination of Trustees. While this Plan
------------------------------------
is in effect, the selection and nomination of Trustees who are not
interested persons (as defined in the Act) of the Fund shall be
committed to the discretion of the Trustees who are not interested
persons of the Fund.
9. Records. The Fund shall preserve copies of this Plan
-------
and any related agreements and all reports made pursuant to
paragraph 7 hereof for a period of not less than six years from the
date of this Plan, or the agreements or such reports, as the case may
be, and shall preserve the Plan, agreement or report the first two
years in an easily accessible place.
10. Limitation on Personal Liability. NOTICE IS HEREBY
--------------------------------
GIVEN that the Trust is a business trust organized under the Delaware
Business Trust Act pursuant to a Certificate of Trust filed in the
office of the Secretary of State of the State of Delaware. The Trust
is a series trust and all debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with
respect to such series only, and not against the assets of the Trust
generally or against the assets held with respect to any other series
and further that no trustee, officer or holder of shares of beneficial
interest of the Trust shall be personally liable for any of the
foregoing.
-2-<PAGE>
IN WITNESS WHEREOF, the Trust has executed this 12b-1 Plan
with respect to the Fund as of the day and year set forth below in
Denver, Colorado.
Date: ________________, 1996
BERGER INVESTMENT PORTFOLIO TRUST
ATTEST:
______________________________ By____________________________________
Rodney A. Linafelter, President
3
