As filed with the Securities and Exchange Commission on August 28, 1997
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. 11 X
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13 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
Gerard M. Lavin, 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 September 3, 1997, 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 intends to file
its Rule 24f-2 Notice on or about November 15, 1997, for the fiscal year ended
September 30, 1997.
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BERGER INVESTMENT PORTFOLIO TRUST
SHARES OF BENEFICIAL INTEREST
($.01 Par Value)
Cross-Reference Sheet Pursuant to Rule 481
I. Berger Balanced Fund
Item No. and Caption in Form N-1A Number of Section
A. Prospectus
1. Cover Page Cover Page
2. Synopsis Section 1
3. Condensed Financial Information Section 2
4. General Description of Registrant Sections 3, 4, 5 and 16
5. Management of the Fund Sections 6, 7 and 8
5A. Management's Discussion of Fund
Performance Annual Report
6. Capital Stock and Other Securities Sections 15, 16 and 17
7. Purchase of Securities Being Offered Sections 8, 9, 10, 11, 13
and 14
8. Redemption or Repurchase Section 12
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 and 6
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing of
Securities Being Offered Sections 7, 8, 10, 11 and
12
20. Tax Status Section 9
21. Underwriters Section 14
22. Calculations of Performance Data Section 13
23. Financial Statements Financial Statements
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EXPLANATORY NOTE
This amendment to the Registration Statement of the Berger Investment
Portfolio Trust contains the following:
One Prospectus for the Berger Balanced Fund
One Statement of Additional Information for the Berger Balanced Fund
One Part C
This amendment does not contain a Prospectus or Statement of Additional
Information for, nor affect the Prospectus or Statement of Additional
Information currently in use for, these other series of the Berger Investment
Portfolio Trust: Berger Small Company Growth Fund and Berger New Generation
Fund.
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PROSPECTUS
BERGER BALANCED FUND
The Berger Balanced Fund (the "Fund") is a no-load, diversified mutual
fund. The investment objective of the Fund is capital appreciation and current
income. The Fund seeks to achieve this objective by investing in a diversified
portfolio of equity and fixed-income securities. The proportion of the Fund's
assets invested in each type of security will vary from time to time in
accordance with the assessment of the Fund's investment advisor of available
investment opportunities and relevant market, financial and economic factors.
Normally, equity securities are expected to range from 50% to 75% of the Fund's
total assets and fixed-income securities are expected to range from 25% to 50%.
However, the Fund will have at all times at least 25% of its total assets
invested in equity securities and at least 25% invested in fixed-income senior
securities, including debt securities, preferred stocks and that portion of the
value of convertible securities that is attributable to their fixed-income
characteristics.
The equity component of the Fund's portfolio emphasizes common stocks
of companies with mid-sized to large market capitalizations that the Fund's
investment advisor believes have favorable prospects for growth. These stocks
generally pay regular dividends, although the Fund may also invest in companies
that do not pay regular dividends if, in the advisor's opinion, they offer
better prospects for growth. The fixed-income component of the Fund's portfolio
emphasizes a variety of income-producing securities, primarily debt securities
of government and corporate issuers and preferred
stocks.
This Prospectus concisely sets forth the information about the Fund
that a prospective investor should consider before investing. Investors are
advised to retain this Prospectus for future reference. Additional information
about the Fund has been filed with the Securities and Exchange Commission. A
copy of the Statement of Additional Information for the Fund, dated
September 3, 1997, which is incorporated into this Prospectus 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. The
Securities and Exchange Commission maintains an Internet Web site
(http://www.sec.gov) that contains the Statement of Additional Information,
material incorporated by reference and other information regarding the 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.
Dated September 3, 1997
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Table of Contents
Section Page
1. Fee Tables............................................................ 1
2. Introduction.......................................................... 2
3. Investment Objectives and Policies and Risk Factors................... 2
4. Portfolio Turnover.................................................... 9
5. Management and Investment Advice..................................... 9
6. Expenses of the Fund................................................. 10
7. Policies of the Fund to Promote Sales of Fund Shares................. 12
8. How to Purchase Shares in the Fund.................................... 13
9. How the Net Asset Value Is Determined................................. 15
10. Open Account System and Share Certificates........................... 15
11. How to Redeem or Sell Fund Shares.................................... 15
12. Exchange Privilege and Systematic Withdrawal Plan.................... 18
13. Tax-Sheltered Retirement Plans....................................... 20
14. Income Dividends, Capital Gains Distributions and Tax Treatment...... 20
15. Additional Information............................................... 21
16. Performance.......................................................... 22
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1. FEE TABLES
SHAREHOLDER TRANSACTION EXPENSES
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Maximum Sales Load Imposed on Purchases 0%
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Maximum Sales Load Imposed on Reinvested Dividends 0%
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Deferred Sales Load 0%
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Redemption Fees 0%*
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Exchange Fee 0%
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* There will be a $10 wire service charge if redemption proceeds are
requested by wire.
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
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TOTAL
INVESTMENT FUND
ADVISORY OPERATING
FEE OTHER EXPENSES
(AFTER WAIVER) 12b-1 FEE EXPENSES* (AFTER WAIVER)
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Berger Balanced 0.56% 0.25% 0.69% 1.50%
Fund
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* Other Expenses are based on estimated expenses for the Fund's first year
of operations and primarily include transfer agency fees, shareholder
report expenses, registration fees and custodian fees.
** 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 1.50%
of the Fund's average daily net assets for that fiscal year. Absent the
waiver, the Investment Advisory Fee would be 0.70% and Total Fund
Operating Expenses would be estimated to be 1.64%.
EXAMPLES
You would pay the following expenses on a $1,000 investment, assuming (1)
5% annual return, and (2) redemption at the end of each time period:
==============================================================================
1 Year 3 Years
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Berger Balanced Fund $15* $47*
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* Based on estimated expenses for the Fund's first year of operations,
after waiver.
THE EXPENSES SET FORTH IN THE PRECEDING TABLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN. THE ASSUMED 5% ANNUAL RETURN IS HYPOTHETICAL AND SHOULD
NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE ANNUAL RETURNS, WHICH MAY
BE GREATER OR LESS THAN THE ASSUMED AMOUNT.
As a result of the 12b-1 fee paid by the shareholders of the Fund, over
time long-term shareholders of the Fund may pay more than the economic
equivalent of the maximum
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front-end sales charge permitted for mutual funds by the National Association of
Securities Dealers, Inc.
The purpose of the preceding tables is to assist the investor in
understanding the various costs and expenses that a shareholder of 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 Fund is a mutual fund or, to use the technical name, an open-end,
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 shares of the Fund pay certain costs of distributing those shares. See
"Policies of the Fund to Promote Sales of Shares."
3. INVESTMENT OBJECTIVE AND POLICIES AND RISK FACTORS
The investment objective of the Fund is capital appreciation and current
income. The Fund seeks to achieve this objective by investing in a diversified
portfolio of equity and fixed-income securities. The proportion of the Fund's
assets invested in each type of security will vary from time to time in
accordance with the assessment of the Fund's investment advisor of available
investment opportunities and relevant market, financial and economic factors.
Normally, equity securities are expected to range from 50% to 75% of the Fund's
total assets and fixed-income securities are expected to range from 25% to 50%.
However, the Fund will have at all times at least 25% of its total assets
invested in equity securities and at least 25% invested in fixed-income senior
securities, including debt securities, preferred stocks and that portion of the
value of convertible securities that is attributable to their fixed-income
characteristics.
The equity component of the Fund's portfolio emphasizes common stocks of
companies with mid-sized to large market capitalizations that the Fund's
investment advisor believes have favorable prospects for growth. Market
capitalization is defined as total current market value of a company's
outstanding common stock. These stocks generally pay regular dividends, although
the Fund may also invest in companies that do not pay regular dividends if, in
the advisor's opinion, they offer better prospects for growth. The fixed-income
component of the Fund's portfolio emphasizes a variety of income-producing
securities, primarily debt securities of government and corporate issuers and
preferred stocks.
In general, investment decisions for the Fund are based on a "bottom-up"
approach which seeks out successful companies because they are believed to be
more apt to
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become profitable investments. To evaluate a prospective equity investment, the
investment advisor analyzes information from various sources, including earnings
expectations, fundamental securities valuation factors and industry economic
trends, to identify companies which in the advisor's opinion are more likely to
have predictable, above average earnings growth and whose securities are
reasonably priced, regardless of the company's geographic location. The advisor
also takes into account a company's management and its innovations in products
and services in evaluating its prospects for continued or future earnings
growth. To evaluate a prospective fixed-income investment, the advisor analyzes,
among other things, the security's current yield, the current level and
anticipated direction of interest rates, the security's structural features, the
issuer's creditworthiness and economic factors relative to the issuer's
industry.
The portions of the Fund invested in equity and fixed-income securities
will be a by-product of the "bottom-up" equity selection process. In periods
where the advisor believes attractive equity investments are prevalent, the
asset allocation will be weighted toward equity securities. In periods where the
advisor believes attractive equities are more limited, the asset allocation will
shift more toward fixed-income securities. The advisor believes its investment
style offers shareholders the opportunity for capital appreciation along with a
reasonable level of capital preservation. However, the Fund may be more volatile
than other balanced funds that have an asset mix more heavily weighted toward
fixed-income securities.
The Fund's investment objective 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. Since the shares of the Fund
primarily represent an investment in common stocks and other securities,
investors should realize 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 Fund may increase its investment in government securities, and other
short-term, interest-bearing securities without regard to its otherwise
applicable percentage limits 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.
The following is additional information about some of the specific types of
securities and other instruments in which the Fund may invest:
COMMON AND PREFERRED STOCKS. Stocks represent shares of ownership in a
company. Generally, preferred stock has a specified dividend and ranks after
bonds and before common stocks in its claim on income for dividend payments and
on assets should the company be liquidated. After other claims are satisfied,
common stockholders participate in company profits on a pro-rata basis. Profits
may be paid out in dividends or reinvested in the company to help it grow.
Increases and decreases in earnings are usually reflected in a company's stock
price, so common stocks generally have the greatest appreciation and
depreciation potential of all corporate securities. While most preferred stocks
pay dividends, the Fund may purchase
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preferred stock where the issuer has omitted, or is in danger of omitting,
payment of its dividends. Such investments would be made primarily for their
capital appreciation potential.
DEBT SECURITIES. Debt securities (such as bonds or debentures) are
fixed-income securities which bear interest and are issued by corporations or
governments. The issuer has a contractual obligation to pay interest at a stated
rate on specific dates and to repay principal on a specific maturity date. Debt
securities are generally subject to two kinds of risk: credit risk and interest
rate risk. Credit risk refers to the ability of the issuer to meet interest or
principal payments as they come due. The lower the rating given a security by a
rating service (such as Moody's and S&P), the greater the credit risk the rating
service perceives with respect to that security. The Fund will not purchase any
nonconvertible securities rated below investment grade (Ba or lower by Moody's,
BB or lower by S&P). In cases where the ratings assigned by more than one rating
agency differ, the Fund will consider the security as rated in the higher
category. If nonconvertible securities purchased by the Fund are downgraded to
below investment grade following purchase, the trustees of the Fund, in
consultation with the Fund's advisor, will determine what action, if any, is
appropriate in light of all relevant circumstances. For a further discussion of
debt security ratings, see Appendix A to the Statement of Additional
Information.
Interest rate risk refers to the fact that the value of fixed-income
securities (like debt securities) generally fluctuate in response to changes in
interest rates. A decrease in interest rates will generally result in an
increase in the price of fixed-income securities held by the Fund. Conversely,
during periods of rising interest rates, the value of fixed-income securities
held by the Fund will generally decline. The fixed-income component of the
Fund's portfolio may be invested in short- to long-term fixed-income securities.
Longer-term securities are generally more sensitive to interest rate changes and
are more volatile than shorter-term securities, but they generally offer higher
yields to compensate investors for the associated risks.
CONVERTIBLE SECURITIES. The Fund may purchase securities which are
convertible into common stock when the Fund's advisor believes they offer the
potential for a higher total return than nonconvertible securities. While
fixed-income securities generally have a priority claim on a corporation's
assets over that of common stock, some of the convertible securities which the
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 or S&P or being of similar
creditworthiness in the determination of the Fund's advisor. 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, the Fund will not invest in any security in default
at the time of purchase, and the Fund will invest less than 20% of the market
value of its assets at the time of purchase in convertible securities rated
below investment grade. If convertible securities purchased by the Fund are
downgraded following purchase, or if other circumstances cause 20% or more of
the Fund's assets to be invested in convertible securities rated below
investment grade, the trustees of the Fund, in consultation with the Fund's
advisor, will determine what action, if any, is appropriate in light of all
relevant circumstances. For a further discussion of debt security ratings, see
Appendix A to the Statement of Additional Information.
ZEROS/STRIPS. The Fund may invest in zero coupon bonds or in "strips". Zero
coupon bonds do not make regular interest payments; rather, they are sold at a
discount from face value. Principal and accreted discount (representing interest
accrued but not paid) are paid at maturity. "Strips" are debt securities that
are stripped of their interest coupon after the securities are issued, but
otherwise are comparable to zero coupon bonds. The market values of "strips" and
zero coupon bonds generally fluctuate in response to changes in interest rates
to a greater degree than do interest-paying securities of comparable term and
quality. The Fund will not invest in mortgage-backed or other asset-backed
securities.
SECURITIES OF SMALLER COMPANIES. The Fund may invest in securities of
companies with small or medium-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.
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
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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.
ILLIQUID SECURITIES. The Fund is authorized to invest in securities which
are illiquid or not readily marketable because they are subject to restrictions
on their resale ("restricted securities") or because, based upon their nature or
the market for such securities, no ready market is available. However, the 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. If securities become illiquid following purchase or other
circumstances cause more than 15% of the Fund's net assets to be invested in
illiquid securities, the trustees, in consultation with the Fund's advisor, will
determine what action, if any, is appropriate in light of all relevant
circumstances. Repurchase agreements maturing in more than seven days will be
considered as illiquid for purposes of this restriction. 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.
HEDGING TRANSACTIONS. The Fund is authorized to make limited use of 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, hedging may also limit the Fund's opportunity to
profit from favorable price movements, and the cost of the transaction will
reduce the potential return on the security or the portfolio. Following is a
summary of the futures, forwards and options which the Fund may utilize,
provided that no more than 5% of the Fund's net assets at the time of purchase
may be utilized as 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 exchange traded instruments that may be
physically settled or settled with cash or by entering into an offsetting
transaction, 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 or a futures contract) 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
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specific securities. Securities options may be either exchange-traded or
privately negotiated, whereas options on futures contracts are always
exchange-traded. 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.
Use of these instruments by the Fund involves the potential for a loss that
may exceed the amount of initial margin the Fund would be permitted to commit to
the contracts under its investment limitation, or in the case of a call option
written by the Fund, may exceed the premium received for the option. However,
the Fund will be permitted to use such instruments for hedging purposes only,
and only if the aggregate amount of its obligations under these contracts does
not exceed the total market value of the assets the Fund is attempting to hedge,
such as a portion or all of its exposure to equity securities or its holding in
a specific foreign currency. To help ensure that the Fund will be able to meet
its obligations under its futures and forward contracts and its obligations
under options written by that Fund, the Fund will be required to maintain liquid
assets in a segregated account with its custodian bank or to set aside portfolio
securities to "cover" its position in these contracts.
The principal risks of the Fund utilizing futures transactions, forward
contracts and options are: (a) losses resulting from market movements not
anticipated by the Fund; (b) possible imperfect correlation between movements in
the prices of futures, forwards and options and movements in the prices of the
securities or currencies hedged or used to cover such positions; (c) lack of
assurance that a liquid secondary market will exist for any particular futures
or options at any particular time, and possible exchange-imposed price
fluctuation limits, either of which may make it difficult or impossible to close
a position when so desired; (d) lack of assurance that the counterparty to a
forward contract would be willing to negotiate an offset or termination of the
contract when so desired; (e) the need for additional information and skills
beyond those required for the management of a portfolio of traditional
securities; and (f) 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 use of futures, forwards and
options and the risks of such investments can be found in the Statement of
Additional Information.
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 debt securities to the Fund and agrees
to repurchase the securities at the Fund's cost plus
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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 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.
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INVESTMENT RESTRICTIONS
The Fund has adopted a number of other restrictions on its investments and
other activities that may not be changed without shareholder approval. For
example, as to 75% of its total assets, the Fund may not purchase securities of
any issuer (except U.S. Government securities) if, immediately after and as a
result of such purchase, the value of the Fund's holdings in the securities of
that issuer exceeds 5% of the value of its total assets or it owns more than 10%
of the outstanding voting securities 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 total assets (including the amount borrowed), and may not
make loans (except that the Fund may enter into repurchase agreements and may
lend portfolio securities in accordance with the Fund's investment policies).
The Fund may not invest in any one industry more than 25% of the value of its
assets at the time of investment, nor invest in commodities, except, only for
the purpose of hedging, in certain futures, forwards and options as specified in
greater detail above and in the Statement of Additional Information.
Also, the Fund currently 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
total assets are invested in such securities, although this restriction 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, the advisor continuously
monitors the Fund's investments and makes portfolio changes whenever changes in
the market, industry trends or the outlook for any portfolio security indicate
to the advisor 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. The annual portfolio turnover rate of the Fund
may at times exceed 100%, but is not expected to exceed 200%. Increased
portfolio turnover would necessarily result in correspondingly higher brokerage
costs for the Fund and may result in the acceleration of net taxable gains.
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5. MANAGEMENT AND INVESTMENT ADVICE
The trustees of the Fund are responsible for major decisions relating to
the Fund's policies and objective. They also oversee the operation of the Fund
by its officers and review the investment performance of the Fund on a regular
basis.
The 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 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 who are interested persons
of Berger Associates. Berger Associates also acts as the Fund's administrator
and is responsible for such functions as monitoring the Fund's compliance with
all applicable federal and state laws.
Berger Associates has been in the investment advisory business for over 20
years. It serves as investment advisor or sub-advisor to mutual funds, pension
and profit-sharing plans, and institutional and private investors, and had
assets under management of more than $3.6 billion as of May 31, 1997. Kansas
City Southern Industries, Inc. ("KCSI") owns approximately 87% of the
outstanding shares of Berger Associates. KCSI is a publicly traded holding
company with principal operations in rail transportation, through its subsidiary
The Kansas City Southern Railway Company, and financial asset management
businesses. 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.
Patrick S. Adams, Senior Vice President of Berger Associates, and John B.
Jares, Portfolio Manager with Berger Associates, are co-portfolio managers for
the Fund and as such, are responsible for the investments of the Fund, including
the day-to-day investment decisions for the Fund. Mr. Adams also serves as
President and Mr. Jares serves as Vice President of the Fund.
Mr. Adams joined Berger Associates in February 1997, where he serves as
portfolio manager for the Berger 100 Fund, co-portfolio manager for the Berger
Balanced Fund and the Berger Growth and Income Fund, and portfolio manager for
retirement plans and institutional and private investors. Mr. Adams, who has 12
years of experience in the investment management industry, previously served as
Senior Vice President with Zurich Kemper Investments, Inc., from June 1996 to
January 1997, where he was portfolio manager of the Kemper Growth Fund. Mr.
Adams served as Portfolio Manager with Founders Asset Management, Inc., from
March 1993 to May 1996, where he managed the Founders Blue Chip Growth Fund and
the Founders Balanced Fund. Prior to that, Mr. Adams served in various positions
with First of America Investment Corp. for over three years, including as Senior
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Portfolio Manager/Senior Analyst from January 1992 to February 1993, during
which time he managed the Parkstone Equity Fund.
Mr. Jares joined Berger Associates in May 1997, where he serves as Senior
Analyst and co-portfolio manager for the Berger Balanced Fund. Mr. Jares, who
has 5 years of experience in the investment management industry, previously
served with Founders Asset Management, Inc., as a Research Analyst from February
1994 to December 1996, and as co- lead portfolio manager of the Founders Special
Fund from January 1997 to May 1997. Prior to that, Mr. Jares worked as a
Research Associate with Lipper Analytical Services, Inc., a provider of mutual
fund information.
Under the Investment Advisory Agreement for the Fund, Berger Associates is
compensated for its services to the Fund by the payment of a fee at the annual
rate of 0.70% of the average daily net assets of the Fund. Berger Associates has
voluntarily agreed to waive its advisory fee to the extent that the Fund's
normal operating expenses in any fiscal year, including the investment advisory
fee and the 12b-1 fee, but excluding brokerage commissions, interest, taxes and
extraordinary expenses, exceed 1.50% of the Fund's average daily net assets for
that fiscal year.
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/or Berger Associates may enter into arrangements with certain
organizations (broker-dealers, recordkeepers and administrators) to provide
sub-transfer agency, recordkeeping, shareholder communications, sub-accounting
and/or other services to investors purchasing shares of the Fund through
investment programs or pension plans established or serviced by those
organizations. The 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 these organizations were registered record
holders of shares in the Fund.
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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 are effected
through DSTS, the commission received by DSTS is credited against, and thereby
reduces, certain operating expenses that the Fund would otherwise be obligated
to pay. No portion of the commission is retained by DSTS.
In addition, under a separate Administrative Services Agreement with the
Fund, Berger Associates performs certain administrative and recordkeeping
services not performed by other service providers, including compliance
monitoring and 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 .01 of 1% (0.01%) of its average daily net assets for such services.
The Fund also incurs other expenses, including accounting, administrative and
legal expenses.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is Berger
Distributors, Inc. (the "Distributor"), 210 University Boulevard, Suite 900,
Denver, CO 80206. The Distributor may be reimbursed by Berger Associates for its
costs in distributing Fund shares. See "Policies of the Fund to Promote Sales of
Fund Shares" below. The Distributor is a wholly-owned subsidiary of Berger
Associates, and certain officers of the Fund are officers or directors of the
Distributor.
7. POLICIES OF THE FUND TO PROMOTE SALES OF FUND SHARES
The Fund has adopted a 12b-1 plan (the "Plan") for the Fund pursuant to
Rule 12b-1 under the Investment Company Act of 1940, which permits the Fund to
pay certain costs for the distribution of Fund 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 attributable to Fund shares 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 costs incurred by, the Fund's principal underwriter in
connection with the distribution of Fund shares, including payments made to and
expenses of officers and registered representatives of the Distributor; payments
made to and expenses of other 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 Fund shares,
including services to holders of Fund shares and prospective investors; costs
related to the formulation and implementation of marketing and promotional
activities, including direct
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mail promotions and television, radio, newspaper, magazine and other mass media
advertising; costs of printing and distributing prospectuses and reports to
prospective shareholders of Fund shares; costs involved in preparing, printing
and distributing sales literature for Fund shares; costs involved in obtaining
whatever information, analyses and reports with respect to market and
promotional activities on behalf of the Fund relating to Fund shares that Berger
Associates deems advisable; and such other costs relating to Fund shares as the
Trust may from time to time reasonably deem necessary or appropriate in order to
finance activities primarily intended to result in the sale of Fund shares. Such
12b-1 fee payments are to be made by 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 Fund shares and other funds that are or may in the future be
advised or administered by Berger Associates, 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, unless otherwise directed by the trustees.
The current 12b-1 Plan will continue in effect until the end of April 1998,
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 Fund shares without shareholder approval.
The trustees of the Fund have authorized Berger Associates to consider
sales of shares of the Fund by a broker-dealer and the recommendations of a
broker-dealer to its customers that they purchase Fund shares as factors in the
selection of broker-dealers to execute portfolio transactions for the Fund. In
placing portfolio business with such broker-dealers, Berger Associates will seek
the best execution of each transaction.
8. HOW TO PURCHASE SHARES IN THE FUND
(i) MINIMUM INITIAL INVESTMENT -- $2,000.00. To purchase shares in the
Fund, simply complete the application form enclosed with this Prospectus. Then
mail it along with a check made payable to "Berger Funds" in care of DST
Systems, Inc., the Fund's sub-transfer agent, as follows:
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Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
A confirmation indicating the details of the transaction will be sent to you
promptly. Unless you specify full shares only, the purchase will be made in full
and fractional shares calculated to three decimal places.
In addition, Fund shares may be purchased through certain broker-dealers
that have established mutual fund programs and certain other organizations
connected with pension and retirement plans. These broker-dealers and other
organizations may charge investors a transaction or other fee for their
services, may require different minimum initial and subsequent investments than
the Fund and may impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's total
return on an investment in Fund shares. No such charge will be paid by an
investor who purchases shares directly from the Fund as described above.
The Fund will, at its discretion, accept orders transmitted by these
organizations although not accompanied by payment for the shares being
purchased. Payment must be received by the Fund within three business days after
acceptance of the order. The price at which a purchase will be effected is based
on the next calculation of net asset value after the order is received by the
Fund's transfer agent, sub-transfer agent or any other authorized agent of the
Fund.
(ii) MINIMUM SUBSEQUENT INVESTMENTS -- $50.00. Shareholders may, at any
time, purchase additional shares subject to a minimum investment of $50.00. A
check made payable to "Berger Funds" in the amount to be invested, should be
sent to the Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas City,
MO 64141. Please be sure to give your name and account number. You will receive
a confirmation of every transaction.
(iii) AUTOMATIC INVESTMENT PLAN. By completing the Automatic Investment
Plan section of the application, you may authorize the Fund to debit your bank
account for the periodic purchase of shares on or about the 5th or 20th day of
each month. Automatic investments are subject to the minimum initial investment
of $2,000, a minimum investment of $50.00 per month and are unrestricted as to
the permitted maximum. You will receive confirmation of automatic investments
after the end of each calendar quarter.
(iv) TELEPHONE AND ON-LINE INVESTMENTS. The Fund will, at its discretion,
accept purchase orders from existing shareholders by telephone, or via their
personal computer, through on-line service providers or other on-line access
points approved by the Fund, although not accompanied by payment for the shares
being purchased. To receive the net asset value for a
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specific day, a telephone or on-line purchase request must be received before
the close of the New York Stock Exchange on that day. Payment for shares ordered
on-line must be made by electronic funds transfer. Payment for shares ordered by
telephone 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 electronic
funds transfer. Shareholders may also remit payment by wire or by overnight
delivery. If payment is not received on time, the Fund may cancel the order and
redeem shares held in the shareholder's account to compensate the Fund for any
decline in the value of the purchased shares. Telephone and on-line purchase
orders may not exceed four times the value of an account on the date the order
is placed (shares previously purchased by telephone or on-line are included in
computing such value only if payment has been received). See "How to Redeem or
Sell Fund Shares - Telephone and On-line Redemptions" for procedures for
telephone transactions.
(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 by telephone may be made by wire or
electronic funds transfer from the investor's bank to DST Systems, Inc. Shares
purchased on-line must be paid for by electronic funds transfer. 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 minimum investment or account balance requirements 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 (the "Exchange") (normally 4:00 p.m., New York time) each day
that the Exchange is open.
The per share net asset value of the Fund is determined by dividing the
total value of its 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
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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 offered for redemption. The redemption price of
shares tendered for redemption will be the net asset value next determined after
receipt of all required documents by the Fund's transfer agent, sub-transfer
agent or other authorized agent of the Fund. To receive the net asset value for
a specific day, a redemption request must be received before the close of the
Exchange on that day. Shareholders who purchased their shares directly from the
Fund may redeem all or part of their shares in the Fund by sending a written
request to the 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
National Association of Securities Dealers (NASD), a credit union, a federal
savings and loan association or another eligible guarantor institution if the
redemption: exceeds $100,000; is being made payable other than exactly as
registered; is being mailed to an address which has been changed within 30 days
of the redemption request; or is being mailed to an address other than the one
on record. A notary public is not an acceptable guarantor. The Fund also
reserves the right to 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
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(iii) on any share certificates tendered for redemption. The use of signature
guarantees is intended to protect the shareholder and the Fund from a possibly
fraudulent application for redemption.
Additional documents are required for redemptions by corporations,
executors, administrators, trustees and guardians. If there is doubt as to what
additional documents are required, please write the Berger Funds, c/o DST
Systems, Inc., P.O. Box 419958, Kansas City, MO 64141, or call DST at
1-800-551-5849.
(ii) TELEPHONE AND ON-LINE REDEMPTIONS. All shareholders have Telephone and
On-line Transaction Privileges to authorize purchases, exchanges or redemptions
unless they specifically decline this service on the account application or by
writing to the Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141. Shareholders may redeem shares by telephone or, via their
personal computer, through on-line service providers or other on-line access
points approved by the Fund. The telephone and on-line redemption option is not
available for shares held in retirement accounts sponsored by the Fund.
Telephone redemption requests may be made by calling DST Systems, Inc., at
1-800-551-5849. To receive the net asset value for a specific day, a redemption
request must be received before the close of the New York Stock Exchange on that
day. As discussed above, certain requests must be in writing and the signature
of a redeeming shareholder must be signature guaranteed, and therefore shares
may not be redeemed by telephone or on-line, if the redemption: exceeds
$100,000; is being made payable other than exactly as registered; is being
mailed to an address which has been changed within 30 days of the redemption
request; is being mailed to an address other than the one on record; or the
shares are represented by share certificates issued to the shareholder.
All telephone and on-line transactions are recorded and written
confirmations indicating the details of all telephone and on-line transactions
will promptly be sent to the shareholder of record. Prior to accepting a
telephone or on-line transaction, the shareholder placing the order may be
required to provide certain identifying information. A shareholder electing to
communicate instructions by telephone or on-line may be giving up some level of
security that would otherwise be present were the shareholder to request a
transaction in writing. Neither the Fund nor its transfer agent or investment
advisor assume responsibility for the authenticity of instructions communicated
by telephone or on-line which are reasonably believed to be genuine and which
comply with the foregoing procedures. The Fund, and/or its transfer agent, may
be liable for losses resulting from unauthorized or fraudulent telephone or
on-line instructions in the event these procedures are not followed.
In times of extreme economic or market conditions, redeeming shares by
telephone or on-line may be difficult. The Fund may terminate or modify the
procedures concerning the telephone or on-line redemption and wire transfer
services at any time, 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 these redemption requirements.
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(iii) PAYMENT FOR REDEEMED SHARES. Payment for shares redeemed upon written
request will be made by draft and generally will be mailed within three business
days after receipt by the transfer agent of the properly executed redemption
request and any outstanding certificates for the shares to be redeemed. Payment
for shares redeemed by telephone or on-line will be made by draft 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 generally 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 Berger
Cash Account Trust portfolio be made by wire or electronic funds transfer and
should review the Berger Cash Account Trust portfolio prospectus for procedures
and charges applicable to redemptions by wire and electronic funds transfers.
See below under "Exchange Privilege and Systematic Withdrawal Plan" for more
information concerning the Berger 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 draft will
be mailed within 15 days after the transfer agent's receipt of the purchase
instrument, provided that it has not been dishonored or cancelled during that
time. The foregoing policy is to ensure that all payments for the shares being
redeemed have been honored. In addition to the foregoing restrictions, no
redemption payment can be made for shares which have been purchased by telephone
or on-line order until full payment for the shares has been received. In any
event, valid redemption requests concerning shares for which full payment has
been made will be priced at the net asset value next determined after receipt of
the request.
(iv) REDEMPTIONS BY THE FUND. As a means of reducing its expenses, the Fund
is authorized to redeem involuntarily all shares held in accounts with a value
of less than $2,000. Such redemptions will be permitted only when the account is
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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 by the Fund 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. If such amount is
not added to the account, the shares will be subject to redemption at the per
share net asset value next determined after the 60th day following the notice. A
draft for the proceeds will be sent to the shareholder unless a share
certificate has been issued, in which case payment will be made upon surrender
of the certificate.
12. EXCHANGE PRIVILEGE AND SYSTEMATIC WITHDRAWAL PLAN
(i) EXCHANGES. By telephoning the Fund at 1-800-551-5849, or writing to the
Fund at P.O. Box 419958, Kansas City, MO 64141, or, via their personal computer
through on-line service providers or other on-line access points approved by the
Fund, any shareholder may exchange, without charge, any or all of the
shareholder's shares in the Fund for shares of any of the other publicly
available Berger Funds, or for shares of the Money Market Portfolio, the
Government Securities Portfolio or the Tax-Exempt Portfolio of the Berger Cash
Account Trust (the "Berger CAT Portfolios"), separately managed, unaffiliated
money market funds. Exchanges may be made only if the Berger Fund or Berger CAT
Portfolio with which you wish to exchange your shares is eligible for sale in
your state of residence. The exchange privilege with the Berger CAT Portfolios
does not constitute an offering or recommendation of the shares of any such
Berger CAT Portfolio by any of the Berger Funds or Berger Associates. Berger
Associates is compensated for administrative services it performs with respect
to the Berger CAT Portfolios.
It is your responsibility to obtain and read a prospectus of the Berger
Fund or Berger 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 Berger 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 Berger CAT Portfolios. In times of extreme economic or market conditions,
exchanging Fund or Berger CAT Portfolio shares by telephone or on-line may be
difficult. See "How to Redeem or Sell Fund Shares - Telephone and On-line
Redemptions" for procedures for telephone and on-line transactions.
Redemptions of shares in connection with exchanges into or out of the Fund
are made at the net asset value per share next determined after the exchange
request is received. To receive a specific day's price, your letter, call or
on-line order must be received before that day's close of the New York Stock
Exchange. A day or more delay may be experienced prior to the investment of the
redemption proceeds into a Berger CAT Portfolio. Each exchange
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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 are subject to the minimum and subsequent investment
requirements of the fund or Berger 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 Berger CAT Portfolios, or their
transfer agents or advisors assume responsibility for the authenticity of
exchange instructions communicated in writing or by telephone or on-line which
are believed to be genuine. See "How to Redeem or Sell Fund Shares - Telephone
and On-line Redemptions" for procedures for telephone and on-line transactions.
All shareholders have Telephone and On-line Transaction Privileges to authorize
exchanges unless they specifically decline this service on the account
application or by writing to the Berger Funds, c/o DST Systems, Inc., P.O. Box
419958, Kansas City, MO 64141.
(ii) SYSTEMATIC WITHDRAWAL PLAN. A shareholder who owns shares of the Fund
worth at least $5,000 at the current net asset value may establish a Systematic
Withdrawal account from which a fixed sum, minimum of $50, will be paid to the
shareholder monthly, quarterly, semiannually or annually. You will receive
confirmation of systematic withdrawals after the end of each calendar quarter.
For more information regarding the Systematic Withdrawal Plan and forms to
open such accounts, please write to the Berger Funds, c/o DST Systems, Inc.,
P.O. Box 419958, Kansas City, MO 64141, or call 1-800-551-5849.
13. TAX-SHELTERED RETIREMENT PLANS
The Fund offers several tax-qualified retirement plans for individuals,
businesses and non-profit organizations. employers. For information about
establishing a Berger Funds IRA, profit-sharing or money purchase pension plan,
403(b) Custodial Account, SEP-IRA or SIMPLE IRA account, please call
1-800-333-1001 or write to the Fund c/o Berger Associates, P.O. Box 5005,
Denver, CO 80217. Trustees for existing 401(k) or other plans interested in
using Fund shares as an investment or investment alternative in their plans are
invited to call the Fund at 1-800-333-1001.
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14. INCOME DIVIDENDS, CAPITAL GAINS DISTRIBUTIONS AND TAX TREATMENT
The Fund intends to declare dividends representing net investment income
four times annually, generally in the months of March, June, September and
December. It is also the present policy of the Fund to distribute annually all
of its net realized capital gains.
The Fund 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 generally will not be liable for Federal
income tax on the amount of its earnings that are timely distributed. If the
Fund distributes annually less than 98% of its income and gain, it may be
subject to a nondeductible excise tax equal to 4% of the shortfall.
All dividends and capital gains distributions paid by the Fund will be
automatically reinvested in shares of the Fund at the net asset value on the
ex-dividend date unless an investor specifically requests that either dividends
or distributions, or both, be paid in cash. The election to receive dividends or
distributions in cash or to reinvest them in Fund shares may be changed by
calling the 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 declared
and payable to shareholders of record on a specified date in December will be
deemed to have been received by shareholders on December 31 for tax purposes if
paid during January the following year. 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
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reinvested, will be taxable as long-term capital gains without regard to the
length of time a shareholder has owned shares in the Fund. Any loss on the
redemption or other sale or exchange of the Fund's shares held for six months or
less will be treated as a long-term capital loss to the extent of any long-term
capital gain distribution received on the shares. A portion of the dividends
(but not capital gains distributions) paid by the Fund may be eligible for the
dividends received deduction for corporate shareholders to the extent that the
Fund's income consists of dividends paid by United States corporations. If a
shareholder is exempt from Federal income tax, the shareholder will not
generally be taxed on amounts distributed by the Fund.
At certain levels of taxable income, the Internal Revenue Code provides a
preferential tax rate for long-term capital gains. Long-term capital gains of
taxpayers other than corporations are taxed at a 28% maximum rate, whereas
ordinary income is taxed at a 39.6% maximum rate. Capital losses continue to be
deductible only against capital gains plus (in the case of taxpayers other than
corporations) $3,000 of ordinary income annually ($1,500 for married individuals
filing separately).
Some shareholders may be subject to 31% "backup withholding" on dividends,
capital gains distributions and redemption payments made by the Fund. Backup
withholding generally will apply to shareholders who fail to provide the Fund
with their correct taxpayer identification number or to make required
certifications. Backup withholding is not an additional tax. Any amounts
withheld may be credited against a shareholder's U.S. Federal income tax
liability.
The foregoing is only a brief summary of the 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 Fund is a separate series or portfolio established under the Berger
Investment Portfolio Trust, a Delaware business trust. The Fund was established
on August 22, 1997. The Trust is authorized to issue an unlimited number of
shares of beneficial interest in series or portfolios, which may be divided into
classes. Currently, the Fund is one of three series established under the Trust,
although others may be added in the future. Shares of the Fund are fully paid
and 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 owning a particular series or class of shares of the Fund will
vote separately on matters relating to that series or class, although they will
vote together and along with the shareholders of other series and classes of the
Fund 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
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vote. Shares of the Fund have non-cumulative voting rights, which means that the
holders of more than 50% of the shares voting for the election of trustees can
elect 100% of the trustees if they choose to do so and, in such event, the
holders of the remaining less than 50% of the shares voting for the election of
trustees will not be able to elect any person or persons as trustees. The Fund
is not required to hold annual shareholder meetings unless required by the
Investment Company Act of 1940 or other applicable law or unless called by the
trustees.
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.
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 Value Line Investment Survey or by publications of general
interest such as The Wall Street Journal, Investor's Business Daily, Barron's,
Financial World or Kiplinger's Personal Finance Magazine. In addition, the Fund
may compare its performance to that of recognized broad-based securities market
indices, including the Standard & Poor's 500 Stock Index, the Dow Jones
Industrial Average, the Russell 2000 Stock Index, the Russell 2000 Value Index,
the Standard & Poor's 600 Small Cap Index, the Standard & Poor's/BARRA Value
Index, the Nasdaq Composite Index or the Lehman Brothers Intermediate Term
Government/Corporate Bond Index, or more narrowly-based or blended 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.
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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.
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BERGER BALANCED FUND
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information about the Berger Balanced Fund
(the "Fund") is not a prospectus. It should be read in conjunction with the
Prospectus describing the shares of the Fund, dated September 3, 1997,
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, diversified mutual fund. The investment objective of
the Fund is capital appreciation and current income. The Fund seeks to achieve
this objective by investing in a diversified portfolio of equity and
fixed-income securities. The proportion of the Fund's assets invested in each
type of security will vary from time to time in accordance with the assessment
of the Fund's investment advisor of available investment opportunities and
relevant market, financial and economic factors. Normally, equity securities are
expected to range from 50% to 75% of the Fund's total assets and fixed-income
securities are expected to range from 25% to 50%. However, the Fund will have at
all times at least 25% of its total assets invested in equity securities and at
least 25% invested in fixed-income senior securities, including debt securities,
preferred stocks and that portion of the value of convertible securities that is
attributable to their fixed-income characteristics.
The equity component of the Fund's portfolio emphasizes common stocks of
companies with mid-sized to large market capitalizations that the Fund's
investment advisor believes have favorable prospects for growth. These stocks
generally pay regular dividends, although the Fund may also invest in companies
that do not pay regular dividends if, in the advisor's opinion, they offer
better prospects for growth. The fixed-income component of the Fund's portfolio
emphasizes a variety of income-producing securities, primarily debt securities
of government and corporate issuers and preferred stocks.
SEPTEMBER 3, 1997
<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
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 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
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INTRODUCTION
The Berger Balanced Fund (the "Fund") is a mutual fund, or to use a more
technical term, a diversified open-end, management investment company. The
Fund's investment objective is capital appreciation and current income.
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 certain 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.
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 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 net assets would be invested in such
repurchase agreements and other illiquid securities.
The use of repurchase agreements involves certain risks. For example, if
the other party to the agreement defaults on its obligation to repurchase the
underlying security at a time when the value of the security has declined, the
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. Although these risks are
acknowledged, it is expected that they can be controlled through careful
monitoring procedures.
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<PAGE>
UNSEASONED ISSUERS. The 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 5% of its total assets in securities of unseasoned issuers.
ILLIQUID AND RESTRICTED SECURITIES. The Fund is authorized to invest in
securities which are illiquid or not readily marketable because they are subject
to restrictions on their resale ("restricted securities") or because, based upon
their nature or the market for such securities, no ready market is available.
However, the 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. 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. If securities become
illiquid following purchase or other circumstances cause more than 15% of the
Fund's net assets to be invested in illiquid securities, the trustees of the
Fund, in consultation with the Fund's advisor, will determine what action, if
any, is appropriate in light of all relevant circumstances.
Repurchase agreements maturing in more than seven days will be considered
as illiquid for purposes of this restriction. Pursuant to guidelines established
by the trustees, the Fund's advisor will determine whether securities eligible
for resale to qualified institutional buyers pursuant to SEC Rule 144A under the
Securities Act of 1933 should be treated as illiquid investments considering,
among other things, the following factors: (1) the frequency of trades and
quotes for the security; (2) the number of dealers wanting to purchase or sell
the security and the number of other potential purchasers; (3) dealer
undertakings to make a market in the security; and (4) the nature of the
security and the marketplace trades (e.g., the time needed to dispose of the
security, the method of soliciting offers, and the mechanics of the transfer).
The liquidity of the Fund's investments in Rule 144A securities could be
impaired if qualified institutional buyers become uninterested in purchasing
these securities.
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<PAGE>
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 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 is currently only permitted to engage in short sales
if, at the time of the short sale, the Fund owns or has the right to acquire an
equivalent kind and amount of the
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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.
Historically, the Fund could have made a short sale, as described above,
when it wanted to sell a security it owned at a current attractive price, but
also wished to defer recognition of gain or loss for Federal income tax purposes
and for purposes of satisfying certain tests applicable to regulated investment
companies under the Internal Revenue Code. However, recent federal tax
legislation eliminated the ability to defer recognition of gain or loss in short
sales against the box and accordingly, it is not anticipated that the Fund will
be engaging in these transactions unless there are further legislative changes.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase and sell
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions arise when securities (normally, 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 available on
a comparable security when delivery takes place may vary from the yield on the
security at the time that the when-issued or delayed delivery transaction was
entered into. Any failure to consummate a when-issued or delayed delivery
transaction may result in 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.
When the Fund purchases securities on a when-issued basis, it will maintain
in a segregated account with its custodian
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<PAGE>
cash, U.S. government securities or other liquid assets having an aggregate
value equal to the amount of such purchase commitments, until payment is
made. If necessary, additional assets will be placed in the account daily so
that the value of the account will equal or exceed the amount of the Fund's
purchase commitments.
HEDGING TRANSACTIONS. As described in the Prospectus, the Fund is
authorized to make limited use of 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 hedging may also limit
the Fund's opportunity to profit from favorable price movements, and the cost of
the transaction will reduce the potential return on the security or the
portfolio. Following is additional information concerning the futures, forwards
and options which the Fund may utilize, provided that no more than 5% of the
Fund's net assets at the time the contract is entered into may be used for
initial margins for financial futures transactions and premiums paid for the
purchase of options. In addition, 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 use of
futures, forwards and options and the risks of such instruments contained in the
Prospectus.
FUTURES CONTRACTS. Financial futures contracts are exchange-traded
contracts on financial instruments (such as securities and foreign currencies)
and securities indices that obligate the holder to take or make delivery of a
specified quantity of the underlying financial instrument, or the cash value of
an index, at a future date. Although futures contracts by their terms call for
the delivery or acquisition of the underlying instruments or a cash payment
based on the mark-to-market value of the underlying instruments, in most cases
the contractual obligation will be offset before the delivery date by buying (in
the case of an obligation to sell) or selling (in the case of an obligation to
buy) an identical futures contract. Such a transaction cancels the original
obligation to make or take delivery of the instruments.
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 other
liquid assets. If the value of either party's position declines, that party will
be required to make additional "variation margin" payments to the other party to
settle the change in value on a daily basis. Initial and variation margin
payments are similar to good faith deposits or performance bonds or
party-to-party payments resulting from daily changes in the value of the
contract, unlike margin extended by a securities broker, and would be released
or credited to the Fund upon termination of the futures contract, assuming all
contractual obligations have been satisfied. Unlike margin extended by a
securities broker, initial and variation margin payments do not constitute
purchasing securities on margin for purposes of 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
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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 mark-to-market 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.
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 a hedging 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 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.
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
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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 additional 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
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
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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 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.
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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 a
privately negotiated agreement between two parties in which one party is
obligated to deliver a stated amount of a stated asset at a specified time in
the future and the other party is obligated to pay a specified invoice amount
for the assets at the time of delivery. The Fund currently intends that it will
only use forward contracts or commitments for hedging purposes and will only use
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 exchange-traded
contracts, forward contracts can be specifically drawn to meet the needs of the
parties that enter into them. The parties to a forward contract may agree to
offset or terminate the contract before its maturity, or may hold the contract
to maturity and complete the contemplated exchange.
The following discussion summarizes the 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
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or sell an amount of a specified currency for an agreed price (which may be in
U.S. dollars or a foreign currency) on a specified date. 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 (in terms of a specified currency)
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 (or a proxy currency whose price
movements are expected to have a high degree of correlation with the currency
being hedged) relative to the U.S. dollar by entering into forward currency
contracts to sell an amount of that currency approximating the value of some or
all of its portfolio securities denominated in that currency ("position hedge")
or by participating in futures contracts (or options on such futures) with
respect to the currency. 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 a foreign currency whose performance is expected to replicate the
performance of the currency being hedged if the portfolio manager believes there
is a high 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 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 that Fund's opportunity to profit from increases in
the value of the original currency and involves a risk of increased losses to
such Fund if its portfolio manager's projection of future exchange rates is
inaccurate. Unforeseen changes in currency prices may result in poorer overall
performance for the Fund than if it had not entered into such contracts.
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 liquid assets having a value equal
to the aggregate amount of such Fund's commitments under forward contracts
entered into. If the value of the securities used to cover a position or the
value of segregated assets declines, the Fund must find alternative cover or
segregate additional cash or liquid assets on a daily basis so that the value
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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 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
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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 liquid assets in a segregated account with its
custodian.
The writer of a call option may have no control when the underlying
securities must be sold. Whether or not an option expires unexercised, the
writer retains the amount of the premium. This amount, of course, may, in the
case of a covered call option, be offset by a decline in the market value of the
underlying security during the option period.
The writer of an exchange-traded call option that wishes to terminate its
obligation may effect a "closing purchase transaction." This is accomplished by
buying an option of the same series as the option previously written. The effect
of the purchase is that the writer's position will be cancelled by the clearing
corporation. If 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
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underlying security until the option expires or the Fund delivers the underlying
security upon exercise. Reasons for the absence of a liquid secondary market may
include the following: (i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national securities exchange on
which the option is traded ("Exchange") on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
In addition, when 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
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<PAGE>
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 Fund may
exceed 100%, but is not expected to exceed 200%. 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. Investment changes will be made
whenever the advisor deems them appropriate even if this results in a higher
portfolio turnover rate. In addition, portfolio turnover may increase as a
result of large amounts of purchases and redemptions of shares of the Fund due
to economic, market or other factors that are not within the control of
management.
Increased portfolio turnover would necessarily result in correspondingly
higher brokerage costs for the Fund. The existence of a high portfolio 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 15 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 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.
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<PAGE>
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 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 nonfundamental 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 5% 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
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<PAGE>
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 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 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. Warrants acquired by the Fund in units or attached to securities are
not subject to these limits.
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.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver, CO
80206, age 55. President and a trustee of Berger Omni
Investment Trust and Berger Investment Portfolio Trust, and
President and a director of Berger 100 Fund and Berger Growth
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and Income Fund, since February 1997. President and a trustee of
Berger/BIAM Worldwide Portfolios Trust and Berger/BIAM Worldwide
Funds Trust since their inception in May 1996. President and a
trustee of Berger Institutional Products Trust since its inception in
October 1995. President and a director since April 1995 of Berger
Associates, Inc. Member and Chairman of the Board of Managers and
Chief Executive Officer on the Management Committee of BBOI Worldwide
LLC since November 1996. A Vice President of DST Systems, Inc. (data
processing) since July 1995. Formerly President and Chief Executive
Officer of Investors Fiduciary Trust Company (banking) from February
1992 to March 1995 and Chief Operating Officer of SunAmerica Asset
Management Co. (money management) from January 1990 to February 1992.
* PATRICK S. ADAMS, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 36. President and co-portfolio manager of the
Berger Balanced Fund since its inception in August
1997. Executive Vice President and portfolio manager of the
Berger 100 Fund and Executive Vice President and co-portfolio
manager of the Berger Growth and Income Fund since February
1997. President and portfolio manager of the Berger IPT -
100 Fund and President and co-portfolio manager of the Berger
IPT - Growth and Income Fund since February 1997. Senior
Vice President of Berger Associates since February 1997.
Formerly, Senior Vice President from June 1996 to January
1997 with Zurich Kemper Investments, Inc., Portfolio Manager
from March 1993 to May 1996 with Founders Asset Management,
Inc., and Senior Portfolio Manager/Senior Analyst from
January 1992 to February 1993 with First of America
Investment Corp.
* JOHN B. JARES, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 31. Vice President and co-portfolio manager
of the Berger Balanced Fund since its inception in
August 1997. Senior Analyst with Berger
Associates since May 1997. Formerly, Research Analyst
(February 1994 to December 1996) and Co-Lead Portfolio
Manager (January 1997 to May 1997) with Founders Asset
Management, Inc., and Research Associate with Lipper
Analytical Services, Inc. from October 1992 to February 1994.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110,
age 68. President, Baldwin Financial Counseling. Formerly
(1978-1990), Vice President and Denver Office Manager of
Merrill Lynch Capital Markets. Director of Berger 100 Fund
and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products
Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM
Worldwide Portfolios Trust and Berger Omni Investment Trust.
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* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900,
Denver, CO 80206, age 71. Director and, formerly, President
(1974-1994) of Berger 100 Fund and Berger Growth and Income
Fund. Trustee of Berger Investment Portfolio Trust since its
inception in August 1993 (Chairman of the Trustees through
November 1994). Trustee of Berger Institutional Products
Trust since its inception in October 1995. Trustee of
Berger/BIAM Worldwide Funds Trust and Berger/BIAM Worldwide
Portfolios Trust since their inception in May 1996. Trustee
of Berger Omni Investment Trust since February 1997.
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 71.
President, Climate Engineering, Inc. (building environmental
systems). Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide
Funds Trust, Berger/BIAM Worldwide Portfolios Trust and
Berger Omni Investment Trust.
KATHERINE A. CATTANACH, 384 South Ogden, Denver, CO 80209, age
52. Managing Principal, Sovereign Financial Services, L.L.C.
(investment consulting firm). Formerly (1981-1988),
Executive Vice President, Captiva Corporation, Denver,
Colorado (private investment management firm). Ph.D. in
Finance (Arizona State University); Chartered Financial
Analyst (CFA). Director of Berger 100 Fund and Berger Growth
and Income Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust
and Berger Omni Investment Trust.
LUCY BLACK CREIGHTON, 1917 Leyden Street, Denver, CO 80220, age
69. Associate, University College, University of Denver.
Formerly, President of the Colorado State Board of Land
Commissioners (1989-1995), and Vice President and Economist
(1983-1988) and Consulting Economist (1989) for First
Interstate Bank of Denver. Ph.D. in Economics (Harvard
University). Director of Berger 100 Fund and Berger Growth
and Income Fund. Trustee of Berger Investment Portfolio
Trust, Berger Institutional Products Trust, Berger/BIAM
Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust
and Berger Omni Investment Trust.
PAUL R. KNAPP, 33 North LaSalle Street, Suite 1920, Chicago, IL 60602, age
51. 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
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Growth and Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni
Investment Trust.
HARRY T. LEWIS, JR., 370 17th Street, Suite 3560, Denver, CO 80202, age
64. Self-employed as a private investor. Formerly (1981-1988), Senior
Vice President, Rocky Mountain Region, of Dain Bosworth Incorporated
and member of that firm's Management Committee. Director of Berger
100 Fund and Berger Growth and Income Fund. Trustee of Berger
Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios
Trust and Berger Omni Investment Trust.
MICHAEL OWEN, 412 Reid Hall, Montana State University, Bozeman, MT 59717,
age 60. Since 1994, Dean, and from 1989 to 1994, a member of the
Finance faculty, of the College of Business, Montana State
University. Self-employed as a financial and management consultant,
and in real estate development. Formerly (1976-1989), Chairman and
Chief Executive Officer of Royal Gold, Inc. (mining). Chairman of the
Board of Berger 100 Fund and Berger Growth and Income Fund. Chairman
of the Trustees of Berger Investment Portfolio Trust, Berger
Institutional Products Trust, Berger/BIAM Worldwide Funds Trust,
Berger/BIAM Worldwide Portfolios Trust and Berger Omni Investment
Trust.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135,
age 68. President, Sinclaire Cattle Co., and private
investor. Director of Berger 100 Fund and Berger Growth and
Income Fund. Trustee of Berger Investment Portfolio Trust,
Berger Institutional Products Trust, Berger/BIAM Worldwide
Funds Trust, Berger/BIAM Worldwide Portfolios Trust and
Berger Omni Investment Trust.
* KEVIN R. FAY, 210 University Boulevard, Suite 900, Denver,
CO 80206, age 42. Vice President, Secretary and Treasurer
of Berger 100 Fund and Berger Growth and Income Fund since
October 1991, of Berger Investment Portfolio Trust since its
inception in August 1993, of Berger Institutional Products
Trust since its inception in October 1995, of Berger/BIAM
Worldwide Funds Trust and Berger/BIAM Worldwide Portfolios
Trust since their inception in May 1996, and of Berger Omni
Investment Trust since February 1997. Also, Vice President-
Finance and Administration, Secretary and Treasurer of Berger
Associates since September 1991 and a director of Berger
Distributors, Inc., since its inception in May 1996.
Formerly, Financial Consultant (registered representative)
with Neidiger Tucker Bruner, Inc. (broker-dealer) (October
1989 to September 1991) and Financial Consultant with Merrill
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Lynch, Pierce, Fenner & Smith, Inc. (October 1985 to October
1989).
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* Interested person (as defined in the Investment Company Act of 1940) of the
Fund and of the Fund's advisor.
The trustees of the Fund have adopted a trustee retirement age of 75 years.
TRUSTEE COMPENSATION
The officers of the Fund receive no compensation from the Fund. However,
directors and trustees of the Berger Funds who are not interested persons of
Berger Associates are compensated for their services according to a fee
schedule, allocated among the funds. 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 paid or accrued
during the fiscal year ended September 30, 1996, for each trustee of the Berger
Investment Portfolio Trust.
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================================================================================
NAME AND POSITION AGGREGATE AGGREGATE
WITH BERGER FUNDS COMPENSATION FROM COMPENSATION(1)
THE FUND FROM
ALL BERGER FUNDS(2)
- --------------------------------------------------------------------------------
Dennis E. Baldwin(3) $0* $45,000
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William M.B. $0* $ 0
Berger(3),(5)
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Louis R. Bindner(3) $0* $36,000
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Katherine A. $0* $43,500
Cattanach(3)
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Lucy Black $0* $36,000
Creighton(3)
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Paul R. Knapp(3) $0* $45,000
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Gerard M. Lavin(4),(5) $0* $ 0
- --------------------------------------------------------------------------------
Harry T. Lewis(3) $0* $40,500
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Michael Owen(3) $0* $55,000
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William Sinclaire(3) $0* $34,500
================================================================================
* The Fund was not established until August 1997, and accordingly
the trustees of the Fund did not receive any compensation from the Fund during
the fiscal year ended September 30, 1996. For the Fund's first year of
operations, it is estimated that the Fund will bear an aggregate of
approximately $6,200 of trustee fees.
(1) Trustees who are not interested persons of Berger Associates received as a
group trustees' compensation (excluding reimbursement of expenses) from Berger
Investment Portfolio Trust of approximately $80,742 during the fiscal year ended
September 30, 1996.
(2) Includes Berger 100 Fund, Berger Growth and Income Fund, Berger Investment
Portfolio Trust (three funds), Berger Institutional Products Trust (four funds),
Berger/BIAM Worldwide Portfolios Trust (one fund) and Berger/BIAM Worldwide
Funds Trust (three funds). Berger Omni Investment Trust (one fund) was added to
the Berger Funds in February 1997.
(3) Director of Berger 100 Fund and Berger Growth and Income Fund. Trustee of
Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Funds Trust, Berger/BIAM Worldwide Portfolios Trust and
Berger Omni Investment Trust.
(4) Trustee of Berger Institutional Products Trust, Berger/BIAM Worldwide Funds
Trust, Berger/BIAM Worldwide Portfolios Trust and Berger Omni Investment Trust.
(5) Interested person of the Fund or the Fund's advisor.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by certain of the Berger Funds. Under
the plan, deferred fees are credited to an account and adjusted thereafter to
reflect the investment experience of whichever of the Berger Funds (or approved
money market funds) is designated by the trustee for this purpose. Pursuant to
an SEC exemptive order, those Berger Funds that have
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adopted the plan are permitted to purchase shares of the designated funds in
order to offset their obligation to the trustees participating in the plan.
Purchases made pursuant to the plan are excepted from any otherwise applicable
investment restriction limiting the purchase of securities of any other
investment company. The obligation of a Berger Fund to make payments of deferred
fees under the plan is a general obligation of that fund.
As of August 31, 1997, the current officers and trustees of the Fund as a
group owned of record or beneficially less than 1% of the outstanding shares of
the Fund.
4. INVESTMENT ADVISOR
INVESTMENT ADVISOR
The investment advisor to the Fund is Berger Associates, Inc. (the
"Advisor" or "Berger Associates"), 210 University Boulevard, Suite 900, Denver,
CO 80206. The Advisor is responsible for managing the investment operations of
the Fund and the composition of its investment portfolio. The Advisor also acts
as the Fund's administrator and is responsible for such functions as monitoring
the Fund's compliance with all applicable federal and state laws.
The Advisor has been in the investment advisory business for over 20 years.
It serves as investment advisor or sub-advisor to mutual funds, pension and
profit-sharing plans, and institutional and private investors, and has assets
under management of more than $3.6 billion as of May 31, 1997. Kansas City
Southern Industries, Inc. ("KCSI") owns approximately 87% of the outstanding
shares of the Advisor. KCSI is a publicly traded holding company with principal
operations in rail transportation, through its subsidiary The Kansas City
Southern Railway Company, and financial asset management businesses. 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.
INVESTMENT ADVISORY AGREEMENT
Under the Investment Advisory Agreement between the Advisor and the Fund,
the Advisor is responsible for managing the investment operations of the Fund
and the composition of its investment portfolio. Under the Investment Advisory
Agreement, the Advisor is compensated for its services to the Fund by the
payment of a fee at the annual rate of 0.70% of the average daily net assets of
the Fund.
The Fund's investment advisor has voluntarily agreed to waive its advisory
fee to the extent that the Fund's normal operating expenses in any fiscal year,
including the investment advisory fee and the 12b-1 fee, but excluding brokerage
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commissions, interest, taxes and extraordinary expenses, exceed 1.50% of the
Fund's average daily net assets for that fiscal year.
The Investment Advisory Agreement will continue in effect until April 1999,
and thereafter from year to year if such continuation is specifically approved
at least annually by the trustees or by vote of a majority of the outstanding
shares of the Fund and in either case by vote of a majority of the trustees of
the Fund who are not "interested persons" (as that term is defined in the
Investment Company Act of 1940) of the Fund or the advisor. The Agreement is
subject to termination by the Fund or the Advisor on 60 days' written notice,
and terminates automatically in the event of its assignment.
TRADE ALLOCATIONS
Investment decisions for the Fund and other accounts advised by the Advisor
are made independently with a view to achieving each of their respective
investment objectives and after consideration of such factors as their current
holdings, availability of cash for investment and the size of their investments
generally. However, certain investments may be appropriate for the Fund and one
or more such accounts. If the Fund and other accounts advised by the Advisor are
contemporaneously engaged in the purchase or sale of the same security, the
orders may be aggregated and/or the transactions averaged as to price and
allocated equitably to the Fund and each participating account. While in some
cases, this policy might adversely affect the price paid or received by the Fund
or other participating accounts, or the size of the position obtained or
liquidated, the Advisor will aggregate orders if it believes that coordination
of orders and the ability to participate in volume transactions will result in
the best overall combination of net price and execution.
RESTRICTIONS ON PERSONAL TRADING
Berger Associates permits its directors, officers, employees and other
access persons (as defined below) of Berger Associates ("covered persons") to
purchase and sell securities for their own accounts in accordance with
provisions governing personal investing in Berger Associates' Code of Ethics.
The Code requires all covered persons to conduct their personal securities
transactions in a manner which does not operate adversely to the interests of
the Fund or 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 covered persons deemed to have access
to current trading information ("access persons") are required to pre-clear all
transactions in securities not otherwise exempt under the Code. Requests for
authority to trade will be denied pre-clearance when, among other reasons, the
proposed personal transaction would be contrary to the provisions of the Code or
would be deemed to adversely affect any transaction then known to be under
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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 Code
subjects those covered persons deemed to be access persons to various trading
restrictions and reporting obligations. All reportable transactions are reviewed
for compliance with Berger Associates' Code. Those covered persons also may be
required under certain circumstances to forfeit their profits made from personal
trading. The Code is administered by Berger Associates and the provisions of the
Code are subject to interpretation by and exceptions authorized by its board of
directors.
5. EXPENSES OF THE FUND
Under the Investment Advisory Agreement, the Fund has agreed to compensate
Berger Associates for its investment advisory services to the Fund by the
payment of a fee at the annual rate of .70 of 1% (0.70%) of the average daily
net assets of the Fund. The fee is accrued daily and payable monthly. Berger
Associates has voluntarily agreed to waive its advisory fee to the extent that
the Fund's normal operating expenses in any fiscal year, including the
investment advisory fee and the 12b-1 fee, but excluding brokerage commissions,
interest, taxes and extraordinary expenses, exceed 1.50% of the Fund's average
daily net assets for that fiscal year.
The Fund pays all of its expenses not assumed by Berger Associates, which
normally would include, but not be 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 for shareholders of the Fund.
The Fund has adopted a 12b-1 plan (the "Plan") for the Fund 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 represented by Fund shares to finance
activities primarily intended to result in the sale of Fund shares. The expenses
paid by Berger Associates may include payments made to the Fund's distributor in
connection with the distribution of the Fund shares, costs of preparing,
printing and mailing prospectuses to
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other than existing shareholders, as well as promotional expenses directed at
increasing the sale of Fund shares.
The 12b-1 Plan for the Fund will come into effect on September 30, 1997. A
further discussion of the Plan is contained in Section 7 of the Prospectus.
The Fund has appointed Investors Fiduciary Trust Company ("IFTC") as its
recordkeeping and pricing agent. In addition, IFTC also serves as the Fund's
custodian, transfer agent and dividend disbursing agent. IFTC has engaged DST as
sub-agent to provide transfer agency and dividend disbursing services for the
Fund. As noted in the previous section, approximately 41% of the outstanding
shares of DST are owned by KCSI. The addresses and telephone numbers for DST set
forth in the Prospectus and this Statement of Additional Information should be
used for correspondence with the transfer agent.
As recordkeeping and pricing agent, IFTC calculates the daily net asset
value of the Fund and performs certain accounting and recordkeeping functions
required by the Fund. The Fund pays IFTC a monthly base fee plus an asset-based
fee. 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 an asset-based fee plus
certain transaction fees and 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 $15.65 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
upon 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 are effected
through DSTS, the commission received by DSTS is credited against, and thereby
reduces, certain operating expenses that the Fund would otherwise
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be obligated to pay. No portion of the commission is retained by
DSTS. See Section 6 Brokerage Policy for further information.
The Fund and Berger Associates have entered into arrangements with certain
organizations (broker-dealers, recordkeepers and administrators) to provide
sub-transfer agency, recordkeeping, shareholder communications, sub-accounting
and/or other services to investors purchasing shares of the Fund through
investment programs or pension plans established or serviced by those
organizations. The 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 these organizations 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 .01 of 1% (0.01%) of its average daily
net assets for such services. Those fees are in addition to the investment
advisory fees paid under the Investment Advisory Agreement. The administrative
services fees may be changed by the trustees without shareholder approval.
DISTRIBUTOR
The distributor (principal underwriter) of the Fund's shares is Berger
Distributors, Inc. (the "Distributor"), 210 University Blvd., Suite 900, Denver,
CO 80206. The Distributor may be reimbursed by Berger Associates for its costs
in distributing Fund shares.
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 between the Fund and 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
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dealer would have charged for effecting that transaction if Berger Associates
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker viewed in terms of either that particular transaction or the overall
responsibilities of Berger Associates.
In accordance with this provision of the Agreement, Berger Associates
places portfolio brokerage business of the Fund with brokers who provide useful
research services to Berger Associates. Such research services typically consist
of studies made by investment analysts or economists relating either to the past
record of and future outlook for companies and the industries in which they
operate, or to national and worldwide economic conditions, monetary conditions
and trends in investors' sentiment, and the relationship of these factors to the
securities market. In addition, such analysts may be available for regular
consultation so that Berger Associates may be apprised of current developments
in the above-mentioned factors.
The research services received from brokers are often helpful to Berger
Associates in performing its investment advisory responsibilities to the Fund,
but they are not essential, and the availability of such services from brokers
does not reduce the responsibility of Berger Associates' advisory personnel to
analyze and evaluate the securities in which the Fund invests. The research
services obtained as a result of the Fund's brokerage business also will be
useful to Berger Associates in making investment decisions for its other
advisory accounts, and, conversely, information obtained by reason of placement
of brokerage business of such other accounts may be used by Berger Associates in
rendering investment advice to the Fund. Although such research services may be
deemed to be of value to Berger Associates, they are not expected to decrease
the expenses that Berger Associates would otherwise incur in performing its
investment advisory services for the Fund nor will the advisory fees that are
received by Berger Associates from the Fund be reduced as a result of the
availability of such research services from brokers.
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 are effected through DSTS,
the commission received by DSTS is credited against, and thereby reduces,
certain operating expenses that the Fund would otherwise be obligated to pay. No
portion of the commission is retained by DSTS. To date, the trustees have not
authorized Berger Associates to place the Fund's brokerage with any other broker
or dealer affiliated with Berger Associates.
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7. HOW TO PURCHASE SHARES IN THE FUND
Minimum Initial Investment $2,000.00
Minimum Subsequent Investment $ 50.00
To purchase shares in the Fund, simply complete the application form
enclosed with the Prospectus. Then mail it with a check payable to "Berger
Funds" to the Fund in care of DST Systems, Inc., the Fund's sub-transfer agent,
as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
If a shareholder is adding to an existing account, shares may also be
purchased by placing an order by telephone call to the Fund at 1-800-551-5849 or
via personal computer through on-line service providers or other on-line access
points approved by the Fund, and remitting payment to DST Systems, Inc. Payment
for shares ordered on-line must be made by electronic funds transfer. In order
to make sure that payment for telephone purchases is received on time,
shareholders are encouraged to remit payment by electronic funds transfer.
Shareholders may also remit payment by wire or by overnight delivery.
In addition, Fund shares may be purchased through certain broker-dealers
that have established mutual fund programs and certain other organizations
connected with pension and retirement plans. These broker-dealers and other
organizations may charge investors a transaction or other fee for their
services, may require different minimum initial and subsequent investments than
the Fund and may impose other charges or restrictions different from those
applicable to shareholders who invest in the Fund directly. Fees charged by
these organizations will have the effect of reducing a shareholder's total
return on an investment in Fund shares. No such charge will be paid by an
investor who purchases the Fund shares directly from the Fund as described
above.
8. HOW THE NET ASSET VALUE IS DETERMINED
The net asset value of the Fund is determined once daily, at the close of
the regular trading session of the New York Stock Exchange (the "Exchange")
(normally 4:00 p.m., New York time, Monday through Friday) each day that the
Exchange is open. The Exchange is closed and the net asset value of the Fund is
not determined on weekends and on New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day each year. The per share net asset value of
the Fund is determined by dividing the total value of its securities and other
assets, less liabilities, by the total number of shares outstanding.
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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. 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. All assets and liabilities initially expressed in
terms of non-U.S. dollar currencies are translated into U.S. dollars at the
prevailing market rates as quoted by one or more banks or dealers shortly before
the close of the Exchange. Securities and assets for which quotations are not
readily available are valued at fair values determined in good faith pursuant to
consistently applied procedures established by the trustees.
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. The Fund met the
requirements for the last fiscal year end, and intends to meet them in the
future. If the Fund meets the Subchapter M requirements, it generally 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 redemption or other sale or exchange of the
Fund's shares held for six months or less will be treated as a long-term capital
loss to the extent of any long-term capital gain distribution received on the
shares. A portion of the dividends (but not capital gains distributions) paid by
the Fund may be
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eligible for the dividends received deduction for corporate shareholders to the
extent that the Fund's income consists of dividends paid by United States
corporations. If a shareholder is exempt from Federal income tax, the
shareholder will not generally be taxed on amounts distributed by the Fund.
Dividends and interest received by the Fund on foreign securities may give
rise to withholding and other taxes imposed by foreign countries. It is expected
that foreign taxes paid by the Fund will be treated as expenses of the Fund. Tax
conventions between certain countries and the United States may reduce or
eliminate such taxes.
If the amount of the Fund's distributions for a taxable year exceeds the
Fund's tax earnings and profits available for distribution, all or portion or
the distributions may be treated as a return of capital or as capital gains. In
the event a distribution is treated as a return of capital, the shareholder's
basis in his or her Fund shares will be reduced to the extent the distribution
is so treated.
At certain levels of taxable income, the Internal Revenue Code provides a
preferential tax rate for long-term capital gains. Long-term capital gains of
taxpayers other than corporations are taxed at a 28% maximum rate, whereas
ordinary income is taxed at a 39.6% maximum rate. Capital losses continue to be
deductible only against capital gains plus (in the case of taxpayers other than
corporations) $3,000 of ordinary income annually ($1,500 for married individuals
filing separately).
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
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exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder
generally will incur brokerage costs in converting the assets to cash. The
method of valuing securities used to make redemption in-kind will be the same as
the method of valuing portfolio securities described under Section 8.
11. TAX-SHELTERED RETIREMENT PLANS
The Fund offers a Profit-Sharing Plan, a Money Purchase Pension Plan, an
Individual Retirement Account and a 403(b) Custodial Account for adoption by
employers and individuals who wish to participate in such Plans by accumulating
shares of the Fund with tax-deductible dollars.
PROFIT-SHARING AND MONEY PURCHASE PENSION PLANS
Employers, self-employed individuals and partnerships may make
tax-deductible contributions to the tax-qualified retirement plans offered by
the Fund. All income and capital gains in the Plans are tax free until
withdrawn. The amounts that are deductible depend upon the type of Plan or Plans
adopted.
If you, as an employer, self-employed person or partnership, adopt the
Profit-Sharing Plan, you may vary the amount of your contributions from year to
year and may elect to make no contribution at all for some years. If you adopt
the Money Purchase Pension Plan, you must commit yourself to make a contribution
each year according to a formula in the Plan that is based upon your and your
employees' compensation or earned income. By adopting both the Profit-Sharing
and the Money Purchase Pension Plan, you can increase the amount of
contributions that you may deduct in any one year.
If you wish to purchase shares of the Fund in conjunction with one or both
of these tax-qualified plans, you may use an Internal Revenue Service approved
prototype Trust Agreement and Retirement Plan available from the Fund. IFTC
serves as trustee of the Plan, for which it charges an annual trustee's fee of
$12 for each Fund or Berger 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 Fund or the Berger Cash Account Trust
Money Market Portfolios, which are then held by the trustee under the terms of
the Plans to create a retirement fund in accordance with the tax code.
Distributions from the Profit-Sharing and Money Purchase Pension Plans generally
may not be made without penalty until the participant reaches age 59 1/2 and
must begin no later than April 1 of the calendar year following the year in
which the participant attains age 70 1/2. A participant who is not a 5% owner of
the employer may postpone such distributions to April 1 of the calendar year
following the year of retirement. This exception does not apply to distributions
from an individual retirement account (IRA).
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Except for required distributions after age 70 1/2, periodic distributions over
more than 10 years and the distribution of any after-tax contributions,
distributions are subject to 20% Federal income tax withholding unless those
distributions are rolled directly to another qualified plan or an IRA.
Participants may not be able to receive distributions immediately upon request
because of certain requirements under Federal tax law. Since distributions which
do not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor regarding the Plans is recommended.
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. Trustees
for 401(k) or other existing plans interested in utilizing Fund shares as an
investment or investment alternative in their plans should contact the Fund at
1-800-333-1001.
INDIVIDUAL RETIREMENT ACCOUNT (IRA)
If you are an individual with compensation or earned income, whether or not
you are actively participating in an existing qualified retirement plan, you can
provide for your own retirement by adopting an IRA. Under an IRA, you can
contribute each year up to the lesser of 100% of your compensation or $2,000. If
you have a nonemployed spouse (or if your spouse elects to be treated as having
no compensation), you may make contributions totaling up to $4,000 to two IRAs
(with no more than $2,000 being contributed to either account). 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 Fund or Berger Cash Account Trust Money Market Portfolio in which the
IRA is invested.
Distributions from an IRA generally may not be made without penalty until
you reach age 59 1/2 and must begin no later than April 1 of the calendar year
following the year in which you attain age 70 1/2. Since distributions which do
not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor is recommended.
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In order to receive the necessary materials to create an IRA account,
please write to the Fund, c/o Berger Associates, Inc., P.O. Box 5005, Denver,
Colorado 80217, or call 1-800-333-1001.
403(B) CUSTODIAL ACCOUNTS
If you are employed by a public school system or certain tax-exempt
organizations such as private schools, colleges, universities, hospitals,
religious and charitable or other nonprofit organizations, you may establish a
403(b) Custodial Account. Your employer must participate in the establishment of
the account.
Your employer will automatically deduct the amount you designate from your
gross salary and contribute it to your 403(b) Custodial Account. The amount
which you may contribute annually under a salary reduction agreement is
generally the lesser of $9,500 or your exclusion allowance, which is based upon
a specified formula. There is a $50 minimum investment in the 403(b) Custodial
Account. Contributions made to the account reduce the amount of your current
income subject to Federal income tax. Federal income tax is not paid on your
contribution until you begin making withdrawals. In addition, all income and
capital gains in the account are tax-free until withdrawn.
Withdrawals from your 403(b) Custodial Agreement may begin as soon as you
reach age 59-1/2 and must begin no later than April 1 of the year following the
later of the calendar year in which you attain age 70 1/2 or the calendar year
in which you retire. Except for required distributions after age 70 1/2 and
periodic distributions over more than 10 years, distributions are subject to 20%
Federal income tax withholding unless those distributions are rolled directly to
another 403(b) account or annuity or an individual retirement account (IRA). You
may not be able to receive distributions immediately upon request because of
certain notice requirements under federal tax law. Since distributions which do
not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor regarding the 403(b) Custodial
Account is recommended.
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 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.
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<PAGE>
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 in
which the shareholder is invested. To establish a Systematic Withdrawal account,
the shareholder deposits Fund shares with the Fund and appoints the Fund as
agent to redeem shares in the shareholder's account in order to make monthly,
quarterly, semi-annual or annual withdrawal payments to the shareholder of a
fixed amount. The minimum withdrawal payment is $50.00. These payments generally
will be made on the 25th day of each month.
Withdrawal payments are not yield or income on the shareholder's
investment, since portions of each payment will normally consist of a return of
the shareholder's investment. Depending on the size of the disbursements
requested and the fluctuation in value of the Fund's portfolio, redemptions for
the purpose of making such disbursements may reduce or even exhaust the
shareholder's account.
The shareholder may vary the amount or frequency of withdrawal payments,
temporarily discontinue them, or change the designated payee or payee's address,
by notifying the Fund. The shareholder may, of course, make additional deposits
of Fund shares in the shareholder's account at any time.
Since redemption of shares to make withdrawal payments is a taxable event,
each investor should consult a tax advisor concerning proper tax treatment of
the redemption.
Any shareholder may exchange any or all of the shareholder's shares in the
Fund for shares of any of the other available Berger Funds or for shares of the
Money Market Portfolio, the Government Securities Portfolio or the Tax-Exempt
Portfolio of the Berger Cash Account Trust ("Berger CAT Portfolios"), separately
managed, unaffiliated money market funds, without charge, after receiving a
current prospectus of the other fund or Berger CAT Portfolio. The exchange
privilege with the Berger CAT Portfolios does not constitute an offering or
recommendation of the shares of any such Berger CAT Portfolio by any of the
funds 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., via a personal computer through on-line service
providers or other on-line access points approved by the Fund, 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
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<PAGE>
the shares of the Fund or Berger CAT Portfolio being acquired in the exchange
are not eligible for sale. Shareholders automatically have telephone and on-line
privileges to authorize exchanges unless they specifically decline this service
in the account application or in writing.
13. PERFORMANCE INFORMATION
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 period
since the Fund's registration statement became effective, if shorter. These are
the rates of return that would equate the initial amount invested to the ending
redeemable value. These rates of return are calculated pursuant to the following
formula: P(1 + T)n = ERV (where P = a hypothetical initial payment of $1,000, T
= the average annual total return, n = the number of years and ERV = the ending
redeemable value of a hypothetical $1,000 payment made at the beginning of the
period). All total return figures reflect the deduction of a proportional share
of Fund expenses on an annual basis, and assume that all dividends and
distributions are reinvested when paid.
14. ADDITIONAL INFORMATION
The Fund is a separate portfolio established on August 22, 1997, under the
Berger Investment Portfolio Trust, a Delaware business trust established under
the Delaware Business Trust Act. The Trust is authorized to issue an unlimited
number of shares of beneficial interest in series or portfolios, which may be
divided into classes. Currently, the Fund is one of three 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,
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<PAGE>
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 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 possibility that these
circumstances would occur is remote. The trustees intend to conduct the
operations of the Trust and the Fund so as to avoid, to the extent possible,
liability of shareholders for liabilities of the Trust or the Fund.
Shares of the Fund have no preemptive rights, and since the Fund has only
one class of securities there are no sinking funds or arrearage provisions which
may affect the rights of the Fund shares. Fund shares have no conversion or
subscription rights. Shares of the Fund may be transferred by endorsement, or
other customary methods, but the Fund is not bound to recognize any transfer
until it is recorded on its books.
Insofar as the management of the Fund is aware, as of August 31, 1997, no
person owned, beneficially or of record, more than 5% of the outstanding shares
of the Fund.
DISTRIBUTION
The Distributor is the principal underwriter of the Fund's shares. The
Distributor is a registered broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc. The
Distributor acts as the agent of the Fund in connection with the sale of its
shares in all states in which the shares are eligible for sale and in which the
Distributor is qualified as a broker-dealer.
The Trust, on behalf of the Fund, and the Distributor are parties to a
Distribution Agreement that continues through April 1999, and thereafter from
year to year if such continuation is specifically approved at least annually by
the trustees or by vote of a majority of the outstanding shares of the Fund and
in either case by vote of a majority of the trustees of the Trust who are not
"interested persons" (as that term is defined in the Investment
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<PAGE>
Company Act of 1940) of the Trust or the Distributor. The Distribution Agreement
is subject to termination by the Trust or the Distributor on 60 days' prior
written notice, and terminates automatically in the event of its assignment.
Under the Distribution Agreement, the Distributor continuously offers the Fund's
shares and solicits orders to purchase Fund shares at net asset value.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado, acts
as counsel to the Fund.
Price Waterhouse, 950 Seventeenth Street, Denver, Colorado, has been
appointed to act as independent accountants for the Fund for the fiscal year
ended September 30, 1997.
The Fund 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 Fund of which this Statement of Additional
Information is a part. If further information is desired with respect to the
Fund or such securities, reference is made to the Registration Statement and the
exhibits filed as a part thereof.
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<PAGE>
APPENDIX A
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard & Poor's are
a generally accepted measurement of credit risk. However, they are subject to
certain limitations. Ratings are generally based upon historical events and do
not necessarily reflect the future. In addition, there is a period of time
between the issuance of a rating and the update of the rating, during which time
a published rating may be inaccurate.
KEY TO MOODY'S CORPORATE RATINGS
Aaa-Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa-Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
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.
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<PAGE>
B-Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa-Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca-Bonds which are rated Ca represent obligations which are speculative in
a high degree. Such issues are often in default or have other marked
shortcomings. C-Bonds which are rated C are the lowest rated class of bonds and
issues so rated can be regarded as having extremely poor prospects of ever
attaining any real investment standing.
Note: Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic category.
KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in 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,
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<PAGE>
these are out-weighed by the large uncertainties or major risk
exposures to adverse conditions.
C1-The rating C1 is reserved for income bonds on which no interest is being
paid.
D-Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
Plus (+) or Minus (-)-The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
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<PAGE>
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 August 22, 1997, was as follows:
(1) (2)
Number of
Title of Class Record Holders
Shares of Beneficial 90,384
Interest in Berger Small
Company Growth Fund
Shares of Beneficial 18,343
Interest in Berger New
Generation Fund
Shares of Beneficial -0-
Interest in Berger
Balanced Fund
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<PAGE>
Item 27. INDEMNIFICATION
Article IX, Section 2 of the Trust Instrument for Berger Investment
Portfolio Trust (the "Trust"), of which the Fund is a series, provides for
indemnification of certain persons acting on behalf of the Trust to the fullest
extent permitted by the law. In general, trustees, officers, employees and
agents will be indemnified against liability and against all expenses incurred
by them in connection with any claim, action, suit or proceeding (or settlement
thereof) in which they become involved by virtue of their Trust office, unless
their conduct is determined to constitute willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties, or unless it has been
determined that they have not acted in good faith in the reasonable belief that
their actions were in or not opposed to the best interests of the Trust. The
Trust also may advance money for these expenses, provided that the trustees,
officers, employees or agents undertake to repay the Trust if their conduct is
later determined to preclude indemnification. The Trust has the power to
purchase insurance on behalf of its trustees, officers, employees and agents,
whether or not it would be permitted or required to indemnify them for any such
liability under the Trust Instrument or applicable law, and the Trust has
purchased and maintains an insurance policy covering such persons against
certain liabilities incurred in their official capacities.
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
The business of Berger Associates, Inc., the investment
adviser of the Fund, is described in the Prospectus in Section 5 and in the
Statement of Additional Information in Section 3 which are included in this
Registration Statement. Information relating to the business and other
connections of the officers and directors of Berger Associates (current and for
the past two years) is listed in Schedules A and D of Berger Associates' Form
ADV as filed with the Securities and Exchange Commission (File No. 801-9451,
dated February 28, 1997), which information from such schedules is incorporated
herein by reference.
Item 29. PRINCIPAL UNDERWRITERS
(a) Investment companies (other than the Fund) for which the
Registrant's principal underwriter also acts as principal underwriter:
The One Hundred Fund, Inc.
Berger One Hundred and One Fund, Inc.
Berger Investment Portfolio Trust
- --Berger Small Company Growth Fund
- --Berger New Generation Fund
Berger Omni Investment Trust
- --Berger Small Cap Value Fund
Berger Institutional Products Trust
- --Berger IPT - 100 Fund
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<PAGE>
- --Berger IPT - Growth and Income Fund --Berger IPT - Small Company Growth Fund
- --Berger/BIAM IPT - International Fund Berger/BIAM Worldwide Funds Trust
- --Berger/BIAM International Fund --Berger/BIAM International Institutional Fund
- --Berger/BIAM International CORE Fund
(b) For Berger Distributors, Inc.:
================================================================================
Name Positions and Positions and
Offices with Offices with
Underwriter Registrant
- --------------------------------------------------------------------------------
Craig D. Cloyed President and Vice President
Director
- --------------------------------------------------------------------------------
David G. Mertens Vice President and None
Director
- --------------------------------------------------------------------------------
David J. Schultz Chief Financial Assistant Treasurer
Officer
- --------------------------------------------------------------------------------
Brian S. Ferrie Chief Compliance None
Officer
- --------------------------------------------------------------------------------
Kevin R. Fay Director Vice President,
Secretary and
Treasurer
================================================================================
The principal business address of Mr. Mertens is 1850
Parkway Place, Suite 420, Marietta, GA 30067. The principal business address of
each of the other persons in the table above is
210 University Blvd., Suite 900, Denver, CO 80206.
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act and the rules promulgated thereunder
are maintained as follows:
(a) Shareholder records are maintained by the
Registrant's sub-transfer agent, DST Systems,
Inc., P.O. Box 419958, Kansas City, MO 64141;
(b) Accounting records relating to cash and other money
balances; asset, liability, reserve, capital,
income and expense accounts; portfolio securities;
purchases and sales; and brokerage commissions are
maintained by the Registrant's Recordkeeping and
Pricing Agent, Investors Fiduciary Trust Company
("IFTC"), 127 West 10th
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<PAGE>
Street, Kansas City, Missouri 64105. Other records
of the Registrant relating to purchases and sales;
the Trust Instrument, minute books and other trust
records; brokerage orders; performance information
and other records are maintained at the offices of
the Registrant at 210 University Boulevard, Suite
900, Denver, Colorado 80206.
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 Agreement entered into
between the Registrant and Berger Associates, Inc., investment adviser to the
Registrant.
Item 32. UNDERTAKINGS
(a) 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.
(b) Registrant hereby undertakes to file a post-effective
amendment, containing reasonably current financial statements relating to the
Berger Balanced Fund (which need not be certified) within four to six months of
the later of the effective date of this amendment to the Registration Statement
or commencement of operations of such Fund.
(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
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<PAGE>
applicants access to a list of the names and addresses of all shareholders of
record of the Registrant, or (ii) inform such applicants of the approximate
number of shareholders of record and the approximate cost of mailing the
proposed communication and form of request.
3. If the Trustees elect to follow the course specified in
clause (ii), above, the Trustees, upon the written request of such applicants
accompanied by tender of the material to be mailed and the reasonable expenses
of the mailing, will, with reasonable promptness, mail such material to all
shareholders of record, unless within 5 business days after such tender the
Trustees shall mail to such applicants and file with the Securities and Exchange
Commission (the "Commission"), together with a copy of the material requested to
be mailed, a written statement signed by at least a majority of the Trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
therein not misleading, or would be in violation of applicable law, and
specifying the basis of such opinion.
4. If the Commission enters an order either refusing to
sustain any of the Trustees' objections or declaring that any objections
previously sustained by the Commission have been resolved by the applicants, the
Trustees will cause the Registrant to mail copies of such material to all
shareholders of record with reasonable promptness after the entry of such order
and the renewal of such tender.
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<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 and County of Denver, and
State of Colorado, on the 28th day of August, 1997.
BERGER INVESTMENT PORTFOLIO TRUST
(Registrant)
By /s/ Gerard M. Lavin
Name: Gerard M. Lavin
Title: President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Gerard M. Lavin, Kevin R. Fay and Lester
R. Woodward, and each of them, his or her true and lawful attorneys-in-fact
and agents, with full power of substitution and resubstitution, and in his or
her name, place and stead, in any and all capacities to sign any and all
amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
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
Gerard M. Lavin President (Principal August 28, 1997
- ------------------------- Executive Officer)
Gerard M. Lavin and Director
Kevin R. Fay Vice President, August 28, 1997
- ------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
William M.B. Berger Trustee August 28, 1997
- -------------------------
William M.B. Berger
Dennis E. Baldwin Trustee August 28, 1997
- -------------------------
Dennis E. Baldwin
Louis R. Bindner Trustee August 28, 1997
- -------------------------
Louis R. Bindner
Katherine A. Cattanach Trustee August 28, 1997
- -------------------------
Katherine A. Cattanach
Lucy Black Creighton Trustee August 28, 1997
- -------------------------
Lucy Black Creighton
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<PAGE>
Paul R. Knapp Trustee August 28, 1997
- -------------------------
Paul R. Knapp
Harry T. Lewis, Jr. Trustee August 28, 1997
- -------------------------
Harry T. Lewis, Jr.
Michael Owen Trustee August 28, 1997
- -------------------------
Michael Owen*
William Sinclaire Trustee August 28, 1997
- -------------------------
William Sinclaire*
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<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
(7) Exhibit 5.2 Form of Investment Advisory
Agreement for Berger New
Generation Fund
* Exhibit 5.3 EX-99.B5.3 Form of Investment Advisory
Agreement for Berger Balanced
Fund
* Exhibit 6 EX-99.B6 Form of Distribution Agreement
between the Trust and Berger
Distributors, Inc.
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
(7) Exhibit 9.2.2 Form of Administrative
Services Agreement for Berger
New Generation Fund
* Exhibit 9.2.3 EX-99.B9.2.3 Form of Administrative
Services Agreement for Berger
Balanced 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
(8) Exhibit 9.5.2 Services Agreement between
Berger Associates, Inc.,
Charles Schwab & Co., Inc. and
Berger Investment Portfolio
Trust on behalf of Berger New
Generation Fund
(3) Exhibit 10 Opinion and consent of Davis,
Graham & Stubbs LLP
(8) Exhibit 11 Consent of Price Waterhouse
LLP
Exhibit 12 Not applicable
<PAGE>
(3) Exhibit 13 Investment Letter from Initial
Stockholder
* Exhibit 14.1 EX-99.B14.1 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
(7) Exhibit 15.2 Rule 12b-1 Plan for Berger New
Generation Fund
* Exhibit 15.3 EX-99.B15.3 Rule 12b-1 Plan for Berger
Balanced Fund
(4) Exhibit 16 Schedule for Computation of
Performance Data
(8) Exhibit 17.1 Financial Data Schedule for
Berger Small Company Growth
Fund
(8) Exhibit 17.2 Financial Data Schedule for
Berger New Generation Fund
** Exhibit 17.3 Financial Data Schedule for
Berger Balanced 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.
(7) Previously filed on February 23, 1996, with Post-Effective
Amendment No. 8 to the Registrant's Registration Statement on Form
N-1A and incorporated herein by reference.
<PAGE>
(8) Previously filed on October 30, 1996, with Post-Effective Amendment
No. 9 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference.
EXHIBIT 5.3
INVESTMENT ADVISORY AGREEMENT
BERGER BALANCED FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this ____ day
of _________, 1997, between BERGER ASSOCIATES, INC., a Delaware corporation
("Berger Associates"), and BERGER INVESTMENT PORTFOLIO TRUST, a Delaware
business trust (the "Trust"), with respect to the BERGER BALANCED FUND, a series
of the Trust (the "Fund").
RECITALS
A. 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 its shares for public offering under the Securities Act of 1933, as
amended (the "1933 Act").
B. 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.
C. 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.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints Berger Associates as investment
adviser and manager with respect to the Fund for the period and on the terms set
forth in this Agreement. Berger Associates hereby accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. INVESTMENT ADVISORY FUNCTIONS. In its capacity as investment adviser to
the Fund, Berger Associates shall have the following duties and
responsibilities:
(a) To manage the investment operations of the Fund and the composition of
its investment portfolio, and to determine without prior consultation
with the Trust, what securities and other assets of the Fund will be
acquired, held, disposed of or loaned, in conformity with the
investment objective, policies and restrictions and the other
statements concerning the Fund in the Trust's trust instrument, as
amended from time to time (the "Trust Instrument"), bylaws, and
registration statements under the 1940 Act and the 1933 Act, the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), the
rules thereunder, and all other applicable federal and state laws
<PAGE>
and regulations, and the provisions of the Internal Revenue Code of
1986, as amended, 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
decisions of Berger Associates, and the investment considerations
which have given rise to those decisions;
(c) To place orders for the purchase and sale of securities for
investments of the Fund and for other related transactions; to give
instructions to the custodian (including any subcustodian) of the Fund
as to deliveries of securities to and from such custodian and receipt
and payments of cash for the account of the Fund, and advise the Trust
on the same day such instructions are given; to submit such reports
relating to the valuation of the Fund's assets and to otherwise assist
in the calculation of the net asset value of interests in the Fund as
may reasonably be requested; on behalf of the Fund, to exercise such
voting rights, subscription rights, rights to consent to corporate
action and any other rights pertaining to the Fund's assets that may
be exercised, in accordance with any policy pertaining to the same
that may be adopted or agreed to by the Trustees of the Trust, or, in
the event that the Trust retains the right to exercise such voting and
other rights, to furnish the Trust with advice as to the manner in
which such rights should be exercised;
(d) To maintain all books and records required to be maintained by Berger
Associates pursuant to the 1940 Act and the rules and regulations
promulgated thereunder, as the same may be amended from time to time,
with respect to transactions on behalf of the Fund, and shall furnish
the Trustees with such periodic and special reports as the Trustees
reasonably may request. Berger Associates agrees that all records
which it maintains for the Fund or the Trust are the property of the
Trust, agrees to permit the reasonable inspection thereof by the Trust
or its designees and agrees to preserve for the periods prescribed
under the 1940 Act any records which it maintains for the Trust and
which are required to be maintained under the 1940 Act, and further
agrees to surrender promptly to the Trust or its designees any records
which it maintains for the Trust upon request by the Trust; and
(e) At such times as shall be reasonably requested by the Trustees, to
provide the Trustees with economic, operational and investment data
and reports, including without limitation all information and
materials reasonably requested by or requested to be delivered to the
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<PAGE>
Trustees of the Trust pursuant to Section 15(c) of the 1940 Act, and
make available to the Trustees any economic, statistical and
investment services normally available to similar investment company
clients of Berger Associates.
3. FURTHER OBLIGATIONS. In all matters relating to the performance of this
Agreement, Berger Associates shall act in conformity with the Trust's Trust
Instrument, bylaws and currently effective registration statements under the
1940 Act and the 1933 Act and any amendments or supplements thereto (the
"Registration Statements") and with the written policies, procedures and
guidelines of the Fund, and written instructions and directions of the Trustees
of the Trust and shall comply with the requirements of the 1940 Act, the
Advisers Act, the rules thereunder, and all other applicable federal and state
laws and regulations. The Trust agrees to provide Berger Associates with copies
of the Trust's Trust Instrument, bylaws, Registration Statements, written
policies, procedures and guidelines, and written instructions and directions of
the Trustees, and any amendments or supplements to any of them at, or, if
practicable, before the time such materials become effective.
4. 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
(d) To compensate Berger Associates for its services in accordance with
the provisions of Section 5 hereof.
5. COMPENSATION. The Trust shall pay to Berger Associates for its services
under this Agreement a fee, payable in United States dollars, at an annual rate
of 0.75% of the average daily net asset value of the Fund. This fee shall be
computed and accrued daily and payable monthly on the last day of each month
during which or part of which this Agreement is in effect. 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.
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<PAGE>
6. EXPENSES.
(a) 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 hereunder or otherwise, including, but
not limited to, 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
and other service providers; 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 preparing, printing and mailing prospectuses
and statements of additional information to shareholders 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.
(b) EXPENSES PAID BY BERGER ASSOCIATES. Berger Associates shall pay all its
own costs and expenses incurred in rendering the services required under this
Agreement. In addition to such costs and expenses, Berger Associates shall incur
and pay the following expenses relating to the Fund's operations:
(i) Reasonable compensation, fees and related expenses of the Trust's
officers and Trustees, except for such Trustees who are not interested
persons of Berger Associates; and
(ii) Rental of offices of the Trust.
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. Absent instructions from the Trust to the contrary, 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
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<PAGE>
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 1940 Act 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 any of its affiliates 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. To the extent consistent with applicable law, purchase or sell orders
for the Fund may be aggregated with simultaneous purchase or sell orders for
other clients of Berger Associates. Whenever Berger Associates simultaneously
places orders to purchase or sell the same security on behalf of the Fund and
one or more other clients of Berger Associates, such orders will be allocated as
to price and amount among all such clients in a manner reasonably believed by
Berger Associates to be fair and equitable to each client. The Trust recognizes
that in some cases, this procedure may adversely affect the results obtained for
the Fund.
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.
10. TERM. This Agreement shall continue in effect until April 30, 1999,
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.
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<PAGE>
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 the Fund or Berger
Associates and, (ii) if required by applicable law, 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, so long as its
services under this Agreement are not materially adversely affected or otherwise
impaired thereby. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of Berger Associates to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature. It is understood that trustees, officers and 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", "approved at least annually" 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. Where the effect of a requirement of the federal securities laws
reflected in any provision
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<PAGE>
of this Agreement is made less restrictive by a rule, regulation, order,
interpretation or other authority of the Securities and Exchange Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation, order, interpretation or other
authority.
17. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Colorado (without giving effect to the conflicts of laws
principles thereof) and the 1940 Act. To the extent that the applicable laws of
the State of Colorado conflict with the applicable provisions of the 1940 Act,
the latter shall control.
18. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
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:_________________________
Gerard M. Lavin
President
BERGER INVESTMENT PORTFOLIO TRUST,
with respect to the Berger Balanced Fund
By:_________________________
Name:
Title:
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EXHIBIT 6
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made this 31st day of
March, 1997, by and between BERGER INVESTMENT PORTFOLIO TRUST, a business trust
organized and existing under the laws of the State of Delaware (the "Trust"),
and BERGER DISTRIBUTORS, INC., a corporation organized and existing under the
laws of the State of Colorado (the "Distributor"). This Agreement applies
separately to each series of the Trust, whether now existing or hereafter
created, listed on Exhibit A hereto as it may be amended from time to time (each
a "Fund" and collectively the "Funds").
RECITALS
A. The Trust is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act").
B. The Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and is registered as a
broker-dealer under the laws of each state of the United States and in each
other jurisdiction in which the Distributor engages in business to the extent
that the laws of such states and such jurisdictions require such registration,
and is a member of the National Association of Securities Dealers, Inc. (the
"NASD") (such registration and membership are referred to collectively as the
"Registrations").
C. The Trust and the Distributor desire the Distributor to act as the
principal underwriter for the public offering of the shares of beneficial
interest (the "Shares") of each Fund, whether now existing or hereafter created.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. The Trust appoints the Distributor to act as distributor
of the Shares of each Fund.
2. TRUST TO FURNISH DOCUMENTS. The Trust shall furnish the Distributor
with copies of any registration statements, prospectuses or statements of
additional information pertaining to any Fund filed by the Trust with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act"), or the 1940 Act, together with any financial
statements and exhibits included therein, and all amendments or supplements
thereto hereafter filed.
<PAGE>
The Trust shall also furnish the Distributor with such other certificates
or documents as the Distributor may from time to time, in its discretion,
reasonably deem necessary or appropriate in order to perform its duties under
this Agreement properly.
3. SOLICITATION OF ORDERS FOR PURCHASE OF SHARES.
(a) Subject to the provisions of Sections 4 and 7 hereof, and to such
minimum purchase requirements as may from time to time be indicated in each
Fund's prospectus or statement of additional information, the Distributor is
authorized to solicit, as agent on behalf of the Trust, unconditional orders for
purchases of each Fund's Shares authorized for issuance and registered under the
1933 Act, provided that:
(1) The Distributor shall act solely as a disclosed agent on
behalf of and for the account of the Trust;
(2) The Distributor shall confirm or arrange with the transfer
agent for the Shares to confirm all purchases of the Shares. Such confirmation
shall conform to the requirements of the 1934 Act and the rules thereunder and
shall clearly state that the Distributor is acting as agent in the transaction;
(3) The Distributor shall have no liability for payment for
purchases of Shares it sells as agent, but will use reasonable efforts to
assure that each Fund receives payment for Shares purchased through the
Distributor in accordance with the requirements of applicable law and
regulations; and
(4) Each order to purchase Shares of a Fund received by the
Distributor shall be subject to acceptance by the Trust and entry of the order
on such Fund's records or shareholder accounts and is not binding until so
accepted and entered.
The purchase price of a Fund's Shares to the public shall be the
public offering price described in Section 6 hereof.
(b) The Distributor shall use reasonable efforts (but only in states
and jurisdictions in which the Distributor may lawfully do so) to solicit from
investors unconditional orders to purchase Shares of each Fund.
4. SOLICITATION OF ORDERS TO PURCHASE SHARES BY TRUST. The rights granted
to the Distributor shall be non-exclusive in that the Trust reserves the right
to otherwise solicit purchases from, and sell Shares to, investors, including
without limitation the right to issue Shares in connection with the merger or
consolidation of any other investment company, trust or personal holding company
with a Fund, or a Fund's acquisition, by the purchase or otherwise, of all or
substantially all of the assets of an investment company, trust or personal
holding company, or substantially all of the outstanding shares or interests of
any such entity.
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<PAGE>
5. NO COMPENSATION; PAYMENT OF EXPENSES. The Distributor will not be
entitled to any compensation with respect to its services under this Agreement.
The Distributor shall pay its own expenses incurred in the discharge of its
duties hereunder, but shall not be responsible to pay any expenses of the Trust
or any Fund, including without limitation, any charges of the Trust's transfer,
recordkeeping, dividend disbursing and redemption agents, if any; any expenses
of preparation, printing and mailing of confirmations; any expenses of
preparation and printing of annual or more frequent revisions of each Fund's
prospectus and statement of additional information and of supplying copies
thereof to shareholders; any expenses of registering and maintaining the
registrations of the Trust under the 1940 Act and the sale of the Trust's Shares
under the 1933 Act; and any expenses of registering or qualifying and
maintaining registrations or qualifications of each Fund and of the Shares for
sale under securities laws of various states or other jurisdictions and of
registration or qualification of the Trust and each Fund under all laws
applicable to the Trust or its business activities.
6. PUBLIC OFFERING PRICE. All solicitations by the Distributor pursuant to
this Agreement shall be for orders to purchase Shares of a Fund at the public
offering price. The public offering price for each accepted order for a Fund's
Shares will be the net asset value per Share next determined by the Trust after
it or its authorized agent or designee accepts such order. The net asset value
per Share of the Shares shall be determined in the manner provided in the
Trust's Trust Instrument and Bylaws as now in effect or as may be amended, and
as reflected in the then current prospectus and statement of additional
information pertaining to such Fund.
7. SUSPENSION OF SALES. If and whenever the determination of a Fund's net
asset value is suspended and until such suspension is terminated, no further
orders for Shares shall be accepted by the Trust except such unconditional
orders placed with the Trust and accepted by it before the suspension. In
addition, the Trust reserves the right to suspend sales of Shares of a Fund if,
in the judgment of the Trustees, it is in the best interest of the Fund to do
so, such suspension to continue for such period as may be determined by the
Trustees; and in that event, (i) at the direction of the Trust, the Distributor
shall suspend its solicitation of orders to purchase Shares of such Fund until
otherwise instructed by the Trust and (ii) no orders to purchase Shares of such
Fund shall be accepted by the Trust while such suspension remains in effect
unless otherwise directed by its Trustees.
8. SOLICITATION MATERIALS; AUTHORIZED REPRESENTATIONS.
(a) The Trust shall make available to the Distributor, without cost to
the Trust, such number of copies of each Fund's currently effective prospectus
and statement of additional information and reports to shareholders and copies
of all other information that the Distributor may reasonably request for use in
connection with the distribution of Shares.
(b) The Distributor is not authorized by the Trust to give with
respect to any Fund any information or to make any representations in
connection with the sale of Shares other than the information and
representations contained in the Trust's registration statement, or such Fund's
prospectus or statement of additional information, as amended or supplemented
from time to time, or contained in shareholder reports or other material
pertaining
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<PAGE>
to such Fund that may be prepared by or on behalf of the Trust or approved by
the Trust for the Distributor's use.
9. REGISTRATION OF ADDITIONAL SHARES. The Trust hereby agrees to register
either (i) an indefinite number of Shares pursuant to Rule 24f-2 under the 1940
Act, or (ii) a definite number of Shares as the Trust shall deem advisable
pursuant to Rule 24e-2 under the 1940 Act, or both. The Trust will, in
cooperation with the Distributor, take such action as may be necessary from time
to time to register or qualify the Shares of each Fund (so registered or
otherwise qualified for sale under the 1933 Act), in any state or jurisdiction
mutually agreeable to the Distributor and the Trust, and to maintain such
registration or qualification; provided, however, that nothing herein shall be
deemed to prevent the Trust from registering or qualifying the Shares without
approval of the Distributor in any state or jurisdiction it deems appropriate.
10. CONFORMITY WITH LAW. The Distributor agrees that in soliciting orders
to purchase Shares it shall duly conform in all respects with applicable federal
and state laws and with the rules and regulations of the NASD. The Distributor
will use its best efforts to maintain its Registrations in good standing during
the term of this Agreement and will promptly notify the Trust in the event of
(i) the suspension or termination of any of the Registrations, (ii) the
occurrence of any event that would disqualify the Distributor from acting as the
principal underwriter of the Trust or any of its Funds pursuant to Section 9(a)
of the 1940 Act or otherwise, or (iii) the institution of any administrative,
regulatory or judicial proceeding against the Distributor.
11. INDEPENDENT CONTRACTOR. The Distributor shall be an independent
contractor and none of its officers, directors, employees or representatives
shall be acting as an employee or other agent of the Trust in the performance of
the Distributor's duties hereunder. The Distributor shall be responsible for its
own conduct and the employment, control and conduct of its agents and employees
and for injury to such agents or employees or to others through its agents and
employees and agrees to pay or to insure that persons other than the Trust will
pay all compensation and taxes due with respect to the activities of its agents
and employees.
12. INDEMNIFICATION. The Distributor agrees to indemnify and hold harmless
the Trust and each of its Trustees, officers, employees and representatives, and
each person, if any, who controls the Trust within the meaning of Section 15 of
the 1933 Act, against any and all losses, liabilities, damages, claims and
expenses (including the reasonable costs of investigating or defending any
alleged loss, liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Trust or such Trustees,
officers, employees, representatives, or controlling person or persons may
become subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the offer or sale of any Shares of any Fund or any
other security to any person which (i) may be based upon any wrongful act by the
Distributor or any of the Distributor's directors, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, statement of additional information, shareholder report or other
information covering Shares of such Fund filed or made public by the Trust or
any amendment thereof or supplement thereto or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein
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<PAGE>
not misleading, if such statement or omission was made in reliance upon written
information furnished or confirmed by the Distributor to the Trust. In no case
is the Distributor's indemnity in favor of the Trust, or any person indemnified,
to be deemed to protect the Trust or such indemnified person against any
liability to which the Trust or such person would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
or such person's duties or by reason of its or such person's reckless disregard
of its or such person's obligations and duties under this Agreement. The Trust
or any person indemnified, as the case may be, shall notify the Distributor in
writing of the claim within a reasonable time after the summons or other first
written notification giving information of the nature of the claim is served
upon the Trust or upon such person (or after the Trust or such person shall have
received notice of such service on any designated agent); however, failure to so
notify the Distributor of any such claim shall not relieve the Distributor from
any liability hereunder unless and to the extent that its ability to defend
against such claim is prejudiced by such failure, nor from any liability that
the Distributor may have to the Trust or any person against whom such action is
brought otherwise than on account of the Distributor's indemnity agreement
contained in this section.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if Distributor so elects, to assume the defense of any action
brought to enforce any such claim but, if the Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the
Distributor and reasonably satisfactory to the persons indemnified who are
defendants in the action. In the event that the Distributor elects to assume the
defense of any such action and retain such legal counsel, persons indemnified
who are defendants in the action shall bear the fees and expenses of any
additional legal counsel retained by them. If the Distributor does not elect to
assume the defense of any such action, the Distributor shall reimburse persons
indemnified who are defendants in such action for the reasonable fees of any
legal counsel retained by them in such litigation.
The Trust agrees to indemnify and hold harmless the Distributor and each of
its directors, officers, employees and representatives, and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act,
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expenses and reasonable legal counsel fees incurred in
connection therewith) to which the Distributor or such of its directors,
officers, employees, representatives or controlling person or persons may become
subject under the 1933 Act, under any other statute, at common law, or
otherwise, arising out of the offer or sale of any Shares of any Fund to any
person which (i) may be based upon any wrongful act by the Trust or any of its
Trustees, officers, employees or representatives other than the Distributor, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, statement of
additional information, shareholder report or other information covering Shares
filed or made public by the Trust or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon written
information furnished or confirmed by the Distributor to the Trust. In no case
is the Trust's indemnity in favor of the Distributor or any person indemnified
to be deemed to protect the Distributor or such
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<PAGE>
indemnified person against any liability to which the Distributor or such
indemnified person would otherwise be subject by reason of willful misfeasance,
bad faith or gross negligence in the performance of its or such person's duties
or by reason of its or such person's reckless disregard of its or such person's
obligations and duties under this Agreement. The Distributor or any person
indemnified, as the case may be, shall notify the Trust in writing of the claim
within a reasonable time after the summons or other first written notification
giving information of the nature of the claim is served upon the Distributor or
upon such person (or after the Distributor or such person shall have received
notice of such service on any designated agent); however, failure to so notify
the Trust of any such claim shall not relieve the Trust from any liability
hereunder unless and to the extent that its ability to defend against such claim
is prejudiced by such failure, nor from any liability which the Trust may have
to the Distributor or any person against whom such action is brought otherwise
than on account of the Trust's indemnity agreement contained in this section.
The Trust shall be entitled to participate, at its own expense, in the
defense or, if the Trust so elects, to assume the defense of any action brought
to enforce such claim but, if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and reasonably
satisfactory to the persons indemnified who are defendants in the action. In the
event that the Trust elects to assume the defense of any such action and retain
such legal counsel, the persons indemnified who are defendants in the action
shall bear the fees and expenses of any additional legal counsel retained by
them. If the Trust does not elect to assume the defense of any such action, the
Trust shall reimburse the persons indemnified who are defendants in such action
for the reasonable fees and expenses of any legal counsel retained by them in
such litigation.
13. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become
effective with respect to each Fund on the Effective Date specified on Exhibit A
hereto with respect to such Fund, and unless terminated as provided herein,
shall remain in effect until the Termination Date specified on Exhibit A hereto
with respect to such Fund, and shall continue thereafter from year to year, but
only so long as such continuance is specifically approved at least annually (a)
by a vote of a majority of the Trustees who are not interested persons of the
Distributor or of the Trust, voting in person at a meeting called for the
purpose of voting on such approval, and (b) by the vote of either the Trustees
or a majority of the outstanding voting securities of the Fund. If the
continuance of this Agreement is not approved as to a Fund, this Agreement shall
nonetheless continue with respect to those Funds as to which such continuance
has been approved. This Agreement may be terminated with respect to an
individual Fund at any time, without the payment of any penalty (a) on 60 days'
written notice, by the Trustees or by a vote of a majority of the outstanding
voting securities of such Fund, or by the Distributor, or (b) immediately, on
written notice by the Trustees, in the event of termination or suspension of any
of the Registrations. This Agreement will automatically terminate in the event
of its assignment.
In interpreting the provisions of this Section 13, the terms "assignment,"
"approved at least annually," "interested persons" and "vote of a majority of
the outstanding voting securities" shall have same meanings as when used in the
1940 Act (in each case as the 1940 Act is now in effect or hereafter may be
amended) and the rules and regulations thereunder, subject to such orders,
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<PAGE>
exemptions and interpretations as may be issued by the SEC under the 1940 Act
and as may be then in effect. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation, order, interpretation or other authority of
the SEC, whether of special or general application, such provisions shall be
deemed to incorporate the effect of such rule, regulation or order.
14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by each party against which enforcement of the change, waiver,
discharge or termination is sought. If the Trust should at any time deem it
necessary or advisable in the best interests of a Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the SEC or any other governmental authority or to obtain any
advantage under state or federal or tax laws and notifies the Distributor of the
form of such amendment, and the reasons therefor, and if the Distributor should
decline to assent to such amendment, the Trust may immediately thereupon
terminate this Agreement as to that Fund.
15. 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.
16. NOTIFICATION BY THE TRUST. The Trust agrees to advise the Distributor
immediately:
(a) of any request by the SEC for amendments to the Trust's
registration statement insofar as it relates to any of the Funds, the
prospectus or the statement of additional information pertaining to any Fund
or for additional information,
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Trust's registration statement insofar as
it relates to any of the Funds, the prospectus or the statement of additional
information pertaining to any Fund or the initiation of any proceeding for that
purpose,
(c) of the occurrence of any material event which makes untrue any
statement made in the Trust's registration statement insofar as it relates to
any of the Funds, the prospectus or the statement of additional information
pertaining to any Fund or which requires the making of a change in order to make
the statements therein not misleading, and
(d) of all actions of the SEC with respect to any amendments to the
Trust's registration statement insofar as it relates to any of the Funds, the
prospectus or the
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<PAGE>
statement of additional information pertaining to any Fund which may from time
to time be filed with the SEC under the 1933 Act.
17. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Colorado (without giving effect to the conflicts of laws
principles thereof) and the 1940 Act. To the extent that the applicable laws of
the State of Colorado conflict with the applicable provisions of the 1940 Act,
the latter shall control.
18. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
19. NOTICE. Any notice required or permitted to be given by a party to this
Agreement or to any other party hereunder shall be deemed sufficient if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such other party at the address
provided below or to the last address furnished by each such other party to the
party giving notice.
If to the Trust: 210 University Boulevard, #900
Denver, Colorado 80206
Attn: Secretary
If to the Distributor: 210 University Boulevard, #900
Denver, Colorado 80206
Attn: Secretary
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BERGER DISTRIBUTORS, INC.
By:
----------------------------------
BERGER INVESTMENT PORTFOLIO TRUST
By:
----------------------------------
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<PAGE>
EXHIBIT A
FUND EFFECTIVE TERMINATION
DATE DATE
Berger Small Company March 31, 1997 April 30, 1998
Growth Fund
Berger New Generation Fund March 31, 1997 April 30, 1998
Berger Balanced Fund September 30, 1997 April 30, 1998
NEW ACCOUNT APPLICATION
Berger Balanced Fund
PID # ____________________For assistance call: (800) 551-5849
STEP1 REGISTER YOUR ACCOUNT (Please choose one)
Please type or print clearly.
(BOX) Individual Account Your Name: First Middle Last
Your Social Security Number
(BOX) Joint Owner Joint Owner's Name: First Middle Last
(BOX) Gift/Transfer to Minor (List one name only for each line.)
Custodian's Name: First Middle Last
Minor's Social Security Number
Minor's Name: First Middle Last
under the (State) Uniform Gifts/Transfers to Minors Act
(BOX) Trust Trustee(s)'s Name Date of Trust
Name of Trust Agreement Trust's Taxpayer Identification Number
(BOX) Corporation/Other
(Please include a corporate resolution.) Name of Corporation
or Other Entity Taxpayer Identification Number
Type of Entity
STEP2 YOUR MAILING ADDRESS
Street Address Apt./Suite #
Daytime Telephone Evening Telephone
City State Zip
Electronic Mail Address
Fax Number
<PAGE>
Citizenship: (BOX) US Citizen (BOX) Non-Resident Alien
(BOX) Resident Alien Country of Tax Residency
STEP3 INITIAL AND SYSTEMATIC INVESTMENT PLANS
Berger Balanced Fund (213)
Minimum Initial Investment - $2,000
Your Initial Investment: $__________________
Enclose your check made payable to the: BERGER FUNDS
(BOX) Automatic Investment Plan - from your bank account. (Note: Step 6 must be
completed.)
Amount per withdrawal: $______________
Please check one or both of the following withdrawal dates:
(BOX) 5th day of month (BOX) 20th day of month
(BOX) Payroll Deduction / Direct Deposit Plan - ($50 minimum)
Check this box to invest through payroll deduction. We will mail you a
form to complete and give to your employer.
STEP4 DISTRIBUTION OPTIONS
All income and capital gains distributions will be reinvested UNLESS you check
the box(es) below:
(BOX) Pay all income in cash
(BOX) Pay all capital gains in cash
STEP5 TELEPHONE TRANSACTION / ON-LINE COMPUTER ACCESS PRIVILEGES
The privileges below allow you to make telephone/on-line purchases, exchanges
and redemptions, subject to the applicable minimums and maximums that are
disclosed in the Prospectus.
(Step 6 must be completed.)
Telephone Transaction Privileges are available on all accounts unless you
specifically decline them below.
<PAGE>
(BOX) I decline the use of telephone transaction privileges.
On-line Computer Access Privileges are available on all accounts unless you
specifically decline them below.
(BOX) I decline the use of on-line computer access.
All telephone and on-line transactions are recorded and written confirmations
indicating the details of all telephone and on-line transactions will be
promptly sent to the shareholder of record. Prior to placing an order, the
shareholder may be required to provide certain identifying information. See the
Prospectus for further information.
STEP6 BANK INFORMATION
You must complete this step if you selected the Automatic Investment Plan in
Step 3. If you did not check a box in Step 5, by completing the bank information
below, you may settle purchase and redemption transactions made by telephone or
on-line via computer access by using wire or electronic funds transfer.
Name of Bank Name(s) on Bank Account
Street Address Bank Account Number
City State Zip
Co-signer Signature (if applicable) Date
Your bank account information must be on file in order to utilize the Automatic
Investment Plan, or to settle by wire or electronic funds transfer any purchase
or redemption transactions made by telephone or by on-line computer access. The
account name(s) at left must exactly match at least one name in Step 1. Any
co-signer of your checking or savings account who is not a joint owner of the
funds must authorize these services by signing at left.
Checking Acct. (BOX) Savings Acct. (BOX)
Please attach a voided check or savings deposit slip.
STEP7 YOUR SIGNATURE
<PAGE>
All of the undersigned represent that they have the authority and legal capacity
to purchase mutual fund shares, all are of legal age in their state and believe
each investment is suitable for themselves. All of the undersigned have received
and read the Prospectus for the investment selected, agree to its terms and
agree that by signing below (a) their account will have exchange privileges with
other Berger Funds and the Portfolios of the Berger Cash Account Trust ("CAT")
and that all information provided in the above steps will apply to any Fund or
Berger CAT Portfolio into which their shares may be exchanged; (b) they hereby
ratify any instructions given on this account and any account into which they
exchange related to the above steps and agree that neither the Funds, Berger CAT
Portfolios, Berger Associates nor BBOI Worldwide will be liable for any loss,
cost or expense for acting upon such instructions (by telephone, computer
on-line access or writing) believed to be genuine and in accordance with the
procedures described in the Prospectus; and (c) their responsibility is to read
the Prospectus of any Fund or Berger CAT Portfolio into which they exchange.
Under penalties of perjury, I certify:
(1) The number shown on this form is my correct social security or taxpayer
identification number and (2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I have not been notified by the
Internal Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
The Internal Revenue Service does not require your consent to any provision of
this document other than the certifications required to avoid backup
withholding.
(Box) Check this box only if the IRS has notified you that you are subject to
backup withholding.
Signature of Owner, Trustee or Custodian Date (exactly the same as Step 1)
Signature of Joint Owner (if applicable) Date (exactly the same as Step 1)
<PAGE>
FOR FASTEST SERVICE POSSIBLE
For the fastest service possible, please make sure you
have completed each of these items:
A.) Include your Social Security or Tax ID number
in Step 1.
B.) Fill in the amount invested in Step 3.
C.) Attach a voided check if you selected the
Automatic Investment Plan in Step 3, or Telephone
Transaction Privileges or On-line Computer Access in
Step 5 and you wish to settle purchase or redemption
transactions by wire or electronic funds transfer.
D.) Sign the form in Step 7 exactly the same as
in Step 1.
E.) Enclose your check made payable to: Berger Funds.
F.) Read all the terms applicable to the services you desire.
G.) Return this application in the postage paid envelope
enclosed or to:
Berger Funds
P.O. Box 419958
Kansas City, MO 64141-6958
(c)1997 Berger Associates, Inc.
EXHIBIT 9.2.3
ADMINISTRATIVE SERVICES AGREEMENT
BERGER BALANCED FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is entered into
effective as of the _____ day of _____________, 1997, by and between BERGER
ASSOCIATES, INC. ("Berger Associates"), and BERGER INVESTMENT PORTFOLIO TRUST, a
Delaware business trust (the "Trust"), with respect to the BERGER BALANCED 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, as
amended (the "1940 Act").
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 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. APPOINTMENT. The Trust hereby appoints Berger Associates as the
administrator of the Fund, to provide to the Fund, at Berger Associates' expense
except as specifically set forth below, all services specified herein, for the
period and on the terms set forth in this Agreement. Berger Associates hereby
accepts such appointment and agrees to render the services and assume the
responsibilities herein set forth, for the compensation herein provided. In
performing its services under this Agreement, Berger Associates shall comply
with all relevant provisions of the 1940 Act and all other applicable federal
and state laws and regulations.
2. SERVICES TO BE PROVIDED. Berger Associates shall provide the following
services to the Fund at Berger Associates' own expense:
(a) coordinating all matters relating to the operations of the Fund,
including any necessary coordination among the investment advisor, transfer
agent, dividend disbursing agent, fund accounting agent, accountants, attorneys
and other parties performing services or operational functions for the Fund;
<PAGE>
(b) providing personnel and assistance necessary to maintain the
qualification and/or registration to sell shares under the federal securities
laws and in each state where Berger Associates has determined such qualification
and/or registration to be advisable;
(c) monitoring the Fund's compliance with (i) the Trust's trust
instrument, as amended from time to time (the "Trust Instrument"), bylaws and
currently effective registration statement under the Securities Act of 1933, as
amended (the "1933 Act") and the 1940 Act and any amendments or supplements
thereto ("Registration Statement"); (ii) the written policies, procedures and
guidelines of the Fund, and the written instructions from the Trustees of the
Trust; (iii) the requirements of the 1933 Act, the 1940 Act, the rules
thereunder, and all other applicable federal and state laws and regulations;
and (iv) the provisions of Subchapter M of the Internal Revenue Code,
applicable to the Fund as a regulated investment company;
(d) supervising the preparation of any or all registration statements
(including prospectuses and statements of additional information), tax returns,
proxy materials, financial statements, notices and reports for filings with
regulatory authorities and distribution to shareholders of the Fund;
(e) issuing certain correspondence to shareholders;
(f) maintaining or supervising the maintenance of certain books and
records;
(g) providing the Trust with adequate personnel, office space,
communications facilities and other facilities necessary for operation of the
Fund as contemplated by this Agreement; and
(h) preparing and rendering to the Trustees of the Trust such periodic
and special reports as the Trustees may reasonably request.
3. EXPENSES AND EXCLUDED EXPENSES. Berger Associates shall pay all its own
costs and expenses incurred in rendering the services required under this
Agreement. Notwithstanding any other provision hereof, it is expressly agreed
that Berger Associates shall not be responsible to pay, except as the parties
may otherwise agree, directly or on behalf of the Fund, any of the Fund's
expenses which shall remain the Trust's own obligation and responsibility to
pay.
4. COMPENSATION. The Trust shall pay to Berger Associates for the services
provided under this Agreement a fee, payable in United States dollars, at an
annual rate of 0.01% of the average daily net asset value of the Fund. Such fee
shall be computed and accrued daily and payable monthly on the last day of each
month during which or part of which this Agreement is in effect.
5. BOOKS AND RECORDS. Berger Associates hereby agrees that all records
which it maintains for the Fund or the Trust hereunder are the property of the
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<PAGE>
Trust, agrees to permit the reasonable inspection thereof by the Trust or its
designees and agrees to preserve for the periods prescribed under the 1940 Act
any records which it maintains for the Fund or the Trust and which are required
to be maintained under the 1940 Act. Berger Associates further agrees to
surrender promptly to the Trust or its designees any records which it maintains
for the Fund or the Trust upon request by the Trust.
6. TERM AND TERMINATION. This Agreement shall become effective as of the
date first set forth above and shall continue until terminated by either party
on 60 days' written notice to the other party. This Agreement may also be
terminated by the Trustees of the Trust at any time if Berger Associates becomes
unable to discharge its duties and obligations under this Agreement.
7. ASSIGNMENT AND AMENDMENTS. This Agreement shall not be assigned by
either party without the prior written consent of the other party to the
Agreement. This Agreement may be amended in writing by the parties, provided
that all such amendments shall be subject to the approval of the Trustees of the
Trust.
8. LIMITATION OF LIABILITY OF BERGER ASSOCIATES. Berger Associates shall
not be liable for any error of judgment or mistake of law 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, "Berger Associates"
shall include directors, officers and employees of Berger Associates.
9. ACTIVITIES OF BERGER ASSOCIATES. The services of Berger Associates
hereunder are not to be deemed to be exclusive, and Berger Associates is free to
render services to other parties, so long as its services under this Agreement
are not materially adversely affected or otherwise impaired thereby. Nothing in
this Agreement shall limit or restrict the right of any director, officer or
employee of Berger Associates to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
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. 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.
11. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of Colorado (without giving effect to the conflicts of laws
principles thereof) and the 1940 Act. To the extent that the applicable laws of
the State of Colorado conflict with the applicable provisions of the 1940 Act,
the latter shall control.
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<PAGE>
12. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the date first above written.
BERGER ASSOCIATES, INC.
By:
------------------------------------
Gerard M. Lavin
President
BERGER INVESTMENT PORTFOLIO TRUST, with
respect to the series known as the Berger
Balanced Fund
By:
-------------------------------------
Name:
Title:
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[The following substitutes for the IRA Account Application portion of Exhibit
14.1 incorporated herein by reference from Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of Berger/BIAM Worldwide Funds Trust, filed
October 8, 1996, with the Securities and Exchange Commission.]
IRA ACCOUNT APPLICATION
Berger Balanced Fund - Use this application to open an IRA account.
PID # For assistance call: (800) 551-5849
STEP1 REGISTER YOUR ACCOUNT Please type or print clearly.
Name First Middle Last
Address Street Apt. / Suite #
City State Zip
Citizenship (BOX) US citizen (BOX) Non-Resident
Alien
(BOX) Resident Alien Country of Tax
Residency
State of Permanent Residence
Your Social Security Number
Date of Birth Month / Day / Year
Daytime Telephone Evening Telephone
Electronic Mail Address
Fax Number
STEP2 BENEFICIARY DESIGNATION If the beneficiary is a trust, please indicate the
trust's name and address, the date of the trust, the trustee's name, and if the
trust is revocable or irrevocable. If you wish to designate additional
beneficiaries, please attach instructions. Percent of benefit for each IRA's
primary and/or contingent beneficiary(ies) must add up to 100%.
<PAGE>
Your Primary Beneficiaries
I hereby designate the following person(s) as primary beneficiary(ies) to
receive payment of the value of my IRA account upon my death:
<PAGE>
Name #1 First Middle Last Social Security Number
Relationship % of Benefit
Date of Birth Month / Day / Year
Name #2 First Middle Last Social Security Number
Relationship % of Benefit
Date of Birth Month / Day / Year
Your Contingent Beneficiary(ies)
If no primary beneficiary(ies) is (are) living at the time of my death, I hereby
specify that the balance be distributed to my contingent beneficiary(ies) below:
Name First Middle Last Social Security Number
Relationship % of Benefit
Date of Birth Month / Day / Year
Electing a Beneficiary Other Than Your Spouse
This section should be reviewed if either the custodial account or the residence
of the account holder is located in a community or marital property state and
the account holder is married and is designating a beneficiary other than the
spouse. It is the account holder's responsibility to determine if this section
applies. The account holder may need to consult with legal counsel. Neither the
Custodian nor the Sponsor will be liable for any consequences relating from a
failure of the account holder to provide proper spousal consent.
I am the spouse of the above-named account holder. I acknowledge that I have
received a full and reasonable disclosure of my spouse's property and financial
obligations. Due to any possible consequences of giving up my community property
<PAGE>
interest in this IRA, I have been advised to see a tax professional or legal
advisor. I hereby give the account holder any interest I have in the funds or
property deposited in this IRA and consent to the beneficiary designation(s)
indicated above. I assume full responsibility for any adverse consequences that
may result. No tax or legal advice was given to me by the Custodian.
Signature of Spouse Date
Signature of Witness for Spouse Date
STEP3 TYPE OF IRA
Please check one selection only.
(BOX) Regular IRA. Annual IRA contribution up to a maximum of $2,000 (per tax
year). Effective January 1, 1997, if you are married and each spouse establishes
an IRA, each spouse may contribute up to a maximum of $2,000 (per tax year) as
long as the combined earnings of both spouses is at least $4,000.
(BOX) SEP IRA. Simplified Employee Pension Plan
for tax year: 19____ . For a new or existing SEP
IRA or an existing Salary Reduction SEP (SARSEP)
established prior to December 31, 1996.
(BOX) Direct Transfer of Existing IRA. Authorizes the Berger Funds to transfer
your existing IRA from another custodian to the Berger Funds. You must also
complete the IRA transfer forms from the IRA Disclosure Statement and return the
forms with this application.
(BOX) Rollover of Existing IRA. IRA to be funded with money withdrawn from an
IRA at another custodian and to be reinvested at the Berger Funds within 60
days. Please seek tax advice before combining assets that were previously in a
qualified plan with regular IRA investments.
(BOX) Direct Rollover IRA. IRA to be funded with
money accumulated in an employer's retirement plan
that is eligible for rollover. Please seek tax advice
<PAGE>
before combining with a regular IRA. Method of funding:
(BOX) Enclosed is a check made payable to the Berger Funds.
(BOX) A check will be sent directly to the Berger Funds by my
employer.
STEP4 INITIAL AND SYSTEMATIC INVESTMENT PLANS
Berger Balanced Fund (213)
Minimum Initial Investment - $2,000
Your Initial Investment: $__________________
Enclose your check made payable to the: BERGER FUNDS
(BOX) Automatic Investment Plan - from your bank account. (Note: Step 6 must be
completed.)
Amount per withdrawal: $______________
Please check one or both of the following withdrawal dates:
(BOX) 5th day of month (BOX) 20th day of month
(BOX) Payroll Deduction / Direct Deposit Plan - ($50 minimum)
Check this box to invest through payroll deduction. We will mail you a
form to complete and give to your employer.
STEP5 TELEPHONE TRANSACTION / ON-LINE COMPUTER
ACCESS PRIVILEGES
The privileges below allow you to make telephone/on-line purchases and
exchanges, subject to the applicable minimums and maximums that are disclosed in
the Prospectus. (Step 6 must be completed.)
Telephone Transaction Privileges are available on all accounts unless you
specifically decline them below.
(BOX) I decline the use of telephone transaction privileges.
<PAGE>
On-line Computer Access Privileges are available on all accounts unless you
specifically decline them below.
(BOX) I decline the use of on-line computer access.
All telephone and on-line transactions are recorded and written confirmations
indicating the details of all telephone and on-line transactions will be
promptly sent to the shareholder of record. Prior to placing an order, the
shareholder may be required to provide certain identifying information. See the
Prospectus for further information.
Telephone and on-line redemptions are not available for shares held in IRA
accounts.
STEP6 BANK INFORMATION
You must complete this step if you selected the Automatic Investment Plan in
Step 4. If you did not check a box in Step 5, by completing the bank information
below, you may settle purchase transactions made by telephone or on-line via
computer access by using wire or electronic funds transfer.
Name of Bank
Street Address
Name(s) on Bank Account Bank Account Number
City State Zip
Co-signer Signature (if applicable) Date
Your bank account information must be on file in order to utilize the Automatic
Investment Plan, or to settle by wire or electronic funds transfer any purchase
transactions made by telephone or by on-line computer access. The account
name(s) at left must exactly match the name in Step 1. Any co-signer of your
checking or savings account must authorize these services by signing at left.
As a convenience to me, you are hereby authorized
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to pay and charge to my checking or savings account debits drawn on my account
as indicated in the Automatic Investment Plan section of Step 4 (if applicable).
The authority is to remain in effect until revoked by me. Until IFTC, DST or the
Berger Funds actually receive such notice, I agree you shall be fully protected
in honoring any such debit. I further agree that if any such debit be
dishonored, whether with or without cause and whether intentionally or
inadvertently, you shall be under no liability whatsoever.
Checking Acct. (BOX) Savings Acct. (BOX)
Please attach a voided check or savings deposit slip.
STEP7 YOUR SIGNATURE
Please sign at the end of this section. We must have a signature to open the
account. By signing the application, the undersigned:
- --Establishes an Individual Retirement Account pursuant to the Internal Revenue
Code of 1986, as amended, and in accordance with all the terms of the Form
5305-A Custodial Agreement. --Certifies that all contributions to the IRA will
meet the requirements of the Internal Revenue Code governing such contributions.
- --Appoints Investors Fiduciary Trust Company, or its successors, as Custodian on
the account. --Agrees to promptly give to the Custodian the instructions
necessary to enable the Custodian to carry out its duties under the Custodial
Agreement. --States that he/she has received and read the Prospectus for the
investment(s) selected and agrees that this account will be subject to the
Custodial Agreement and IRA Disclosure Statement as amended from time to time.
- --States that he/she has the authority and legal capacity to purchase mutual
fund shares, is of legal age in his/her state and believes each investment is
suitable for him/her. --Hereby ratifies any instructions given on this
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account and any account into which he/she exchanges related to the above items
and agrees that neither the Funds, the Berger CAT Portfolios, Berger Associates,
BBOI Worldwide, nor Investors Fiduciary Trust Company will be liable for any
loss, cost or expense for acting upon such instructions (by telephone, computer
on-line access or writing) believed to be genuine and in accordance with the
procedures described in the Prospectus. --Acknowledges his/her responsibility to
read the Prospectus of any Fund or Berger CAT Portfolio into which he/she
exchanges. --Understands that the annual IRA maintenance fee must be paid each
year or it will be collected by redeeming sufficient shares from each Fund
account at the end of the year or upon the closing of his/her account. The
custodian may change the fee schedule from time to time, as provided in the
Custodial Agreement. --Understands that if he/she chooses not to designate any
beneficiary(ies), the beneficiary will be his/her estate.
Under penalties of perjury, I certify that the number shown on this form is my
correct Social Security number.
Signature of Depositor: Date
Investors Fiduciary Trust Company
Authorized Signature of Custodian
Return this application along with your check made payable to the Berger Funds
in the postage paid envelope enclosed or to:
Investors Fiduciary Trust Company
c/o Berger Funds
P.O. Box 419958
Kansas City, MO 64141-6958
(c)1997 Berger Associates, Inc.
EXHIBIT 15.3
RULE 12B-1 PLAN OF
BERGER BALANCED FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
1. THE PLAN. The Trustees of Berger Investment Portfolio Trust, a Delaware
business trust (the "Trust"), have adopted 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 Balanced Fund (the "Fund"). In accordance with the terms of this Plan,
the Trust may act as a "distributor" (as that term is used in said Rule 12b-1)
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 an annual 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 costs incurred by, the Fund's principal
underwriter in connection with the distribution of the Fund's shares, including
payments made to and expenses of officers and registered representatives of
Berger Distributors, Inc.; payments made to and expenses of other persons
(including employees of Berger Associates) who are engaged in, or provide
support services in connection with, the distribution of the Fund's 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, including services to shareholders of the Fund and prospective
investors; costs related to the formulation and implementation of marketing and
promotional activities, including direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; costs of printing and
distributing prospectuses and reports to prospective shareholders of the Fund;
costs involved in preparing, printing and distributing sales literature for the
Fund; costs involved in obtaining whatever information, analyses and reports
with respect to marketing and 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.,
if distribution expenditures incurred by Berger Associates are less than the
total of such payments in such year, the difference shall not be reimbursed to
the Trust by Berger Associates, and if distribution expenditures incurred by
Berger Associates are more than the total of such payments, the excess 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
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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.
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 of this Plan in paragraph 3 hereof.
7. QUARTERLY REPORTS. Any person authorized to direct the disposition of
monies paid or payable by the Trust on behalf of 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 or its affiliate serves as investment
adviser or administrator, 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 of the Trust 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
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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.
IN WITNESS WHEREOF, the adoption of this Rule 12b-1 Plan by the Trustees of
the Trust with respect to the Fund is hereby confirmed as of the day and year
set forth below.
BERGER INVESTMENT PORTFOLIO TRUST,
with respect to the series known as
the Berger Balanced Fund
Date: , 1997 By
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Gerard M. Lavin, President
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