<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 16, 1998
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. 17 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 19 /X/
(Check appropriate box or boxes)
BERGER INVESTMENT PORTFOLIO TRUST
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(Exact Name of Registrant as Specified in Charter)
210 University Boulevard, Suite 900, Denver, Colorado 80206
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 329-0200
---------------------------
Gerard M. Lavin, 210 University Boulevard, Suite 900, Denver, CO 80206
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: As soon as practicable after this
post-effective amendment becomes effective.
It is proposed that this filing will become effective: (check appropriate box)
/ / immediately upon filing pursuant to paragraph (b)
/ / on (date) pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/X/ on September 30, 1998, pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/ / this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest of
------------------------------------------
the Berger Special Values Fund
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<PAGE>
BERGER INVESTMENT PORTFOLIO TRUST
SHARES OF BENEFICIAL INTEREST
Cross-Reference Sheet Pursuant to Rule 481
I. Berger Special Values Fund
ITEM NO. AND CAPTION IN FORM N-1A SECTION
A. PROSPECTUS
1. Cover Page Front and back cover pages
2. Synopsis Berger Funds
3. Condensed Financial Berger Funds
Information
4. General Description Berger Funds; Investment
of Registrant Techniques, Securities and the
Associated Risks; Organization
of the Berger Fund Family
5. Management of the Berger Funds; Organization of
Fund the Berger Fund Family
5A. Management's Annual Report
Discussion of Fund
Performance
6. Capital Stock and Information on Your Account;
Other Securities Organization of the Berger Fund
Family; Back cover page
7. Purchase of Information on Your Account;
Securities Being Organization of the Berger Fund
Offered Family
8. Redemption or Information on Your Account
Repurchase
9. Pending Legal Not Applicable
Proceedings
B. STATEMENT OF ADDITIONAL INFORMATION
10. Cover Page Front cover page
11. Table of Contents Table of Contents
12. General Information Section 14
and History
13. Investment Objectives Front cover page; Sections 1
and Policies and 2
14. Management of the Fund Section 3
15. Control Persons and Sections 3 and 14
Principal Holders of
Securities
16. Investment Advisory Sections 3, 4, 5 and 14
and Other Services
17. Brokerage Allocation Sections 1 and 6
and Other Practices
18. Capital Stock and Section 14
Other Securities
19. Purchase, Redemption Sections 7, 8, 10, 11 and 12
and Pricing of
Securities Being
Offered
20. Tax Status Section 9
21. Underwriters Sections 5 and 14
22. Calculations of Section 13
Performance Data
23. Financial Statements Financial Statements
<PAGE>
EXPLANATORY NOTE
This amendment to the Registration Statement of the Berger Investment
Portfolio Trust contains the following:
One Prospectus for the Berger Special Values Fund
One Statement of Additional Information for the Berger Special Values Fund
One Part C
This amendment does not contain a Prospectus or Statement of Additional
Information for, nor affect any Prospectus or Statement of Additional
Information covering, these other series of the Berger Investment Portfolio
Trust: Berger Small Company Growth Fund, Berger New Generation Fund, Berger
Balanced Fund, Berger Select Fund, Berger Mid Cap Growth Fund or Berger Mid Cap
Value Fund.
<PAGE>
[FRONT COVER]
THE BERGER FUNDS PROSPECTUS
[Wooded hillside photo]
BERGER SPECIAL VALUES FUND
(Capital Appreciation)
____________, 1998
Like all mutual funds, these securities have not been approved or disapproved by
the Securities and Exchange Commission (SEC). Also, the SEC has not passed upon
the accuracy or adequacy of this prospectus. Any representation to the contrary
is a criminal offense.
Please remember that mutual fund shares are not deposits or obligations of, or
guaranteed by, any bank or other depository institution. Shares are not insured
by the FDIC, the Federal Reserve Board or any other governmental agency.
Investment in the Fund is subject to investment risk, including possible loss of
principal.
This prospectus gives you important information about the Fund. Please read it
carefully before you invest in the Fund. Keep it for future reference.
page 1
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Contents
FUND OVERVIEW
The Berger Funds are a family of mutual funds. A mutual fund -- technically
known as an open-end, management investment company -- pools money from
shareholders and invests in a portfolio of securities. This section introduces
one of the funds in the Berger Fund family, the Berger Special Values Fund, and
its goals, strategies, risks and management. You also will find expense
information in this section.
BERGER SPECIAL VALUES FUND PAGE 4
INVESTMENT TECHNIQUES, SECURITIES AND THE ASSOCIATED RISKS
Risk and investment table PAGE 6
Risk and investment glossary PAGE 9
INFORMATION ABOUT YOUR ACCOUNT
Buying shares PAGE 11
Selling (redeeming) shares PAGE 12
Exchanging shares PAGE 14
Signature Guarantees/special documentation PAGE 14
Net asset value (NAV) -- your price PAGE 15
Other information about your account PAGE 16
Distributions and taxes PAGE 16
Tax-sheltered retirement plans PAGE 17
ORGANIZATION OF THE BERGER FUND FAMILY
Fund oversight PAGE 18
Fund operations and expenses PAGE 18
Additional expense information PAGE 18
Other service providers PAGE 19
page 2
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FUND OVERVIEW
The Berger Funds are "no-load" -- that is, you pay no sales load or commissions
when you buy or sell Fund shares. Each of the Berger Funds has its own
investment objective.
The Berger Funds ARE DESIGNED for those investors who:
- - Have long-term investment goals and are willing to accept higher short-term
risk for potential long-term returns
- - Want to diversify their portfolios with stock-oriented funds.
The Berger Funds ARE NOT DESIGNED for those investors who:
- - Have short-term investment goals or needs
- - Are uncomfortable with investments that fluctuate in value like stock
investments.
KEY TO ICONS
In this prospectus you will find concise descriptions about the Fund. Each
description provides you with information about:
[icon-profile of head with mountain peak in background]
THE FUND'S GOAL
Describes the Fund's particular investment goals and the strategies the
investment manager uses in pursuing those goals.
[icon-profile of head with stock ticker tape in background]
WHAT THE FUND INVESTS IN
Describes the types of securities in which the Fund primarily invests.
[icon-left facing profile of head with lightening bolt; right facing profile of
head with sunshine]
RISKS AND INVESTMENT CONSIDERATIONS
Describes your risks as an investor and risks associated with the Fund's
primary investments.
[icon-profile of head with dotted lines emanating forward from eyes]
INVESTMENT MANAGEMENT
Describes the individual or group designated to handle the Fund's day-to-day
investment management.
[icon-two coins]
YOUR EXPENSES
Shows you what overall costs you will bear as an investor in the Fund.
page 3
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BERGER SPECIAL VALUES FUND
SEC REGISTRANT NAME/NUMBER: Morningstar Category:__________
Berger Investment Portfolio Trust 811-8046 Lipper Category:_______________
[icon-profile of head with mountain peak in background]
THE FUND'S GOAL
The Fund aims for capital appreciation. In pursuit of that goal, this
nondiversified Fund invests primarily in equity securities of companies that
are out-of-favor or overlooked by the market and are therefore believed to be
undervalued. In particular, the Fund focuses on "special situations," meaning
companies believed to be undergoing a significant change or development that may
cause their securities to appreciate. The Fund does not invest to provide
current income.
The Fund's investment manager generally looks for companies with:
- - Anticipated cash flow and earnings that are underestimated by the market
- - Prospects for consolidation, acquisition, reinvigorated product line or new
management
- - Unrecognized asset value or business franchise.
[icon-profile of head with stock ticker tape in background]
WHAT THE FUND INVESTS IN
The Fund primarily invests in common stocks, both domestic and foreign, and
other securities with equity features, such as convertible securities, preferred
stocks, warrants and rights. The Fund is free to invest in companies of any
size market capitalization. However, due to its focus on companies with the
characteristics described above, the Fund generally is weighted toward small to
mid-sized market capitalization companies. The Fund may also invest in
government securities or other short-term investments.
[icon-left facing profile of head with lightening bolt; right facing profile of
head with sunshine]
RISKS AND INVESTMENT CONSIDERATIONS
The Fund may be of interest to you if you are comfortable with above-average
risk and intend to make an investment commitment over the long term. The Fund
is not intended to be a complete investment program on its own, but may serve to
diversify other types of investments in your portfolio.
By its nature, a "special situation" company involves to some degree a break
with the company's past experience. This creates greater uncertainty and
potential risk of loss than if the company were operating according to
long-established patterns. Stock of companies in special situations may decline
or not appreciate as expected if an anticipated change or development does not
occur or is not assessed by the market as favorably as expected. In addition,
the Fund's NAV may be more volatile than that of funds invested primarily in
stocks of larger companies. Smaller companies may pose greater risk due to
narrow product lines, limited financial resources, less depth in management or a
limited trading market for their stocks. The Fund's NAV may be more volatile
than the market in general and most equity funds due to its ability as a
nondiversified fund to take larger positions in a smaller number of companies.
As a result, the gains or losses on a single stock will have a greater impact on
the Fund's NAV. However, the Fund's value approach to investing may help reduce
the volatility associated with these various factors and provide an element of
capital preservation.
The Fund's investments are often focused in a small number of business sectors.
In addition, the Fund may also invest in certain securities with unique risks,
such as foreign securities.
See "Investment techniques, securities and the associated risks" later in this
prospectus for more information on risks.
page 4
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[icon-profile of head with dotted lines emanating forward from eyes]
INVESTMENT MANAGEMENT
Tino Sellitto, Vice President of Berger Associates, is the investment manager of
the Berger Special Values Fund. Mr. Sellitto joined Berger Associates as a
senior equity analyst in January 1998 and assumed management of the Fund at its
inception in 1998. Mr. Sellitto has 4 years of experience in the investment
industry.
[icon-two coins]
YOUR EXPENSES
As a shareholder in the Fund, you will not pay any front-end, back-end or
deferred sales load, or any redemption or exchange fees. However, you will bear
various expenses indirectly. The following figures show historical expenses,
adjusted for any changes in fees, and are calculated as a percentage of average
net assets.
Annual Fund Operating Expenses %
- ---------------------------------------------------------
Investment advisory fee .[ ]
12b-1 fee(1) .25
Other expenses(2) .[ ]
Total 1.[ ]
1. As a result of the 12b-1 fee, long-term shareholders may pay more than the
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. (NASD).
2. "Other expenses" are based on estimated expenses for the Fund's first full
year of operations and include transfer agency fees, shareholder report
expenses, registration fees and custodian fees.
EXAMPLE
This example is intended to help you compare the cost of investing in the Fund
to the cost of investing in other mutual funds. It assumes that you invest
$1,000 in the Fund for the time periods indicated, a 5% return on your
investment each year and that the Fund's operating expenses remain the same.
Based on these assumptions your costs would be:
Years $
- -----------------------------
One [ ]
Three [ ]
THIS EXAMPLE DOES NOT REPRESENT THE FUND'S PAST OR FUTURE EXPENSES OR RETURNS,
WHICH MAY BE HIGHER OR LOWER THAN THOSE SHOWN.
page 5
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INVESTMENT TECHNIQUES, SECURITIES AND THE ASSOCIATED RISKS
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RISK AND INVESTMENT TABLE
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BERGER SPECIAL
VALUES FUND
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DIVERSIFICATION N-
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SMALLER COMPANY SECURITIES [Y]
MARKET, LIQUIDITY AND INFORMATION RISK
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FOREIGN SECURITIES Y
MARKET, CURRENCY, TRANSACTION, LIQUIDITY,
INFORMATION AND POLITICAL RISK
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SECTOR FOCUS [Y]
MARKET AND LIQUIDITY RISK
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CONVERTIBLE SECURITIES (1) Y
MARKET, INTEREST RATE AND CREDIT RISK
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INVESTMENT GRADE BONDS (NONCONVERTIBLE) Y
INTEREST RATE, MARKET AND CREDIT RISK
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BELOW INVESTMENT GRADE BONDS (NONCONVERTIBLE) N
CREDIT, INTEREST RATE AND MARKET RISK
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COMPANIES WITH LIMITED OPERATING HISTORIES Y
MARKET, LIQUIDITY AND INFORMATION RISK
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ILLIQUID AND RESTRICTED SECURITIES 15
MARKET, LIQUIDITY AND TRANSACTION RISK
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REPURCHASE AGREEMENTS Y
CREDIT RISK
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SPECIAL SITUATIONS [Y]
MARKET AND INFORMATION RISK
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page 6
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INVESTMENT TECHNIQUES, SECURITIES AND THE ASSOCIATED RISKS (CONT'D)
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BERGER SPECIAL
VALUES FUND
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ZERO/STRIPS Y
INTEREST RATE, MARKET AND CREDIT RISK
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WHEN-ISSUED AND DELAYED DELIVERY SECURITIES 5A
CREDIT AND OPPORTUNITY RISK
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TEMPORARY DEFENSIVE MEASURES Y
OPPORTUNITY RISK
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LENDING PORTFOLIO SECURITIES 33-1/3A
CREDIT RISK
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BORROWING 25A-
LEVERAGE RISK
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PLEDGING ASSETS 25A-
OPPORTUNITY RISK
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HEDGING STRATEGIES
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FINANCIAL FUTURES (2) 5
HEDGING, CORRELATION, OPPORTUNITY AND LEVERAGE
RISK
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FORWARD FOREIGN CURRENCY CONTRACTS (2) Y
HEDGING, CREDIT, CORRELATION, OPPORTUNITY AND
LEVERAGE RISK
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OPTIONS (2) 5
(EXCHANGE-TRADED AND OVER-THE-COUNTER)
HEDGING, CREDIT, CORRELATION AND LEVERAGE RISK
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WRITING (SELLING) COVERED CALL OPTIONS (2) 25A
(EXCHANGE-TRADED AND OVER-THE-COUNTER)
OPPORTUNITY, CREDIT AND LEVERAGE RISK
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page 7
<PAGE>
BEFORE YOU INVEST . . .
. . . in the Fund, make sure you understand the risks involved. There are two
basic risks prevalent in all mutual funds primarily invested in common stocks:
"MARKET RISK" and "MANAGEMENT RISK." As a result of these risks, when you sell
your shares, they may be worth less than when you purchased them and there can
be no assurance that the Fund will achieve its goals.
The table on the opposite page is aimed at helping you further understand the
risks of investing in the Fund by showing the primary risks associated with
certain securities and investment techniques used by the Fund. A glossary
follows this page.
You may get more detailed information about the risks of investing in the Fund
in the Statement of Additional Information (SAI), including a discussion of debt
security ratings in Appendix A to the SAI.
KEY TO TABLE
Follow down the columns under the name of the Fund. The boxes will tell you:
[Y] Yes, the security or technique is permitted by the Fund and is
emphasized by the Fund.
Y Yes, the security or technique is permitted by the Fund.
N No, the security or technique is not permitted by the Fund.
- - The restriction is fundamental to the Fund. (Fundamental restrictions
cannot be changed without a shareholder vote.)
5A Use of a security or technique is permitted, but subject to a
restriction of up to 5% of total assets.
25A Use of a security or technique is permitted, but subject to a
restriction of up to 25% of total assets.
33 1/3A Use of a security or technique is permitted, but subject to a
restriction of up to 331/3% of total assets.
5 Use of a security or technique is permitted, but subject to a
restriction of up to 5% of net assets.
15 Use of a security or technique is permitted, but subject to a
restriction of up to 15% of net assets.
NOTES TO TABLE
1. The Fund has no minimum quality standards for convertible securities,
although it will not invest in defaulted securities. It also will not
invest 20% or more of its assets in convertible securities rated below
investment grade or in unrated convertible securities that the sub-advisor
considers to be below investment grade.
2. The Fund may use futures, forwards and options only for hedging. Not more
than 5% of the Fund's net assets may be used for initial margins for
futures and premiums for options, although the Fund may have more at risk
under these contracts than the initial margin or premium. However, the
Fund's aggregate obligations under these contracts may not exceed the total
market value of the assets being hedged, such as some or all of the value
of the Fund's equity securities.
page 8
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RISK AND INVESTMENT GLOSSARY
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BELOW INVESTMENT GRADE BONDS Bonds with ratings of BB (STANDARD & POOR'S) or Ba
(MOODY'S) or below. Bonds rated below investment grade are subject to greater
credit risk than investment grade bonds. Also called "high-yield bonds" or
"junk bonds."
BORROWING Borrowing money from a bank or other financial institution undertaken
by the Fund only for temporary or emergency reasons.
COMMON STOCKS Shares of ownership (equity) interest in a company.
COMPANIES WITH LIMITED OPERATING HISTORIES Securities issued by companies which
have been in continuous operation for less than three years. Sometimes called
"unseasoned" issuers.
CONVERTIBLE SECURITIES Debt or equity securities which may be converted on
specified terms into stock of the issuer.
CORRELATION RISK This occurs when the Fund "hedges" - uses one investment to
offset the Fund's position in another. If the two investments do not behave in
relation to one another the way Fund managers expect them to, then unexpected
results may occur.
CREDIT RISK Credit risk means that the issuer of a security or the counterparty
to an investment contact may default or become unable to pay its obligations
when due.
CURRENCY RISK Currency risk happens when the Fund buys or sells a security
denominated in foreign currency. Foreign currencies "float" in value against
the U.S. dollar. Adverse changes in foreign currency value can cause investment
losses when the Fund's investments are converted to U.S. dollars.
DIVERSIFICATION A diversified fund may not, with respect to at least 75% of its
assets, invest more than 5% in the securities of one company. A nondiversified
fund may be more volatile than a diversified fund because it invests more of its
assets in a smaller number of companies and the gains or losses on a single
stock will therefore have a greater impact on the fund's NAV. The Fund is a
nondiversified fund.
FINANCIAL FUTURES Exchange-traded contracts on securities, securities indexes
or foreign currencies that obligate the holder to take or make future delivery
of a specified quantity of those underlying securities or currencies on a
predetermined future date.
FOREIGN SECURITIES Securities issued by companies located outside of the United
States. The Fund considers a company to be located outside the United States if
the principal securities trading market for its equity securities is located
outside the U.S. or it is organized under the laws of, and has a principal
office in, a country other than the U.S.
FORWARD FOREIGN CURRENCY CONTRACTS Privately negotiated contracts committing
the holder to purchase or sell a specified quantity of a foreign currency on a
predetermined future date.
HEDGING RISK Hedging risk comes into play when the Fund uses a security whose
value is based on an underlying security or index to "offset" the Fund's
position in another security or currency. The objective of hedging is to offset
potential losses in one security with gains in the hedge. But a hedge can
eliminate or reduce gains as well as offset losses. (Also see "Correlation
risk.")
ILLIQUID AND RESTRICTED SECURITIES Securities which, by rules of their issue or
by their nature, cannot be sold readily. These include illiquid Rule 144A
securities.
INFORMATION RISK Information risk means that information about a security or
issuer might not be available, complete, accurate or comparable.
INTEREST RATE RISK The risk that changes in interest rates will adversely
affect the value of an investor's securities. When interest rates rise, the
value of fixed-income securities will generally fall. Conversely, a drop in
interest rates will generally cause an increase in the value of fixed-income
securities. Longer-term securities and zeros/strips are subject to greater
interest rate risk.
INVESTMENT GRADE BONDS Bonds with ratings of BBB (STANDARD & POOR'S) or Baa
(MOODY'S) or above.
LENDING PORTFOLIO SECURITIES The Fund lends securities to qualified financial
institutions in order to earn income. The Fund lends securities only on a fully
collateralized basis.
LEVERAGE RISK Risk that occurs in some securities or techniques which tend to
magnify the effect of small changes in an index or a market. This can result in
a loss that exceeds the amount that was invested in the contract.
LIQUIDITY RISK Risk that occurs when investments cannot be sold readily. The
Fund may have to accept a less-than-desirable price to complete the sale of an
illiquid security or may not be able to sell it at all.
page 9
<PAGE>
- --------------------------------------------------------------------------------
. . . CONTINUED
- --------------------------------------------------------------------------------
MANAGEMENT RISK This risk exists in all mutual funds and means that the Fund's
portfolio management practices might not work to achieve a desired result.
MARKET CAPITALIZATION The total current market value of a company's outstanding
common stock.
MARKET RISK Risk that exists in all mutual funds and means the risk that
securities prices in a market, a sector or an industry will fluctuate, and that
such movements might reduce an investment's value.
OPPORTUNITY RISK The risk of missing out on an investment opportunity because
the assets necessary to take advantage of it are committed to less advantageous
investments or strategies.
OPTIONS Contracts giving the holder the right but not the obligation to
purchase or sell a security on or before a predetermined future date for a fixed
price. Options on securities indexes are similar, but settled in cash.
PLEDGING ASSETS Transferring securities to a lender or creditor as collateral
for an obligation.
POLITICAL RISK Risk that comes into play with investments, particularly foreign
investments, which may be adversely affected by nationalization, taxation, war,
government instability or other economic or political actions or factors.
REPURCHASE AGREEMENTS The Fund uses repurchase agreements (repos) to invest cash
on a short-term basis. A seller (bank or broker-dealer) sells securities,
usually government securities, to the Fund, agreeing to buy them back at a
designated time--usually the next day. The Fund enters into only fully
collateralized repos.
SECTOR FOCUS When a significant portion of the Fund's assets are invested in a
relatively small number of related industries. The Fund will not concentrate
25% or more of its total assets in any one industry. Sector focus may increase
both market and liquidity risk.
SMALLER COMPANY SECURITIES Securities issued by small or mid-sized companies,
as measured by their market capitalization. The market capitalization range
targeted by funds investing in small or mid-sized companies varies by fund. In
general, the smaller the company, the greater its risks.
SPECIAL SITUATIONS Companies about to undergo a structural, financial or
management change which may significantly affect the value of their securities.
TEMPORARY DEFENSIVE MEASURES When the Fund's investment manager believes market
conditions warrant a temporary defensive position, the Fund may increase its
investment in government securities and other short-term interest-bearing
securities without regard to the Fund's otherwise applicable investment
restrictions, policies or normal investment emphasis.
TRANSACTION RISK This means that the Fund may be delayed or unable to settle a
transaction or that commissions and settlement expenses may be higher than
usual.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES Securities bought in advance of
their actual issue or delivery.
WRITING (SELLING) COVERED CALL OPTIONS Selling a contract to another party
which gives them the right but not the obligation to buy a particular security
from you. The Fund writes call options only if they already own the security
(if it is "covered").
ZERO/STRIPS A zero is a debt security which does not make regular interest
payments, but rather is sold at a discount from face value. A strip is a debt
security which is stripped of its interest coupon after issuance, but is
otherwise comparable to a zero.
page 10
<PAGE>
BUYING SHARES
[SIDEBAR BOX]
SEND NEW ACCOUNT APPLICATIONS TO
The Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
OR FOR OVERNIGHT, CERTIFIED OR REGISTERED MAIL ONLY
The Berger Funds
c/o DST Systems, Inc.
330 West 9th Street, 1st Floor
Kansas City, MO 64105
[SIDEBAR TABLE]
Minimums:
Initial investment $2,000
Subsequent investments $50
Automatic investment plan $50
BY MAIL
Read this prospectus.
Fill out the application if you are opening a new account.
Make out a check to BERGER FUNDS for the amount you want to invest.
Send the application and a check to The Berger Funds in the envelope
provided.
To add to an existing account, be sure to include your account number on
your check and mail it to the appropriate address above.
BY TELEPHONE
If you already have a Berger Funds account, you may purchase additional
shares by telephone order.
You must pay for them within three business days by wire, electronic funds
transfer or overnight delivery of a check.
Call 1.800.551.5849 for current wire or electronic funds transfer
instructions.
BY ONLINE ACCESS
If you already have established a Berger Funds account with electronic
funds transfer privileges, you may purchase additional shares via online
access.
page 11
<PAGE>
You will find us online at www.bergerfunds.com.
BY AUTOMATIC INVESTMENT PLAN
To automatically purchase more shares each month, fill out the Automatic
Investment Plan section of the application.
Investments are transferred automatically from your bank account monthly.
See details on the application.
ALL SHAREHOLDERS ARE AUTOMATICALLY GRANTED TELEPHONE AND ONLINE TRANSACTION
PRIVILEGES UNLESS THEY DECLINE THEM EXPLICITLY IN WRITING, EITHER ON THE
ACCOUNT APPLICATION OR BY WRITING TO THE BERGER FUNDS AT THE ADDRESS ABOVE.
YOU MAY GIVE UP SOME LEVEL OF SECURITY BY CHOOSING TO BUY AND SELL SHARES
BY TELEPHONE OR ONLINE RATHER THAN BY MAIL.
IMPORTANT NOTES ABOUT PAYING FOR YOUR SHARES
Your check must be made payable to BERGER FUNDS, or it will not be
accepted.
You may NOT purchase shares by cash, credit card, third-party checks or
checks drawn on foreign banks.
Telephone and online purchase orders may not exceed four times the value of
an account on the date the order is placed. Shares previously bought by
telephone or online access are included in calculating account size only if
payment has been received for those shares.
Orders not paid for on time will be canceled and shares redeemed from your
account to compensate for any decline in price of the shares canceled.
The Fund reserves the right to reject any order and to waive minimums or
increase minimums following notice.
SELLING (REDEEMING) SHARES
BY MAIL
Send a written request indicating your account number and the dollar amount
or number of shares you are redeeming to the appropriate address shown
under "Buying shares."
Your request must be signed by each registered shareholder, with the
signature(s) appearing exactly as they do on your account registration.
BY TELEPHONE
Call 1.800.551.5849.
page 12
<PAGE>
BY ONLINE ACCESS
You will find us online at www.bergerfunds.com.
FOR TELEPHONE AND ONLINE REDEMPTIONS SEE "SIGNATURE GUARANTEES / SPECIAL
DOCUMENTATION" IN THE FOLLOWING SECTION FOR LIMITATIONS.
TELEPHONE AND ONLINE REDEMPTIONS ARE NOT AVAILABLE FOR SHARES HELD IN
RETIREMENT ACCOUNTS SPONSORED BY THE FUND.
BY SYSTEMATIC WITHDRAWAL PLAN
Shares may be redeemed automatically ($50 minimum) monthly, quarterly,
semi-annually or annually.
A systematic withdrawal plan may be established if you own shares in the
Fund worth at least $5,000.
Call 1.800.551.5849 for more information and forms.
IMPORTANT NOTES ABOUT PAYMENT FOR YOUR REDEEMED SHARES
IN TIMES OF EXTREME ECONOMIC OR MARKET CONDITIONS, TRANSACTIONS BY
TELEPHONE OR ONLINE MAY BE DIFFICULT.
Generally, payment for your redeemed shares will be sent to you within
three business days after receipt of your redemption request in good order.
You may receive payment for redeemed shares via wire or electronic funds
transfer. You may elect these services on the account application or send
to The Berger Funds a written request providing your bank information with
your signature guaranteed. (See "Signature Guarantees/special
documentation" in the following section.)
Wire and electronic funds transfers are subject to a $1,000 minimum and
$100,000 maximum.
You will be charged $10 for a wire transfer. There is no charge for an
electronic funds transfer.
A wire transfer will be sent the next business day after receipt of your
order, and an electronic funds transfer will be sent the second business
day after receipt of your order.
Proceeds from the redemption of shares purchased by check may be delayed
until full payment for the shares has been received and cleared, which may
take up to 15 days from the purchase date.
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<PAGE>
INFORMATION ABOUT YOUR ACCOUNT
EXCHANGING SHARES
Shares of the Fund described in this prospectus may be exchanged for shares of
any other Berger Fund or for shares in the Berger Cash Account Trust Portfolios
(the Berger CAT Portfolios). The Berger CAT Portfolios are three separately
managed, unaffiliated money market funds: the Money Market Portfolio, the
Government Securities Portfolio and the Tax-Exempt Portfolio.
The exchange privilege with the Berger CAT Portfolios does not constitute an
offering or recommendation of the shares of these portfolios by the Berger Funds
or Berger Associates. Berger Associates is compensated for administrative
services it performs with respect to the Berger CAT Portfolios.
When exchanging shares:
- - Each account must be registered identically -- have the same signatures and
addresses.
- - The Fund or Berger CAT Portfolio into which you are exchanging must be
legally eligible for sale in your state of residence.
- - You may exchange out of the Berger Funds up to four times per calendar
year. At this time, there is no limit on the number of exchanges permitted
out of the Berger CAT Portfolios.
- - You may exchange by telephone, online access or mail.
- - You are responsible for obtaining and reading the prospectus for the Fund
or Berger CAT Portfolio into which you are exchanging.
- - Exchanges result in the sale of one Fund's shares and the purchase of
another, normally resulting in a taxable event for you.
- - It may take one business day or more for your money from a redemption of
Fund shares to be invested in a Berger CAT Portfolio.
- - Exchanges into any new Fund or Berger CAT Portfolio are subject to that
Fund's or Portfolio's initial and subsequent investment minimums.
SIGNATURE GUARANTEES/SPECIAL DOCUMENTATION
The Fund uses Signature Guarantees to protect you and the Fund from possible
fraudulent requests for redeemed shares. Your redemption request must be in
writing and accompanied by a Signature Guarantee if:
- - Your request exceeds $100,000.
- - You request that payment be made to a name other than the one on your
account registration.
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<PAGE>
- - You request that payment be mailed to an address which has been changed
within 30 days of your redemption request or to an address other than the
one of record.
- - You change or add information relating to your designated bank.
The Berger Funds reserve the right to require Signature Guarantees under other
certain circumstances.
You can get a Signature Guarantee from most broker-dealers, national or state
banks, credit unions, federal savings and loan associations or other eligible
institutions. YOU CANNOT OBTAIN A SIGNATURE GUARANTEE FROM A NOTARY PUBLIC.
Make sure the Signature Guarantee appears:
- - Together with the signature(s) of all registered owner(s) of the redeemed
shares on the written redemption request.
- - On any share certificates you hold for the redeemed shares or on a separate
statement of assignment (stock power) which may be obtained from a bank or
broker.
Additional documents are required for redemptions by corporations, executors,
administrators, trustees and guardians. For instructions, call 1.800.551.5849
or write to The Berger Funds, c/o DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141.
NET ASSET VALUE (NAV) -- YOUR PRICE
The price at which you buy, sell or exchange Fund shares is the NAV. The NAV
for the Fund is determined by adding the value of the Fund's investments, cash
and other assets, deducting liabilities, and then dividing that value by the
total number of the Fund's shares outstanding.
The Fund's NAV is calculated at the close of the regular trading session of the
New York Stock Exchange (normally 4:00 p.m. New York time) each day that the
Exchange is open.
FOR A PURCHASE, REDEMPTION OR EXCHANGE OF FUND SHARES, YOUR PRICE IS THE NAV
NEXT CALCULATED AFTER YOUR REQUEST IS RECEIVED IN GOOD ORDER AND ACCEPTED BY THE
FUND, ITS AUTHORIZED AGENT OR DESIGNEE. TO RECEIVE A SPECIFIC DAY'S PRICE, YOUR
REQUEST MUST BE RECEIVED BEFORE THE CLOSE OF THE NEW YORK STOCK EXCHANGE ON THAT
DAY.
When the Fund calculates its NAV, it values the securities it holds at market
value. Sometimes market quotes for some securities are not available or are not
representative of market value. In that case, securities may be valued in good
faith at fair value, using consistently applied procedures decided on by the
trustees. Money market instruments maturing within 60 days are valued at
amortized cost, which approximates market value. Assets and liabilities
expressed in foreign currencies are converted into U.S. dollars at the
prevailing market rates quoted by one or more banks or dealers shortly before
the close of the Exchange.
page 15
<PAGE>
OTHER INFORMATION ABOUT YOUR ACCOUNT
SECURITY CONSIDERATIONS
You may give up some level of security by choosing to buy or sell shares by
telephone or online, rather than by mail. The Fund uses procedures designed to
give reasonable assurance that telephone and online instructions are genuine,
including recording the transactions, testing the identity of the shareholder
placing the order and sending prompt written confirmation of transactions to the
shareholder of record. The Fund, and its service providers, are not liable for
acting upon instructions communicated by telephone or online that they believe
to be genuine if these procedures are followed.
CONFIRMATION OF YOUR PURCHASES AND REDEMPTIONS
After any transaction, you will receive written confirmation including the per
share price and the dollar amount and number of shares bought or redeemed.
Exception: Shares purchased under Automatic Investment Plans or redeemed under
Systematic Withdrawal Plans will be confirmed quarterly. Partial shares will be
calculated to three decimal places.
SHARE CERTIFICATES
You may request and receive share certificates. However, unless specifically
requested, your account will be maintained on a book-entry basis without issuing
share certificates to represent your shares. If you decide to hold share
certificates, you must endorse your certificates and send them back to the
Berger Funds when you sell your shares.
PURCHASES THROUGH BROKER-DEALERS
You may buy Fund shares through certain broker-dealers or other financial
organizations, but these organizations may charge you a fee or may have
different minimums for first-time or additional investments which are not
applicable if you buy shares directly from the Fund.
REDEMPTIONS BY THE FUND OF CERTAIN ACCOUNTS
To reduce its expenses, the Fund may involuntarily redeem the shares in your
account if your balance drops below $2,000 -- but only if it drops below this
amount because you have redeemed shares, not because the share value has
declined. You will be given 60 days' notice before the Fund undertakes any
involuntary redemption. During that time, you may buy more shares to bring your
account above the minimum.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS OF INCOME AND GAINS
Unless you tell us that you want to receive your distributions in cash, they
will be reinvested automatically in Fund shares. The Fund may make two
different kinds of distributions to you as a shareholder:
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<PAGE>
- - Capital gains from the sale of portfolio securities held by the Fund. The
Fund will distribute any net realized capital gains annually, normally in
December.
- - Net investment income from interest or dividends received on securities
held by the Fund. The Fund will distribute its investment income annually,
normally in December.
YOUR TAXES
You generally will owe tax on amounts distributed to you by the Fund whether you
reinvest them in additional shares or receive them in cash. Shareholders not
subject to tax on their income generally will not be required to pay any income
tax on amounts distributed to them.
Distributions of gains from the sale of assets held by the Fund for more than
one year generally are taxable to you at the applicable mid-term or long-term
capital gains rate, regardless of how long you have owned your Fund shares.
Distributions from other sources generally are taxed as ordinary income.
Each year the Fund will send you a Form 1099 for any distributions made to
nonretirement accounts. This form will detail the tax status for federal income
tax purposes of distributions made to you that year.
If you redeem Fund shares that have appreciated in value, you will have a
taxable gain upon redemption. Exchanges are treated as a redemption and
purchase for tax purposes. Therefore, you will also have a taxable gain upon
exchange if the shares redeemed have appreciated in value.
TAX TREATMENT OF THE FUND
In general, as long as the Fund qualifies under certain federal tax laws, it
will not be subject to federal income tax on income and capital gains that it
distributes to its shareholders. The Fund intends to qualify under those laws.
The Fund also intends to avoid an excise tax on undistributed income by making
timely distributions.
ADDITIONAL TAX INFORMATION
You should also consult your own tax advisor, since this is only a summary and
may not cover your particular situation. For more information about other tax
matters, including backup withholding for certain taxpayers and other tax
aspects of redemptions, see the SAI.
TAX-SHELTERED RETIREMENT PLANS
The Fund offers several tax-qualified retirement plans for individuals,
businesses and nonprofit organizations. For information about establishing a
Berger Funds IRA, Roth IRA, profit-sharing or money purchase pension plan,
403(b) Custodial Account, SEP-IRA, SIMPLE IRA account or other retirement plans,
please call 1.800.333.1001 or write to The Berger Funds 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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<PAGE>
ORGANIZATION OF THE BERGER FUND FAMILY
FUND OVERSIGHT
The Fund is supervised by a board of trustees who are responsible for major
decisions about the Fund's policies and overall Fund oversight. The Fund's
board hires the companies that run day-to-day Fund operations, such as the
investment advisor, administrator, transfer agent and custodian. For more
information about the Fund's trustees and officers, see the SAI.
FUND OPERATIONS AND EXPENSES
The following companies provide day-to-day investment management and
administrative services to the Fund. Their fees are shown in the table below as
a percentage of the Fund's average daily net assets.
BERGER ASSOCIATES (210 University Blvd., Suite 900, Denver, CO 80206) serves as
investment advisor, sub-advisor, administrator or sub-administrator to mutual
funds and institutional investors. Berger Associates has been in the investment
advisory business for over 20 years. Berger Associates is a wholly-owned
subsidiary of Kansas City Southern Industries, Inc. (KCSI). 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. When acting as investment advisor, Berger Associates is
responsible for managing the investment operations of the Fund.
- --------------------------------------------------------------------------------
FUND ADVISOR ADMINISTRATOR
(PAID BY FUND) (PAID BY FUND)
- --------------------------------------------------------------------------------
BERGER SPECIAL VALUES FUND Berger Associates Berger Associates
0.[___]% 0.01%
- --------------------------------------------------------------------------------
ADDITIONAL EXPENSE INFORMATION
12B-1 PLANS. The Fund has adopted a 12b-1 plan permitting it to pay certain
costs of distributing its shares. Berger Associates is entitled to be paid a
fee under each plan of 0.25% of the Fund's average daily net assets. The fee
may be used for such things as:
- - marketing and promotional activities
- - printing and distributing prospectuses and reports to prospective
shareholders
- - printing and distributing Fund sales literature
- - compensation to dealers and others who provide distribution and
administrative services
- - support services (such as routine requests for information).
The Fund may be jointly promoted with other Berger Funds. Costs of joint
promotions are allocated among the funds on the basis of net assets, unless
otherwise directed by the trustees.
BROKERAGE COMMISSIONS. Fund portfolio brokerage is permitted to be placed
through a broker-dealer that may be considered an affiliate of Berger
Associates, but only when commissions paid to that broker-dealer are applied to
reduce Fund expenses.
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<PAGE>
Sales of Fund shares by a broker-dealer and its recommendation that customers
purchase Fund shares are factors that may be considered in the selection of
broker-dealers to execute Fund portfolio transactions. In placing all portfolio
business, the Fund's advisor or sub-advisor will seek best execution.
Portfolio changes are made whenever the Fund's investment manager believes that
the Fund's goal could be better achieved by investment in another security,
regardless of portfolio turnover. Turnover for the Fund is not expected to
exceed 100%. Higher turnover rates may result in higher brokerage costs to the
Fund and in higher net taxable gains for you as an investor.
OTHER SERVICE PROVIDERS
The following additional companies provide services to the Fund:
TRANSFER AGENT AND DIVIDEND PAYING AGENT
DST Systems, Inc. (DST)
P.O. Box 419958
Kansas City, MO 64141
DST may be considered an affiliate of Berger Associates through common ownership
by KCSI.
CUSTODIAN
Investors Fiduciary Trust Company (IFTC)
801 Pennsylvania
Kansas City, MO 64105
DISTRIBUTOR
Berger Distributors, Inc. (BDI)
210 University Blvd., Suite 900
Denver, CO 80206
BDI is not paid a fee for its services, but may be reimbursed by Berger
Associates for its costs in distributing Fund shares. BDI is wholly owned by
Berger Associates and certain Fund officers are also officers or directors of
BDI.
THIRD PARTY ADMINISTRATORS
Certain brokerage firms and other companies may provide administrative services
(such as sub-transfer agency, recordkeeping or shareholder communications
services) to investors purchasing shares of the Fund through those companies.
The Fund's advisor or the Fund (if approved by its trustees) may pay fees to
these companies for their services. These companies may also be appointed as
agents for or authorized by the Fund to accept on its behalf purchase and
redemption requests that are received in good order. Subject to Fund approval,
certain of these companies may be authorized to designate other entities to
accept purchase and redemption orders on behalf of the Fund.
VOTING. The Fund does not hold annual shareholder meetings, but may hold
special meetings for such matters as electing or removing board members or
considering changes to fundamental policies, advisory contracts or 12b-1 fees.
Shareholders of the Fund vote separately on matters relating only to the Fund.
They vote together and along with the shareholders of any other series of the
trust in the election of trustees and on all matters relating to the trust as a
whole. Each full share of the Fund has one vote. The Fund's investment
objective may be changed only with shareholder approval.
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<PAGE>
YEAR 2000. Mutual funds and businesses around the world depend on smooth
functioning computer systems. Many of those systems need to be modified to
distinguish the difference between the year 1900 and the year 2000. The
advisor, distributor, shareholder servicing and transfer agent, custodian and
certain other service providers to the Fund have reported that each expects to
modify its systems, as necessary, prior to January 1, 2000, to address the
so-called "year 2000 problem." However, there can be no assurance that the
problems will be corrected in all respects and that there will be no adverse
effect on the Fund's operations and services provided to shareholders or on the
companies in which the Fund is invested.
page 20
<PAGE>
[BACK COVER]
[LOGO]
BERGER
Together we can
move mountains (R)
The Statement of Additional Information (SAI), as it may be amended or
supplemented from time to time, has been filed with the SEC and is incorporated
by reference in its entirety into this prospectus (meaning it legally becomes a
part of this prospectus). You may read or download the SAI, plus other
information and material incorporated by reference in this prospectus, from the
SEC's Internet Web site at www.sec.gov.
Shareholders with questions or who would like to receive a Prospectus on other
Berger Funds should write to The Berger Funds, c/o Berger Associates, Inc., P.O.
Box 5005, Denver, CO 80217, or call 1.800.551.5849 or contact us online at
www.bergerfunds.com.
Prospectus printed on recycled paper.
page 21
<PAGE>
BERGER SPECIAL VALUES FUND
STATEMENT OF ADDITIONAL INFORMATION
SHAREHOLDER SERVICES: 1-800-551-5849
This Statement of Additional Information ("SAI") is not a prospectus.
It should be read in conjunction with the Prospectus dated [__________], 1998,
describing the Berger Special Values Fund (the "Fund"), which may be obtained by
writing the Fund at P.O. Box 5005, Denver, Colorado 80217, or calling
1-800-333-1001. The Fund is a "no-load" mutual fund, meaning that a buyer pays
no commissions or sales load when buying or redeeming shares of the Fund,
although the Fund pays certain costs of distributing its shares. See "Section
5. Expenses of the Fund -- 12b-1 Plan" below. This SAI provides further
description of the Fund.
BERGER SPECIAL VALUES FUND
The investment objective of the Berger Special Values Fund is capital
appreciation.
DATED [_________], 1998
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
<S> <C>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS CROSS-REFERENCES TO
RELATED DISCLOSURES
IN PROSPECTUS
- --------------------------------------------------------------------------------
Introduction Table of Contents
- --------------------------------------------------------------------------------
1. Portfolio Policies of the Fund Berger Funds;
Investment Techniques, Securities and
the Associated Risks
- --------------------------------------------------------------------------------
2. Investment Restrictions Berger Funds;
Investment Techniques, Securities and
the Associated Risks
- --------------------------------------------------------------------------------
3. Management of the Fund Berger Funds;
Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
4. Investment Advisor Berger Funds;
Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
5. Expenses of the Fund Berger Funds;
Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
6. Brokerage Policy Berger Funds;
Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
7. How to Purchase Shares in the Fund Information on Your Account
- --------------------------------------------------------------------------------
8. How the Net Asset Value is Information on Your Account
Determined
- --------------------------------------------------------------------------------
9. Income Dividends, Capital Gains Information on Your Account
Distributions and Tax Treatment
- --------------------------------------------------------------------------------
10. Suspension of Redemption Rights Information on Your Account
- --------------------------------------------------------------------------------
11. Tax-Sheltered Retirement Plans Information on Your Account
- --------------------------------------------------------------------------------
12. Special Purchase and Exchange Information on Your Account
Plans
- --------------------------------------------------------------------------------
13. Performance Information Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
14. Additional Information Organization of the Berger Fund Family
- --------------------------------------------------------------------------------
Financial Statements N/A
- --------------------------------------------------------------------------------
</TABLE>
-i-
<PAGE>
INTRODUCTION
The Fund described in this SAI is a mutual fund, or open-end,
management investment company.
1. PORTFOLIO POLICIES OF THE FUND
The Prospectus describes the investment goal of the Fund and the
primary policies to be employed to achieve that goal. This section contains
supplemental information concerning the types of securities and other
instruments in which the Fund may invest, the investment policies and portfolio
strategies that the Fund may utilize and certain risks attendant to those
investments, policies and strategies.
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 preferred stock where the issuer has
omitted, or is in danger of omitting, payment of its dividends. Such
investments would be made primarily for their capital appreciation potential.
All investments in stocks are subject to market risk, meaning that their prices
may move up and down with the general stock market, and that such movements
might reduce their value.
DEBT SECURITIES. Debt securities (such as bonds or debentures) are
fixed-income securities 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. In addition to market risk, debt securities are generally subject to two
other kinds of risk: credit risk and interest rate risk. Credit risk refers to
the ability of the issuer to meet interest or principal payments as they come
due. The lower the rating given a security by a rating service (such as Moody's
Investor Service ("Moody's") and Standard & Poor's ("S&P")), the greater the
credit risk the rating service perceives with respect to that security. 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 this SAI.
Interest rate risk refers to the fact that the value of fixed-income
securities (like debt securities) generally fluctuates in response to changes in
interest rates. A decrease in interest rates will generally result in an
increase in the price of fixed-income securities held by the Fund. Conversely,
during periods of rising interest rates, the value of fixed-income securities
held by the Fund will generally decline. Longer-term securities are generally
more sensitive to interest rate changes and are more volatile than shorter-term
securities, but they generally offer higher yields to compensate investors for
the associated risks.
CONVERTIBLE SECURITIES. The Fund may also purchase debt or equity
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
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<PAGE>
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 ratings by organizations
such as Moody's or S&P or a similar determination of creditworthiness by 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 this SAI.
SPECIAL SITUATIONS. The Fund will also invest in "special
situations." Special situations are companies that have recently experienced or
are anticipated to experience a significant change in structure, management,
products or services which may significantly affect the value of their
securities. Examples of special situations are companies being reorganized or
merged, companies emerging from bankruptcy, companies introducing unusual new
products or which enjoy particular tax advantages. Other examples are companies
experiencing changes in senior management, extraordinary corporate events,
significant changes in cost or capital structure or which are believed to be
probable takeover candidates. The opportunity to invest in special situations,
however, is limited and depends in part on the market's assessment of these
companies and their circumstances. By its nature, a "special situation" company
involves to some degree a break with the company's past experience. This
creates greater uncertainty and potential risk of loss than if the company were
operating according to long-established patterns. In addition, stocks of
companies in special situations may decline or not appreciate as expected if an
anticipated change or development does not occur or is not assessed by the
market as favorably as expected.
NONDIVERSIFICATION. The Fund is classified as a "nondiversified" Fund
under the Investment Company Act of 1940, which means that the Fund is not
limited by that Act in the proportion of its assets that it may invest in the
securities of a single issuer. The Fund's net asset value may be more volatile
than that of a more-widely diversified fund because the Fund invests more of its
assets in a smaller number of issuers. Consequently, the Fund may be more
vulnerable to any single economic, political or regulatory occurrence, and the
gains or losses on a single stock will have a greater impact on the Fund's net
asset value.
However, the Fund intends to conduct its operations so as to qualify
to be taxed as a "regulated investment company" under the Internal Revenue Code,
which will generally relieve the Fund of any liability for federal income tax to
the extent its earnings are distributed to shareholders. See Section 9--Income
Dividends, Capital Gains Distributions and Tax Treatment below. To qualify as a
regulated investment company, among other requirements, the Fund will limit its
investments so that, at the close of each quarter of the taxable year, (i) not
more than 25% of the market value of the Fund's total assets will be invested in
securities of a single issuer, and (ii) with respect to 50% of the market value
of its total assets, not more than 5% of the market value of its total assets
will be invested in the securities of a single issuer and the Fund will not own
more than 10% of the outstanding voting securities of a single issuer. These
limitations do not apply to U.S. government securities.
ZEROS/STRIPS. The Fund may invest also 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
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<PAGE>
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 mid-sized market capitalizations. Market capitalization
is defined as total current market value of a company's outstanding common
stock. Investments in companies with smaller market capitalizations may involve
greater risks and price volatility (that is, more abrupt or erratic price
movements) than investments in larger, more mature companies since smaller
companies may be at an earlier stage of development and may have limited product
lines, reduced market liquidity for their shares, limited financial resources or
less depth in management than larger or more established companies. Smaller
companies also may be less significant factors within their industries and may
have difficulty withstanding competition from larger companies. While smaller
companies may be subject to these additional risks, they may also realize more
substantial growth than larger or more established companies.
SECURITIES OF COMPANIES WITH LIMITED OPERATING HISTORIES. The Fund
may invest in securities of companies with limited operating histories. The
Fund considers these to be securities of companies with a record of less than
three years' continuous operation, even including the operations of any
predecessors and parents. (These are sometimes referred to as "unseasoned
issuers.") These companies by their nature have only a limited operating
history which can be used for evaluating the company's growth prospects. As a
result, investment decisions for these securities may place a greater emphasis
on current or planned product lines and the reputation and experience of the
company's management and less emphasis on fundamental valuation factors than
would be the case for more mature companies. In addition, many of these
companies may also be small companies and involve the risks and price volatility
associated with smaller companies.
FOREIGN SECURITIES. The Fund may invest in foreign securities, which
may be traded in foreign markets and denominated in foreign currency. The
Fund's investments may also include American Depositary Receipts (ADRs),
European Depositary Receipts (EDRs) which are similar to ADRs, in bearer form,
designed for use in the European securities markets, and in Global Depositary
Receipts (GDRs).
Investments in foreign securities involve some risks that are
different from the risks of investing in securities of U.S. issuers, such as the
risk of adverse political, social, diplomatic and economic developments and,
with respect to certain countries, the possibility of expropriation, taxes
imposed by foreign countries or limitations on the removal of monies or other
assets of the Fund. Moreover, the economies of individual foreign countries
will vary in comparison to the U.S. economy in such respects as growth of gross
domestic product, rate of inflation, capital reinvestment, resources, self-
sufficiency and balance of payments position. Securities of some foreign
companies, particularly those in developing countries, are less liquid and more
volatile than securities of comparable domestic companies. A developing country
generally is considered to be in the initial stages of its industrialization
cycle. Investing in the securities of developing countries may involve exposure
to economic structures that are less diverse and mature, and to political
systems that can be expected to have less stability than developed countries.
There also may be less publicly available information about foreign
issuers and securities than domestic issuers and securities, and foreign issuers
generally are not subject to accounting, auditing and financial reporting
standards, requirements and practices comparable to those applicable to domestic
issuers. Also, there is generally less government supervision and regulation of
exchanges,
-3-
<PAGE>
brokers, financial institutions and issuers in foreign countries than there is
in the U.S. Foreign financial markets typically have substantially less volume
than U.S. markets. Foreign markets also have different clearance and settlement
procedures and, in certain markets, delays or other factors could make it
difficult to effect transactions, potentially causing the Fund to experience
losses or miss investment opportunities.
Costs associated with transactions in foreign securities are generally
higher than with transactions in U.S. securities. The Fund will incur greater
costs in maintaining assets in foreign jurisdictions and in buying and selling
foreign securities generally, resulting in part from converting foreign
currencies into U.S. dollars. In addition, the Fund might have greater
difficulty taking appropriate legal action with respect to foreign investments
in non-U.S. courts than with respect to domestic issuers in U.S. courts, which
may heighten the risk of possible losses through the holding of securities by
custodians and securities depositories in foreign countries.
If the Fund is invested in securities denominated or quoted in
currencies other than the U.S. dollar, changes in foreign currency exchange
rates will affect the value of the investments in its portfolio and the
unrealized appreciation or depreciation of investments insofar as U.S. investors
are concerned. If the foreign currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase. Conversely, a decline in the exchange rate of the foreign currency
against the U.S. dollar would adversely affect the dollar value of the foreign
securities. Foreign currency exchange rates are determined by forces of supply
and demand on the foreign exchange markets, which are in turn affected by the
international balance of payments and other economic and financial conditions,
government intervention, speculation and other factors.
PASSIVE FOREIGN INVESTMENT COMPANIES (PFICs). The Fund may purchase
the securities of certain foreign investment funds or trusts considered Passive
Foreign Investment Companies (PFICs) under U.S. tax laws. In addition to
bearing their proportionate share of the Fund's expenses (management fees and
operating expenses), shareholders will also indirectly bear similar expenses of
such PFIC. PFIC investments also may be subject to less favorable U.S. tax
treatment, as discussed in Section 9 below.
ILLIQUID AND RESTRICTED SECURITIES. 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
willing to purchase or sell the security and the number of other potential
purchasers; (3) dealer undertakings to make a market in the security; and
(4) the nature of the security and the marketplace trades (e.g., the time needed
to dispose of the security, the method of soliciting offers, and the mechanics
of the transfer). The liquidity of the Fund's investments in Rule 144A
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securities could be impaired if qualified institutional buyers become
uninterested in purchasing these securities.
REPURCHASE AGREEMENTS. 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 debt security issued or guaranteed by the U.S. government or an
agency thereof, a banker's acceptance or a certificate of deposit) from a
commercial 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.
These transactions must be fully collateralized at all times by debt
securities (generally a security issued or guaranteed by the U.S. Government or
an agency thereof, a banker's acceptance or a certificate of deposit), but
involve certain risks, such as credit risk to the Fund if the other party
defaults on its obligation and the Fund is delayed or prevented from liquidating
the collateral. For example, if the other party to the agreement defaults on
its obligation to repurchase the underlying security at a time when the value of
the security has declined, 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 and delayed. Further, 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. The Fund expects that these risks can be controlled through
careful monitoring procedures.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Fund may purchase
and sell securities on a when-issued or delayed delivery basis. However, 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 taken
at market value at the time of purchase would be invested in such securities.
When-issued or delayed delivery transactions arise when securities (normally,
obligations of issuers eligible for investment by 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 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
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necessary, additional assets will be placed in the account daily so that the
value of the account will equal or exceed the amount of the Fund's purchase
commitments.
LENDING OF PORTFOLIO SECURITIES. The Fund may lend its securities to
qualified institutional investors (such as brokers, dealers or other financial
organizations) who need to borrow securities in order to complete certain
transactions, such as covering short sales, avoiding failures to deliver
securities or completing arbitrage operations. Loans of securities by 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. 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 receives reasonable
interest on the loan, which interest may include the Fund's investing cash
collateral in interest bearing short-term investments, and (e) the Fund receives
all dividends and distributions on the loaned securities and any increase in the
market value of the loaned securities.
The Fund bears risk of loss in the event that the other party to a
securities lending transaction defaults on its obligations and the Fund is
delayed in or prevented from exercising its rights to dispose of the collateral,
including the risk of a possible decline in the value of the collateral
securities during the period in which the Fund seeks to assert these rights, the
risk of incurring expenses associated with asserting these rights and the risk
of losing all or a part of the income from the transaction. 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 currently is only permitted to engage in short
sales if, at the time of the short sale, the Fund owns or has the right to
acquire an equivalent kind and amount of the security being sold short at no
additional cost (i.e., short sales "against the box").
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.
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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, federal tax
legislation has 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.
HEDGING TRANSACTIONS. The Fund is authorized to make limited use of
certain types of futures, forwards and/or options, but only for the purpose of
hedging, that is, protecting against market risk due to market movements that
may adversely affect the value of 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.
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 is permitted to use such instruments for hedging purposes only, and
only if the aggregate amount of its obligations under these contracts does not
exceed the total market value of the assets the Fund is attempting to hedge,
such as a portion or all of its exposure to equity securities or its holding in
a specific foreign currency. To help ensure that the Fund will be able to meet
its obligations under its futures and forward contracts and its obligations
under options written by the 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; and (e) the need for additional
information and skills beyond those required for the management of a portfolio
of traditional securities. In addition, when the Fund enters into an
over-the-counter contract with a counterparty, the Fund will assume counterparty
credit risk, that is, the risk that the counterparty will fail to perform its
obligations, in which case the Fund could be worse off than if the contract had
not been entered into.
Following is additional information concerning the futures, forwards
and options which the 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.
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
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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 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.
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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 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 will
only utilize futures contracts when it believes that use of such contracts will
benefit the Fund, if the Fund's investment judgment is incorrect, the Fund's
overall performance could be worse than if the Fund had not entered into futures
contracts. For example, if the Fund has hedged against the effects of a
possible decrease in prices of securities held in the Fund's portfolio and
prices increase instead, the Fund will lose part or all of the benefit of the
increased value of these securities because of offsetting losses in the Fund's
futures positions. In addition, if the Fund has insufficient cash, it may have
to sell securities from its portfolio to meet daily variation margin
requirements. Those sales may be, but will not necessarily be, at increased
prices which reflect the rising market and may occur at a time when the sales
are disadvantageous to the Fund. Although the buyer of an option cannot lose
more than the amount of the premium plus related transaction costs, a buyer or
seller of futures contracts could lose amounts substantially in excess of any
initial margin deposits made, due to the potential for adverse price movements
resulting in additional variation margin being required by such positions.
However, the Fund intends to monitor its investments closely and will attempt to
close its positions when the risk of loss to the Fund becomes unacceptably high.
The prices of futures contracts depend primarily on the value of their
underlying instruments. Because there are a limited number of types of futures
contracts, it is possible that the standardized futures contracts available to
the Fund will not match exactly the Fund's current or potential investments.
The Fund may buy and sell futures contracts based on underlying instruments with
different characteristics from the securities in which it typically invests --
for example, by hedging investments in portfolio securities with a futures
contract based on a broad index of securities -- which involves a risk that the
futures position will not correlate precisely with the performance of the Fund's
investments.
Futures prices can also diverge from the prices of their underlying
instruments, even if the underlying instruments closely correlate with the
Fund's investments. Futures prices are affected by such factors as current and
anticipated short-term interest rates, changes in volatility of the underlying
instruments and the time remaining until expiration of the contract. Those
factors may affect securities prices differently from futures prices. Imperfect
correlations between the Fund's investments and its futures positions may also
result from differing levels of demand in the futures
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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 value
less than or equal to the securities it wishes to hedge or is considering
purchasing. 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.
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
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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 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").
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 the Fund's opportunity to profit from
increases in the value of the original currency and involves a risk of increased
losses to the Fund if its investment 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 the Fund's commitments under forward
contracts entered into. If the value of the securities used to cover a position
or the value of segregated assets declines, the Fund must find alternative cover
or segregate additional cash or liquid assets on a daily basis so that the value
of the covered and segregated assets will be equal to the amount of the Fund's
commitments with respect to such contracts.
While forward contracts are not currently regulated by the CFTC, the
CFTC may in the future assert authority to regulate forward contracts. In such
event, the Fund's ability to utilize
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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 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
canceled 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.
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<PAGE>
The Fund will realize a profit from a closing transaction if the price
of the purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option; the Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only where there exists a
secondary market for an option of the same series. If a secondary market does
not exist, it might not be possible to effect closing transactions in particular
options with the result that the Fund would have to exercise the options in
order to realize any profit. If the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the underlying
security until the option expires or the Fund delivers the underlying security
upon exercise. Reasons for the absence of a liquid secondary market may include
the following: (i) there may be insufficient trading interest in certain
options, (ii) restrictions may be imposed by a national securities exchange on
which the option is traded ("Exchange") on opening or closing transactions or
both, (iii) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities,
(iv) unusual or unforeseen circumstances may interrupt normal operations on an
Exchange, (v) the facilities of an Exchange or of the Options Clearing
Corporation ("OCC") may not at all times be adequate to handle current trading
volume, or (vi) one or more Exchanges could, for economic or other reasons,
decide or be compelled at some future date to discontinue the trading of options
(or a particular class or series of options), in which event the secondary
market on that Exchange (or in that class or series of options) would cease to
exist, although outstanding options on that Exchange that had been issued by the
OCC as a result of trades on that Exchange would continue to be exercisable in
accordance with their terms.
In addition, when the Fund enters into an over-the-counter option
contract with a counterparty, the Fund assumes counterparty credit risk, that
is, the risk that the counterparty will fail to perform its obligations, in
which case the Fund could be worse off than if the contract had not been entered
into.
An option on a securities index is similar to an option on a security
except that, rather than the right to take or make delivery of a security at a
specified price, an option on a securities index gives the holder the right to
receive, on exercise of the option, an amount of cash if the closing level of
the securities index on which the option is based is greater than, in the case
of a call, or less than, in the case of a put, the exercise price of the option.
The Fund may buy call options on securities or securities indices to
hedge against an increase in the price of a security or securities that the Fund
may buy in the future. The premium paid for the call option plus any
transaction costs will reduce the benefit, if any, realized by the Fund upon
exercise of the option, and, unless the price of the underlying security or
index rises sufficiently, the option may expire and become worthless to the
Fund. The Fund may buy put options to hedge against a decline in the value of a
security or its portfolio. The premium paid for the put option plus any
transaction costs will reduce the benefit, if any, realized by the Fund upon
exercise of the option, and, unless the price of the underlying security or
index declines sufficiently, the option may expire and become worthless to the
Fund.
An example of a hedging transaction using an index option would be if
the Fund were to purchase a put on a stock index, in order to protect the Fund
against a decline in the value of all securities held by it to the extent that
the stock index moves in a similar pattern to the prices of the securities held.
While the correlation between stock indices and price movements of the stocks in
which the Fund will generally invest may be imperfect, the Fund expects,
nonetheless, that the use
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<PAGE>
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.
TEMPORARY DEFENSIVE MEASURES. The Fund may increase its investment in
government securities, and other short-term, interest-bearing securities without
regard to the Fund's otherwise applicable percentage limits, policies or its
normal investment emphasis when its advisor believes market conditions warrant a
temporary defensive position. Taking larger positions in such short-term
investments may serve as a means of preserving capital in unfavorable market
conditions. During these periods, the Fund may not participate in stock or bond
market advances or declines to the same extent that it would if the Fund
remained more fully invested in stocks and bonds and it may be more difficult
for the Fund to achieve its investment objective.
PORTFOLIO TURNOVER. Investment changes in the Fund will be made
whenever management deems them appropriate even if this results in a higher
portfolio turnover rate. 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. In addition, portfolio turnover for the Fund 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 for the Fund is not expected to
exceed 100%.
Higher portfolio turnover will 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 to shareholders. The Fund's brokerage policy is discussed
further below under Section 6--Brokerage Policy, and additional information
concerning income taxes is located under Section 9--Income Dividends, Capital
Gains Distributions and Tax Treatment.
2. INVESTMENT RESTRICTIONS
The investment objective of the Fund is set forth on the cover of this
SAI. The investment objective of Fund is considered fundamental, meaning that
it cannot be changed without a shareholders' vote. There can be no assurance
that the Fund's investment objective will be realized.
The Fund has adopted certain fundamental and non-fundamental
restrictions on its investments and other activities. Fundamental restrictions
may not be changed without the approval of (i) 67% or more of the voting
securities of the Fund present at a meeting of shareholders thereof if the
holders of more than 50% of the outstanding voting securities are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Fund. Non-fundamental restrictions may be changed in the future by
action of the trustees without shareholder vote.
BERGER SPECIAL VALUES FUND
The following fundamental restrictions apply to the Berger Special
Values Fund. The Fund may not:
1. 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.
2. 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
-14-
<PAGE>
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.
3. 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.
4. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction (no. 2
above),the Fund uses the industry groups used in the Data Monitor Portfolio
Monitoring System of William O'Neil & Co. Incorporated.
The trustees have adopted additional non-fundamental investment
restrictions for the Fund. These limitations may be changed by the trustees
without a shareholder vote. The non-fundamental investment restrictions include
the following:
1. The Fund may not purchase securities on margin from a broker or
dealer, except that the Fund may obtain such short-term credits as may be
necessary for the clearance of transactions, and may not make short sales of
securities, except that the Fund may make short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). This limitation shall not prohibit or restrict the Fund
from entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
2. The Fund may not purchase the securities of any other investment
company, except by purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's commission).
3. The Fund may not invest in companies for the purposes of
exercising control of management.
4. The Fund may not purchase any security, including any repurchase
agreement maturing in more than seven days, which is not readily marketable, if
more than 15% of the net assets of the Fund, taken at market value at the time
of purchase would be invested in such securities.
5. Only for the purpose of hedging, the Fund may purchase and sell
financial futures, forward foreign currency exchange contracts and put and call
options, but no more than 5% of the Fund's net assets at the time of purchase
may be invested in initial margins for financial futures transactions and
premiums for options. The Fund may only write call options that are covered and
only up to 25% of the Fund's total assets.
-15-
<PAGE>
6. The Fund may not purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total assets taken at
market value at the time of purchase would be invested in such securities.
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.
MICHAEL OWEN, 412 Reid Hall, Montana State University,
Bozeman, MT 59717, DOB: 1937. 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.
* GERARD M. LAVIN, 210 University Boulevard, Suite 900, Denver,
CO 80206, DOB: 1942. President and a director of Berger 100 Fund
and Berger Growth and Income Fund, and President and a trustee of
Berger Investment Portfolio Trust and Berger Omni Investment
Trust, 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 Co-Chief Executive Officer on the Management
Committee of BBOI Worldwide LLC since November 1996. President
and a director of West Side Investments, Inc. (investments), a
wholly-owned subsidiary of DST Systems, Inc., since February 1998.
Formerly, a Vice President of DST Systems, Inc. (data processing)
from July 1995 to February 1998; 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.
DENNIS E. BALDWIN, 3481 South Race Street, Englewood, CO 80110, DOB: 1928.
President, Baldwin Financial Counseling. Formerly (1978-1990), Vice
President and Denver Office Manager of Merrill Lynch Capital Markets.
Director of Berger 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.
* WILLIAM M. B. BERGER, 210 University Boulevard, Suite 900,
Denver, CO 80206, DOB: 1925. 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, DOB: 1925. 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
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<PAGE>
Products Trust, Berger/BIAM Worldwide Funds Trust, Berger/BIAM
Worldwide Portfolios Trust and Berger Omni Investment Trust.
KATHERINE A. CATTANACH, 672 South Gaylord, Denver, CO 80209,
DOB: 1945. Managing Principal, Sovereign Financial Services, Inc.
(investment consulting firm). Formerly (1981-1988), Executive Vice
President, Captiva Corporation, Denver, Colorado (private
investment management firm). Ph.D. in Finance (Arizona State
University); Chartered Financial Analyst (CFA). Director of Berger
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 1900, Chicago, IL 60602, DOB:
1945. Since 1991, Chairman, President, Chief Executive Officer and a
director of Catalyst Institute (international public policy research
organization focused primarily on financial markets and institutions).
Since September 1997, President, Chief Executive Officer and a
director of DST Catalyst, Inc. (international financial markets
consulting, software and computer services company). Since February
1998, Vice President and a director of West Side Investments, Inc.
(investments), a wholly-owned subsidiary of DST Systems, Inc.
Previously (1991 - September 1997), Chairman, President, Chief
Executive Officer and a director of Catalyst Consulting (international
financial institutions business consulting firm). Prior thereto
(1988-1991), President, Chief Executive Officer and a director of
Kessler Asher Group (brokerage, clearing and trading firm). Director
of Berger 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.
HARRY T. LEWIS, JR., 370 17th Street, Suite 3560, Denver, CO
80202, DOB: 1933. Self-employed as a private investor. Formerly
(1981-1988), Senior Vice President, Rocky Mountain Region, of Dain
Bosworth Incorporated and member of that firm's Management
Committee. Director of J.D. Edwards & Co. (computer software
company) since 1995. Director of Berger 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.
WILLIAM SINCLAIRE, 3049 S. Perry Park Road, Sedalia, CO 80135, DOB: 1928.
President, Santa Clara LLC (cattle company), 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, DOB: 1955. 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, Senior Vice President-Finance and Administration (since
January 1997), Vice President-Finance and Administration (September
1991 to January 1997), Secretary and Treasurer (since September
1991) of Berger Associates, 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 Lynch, Pierce, Fenner & Smith, Inc.
(October 1985 to October 1989).
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<PAGE>
* ANTHONY (TINO) R. SELLITTO III, 210 University Boulevard, Suite 900,
Denver, CO 80206, DOB: 1964. Vice President and portfolio manager
of the Berger Special Values Fund since its inception in August 1998.
Vice President (since September 1998) and senior equity analyst
(January 1998 to September 1998) with Berger Associates. Formerly,
Vice President and Assistant Portfolio Manager at Crestone Capital
Management, Inc. (August 1995 to January 1998) , Portfolio Manager
at Hawaiian Trust Company (September 1994 to August 1995) and Account
Executive at W.W. Grainger Inc. (distributor of industrial equipment)
(October 1991 to September 1994).
- ------------------
* Interested person (as defined in the Investment Company Act of 1940) of the
Fund and/or 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 received no compensation from the Fund during
the fiscal year ended September 30, 1997. However, trustees of the Fund who are
not "interested persons" of the Fund or its advisor are compensated for their
services according to a fee schedule, allocated among the Berger Funds. Neither
the officers of the Fund nor the trustees receive any form of pension or
retirement benefit compensation from the Fund.
The following table sets forth information regarding compensation paid
or accrued during the fiscal year ended September 30, 1997, for each trustee of
the Fund:
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<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NAME AND POSITION AGGREGATE COMPENSATION FROM
WITH BERGER FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BERGER SPECIAL VALUES FUND(1) ALL BERGER FUNDS(2)
- --------------------------------------------------------------------------------
Dennis E. Baldwin(3) $ $45,100
- --------------------------------------------------------------------------------
William M.B. Berger(3),(4) $0 $ 0
- --------------------------------------------------------------------------------
Louis R. Bindner(3) $ $41,200
- --------------------------------------------------------------------------------
Katherine A. Cattanach(3) $ $45,100
- --------------------------------------------------------------------------------
Lucy Black Creighton(3),(6) $0 $41,244
- --------------------------------------------------------------------------------
Paul R. Knapp(3) $ $43,300
- --------------------------------------------------------------------------------
Gerard M. Lavin(3),(4),(5) $0 $ 0
- --------------------------------------------------------------------------------
Harry T. Lewis(3) $ $43,300
- --------------------------------------------------------------------------------
Michael Owen(3) $ $54,767
- --------------------------------------------------------------------------------
William Sinclaire(3) $ $39,700
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO TABLE
(1) The Fund will not commence operations until ______, 1998. Figures are
estimates for the Fund's first year of operations.
(2) Includes the Berger 100 Fund, the Berger Growth and Income Fund, the Berger
Investment Portfolio Trust (including the Berger Small Company Growth Fund and
the Berger New Generation Fund), the Berger Institutional Products Trust (four
series), the Berger/BIAM Worldwide Funds Trust (three series, including among
others the Berger/BIAM International Fund), the Berger/BIAM Worldwide Portfolios
Trust (one series) and the Berger Omni Investment Trust (including the Berger
Small Cap Value Fund, which was added to the Berger Funds in February 1997).
Aggregate compensation figures do not include first-year estimates for the Fund.
Of the aggregate amounts shown for each director/trustee, the following amounts
were deferred under applicable deferred compensation plans: Dennis E. Baldwin
$30,565; Louis R. Bindner $19,445; Katherine A. Cattanach $44,468; Lucy Black
Creighton $32,168; Michael Owen $8,553; William Sinclaire $19,555.
(3) Director of Berger 100 Fund and Berger Growth and Income Fund and trustee
of Berger Investment Portfolio Trust, Berger Institutional Products Trust,
Berger/BIAM Worldwide Portfolios Trust, Berger/BIAM Worldwide Funds Trust and
Berger Omni Investment Trust.
(4) Interested person of Berger Associates.
(5) President of Berger 100 Fund, Berger Growth and Income Fund, Berger
Investment Portfolio Trust, Berger/BIAM Worldwide Portfolios Trust, Berger/BIAM
Worldwide Funds Trust and Berger Omni Investment Trust.
(6) Resigned as a director and trustee effective November 1997.
Trustees may elect to defer receipt of all or a portion of their fees
pursuant to a fee deferral plan adopted by the Fund. 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, the Fund is permitted to purchase shares of the designated
funds in order to offset its 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 Fund's obligation to make payments of deferred
fees under the plan is a general obligation of the Fund.
As of [__________], 1998, the officers and trustees of the Fund as a
group owned of record or beneficially no shares of the Fund.
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<PAGE>
4. INVESTMENT ADVISOR
BERGER ASSOCIATES - INVESTMENT ADVISOR
Berger Associates, Inc. ("Berger Associates"), 210 University
Boulevard, Suite 900, Denver, CO 80206, is the investment advisor to the Fund.
Berger Associates is responsible for managing the investment operations of the
Fund and the composition of its investment portfolio. Berger Associates also
acts as the Fund's administrator and is responsible for such functions as
monitoring 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
and institutional investors and had assets under management of more than $3.7
billion as of June 30, 1998. Berger Associates is a wholly-owned subsidiary of
Kansas City Southern Industries, Inc. ("KCSI"). 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 Fund and its
advisor, the advisor is generally responsible for managing the investment
operations of the Fund. Under the Agreement, the advisor is compensated for its
services by the payment of a fee at the following annual rate, calculated as a
percentage of the average daily net assets of the Fund:
- --------------------------------------------------------------------------------
FUND ADVISOR INVESTMENT
ADVISORY FEE
- --------------------------------------------------------------------------------
Berger Special Values Fund Berger Associates 0.[___]%
- --------------------------------------------------------------------------------
The Fund's Investment Advisory Agreement will continue in effect until
the last day of April 2000, and thereafter from year to year if such
continuation is specifically approved at least annually by the trustees or by
vote of a majority of the outstanding shares of the Fund and in either case by
vote of a majority of the trustees who are not "interested persons" (as that
term is defined in the 1940 Act) of the Fund or 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
Fund's 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 Fund's 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.
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<PAGE>
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
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
In addition to paying an investment advisory fee to its advisor, the
Fund pays all of its expenses not assumed by its advisor, including, but not
limited to, custodian and transfer agent fees, legal and accounting expenses,
administrative and record keeping expenses, interest charges, federal and state
taxes, 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.
Under a separate Administrative Services Agreement with respect to the
Fund, Berger Associates performs certain administrative and recordkeeping
services not otherwise performed by the Fund's custodian and recordkeeper,
including the preparation of financial statements and reports to be filed with
the Securities and Exchange Commission and state regulatory authorities. The
Fund pays Berger Associates a fee at an annual rate of 0.01% of its average
daily net assets for such services. These 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.
The Fund has appointed Investors Fiduciary Trust Company ("IFTC"), 801
Pennsylvania, Kansas City, MO 64105, 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 Systems, Inc. ("DST"), P.O. Box 419958,
Kansas City, MO 64141, as sub-agent to provide transfer agency and dividend
disbursing services for the Fund. 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.
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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 $14.00 per open
Fund shareholder account, subject to preset volume discounts, plus certain
transaction fees and fees for closed accounts, and is reimbursed for out-of-
pocket expenses, which fees in turn are passed through to DST as sub-agent.
All of IFTC's fees are subject to reduction pursuant to an agreed
formula for certain earnings credits on the cash balances of the Fund.
12b-1 PLAN
The Fund has adopted a 12b-1 plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940, which provides for the payment to
Berger Associates of a 12b-1 fee of 0.25% per annum of the Fund's average daily
net assets to finance activities primarily intended to result in the sale of
Fund shares. The expenses paid by Berger Associates may include, but are not
limited to, payments made to, and 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 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 Fund may from time to time reasonably deem
necessary or appropriate in order to finance activities primarily intended to
result in the sale of Fund shares. Such 12b-1 fee payments are to be made by
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.
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From time to time the Fund may engage in activities which jointly
promote the sale of Fund shares and other funds that are or may in the future be
advised or administered by Berger 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
1999, 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.
OTHER EXPENSE INFORMATION
The trustees of the Fund have authorized portfolio transactions to be
placed on an agency basis through DST Securities, Inc. ("DSTS"), a wholly-owned
broker-dealer subsidiary of DST. When transactions are effected through DSTS,
the commission received by DSTS is credited against, and thereby reduces,
certain operating expenses that the Fund would otherwise be obligated to pay.
No portion of the commission is retained by DSTS. See Section 6--Brokerage
Policy for further information concerning the expenses reduced as a result of
these arrangements. DSTS may be considered an affiliate of Berger Associates
due to the ownership interest of KCSI in both DSTS and Berger Associates.
The Fund and/or its advisor have entered into arrangements with
certain brokerage firms and other companies(such as recordkeepers and
administrators) to provide administrative services (such as sub-transfer agency,
recordkeeping, shareholder communications, sub-accounting and/or other
services) to investors purchasing shares of the Fund through those firms or
companies. The Fund's advisor or the Fund (if approved by its trustees) may pay
fees to these companies for their services. These companies may also be
appointed as agents for or authorized by the Fund to accept on its behalf
purchase and redemption requests that are received in good order. Subject to
Fund approval, certain of these companies may be authorized to designate other
entities to accept purchase and redemption orders on behalf of the Fund.
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 the Fund's shares.
6. BROKERAGE POLICY
Although the Fund retains full control over its own investment
policies, under the terms of its advisory agreement, the advisor is directed to
place the portfolio transactions of the Fund. A report on the placement of
brokerage business is given 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 the Fund has with its advisor
authorizes and directs the advisor to place portfolio transactions for the Fund
only with brokers and dealers who render satisfactory service in the execution
of orders at the most favorable prices and at reasonable commission rates.
However, the Agreement specifically authorizes the advisor to place such
transactions with a broker with whom it has negotiated a commission that is in
excess of the commission another broker or dealer would have charged for
effecting that transaction if the advisor determines in good faith that such
amount of commission was reasonable in relation to the value of
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the brokerage and research services provided by such broker viewed in terms of
either that particular transaction or the overall responsibilities of the
advisor.
In accordance with this provision of the Agreement, portfolio
brokerage business of the Fund may be placed with brokers who provide useful
research services to the advisor. Such research services include computerized
stock quotation and trading services, fundamental and technical analysis data
and software, broker and other third-party equity research, computerized stock
market and business news services, economic research and account performance
data.
The research services received from brokers are often helpful to the
advisor 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 the advisor's 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 the
advisor in making investment decisions for its other advisory accounts, and,
conversely, information obtained by reason of placement of brokerage business of
such other accounts may be used by the advisor in rendering investment advice to
the Fund. Although such research services may be deemed to be of value to the
advisor, they are not expected to decrease the expenses that the advisor would
otherwise incur in performing its investment advisory services for the Fund nor
will the advisory fees that are received by the advisor from the Fund be reduced
as a result of the availability of such research services from brokers.
The trustees of the Fund have authorized portfolio transactions to be
placed on an agency basis through DSTS, a wholly-owned broker-dealer subsidiary
of DST. When transactions are effected through DSTS, the commission received by
DSTS is credited against, and thereby reduces, certain operating expenses that
the Fund would otherwise be obligated to pay. No portion of the commission is
retained by DSTS. DSTS may be considered an affiliate of Berger Associates due
to the ownership interest of KCSI in both DSTS and Berger Associates.
In selecting broker and dealers and in negotiating commissions, the
Fund's advisor considers a number of factors, including among others: the
advisor's knowledge of currently available negotiated commission rates or prices
of securities currently available and other current transaction costs; the
nature of the security being traded; the size and type of the transaction; the
nature and character of the markets for the security to be purchased or sold;
the desired timing of the trade; the activity existing and expected in the
market for the particular security; confidentiality; the quality of the
execution, clearance and settlement services; financial stability of the broker
or dealer; the existence of actual or apparent operational problems of any
broker or dealer; and research products or services provided. The trustees of
the Fund have also authorized 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 to be considered as factors in the selection of broker-dealers to execute
portfolio transactions for the Fund. In addition, payments made by brokers to
the Fund or to other persons on behalf of the Fund for services provided to the
Fund for which it would otherwise be obligated to pay may also be considered.
In placing portfolio business with any such broker or dealer, the advisor of the
Fund will seek the best execution of each transaction.
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:
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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 on-line access, and remitting payment to DST Systems, Inc. Payment for
shares ordered on-line must be made by electronic funds transfer. In order to
make sure that payment for telephone purchases is received on time, shareholders
are encouraged to remit payment by electronic funds transfer. Shareholders may
also remit payment for telephone purchases by wire or by overnight delivery.
In addition, Fund shares may be purchased through certain
broker-dealers that have established mutual fund programs and certain other
organizations connected with pension and retirement plans. These broker-dealers
and other organizations may charge investors a transaction or other fee for
their services, may require different minimum initial and 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 apply to an
investor who purchases Fund shares directly from the Fund as described above.
Procedures for purchasing, selling (redeeming) and exchanging Fund
shares by telephone and on-line are described in the Prospectus. The Fund may
terminate or modify those procedures and related requirements at any time,
although shareholders of the Fund will be given notice of any termination or
material modification. Berger Associates may, at its own risk, waive certain
of those procedures and related requirements.
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.
In determining net asset value for the Fund, 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 or are not representative
of market value may be valued at their fair value determined in good faith
pursuant to consistently applied procedures established by the trustees.
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Generally, trading in foreign securities markets is substantially
completed each day at various times prior to the close of the Exchange. The
values of foreign securities used in computing the net asset value of the shares
of the Fund are determined as of the earlier of such market close or the closing
time of the Exchange. Occasionally, events affecting the value of such
securities may occur between the times at which they are determined and the
close of the Exchange, or when the foreign market on which such securities trade
is closed but the Exchange is open, which will not be reflected in the
computation of net asset value. If during such periods, events occur which
materially affect the value of such securities, the securities may be valued at
their fair value as determined in good faith pursuant to consistently applied
procedures established by the trustees.
The Fund's securities may be listed primarily on foreign exchanges or
over-the-counter dealer markets which may trade on days when the Exchange is
closed (such as a customary U.S. holiday) and on which the Fund's net asset
value is not calculated. As a result, the net asset value of the Fund may be
significantly affected by such trading on days when shareholders cannot purchase
or redeem shares of the Fund.
9. INCOME DIVIDENDS, CAPITAL GAINS
DISTRIBUTIONS AND TAX TREATMENT
This discussion summarizes certain U.S. federal income tax issues
relating to the Fund. As a summary, it is not an exhaustive discussion of all
possible tax ramifications. Accordingly, shareholders are urged to consult with
their tax advisors with respect to their particular tax consequences.
TAX STATUS OF THE FUND. If the Fund meets certain investment and
distribution requirements, it will be treated as a "regulated investment
company" (a "RIC") under the Internal Revenue Code and will not be subject to
federal income tax on earnings that it distributes in a timely manner to
shareholders. It also may be subject to an excise tax on undistributed income
if it does not meet certain timing requirements for distributions. The Fund
intends to qualify as a RIC annually and to make timely distributions in order
to avoid income and excise tax liabilities.
TAX ON FUND DISTRIBUTIONS. With certain exceptions provided by law,
the Fund will report annually to the Internal Revenue Service and to each
shareholder information about the tax treatment of the shareholder's
distributions. Dividends paid by the Fund, whether received in cash or
reinvested in additional Fund shares, will be treated as ordinary income to the
shareholders. Distributions of net capital gain, whether received in cash or
reinvested in Fund shares, will be taxable to the shareholders, but the rate of
tax will vary depending upon the Fund's holding periods in the assets whose sale
resulted in the capital gain. Dividends and distributions that are declared in
October, November or December but not distributed until the following January
will be considered to be received by the shareholders on December 31.
In general, net capital gains from assets held by the Fund for more
than 18 months will be subject to a maximum tax rate of 20%; net capital gains
from assets held for more than one year but no more than 18 months will be
subject to a maximum tax rate of 28%; and net capital gains from assets held for
one year or less will be taxed as ordinary income. Distributions will be
subject to these capital gains rates, regardless of how long a shareholder has
held Fund shares.
If the Fund's distributions for a taxable year exceeds its tax
earnings and profits available for distribution, all or a portion of its
distributions may be treated as a return of capital or as capital gains. To the
extent a distribution is treated as a return of capital, a shareholder's basis
in his or her Fund shares will be reduced by that amount.
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash and the U.S. Postal Service is unable to deliver checks to
the shareholder's address of record, or if a
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shareholder's checks remain uncashed for six months, the Fund reserves the right
to reinvest the amount distributed in additional Fund shares at the then-current
NAV and to convert the shareholder's distribution option from receiving cash to
having all dividend and other distributions reinvested in additional shares. In
addition, no interest will accrue on amounts represented by uncashed
distribution or redemption checks.
TAX ON REDEMPTIONS OF FUND SHARES. Shareholders may be subject to tax
on the disposition of their Fund shares. In general, such dispositions may give
rise to a capital gain or loss, the treatment of which will depend on the
shareholder's holding period in the Fund shares. Tax laws may prevent the
deduction of a loss on the sale of Fund shares if the shareholder reinvests in
the Fund shortly before or after the sale giving rise to the loss. Any loss on
the redemption or other sale or exchange of Fund shares held for six months or
less will be treated as a long-term capital loss to the extent of any long-term
capital gain distribution received on the shares.
INCOME FROM FOREIGN SOURCES. Dividends and interest received by the
Fund on foreign securities may give rise to withholding and other taxes imposed
by foreign countries, although these taxes may be reduced by applicable tax
treaties. Foreign taxes will generally be treated as an expense of the Fund,
unless the Fund has more than 50% of its assets invested in foreign corporate
securities at the end of the Fund's taxable year. In that case, shareholders of
the Fund may be able to deduct (as an itemized deduction) or claim a foreign tax
credit for their share of foreign taxes, subject to limitations prescribed in
the tax law.
If the Fund invests in a foreign corporation that is a passive foreign
investment company (a "PFIC"), special rules apply that may affect the tax
treatment of gains from the sale of the stock and may cause the Fund to incur
IRS interest charges. The Fund may make appropriate tax elections to mitigate
the tax effects of owning PFIC stock, including elections to "mark-to-market"
PFIC shares each year. The mark-to-market regime may increase or decrease the
Fund's distributable income.
INCOME FROM CERTAIN TRANSACTIONS. Some or all of the Fund's
investments may include transactions that are subject to special tax rules.
Transactions involving foreign currencies may give rise to gain or loss that
could affect the Fund's ability to make ordinary dividend distributions.
Investment in certain financial instruments, such as options, futures contracts
and forward contracts, may require annual recognition of unrealized gains and
losses. Transactions that are treated as "straddles" may affect the character
and/or timing of other gains and losses of the Fund. If the Fund enters into a
transaction (such as a "short sale against the box") that reduces the risk of
loss on an appreciated financial position that it already holds, the entry into
the transaction may constitute a constructive sale and require immediate
recognition of gain.
BACKUP WITHHOLDING. In general, if a shareholder is subject to backup
withholding, the Fund will be required to withhold federal income tax at a rate
of 31% from distributions to that shareholder. These payments are creditable
against the shareholder's federal income tax liability.
FOREIGN SHAREHOLDERS. Foreign shareholders of the Fund generally will
be subject to a 30% U.S. withholding tax on dividends paid by the Fund from
ordinary income and short-term capital gain, although the rate may be reduced by
a tax treaty. If a foreign shareholder dies while owning Fund shares, those
shares may be subject to U.S. estate taxes.
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
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owned by it or to determine the value of its net assets, or for such other
period as the Securities and Exchange Commission may by order permit for the
protection of shareholders of the Fund.
The Fund intends to redeem its shares only for cash, although it
retains the right to redeem its shares in-kind under unusual circumstances, in
order to protect the interests of the remaining shareholders, by the delivery of
securities selected from its assets at its discretion. The Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder
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 several tax-qualified retirement plans for
individuals, businesses and non-profit organizations, including a Profit-Sharing
Plan, a Money Purchase Pension Plan, an Individual Retirement Account (IRA), a
Roth IRA and a 403(b) Custodial Account for adoption by employers and
individuals who wish to participate in such Plans. For information on other
types of retirement plans offered by the Fund, please call 1-800-333-1001 or
write to the Fund c/o Berger Associates, P.O. Box 5005, Denver, CO 80217.
PROFIT-SHARING AND MONEY PURCHASE PENSION PLANS
Employers, self-employed individuals and partnerships may make
tax-deductible contributions to the tax-qualified retirement plans offered by
the Fund. All income and capital gains accumulated in the Plans are tax free
until withdrawn. The amounts that are deductible depend upon the type of Plan
or Plans adopted.
If you, as an employer, self-employed person or partnership, adopt the
Profit-Sharing Plan, you may vary the amount of your contributions from year to
year and may elect to make no contribution at all for some years. If you adopt
the Money Purchase Pension Plan, you must commit yourself to make a contribution
each year according to a formula in the Plan that is based upon your employees'
compensation or your earned income. By adopting both the Profit-Sharing and the
Money Purchase Pension Plan, you can increase the amount of contributions that
you may deduct in any one year.
If you wish to purchase shares of 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
for the Fund or Cash Account Trust Money Portfolio (discussed below) in which
the participant's account is invested. Contributions under the Plans are
invested exclusively in shares of the Fund or the Cash Account Trust Money
Market Portfolios, which are then held by the trustee under the terms of the
Plans to create a retirement fund in accordance with the tax code.
Distributions from the Profit-Sharing and Money Purchase Pension
Plans generally may not be made without penalty until the participant reaches
age 59 1/2 and must begin no later than April 1 of the calendar year
following the year in which the participant attains age 70 1/2. A
participant who is not a 5% owner of the employer may postpone such
distributions to April 1 of the calendar year following the year of
retirement. This exception does not apply to distributions from an
individual retirement account (IRA). Except for required distributions after
age 70 1/2, periodic distributions over
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more than 10 years and the distribution of any after-tax contributions,
distributions are subject to 20% Federal income tax withholding unless those
distributions are rolled directly to another qualified plan or an IRA.
Participants may not be able to receive distributions immediately upon request
because of certain requirements under federal tax law. Since distributions
which do not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor regarding the Plans is recommended.
You should also consult with your tax advisor regarding state tax law
implications of participation in the Plans.
In order to receive the necessary materials to create a Profit-Sharing
or Money Purchase Pension Plan, please write to the 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 are married and you file a joint return, you and your spouse
together may make contributions totaling up to $4,000 to two IRAs (with no more
than $2,000 being contributed to either account) if your joint income is $4,000
or more, even if one spouse has no earned income. If neither you nor your
spouse are active participants in an existing qualified retirement plan, or if
your income does not exceed certain amounts, the amounts contributed to your IRA
can be deducted for Federal income tax purposes whether or not your deductions
are itemized. If you or your spouse are covered by an existing qualified
retirement plan, the deductibility of your IRA contributions will be phased out
for federal income tax purposes if your income exceeds specified amounts,
although the income level at which your IRA contributions will no longer be
deductible is higher if only your spouse (but not you) is an active participant.
However, whether your contributions are deductible or not, the income and
capital gains accumulated in your IRA are not taxed until the account is
distributed.
If you wish to create an IRA to invest in shares of 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
for the Fund and each other Berger Fund and Cash Account Trust Money Market
Portfolio in which the IRA is invested.
Distributions from an IRA generally may not be made without penalty
until you reach age 59 1/2 and must begin no later than April 1 of the calendar
year following the year in which you attain age 70 1/2. Since distributions
which do not satisfy these requirements can result in adverse tax consequences,
consultation with an attorney or tax advisor is recommended.
In order to receive the necessary materials to create an IRA account,
please write to the Fund, c/o Berger Associates, Inc., P.O. Box 5005, Denver,
Colorado 80217, or call 1-800-333-1001.
ROTH IRA
If you are an individual with compensation or earned income, you may
contribute up to the lesser of $2,000 or 100% of your compensation to a Roth
IRA, as long as your income does not exceed a specified income level ($95,000
for single individuals, $150,000 for married individuals filing jointly). A
Roth IRA is similar in many respects to a traditional IRA, as described above.
However, the maximum amount you may contribute to a Roth IRA is phased out
between that income level and a
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maximum income amount ($110,000 and $160,000, respectively), and you may not
make any contribution at all to a Roth IRA if your income exceeds the maximum
income amount. Also, you can make contributions to a Roth IRA even after you
reach age 70-1/2, and you are not required to take distributions from a Roth IRA
prior to your death.
Contributions to a Roth IRA are not deductible for federal income tax
purposes. However, the income and capital gains accumulated in a Roth IRA are
not taxed while held in the IRA, and distributions can be taken tax-free if the
Roth IRA has been established for a minimum of five years and the distribution
is after age 59-1/2, for a first time home purchase, or upon death or
disability.
An individual with an income of less than $100,000 who is not married
filing separately can roll his or her existing IRA into a Roth IRA. However,
the individual must pay taxes on the taxable amount of the traditional IRA
account balance. Individuals who complete the rollover in 1998 will be
permitted to spread the tax liability over a four-year period. After 1996, all
taxes on such a rollover will be due in the year in which the rollover is made.
403(b) CUSTODIAL ACCOUNTS
If you are employed by a public school system or certain federally
tax-exempt private schools, colleges, universities, hospitals, religious and
charitable or other nonprofit organizations, you may establish a 403(b)
Custodial Account. Your employer must participate in the establishment of the
account.
If your employer participates, it will automatically deduct the amount
you designate from your gross salary and contribute it to your 403(b) Custodial
Account. The amount which you may contribute annually under a salary reduction
agreement is generally the lesser of $9,500 or your exclusion allowance, which
is based upon a specified formula, and other Internal Revenue Code limits apply.
There is a $50 minimum investment in the 403(b) Custodial Account.
Contributions made to the account reduce the amount of your current income
subject to Federal income tax. Federal income tax is not paid on your
contribution until you begin making withdrawals. In addition, all income and
capital gains accumulated in the account are tax-free until withdrawn.
Withdrawals from your 403(b) Custodial Agreement may begin as soon
as you reach age 59-1/2 and must begin no later than April 1 of the year
following the later of the calendar year in which you attain age 70 1/2 or
the calendar year in which you retire. Except for required distributions
after age 70 1/2 and periodic distributions over more than 10 years,
distributions are subject to 20% Federal income tax withholding unless those
distributions are rolled directly to another 403(b) account or annuity or an
individual retirement account (IRA). You may not be able to receive
distributions immediately upon request because of certain notice requirements
under federal tax law. Since distributions which do not satisfy these
requirements can result in adverse tax consequences, consultation with an
attorney or tax advisor regarding the 403(b) Custodial Account is
recommended. You should also consult with your tax advisor about state
taxation of your account.
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 for the Fund and
each other Berger Fund and Cash Account Trust Money Market Portfolio in which
the participant's account is invested.
In order to receive the necessary materials to create a 403(b)
Custodial Account, please write to the Fund, c/o Berger Associates, Inc., P.O.
Box 5005, Denver, Colorado 80217, or call 1-800-333-1001.
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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 the month.
Withdrawal payments are not yield or income on the shareholder's
investment, since portions of each payment will normally consist of a return of
the shareholder's investment. Depending on the size of the disbursements
requested and the fluctuation in value of the Fund's portfolio, redemptions for
the purpose of making such disbursements may reduce or even exhaust the
shareholder's account.
The shareholder may vary the amount or frequency of withdrawal
payments, temporarily discontinue them, or change the designated payee or
payee's address, by notifying the Fund. The shareholder may, of course, make
additional deposits of Fund shares in the shareholder's account at any time.
Since redemption of shares to make withdrawal payments is a taxable
event, each investor should consult a tax advisor concerning proper tax
treatment of the redemption.
Any shareholder may exchange any or all of the shareholder's shares in
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 the
Fund or Berger Associates. Berger Associates is compensated for administrative
services it performs with respect to the Berger CAT Portfolios.
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 income tax purposes. An exchange
of shares may be made by written request directed to DST Systems, Inc., via on-
line access, or simply by telephoning the Berger Funds at 1-800-551-5849. This
privilege is revocable by the Fund, and is not available in any state in which
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
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., Morningstar, Inc., or Value Line Investment Survey or by
publications of general interest such as THE WALL STREET JOURNAL, INVESTOR'S
BUSINESS DAILY, MONEY, BARRON'S, FINANCIAL WORLD or KIPLINGER'S PERSONAL
FINANCE MAGAZINE. In addition, the Fund may compare its performance to that
of recognized broad-based securities market indices, including the Standard &
Poor's 500 Stock Index, the Dow Jones Industrial Average, the Russell 2000
Stock Index, the Standard
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& Poor's 400 Mid-Cap Index, the Standard & Poor's 600 Small Cap Index, Morgan
Stanley Capital International EAFE (Europe, Australasia, Far East) Index, the
Dow Jones World Index, the Standard & Poor's/BARRA Value Index, the Nasdaq
Composite Index 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.
All 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.
Quotations of average annual total return for the Fund will be
expressed in terms of the average annual compounded rate of return of a
hypothetical investment in the Fund over periods of 1, 5 and 10 years, or for
the life of the Fund, if shorter. These are the rates of return that would
equate the initial amount invested to the ending redeemable value. These rates
of return are calculated pursuant to the following formula: P(1 + T)n = ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years and ERV = the ending redeemable value of a
hypothetical $1,000 payment made at the beginning of the period). All total
return figures reflect the deduction of a proportional share of Fund expenses on
an annual basis, and assume that all dividends and distributions are reinvested
when paid.
14. ADDITIONAL INFORMATION
Fund Organization
The Fund is a separate series established on [__________], 1998, 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.
Currently, the Fund is one of seven series established under the Trust, although
others may be added in the future. The Trust is also authorized to establish
multiple classes of shares representing differing interests in an existing or
new series. Shares of the Fund are fully paid and 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.
DELAWARE BUSINESS TRUST INFORMATION. Under Delaware law, shareholders
of the Fund 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
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of law governing the limitations of liability of beneficiaries of a business
trust have not been authoritatively established as to business trusts organized
under the laws of one jurisdiction but operating or owning property in other
jurisdictions. In states that have adopted legislation containing provisions
comparable to the Delaware Business Trust Act, it is believed that the
limitation of liability of beneficial owners provided by Delaware law should be
respected. In those jurisdictions that have not adopted similar legislative
provisions, it is possible that a court might hold that the shareholders of the
Trust are not entitled to the limitations of liability set forth in Delaware law
or the Trust Instrument and, accordingly, that they may be personally liable for
the obligations of the Trust.
In order to protect shareholders from such potential liability, the
Trust Instrument requires that every written obligation of the Trust or any
series thereof contain a statement to the effect that such obligation may only
be enforced against the assets of the Trust or such series. The Trust
Instrument also provides for indemnification from the assets of the relevant
series for all losses and expenses incurred by any shareholder by reason of
being or having been a shareholder, and that the Trust shall, upon request,
assume the defense of any such claim made against such shareholder for any act
or obligation of the relevant series and satisfy any judgment thereon from the
assets of that series.
As a result, the risk of a shareholder of the Fund incurring financial
loss on account of shareholder liability is limited to circumstances in which
the Fund itself would be unable to meet its obligations. The Trust believes
that the risk of personal liability to shareholders of the Fund is therefore
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.
CORPORATE GOVERNANCE INFORMATION PERTAINING TO THE FUND. The Fund is
not required to hold annual shareholder meetings unless required by the
Investment Company Act of 1940 or other applicable law or unless called by the
trustees. If shareholders owning at least 10% of the outstanding shares of the
Trust so request, a special shareholders' meeting of the Trust will be held for
the purpose of considering the removal of a trustee. Special meetings will be
held for other purposes if the holders of at least 25% of the outstanding shares
of the Trust so request. Subject to certain limitations, the Trust will
facilitate appropriate communications by shareholders desiring to call a special
meeting for the purpose of considering the removal of a trustee.
Shareholders of the Fund and, where applicable, the other series of
the Trust, generally vote separately on matters relating to those respective
series, although they vote together and with the holders of any other series of
the Trust in the election of trustees of the Trust and on all matters relating
to the Trust as a whole. Each full share of the Fund has one vote.
Shares of the Fund have 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.
Shares of the Fund have no preemptive rights. There are no sinking
funds or arrearage provisions which may affect the rights of the Fund shares.
Fund shares have no subscription rights or conversion rights. 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.
PRINCIPAL SHAREHOLDERS
As of the date of this Statement of Additional Information, no person
owned, beneficially or of record, more than 5% of the outstanding shares of the
Fund.
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<PAGE>
DISTRIBUTION
Berger Distributors, Inc., as the Fund's Distributor, is the principal
underwriter of the Fund's shares. The Distributor is a wholly-owned subsidiary
of Berger Associates. 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 the Fund's shares in all states in which the shares
are eligible for sale and in which the Distributor is qualified as a broker-
dealer.
The Fund and the Distributor are parties to a Distribution Agreement
that continues through April 2000, and thereafter from year to year if such
continuation is specifically approved at least annually by the trustees or by
vote of a majority of the outstanding shares of the Fund and in either case by
vote of a majority of the trustees who are not "interested persons" (as that
term is defined in the Investment Company Act of 1940) of the Fund or the
Distributor. The Distribution Agreement is subject to termination by the Fund
or the Distributor on 60 days' prior written notice, and terminates
automatically in the event of its assignment. Under the Distribution Agreement,
the Distributor continuously offers shares of the Fund and solicits orders to
purchase Fund shares at net asset value. The Distributor is not compensated for
its services under the Distribution Agreement, but may be reimbursed by Berger
Associates for its costs in distributing Fund shares. Subject to certain
restrictions, the Distributor may enter into sales or servicing agreements with
securities dealers, investment advisers, financial institutions and other
industry professionals in exercising its authority and discharging its
responsibilities under the Distribution Agreement.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
acts as counsel to the Fund.
PricewaterhouseCoopers LLP, 950 Seventeenth Street, Denver, Colorado,
has been appointed to act as independent accountants for the Trust and the Fund
for the fiscal year ended September 30, 1998.
The Trust has filed with the Securities and Exchange Commission,
Washington, D.C., a Registration Statement under the Securities Act of 1933, as
amended, with respect to the securities of the 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 Statements
and the exhibits filed as a part thereof.
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APPENDIX A
HIGH-YIELD/HIGH-RISK SECURITIES
The Fund may invest in convertible securities of any quality, including
unrated securities or securities rated below investment grade (Ba or lower by
Moody's, BB or lower by S&P). However, the Fund will not purchase any security
in default at the time of purchase. The Fund will not invest more than 20% of
the market value of its assets at the time of purchase in convertible securities
rated below investment grade.
Securities rated below investment grade are subject to greater risk that
adverse changes in the financial condition of their issuers or in general
economic conditions, or an unanticipated rise in interest rates, may impair the
ability of their issuers to make payments of interest and principal or
dividends. The market prices of lower grade securities are generally less
sensitive to interest rate changes than higher-rated investments, but more
sensitive to economic changes or individual corporate developments. Periods of
economic uncertainty and change can be expected to result in volatility of
prices of these securities. Lower rated securities also may have less liquid
markets than higher rated securities, and their liquidity as well as their value
may be adversely affected by poor economic conditions. Adverse publicity and
investor perceptions as well as new or proposed laws may also have a negative
impact on the market for high-yield/high-risk bonds. In the event of an
unanticipated default, the Fund will experience a reduction in its income and
could expect a decline in the market value of the securities affected. The
prices of these securities may be more volatile and the markets for them may be
less liquid than those for higher-rated securities.
Unrated securities, while not necessarily of lower quality than rated
securities, may not have as broad a market. Unrated securities will be included
in the Fund's percentage limits for investments rated below investment grade,
unless the Fund's advisor deems such securities to be the equivalent of
investment grade. If securities purchased by the Fund are downgraded following
purchase, or if other circumstances cause the Fund to exceed its percentage
limits on assets invested in securities rated below investment grade, the
trustees of the Fund, in consultation with the Fund's advisor, will determine
what action, if any, is appropriate in light of all relevant circumstances.
Relying in part on ratings assigned by credit agencies in making
investments will not protect the Fund from the risk that the securities will
decline in value, since credit ratings represent evaluations of the safety of
principal, dividend and/or interest payments, and not the market values of such
securities. Moreover, such ratings may not be changed on a timely basis to
reflect subsequent events.
Although the market for high-yield debt securities has been in existence
for many years and from time to time has experienced economic downturns, this
market has involved a significant increase in the use of high- yield debt
securities to fund highly leverage corporate acquisitions and restructurings.
Past experience may not, therefore, provide an accurate indication of future
performance of the high-yield debt securities market, particularly during
periods of economic recession.
Expenses incurred in recovering an investment in a defaulted security may
adversely affect the Fund's net asset value. Moreover, the reduced liquidity of
the secondary market for such securities may adversely affect the market price
of, and the ability of the Fund to value, particular securities at certain
times, thereby making it difficult to make specific valuation determinations.
CORPORATE BOND RATINGS
The ratings of fixed-income securities by Moody's and Standard & Poor's are
a generally accepted measurement of credit risk. However, they are subject to
certain limitations. Ratings are generally based upon historical events and do
not necessarily reflect the future. In addition, there is
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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.
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.
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KEY TO STANDARD & POOR'S CORPORATE RATINGS
AAA-Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA-Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB, B, CCC, CC AND C-Debt rated BB, B, CCC, CC and C is regarded, on
balance, as predominantly speculative with respect to capacity to pay interest
and repay principal in accordance with the terms of the obligation. BB
indicates the lowest degree of speculation and C the highest degree of
speculation. While such debt will likely have some quality and protective
characteristics, these are out-weighed by the large uncertainties or major risk
exposures to adverse conditions.
C1-The rating C1 is reserved for income bonds on which no interest is being
paid.
D-Debt rated D is in default, and payment of interest and/or repayment of
principal is in arrears.
PLUS (+) OR MINUS (-)-The ratings from "AA" to "CCC" may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
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BERGER INVESTMENT PORTFOLIO TRUST
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 June 30, 1998, are as follows:
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Shares of Beneficial 78,634
Interest in Berger Small
Company Growth Fund
Shares of Beneficial 17,458
Interest in Berger New
Generation Fund
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<PAGE>
Shares of Beneficial 1,856
Interest in Berger
Balanced Fund
Shares of Beneficial 1,061
Interest in Berger
Select Fund
Shares of Beneficial 301
Interest in Berger
Mid Cap Growth Fund
Shares of Beneficial -0-
Interest in Berger
Mid Cap Value Fund
Shares of Beneficial -0-
Interest in Berger
Special Values Fund
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 under the
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heading "Organization of the Berger Fund Family -- Fund Organization and
Expenses" and in the Statement of Additional Information in Section 4, which are
included in this Registration Statement. Information relating to the business
and other connections of the officers and directors of Berger Associates
(current and for the past two years) is listed in Schedules A and D of Berger
Associates' Form ADV as filed with the Securities and Exchange Commission (File
No. 801-9451, dated March 27, 1998), which information from such schedules is
incorporated herein by reference.
Item 29. PRINCIPAL UNDERWRITERS
(a) Investment companies 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 Balanced Fund
- --Berger Select Fund
- --Berger Mid Cap Growth Fund
- --Berger Mid Cap Value Fund
- --Berger Special Values Fund
Berger Omni Investment Trust
- --Berger Small Cap Value Fund
Berger Institutional Products Trust
- --Berger IPT - 100 Fund
- --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
- --International Equity Fund
- --Berger/BIAM International CORE Fund
(b) For Berger Distributors, Inc.:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Name Positions and Positions and
Offices with Offices with
Underwriter Registrant
- --------------------------------------------------------------------------------
Edgar F. Allison President and Director None
- --------------------------------------------------------------------------------
David G. Mertens Vice President and None
Director
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
David J. Schultz Chief Financial Assistant Treasurer
Officer
- --------------------------------------------------------------------------------
Brian S. Ferrie Vice President and None
Chief Compliance
Officer
- --------------------------------------------------------------------------------
Kevin R. Fay Director Vice President, Secretary
and Treasurer
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The principal business address of each of the persons in the table
above is 210 University Blvd., Suite 900, Denver, CO 80206.
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's
sub-transfer agent, DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141;
(b) Accounting records relating to cash and other money balances;
asset, liability, reserve, capital, income and expense accounts;
portfolio securities; purchases and sales; and brokerage
commissions are maintained by the Registrant's Recordkeeping and
Pricing Agent, Investors Fiduciary Trust Company ("IFTC"),
127 West 10th Street, Kansas City, Missouri 64105. Other records
of the Registrant relating to purchases and sales; the Trust
Instrument, minute books and other trust records; brokerage
orders; performance information and other records are maintained
at the offices of the Registrant at 210 University Boulevard,
Suite 900, Denver, Colorado 80206.
Item 31. MANAGEMENT SERVICES
The Registrant has no management-related service contract which is not
discussed in Parts A and B of this form. See Section 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
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<PAGE>
Services Agreement entered into between the Registrant and Berger Associates,
Inc., investment adviser to the Funds.
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 undertakes to comply with the following policy with
respect to calling meetings of shareholders for the purpose of voting upon the
removal of any Trustee of the Registrant and facilitating shareholder
communications related to such meetings:
1. The Trustees will promptly call a meeting of shareholders for the
purpose of voting upon the removal of any Trustee of the Registrant when
requested in writing to do so by the record holders of at least 10% of the
outstanding shares of the Registrant.
2. Whenever ten or more shareholders of record who have been
shareholders of the Registrant for at least six months, and who hold in the
aggregate either shares having a net asset value of at least $25,000 or at least
1% of the outstanding shares of the Registrant, whichever is less, apply to the
Trustees in writing stating that they wish to communicate with other
shareholders with a view to obtaining signatures to request such a meeting, and
deliver to the Trustees a form of communication and request which they wish to
transmit, the Trustees within 5 business days after receipt of such application
either will (i) give such applicants access to a list of the names and addresses
of all shareholders of record of the Registrant, or (ii) inform such applicants
of the approximate number of shareholders of record and the approximate cost of
mailing the proposed communication and form of request.
3. If the Trustees elect to follow the course specified in clause
(ii), above, the Trustees, upon the written request of such applicants
accompanied by tender of the material to be mailed and the reasonable expenses
of the mailing, will, with reasonable promptness, mail such material to all
shareholders of record, unless within 5 business days after such tender the
Trustees shall mail to such applicants and file with the Securities and Exchange
Commission (the "Commission"), together with a copy of the material requested to
be mailed, a written statement signed by at least a majority of the Trustees to
the effect that in their opinion either such material contains untrue statements
of fact or omits to state facts necessary to make the statements contained
C-5
<PAGE>
therein not misleading, or would be in violation of applicable law, and
specifying the basis of such opinion.
4. If the Commission enters an order either refusing to sustain any
of the Trustees' objections or declaring that any objections previously
sustained by the Commission have been resolved by the applicants, the Trustees
will cause the Registrant to mail copies of such material to all shareholders of
record with reasonable promptness after the entry of such order and the renewal
of such tender.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and County of Denver, and State of
Colorado, on the 16th day of July, 1998.
BERGER INVESTMENT PORTFOLIO TRUST
---------------------------------
(Registrant)
By/s/ Gerard M. Lavin
---------------------------------
Name: Gerard M. Lavin
----------------------------
Title: President
---------------------------
Pursuant to the requirements of the Securities Act of 1933, this
amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
Gerard M. Lavin President (Principal July 16, 1998
- --------------------------- Executive Officer)
Gerard M. Lavin and Director
Kevin R. Fay Vice President, July 16, 1998
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
/s/ Dennis E. Baldwin Trustee July 16, 1998
- ---------------------------
Dennis E. Baldwin*
/s/ William M.B. Berger Trustee July 16, 1998
- ---------------------------
William M.B. Berger*
/s/ Louis R. Bindner Trustee July 16, 1998
- ---------------------------
Louis R. Bindner*
/s/ Katherine A. Cattanach Trustee July 16, 1998
- ---------------------------
Katherine A. Cattanach*
C-7
<PAGE>
/s/ Paul R. Knapp Trustee July 16, 1998
- ---------------------------
Paul R. Knapp*
/s/ Harry T. Lewis, Jr. Trustee July 16, 1998
- ---------------------------
Harry T. Lewis, Jr.*
/s/ Michael Owen Trustee July 16, 1998
- ---------------------------
Michael Owen*
/s/ William Sinclaire Trustee July 16, 1998
- ---------------------------
William Sinclaire*
Gerard M. Lavin
- ---------------------------
*By Gerard M. Lavin
Attorney-in-Fact
C-8
<PAGE>
BERGER INVESTMENT PORTFOLIO TRUST
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
(1) Exhibit 5.1 Form of Investment Advisory
Agreement for Berger Small Company
Growth Fund
(4) Exhibit 5.2 Form of Investment Advisory
Agreement for Berger New Generation
Fund
(6) Exhibit 5.3 Form of Investment Advisory
Agreement for Berger Balanced Fund
(9) Exhibit 5.4 Form of Investment Advisory
Agreement for Berger Select Fund
(9) Exhibit 5.5 Form of Investment Advisory
Agreement for Berger Mid Cap Growth
Fund
(14)Exhibit 5.6 Form of Investment Advisory
Agreement for Berger Mid Cap Value
Fund
(14)Exhibit 5.7 Form of Sub-Advisory Agreement for
Berger Mid Cap Value Fund
* Exhibit 5.8 EX-99.B5.8 Form of Investment Advisory
Agreement for Berger Special Values
Fund
(14)Exhibit 6 Form of Distribution Agreement
between the Trust and Berger
Distributors, Inc.
Exhibit 7 Not applicable
(3) Exhibit 8 Form of Custody Agreement
(8) Exhibit 9.1 New Account Application
(1) Exhibit 9.2.1 Form of Administrative Services
Agreement for Berger Small Company
Growth Fund
(4) Exhibit 9.2.2 Form of Administrative Services
Agreement for Berger New Generation
Fund
(6) Exhibit 9.2.3 Form of Administrative Services
Agreement for Berger Balanced Fund
<PAGE>
(9) Exhibit 9.2.4 Form of Administrative Services
Agreement for Berger Select Fund
(9) Exhibit 9.2.5 Form of Administrative Services
Agreement for Berger Mid Cap Growth
Fund
(14)Exhibit 9.2.6 Form of Administrative Services
Agreement for Berger Mid Cap Value
Fund
* Exhibit 9.2.7 EX-99.B9.2.7 Form of Administrative Services
Agreement for Berger Special Values
Fund
(1) Exhibit 9.3 Form of Recordkeeping and Pricing
Agent Agreement
(1) Exhibit 9.4 Form of Agency Agreement
(13)Exhibit 9.5.1 Amendment No. 4 to 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
(5) Exhibit 9.5.2 Amendment No. 5 to Services
Agreement between Berger
Associates, Inc., Charles Schwab &
Co., Inc. and Berger Investment
Portfolio Trust on behalf of Berger
New Generation Fund, effective
March 29, 1996
(10)Exhibit 9.5.3 Amendment No. 8 to Services
Agreement between Berger
Associates, Inc., Charles Schwab &
Co., Inc. and Berger Investment
Portfolio Trust on behalf of Berger
Balanced Fund, effective September
30, 1997
(11)Exhibit 9.5.4 Amendment No. 9 to Services
Agreement between Berger
Associates, Inc., Charles Schwab &
Co., Inc. and Berger Investment
Portfolio Trust on behalf of Berger
Select Fund, effective December 31,
1997
(12)Exhibit 9.5.5 Amendment No. 10 to Services
Agreement between Berger
Associates, Inc., Charles Schwab &
Co., Inc. and Berger
<PAGE>
Investment Portfolio Trust on
behalf of Berger Mid Cap Growth
Fund, effective December 31, 1997
* Exhibit 10 EX-99.B10 Opinion and consent of Davis,
Graham & Stubbs LLP (for Berger
Special Values Fund)
** Exhibit 11 Consent of PricewaterhouseCoopers
LLP
Exhibit 12 Not applicable
(1) Exhibit 13 Investment Letter from Initial
Stockholder
(7) Exhibit 14.1 IRA Account Application,
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
(1) Exhibit 15.1 Rule 12b-1 Plan for Berger Small
Company Growth Fund
(4) Exhibit 15.2 Rule 12b-1 Plan for Berger New
Generation Fund
(6) Exhibit 15.3 Rule 12b-1 Plan for Berger Balanced
Fund
Exhibit 15.4 Rule 12b-1 Plan for Berger Select
Fund
Exhibit 15.5 Rule 12b-1 Plan for Berger Mid Cap
Growth Fund
(14)Exhibit 15.6 Rule 12b-1 Plan for Berger Mid Cap
Value Fund
* Exhibit 15.7 EX-99.B15.7 Rule 12b-1 Plan for Berger Special
Values Fund
(1) Exhibit 16 Schedule for Computation of
Performance Data
(9) Exhibit 17.1 Financial Data Schedule for Berger
Small Company Growth Fund
(9) Exhibit 17.2 Financial Data Schedule for Berger
New Generation Fund
(1) Exhibit 17.3 Financial Data Schedule for Berger
Balanced Fund
(1) Exhibit 17.4 Financial Data Schedule for Berger
Select Fund
<PAGE>
(1) Exhibit 17.5 Financial Data Schedule for Berger
Mid Cap Growth Fund
** Exhibit 17.6 Financial Data Schedule for Berger
Mid Cap Value Fund
** Exhibit 17.7 Financial Data Schedule for Berger
Special Values Fund
Exhibit 18 Not Applicable
- ---------------------------
* To be filed by amendment.
** Not required to be filed until financial statements for Fund are filed.
(1) Previously filed on April 30, 1998, with Pre-Effective Amendment No. 15 to
the Registrant's 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 November 27, 1995, with Post-Effective Amendment No. 6
to the Registrant's Registration Statement on Form N-1A and incorporated
herein by reference.
(4) 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.
(5) 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.
(6) Previously filed on August 28, 1997, with Post-Effective Amendment No. 11
to the Registrant's Registration Statement on Form N-1A and incorporated
herein by reference.
(7) Previously filed on December 31, 1997, as Exhibit 14.1 to Post-Effective
Amendment No. 58 to the Registration Statement on Form N-1A of The One
Hundred Fund, Inc., and incorporated herein by reference.
(8) Previously filed on December 31, 1997, as Exhibit 9.1 to Post-Effective
Amendment No. 58 to the Registration Statement on Form N-1A of The One
Hundred Fund, Inc., and incorporated herein by reference.
(9) Previously filed on December 31, 1997, with Post-Effective Amendment No. 13
to the Registrant's Registration Statement on Form N-1A and incorporated
herein by reference.
(10) This Agreement is identical to the agreement previously filed on October
30, 1996, as Exhibit 9.5.2 to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A and incorporated herein by
reference with the following changes: the effective date is September 30,
1997, and the Fund name is Berger Balanced Fund.
(11) This Agreement is identical to the agreement previously filed on October
30, 1996, as Exhibit 9.5.2 to Post-Effective Amendment
<PAGE>
No. 9 to the Registrant's Registration Statement on Form N-1A and
incorporated herein by reference with the following changes: the effective
date is December 31, 1997, and the Fund name is Berger Select Fund.
(12) This Agreement is identical to the agreement previously filed on October
30, 1996, as Exhibit 9.5.2 to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A and incorporated herein by
reference with the following changes: the effective date is December 31,
1997, and the Fund name is Berger Mid Cap Growth Fund.
(13) This Agreement is identical to the agreement previously filed on October
30, 1996, as Exhibit 9.5.2 to Post-Effective Amendment No. 9 to the
Registrant's Registration Statement on Form N-1A and incorporated herein by
reference with the following changes: the effective date is February 1,
1994, and the Fund name is Berger Small Company Growth Fund.
(14) Previously filed on June 16, 1998, with Post-Effective Amendment No. 16 to
the Registrant's Registration Statement on Form N-1A and incorporated
herein by reference.
