<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 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. 16 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 18 /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)
/X/ on July 7, 1998, pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / on (date) pursuant to paragraph (a)(1)
/ / 75 days after filing pursuant to paragraph (a)(2)
/ / on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
/X/ 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 Mid Cap Value Fund
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<PAGE>
BERGER INVESTMENT PORTFOLIO TRUST
SHARES OF BENEFICIAL INTEREST
Cross-Reference Sheet Pursuant to Rule 481
I. Berger Mid Cap Value 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 Information Berger Funds
4. General Description of Registrant Berger Funds; Investment
Techniques, Securities and the
Associated Risks; Organization
of the Berger Fund Family
5. Management of the Fund Berger Funds; Organization of
the Berger Fund Family
5A. Management's Discussion of Fund Annual Report
Performance
6. Capital Stock and Other Securities Information on Your Account;
Organization of the Berger Fund
Family; Back cover page
7. Purchase of Securities Being Information on Your Account;
Offered Organization of the Berger Fund
Family
8. Redemption or Repurchase Information on Your Account
9. Pending Legal Proceedings Not Applicable
B. STATEMENT OF ADDITIONAL INFORMATION
Front cover page
10. Cover Page
11. Table of Contents Table of Contents
12. General Information and History Section 14
13. Investment Objectives and Policies Front cover page; Sections 1
and 2
14. Management of the Fund Section 3
15. Control Persons and Principal Sections 3 and 14
Holders of Securities
16. Investment Advisory and Other Sections 3, 4, 5 and 14
Services
17. Brokerage Allocation and Other Sections 1 and 6
Practices
18. Capital Stock and Other Securities Section 14
19. Purchase, Redemption and Pricing Sections 7, 8, 10, 11 and 12
of Securities Being Offered
20. Tax Status Section 9
21. Underwriters Sections 5 and 14
22. Calculations of Performance Data Section 13
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 Mid Cap Value Fund
One Statement of Additional Information for the Berger Mid Cap Value 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 or Berger Mid Cap Growth Fund.
<PAGE>
[FRONT COVER]
THE BERGER FUNDS PROSPECTUS
/ / [Wooded scene photo]
BERGER MID CAP VALUE FUND
(Capital Appreciation)
JULY 7, 1998
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This prospectus gives you important information about the Fund. Please read it
carefully before you invest in the Fund. Keep it for future reference.
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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.
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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.
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page 1
<PAGE>
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 Mid Cap Value Fund, and
its goals, strategies, risks and management. You also will find expense
information in this section.
Berger Mid Cap Value 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 13
Signature Guarantees/special documentation PAGE 14
Net asset value (NAV) -- your price PAGE 15
Other information about your account PAGE 15
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
<PAGE>
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
<PAGE>
BERGER MID CAP VALUE FUND
SEC REGISTRANT NAME/NUMBER: Morningstar Category: Mid-Cap Value
Berger Investment Portfolio Trust 811-8046 Lipper Category: Mid-Cap
[icon-profile of head with mountain peak in background]
THE FUND'S GOAL
The Fund aims for capital appreciation. In pursuit of that goal, the Fund
invests primarily in mid-sized companies whose stock prices are believed to be
undervalued because they have fallen out of favor with the market or are
temporarily misunderstood by the investment community. To a lesser degree, it
also invests in companies that demonstrate special situations or turnarounds,
meaning companies that have experienced significant business problems but are
believed to have favorable prospects for recovery. The Fund does not invest to
provide current income, although some income may be produced while managing the
Fund's portfolio.
The Fund's investment manager generally looks for companies with:
- - A low price relative to their assets, earnings, cash flow or business
franchise
- - Products and services that give them a competitive advantage
- - Quality balance sheets and strong management.
[icon-profile of head with stock ticker tape in background]
WHAT THE FUND INVESTS IN
The Fund primarily invests in common stocks of mid-sized companies, both
domestic and foreign, and other securities with equity features, such as
convertible securities, preferred stocks, warrants and rights. Under normal
circumstances, the Fund invests at least 65% of its assets in equity securities
of companies whose market capitalization falls, at the time of initial purchase,
within a range of $1 billion to the 12-month average of the maximum market
capitalization for companies included in the Standard & Poor's Mid-Cap 400
Index. This average is updated monthly. The balance of the Fund may be
invested in small or large companies, 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.
The Fund's NAV may be more volatile than that of funds primarily invested 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. However, the investment manager's
philosophy is to weigh a security's downside risk before considering its upside
potential, which may help provide an element of capital preservation. The
Fund's investments are often focused in a small number of business sectors. In
addition, the Fund may invest in certain securities with unique risks, such as
special situations and foreign securities.
See "Investment techniques, securities and the associated risks" later in this
prospectus for more information on risks.
page 4
<PAGE>
[icon-profile of head with dotted lines emanating forward from eyes]
INVESTMENT MANAGEMENT
Thomas M. Perkins and Robert H. Perkins are the co-investment managers of the
Berger Mid Cap Value Fund. Thomas Perkins has been an investment manager since
1974 and joined Perkins, Wolf, McDonnell & Company (PWM), the Fund's
sub-advisor, as a portfolio manager in 1998. Robert Perkins has been an
investment manager since 1970 and serves as President and a director of PWM.
Robert Perkins also serves as the investment manager of the Berger Small Cap
Value Fund.
[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.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES %
- --------------------------------------------------
<S> <C>
Investment advisory fee .75
12b-1 fee1 .25
Other expenses2 .62
Total 1.62
</TABLE>
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:
<TABLE>
<CAPTION>
YEARS $
- ---------------------------------
<S> <C>
One 17
Three 52
</TABLE>
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
<PAGE>
<TABLE>
<CAPTION>
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INVESTMENT TECHNIQUES, SECURITIES AND THE ASSOCIATED RISKS
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RISK AND INVESTMENT TABLE
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BERGER MID CAP VALUE FUND
<S> <C>
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DIVERSIFICATION -
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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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</TABLE>
page 6
<PAGE>
<TABLE>
<CAPTION>
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INVESTMENT TECHNIQUES, SECURITIES AND THE ASSOCIATED RISKS (CONT'D)
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BERGER MID CAP VALUE FUND
<S> <C>
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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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</TABLE>
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 33 1/3% 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
<PAGE>
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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 that 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
diversified 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>
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. . . CONTINUED
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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 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. The
range targeted by the Fund is described above under the heading "What the Fund
Invests In." 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>
INFORMATION ABOUT YOUR ACCOUNT
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.
BY ONLINE ACCESS
page 12
<PAGE>
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.
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.
page 13
<PAGE>
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:
o Each account must be registered identically -- have the same signatures and
addresses.
o The Fund or Berger CAT Portfolio into which you are exchanging must be
legally eligible for sale in your state of residence.
o 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.
o You may exchange by telephone, online access or mail.
o You are responsible for obtaining and reading the prospectus for the Fund
or Berger CAT Portfolio into which you are exchanging.
o Exchanges result in the sale of one Fund's shares and the purchase of
another, normally resulting in a taxable event for you.
o 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.
o 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:
o Your request exceeds $100,000.
o You request that payment be made to a name other than the one on your
account registration.
o You request that payment be mailed to an address which has been changed
within 30 days of your redemption request or to an address other than the
one of record.
o You change or add information relating to your designated bank.
The Berger Funds reserve the right to require Signature Guarantees under other
certain circumstances.
page 14
<PAGE>
You can get a Signature Guarantee from most broker-dealers, national or state
banks, credit unions, federal savings and loan associations or other eligible
institutions. YOU CANNOT OBTAIN A SIGNATURE GUARANTEE FROM A NOTARY PUBLIC.
Make sure the Signature Guarantee appears:
o Together with the signature(s) of all registered owner(s) of the redeemed
shares on the written redemption request.
o On any share certificates you hold for the redeemed shares or on a separate
statement of assignment (stock power) 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.
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.
page 15
<PAGE>
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:
- - 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
page 16
<PAGE>
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.
page 17
<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.
PERKINS, WOLF, MCDONNELL & COMPANY (PWM) (53 West Jackson Boulevard, Suite 818,
Chicago, IL 60604) serves as sub-advisor to the Berger Mid Cap Value Fund. PWM
has also served as advisor or sub-advisor to the Berger Small Cap Value Fund
since 1985. Thomas M. Perkins and Robert H. Perkins, as co-investment managers,
are responsible for the day-to-day investment management of the Fund. Robert H.
Perkins owns 49% of PWM and serves as its President and a director. Robert
Perkins and Thomas Perkins are brothers. Gregory E. Wolf owns 20% of PWM and
serves as its Treasurer and a director. As sub-advisor, PWM manages the Fund's
investment operations.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
FUND ADVISOR SUB-ADVISOR ADMINISTRATOR
(PAID BY FUND) (PAID BY ADVISOR) (PAID BY FUND)
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BERGER MID CAP VALUE FUND Berger Associates PWM Berger Associates
0.75% 0.75%(1) 0.01%
- --------------------------------------------------------------------------------------------
</TABLE>
(1) 0.75% of the first $50 million of average daily net assets of the Fund,
0.375% of the next $50 million and 0.20% of any amount in excess of $100
million, subject to a minimum of $400,000 per year for the first 2-1/2 years.
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
page 18
<PAGE>
- - 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.
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. At times, portfolio turnover for the Fund may
exceed 100% per year. Turnover for the Fund is not expected to exceed 150%.
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
page 19
<PAGE>
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.
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
adviser, 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 the Fund's operations and
services provided to shareholders will not be adversely affected.
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 MID CAP VALUE 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 July 7, 1998, describing
the Berger Mid Cap Value 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 MID CAP VALUE FUND
The investment objective of the Berger Mid Cap Value Fund is capital
appreciation.
DATED JULY 7, 1998
<PAGE>
TABLE OF CONTENTS
&
CROSS-REFERENCES TO PROSPECTUS
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
-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 or
sub-advisor, will determine what action, if any, is appropriate in light of all
relevant circumstances. For a further discussion of debt security ratings, see
Appendix A to this SAI.
Interest rate risk refers to the fact that the value of fixed-income
securities (like debt securities) generally fluctuates in response to changes in
interest rates. A decrease in interest rates will generally result in an
increase in the price of fixed-income securities held by 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 or
sub-advisor believes they offer the potential for a higher total return than
nonconvertible securities. While fixed-income securities generally have
-1-
<PAGE>
a priority claim on a corporation's assets over that of common stock, some of
the convertible securities which the Fund may hold are high-yield/high-risk
securities that are subject to special risks, including the risk of default in
interest or principal payments which could result in a loss of income to the
Fund or a decline in the market value of the securities. Convertible securities
often display a degree of market price volatility that is comparable to common
stocks. The credit risk associated with convertible securities generally is
reflected by their ratings by organizations such as Moody's or S&P or a similar
determination of creditworthiness by the Fund's advisor or sub-advisor. The
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 or sub-advisor, will determine what action, if any, is appropriate in
light of all relevant circumstances. For a further discussion of debt security
ratings, see Appendix A to this SAI.
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 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,
-2-
<PAGE>
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, 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
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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 or sub-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 or sub-advisor will determine
whether securities eligible for resale to qualified institutional buyers
pursuant to SEC Rule 144A under the Securities Act of 1933 should be treated as
illiquid investments considering, among other things, the following factors:
(1) the frequency of trades and quotes for the security; (2) the number of
dealers willing to purchase or sell the security and the number of other
potential purchasers; (3) dealer undertakings to make a market in the security;
and (4) the nature of the security and the marketplace trades (e.g., the time
needed to dispose of the security, the method of soliciting offers, and the
mechanics of the transfer). The liquidity of the Fund's investments in Rule
144A 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 or sub-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
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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 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
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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.
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.
SPECIAL SITUATIONS. The Fund may also invest in special situations,
that is, in common stocks of companies that have recently experienced or are
anticipated to experience a significant change in structure, management,
products or services. Examples of special situations are companies being
reorganized or merged, companies having unusual new products, or which enjoy
particular tax advantages, or companies that are run by new management or may 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
issuers and their circumstances. In addition, stocks of companies in special
situations may be more volatile, since the market value of these stocks may
decline if an anticipated event or benefit does not materialize.
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
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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 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
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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.
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
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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 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.
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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 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
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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 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
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<PAGE>
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
cancelled by the clearing corporation. If the Fund desires to sell a particular
security from the Fund's portfolio on which the Fund has written a call option,
the Fund will effect a closing transaction prior to or concurrent with the sale
of the security. However, a writer may not effect a closing purchase
transaction after being notified of the exercise of an option. An investor who
is the holder of an exchange-traded option may liquidate its position by
effecting a "closing sale transaction." This is accomplished by selling an
option of the same series as the option previously bought. There is no
guarantee that either a closing purchase or a closing sale transaction can be
effected.
The Fund will realize a profit from a closing transaction if the price
of the purchase transaction is less than the premium received from writing the
option or the price received from a sale transaction is more than the premium
paid to buy the option; the Fund will realize a loss from a closing transaction
if the price of the purchase transaction is more than the premium received from
writing the option or the price received from a sale transaction is less than
the premium paid to buy the option. Because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from the repurchase of a call option is
likely to be offset in whole or in part by appreciation of the underlying
security owned by the Fund.
An option position may be closed out only where there exists a
secondary market for an option of the same series. If a secondary market does
not exist, it might not be possible to effect closing transactions in particular
options with the result that the Fund would have to exercise the options in
order to realize any profit. If the Fund is unable to effect a closing purchase
transaction in a secondary market, it will not be able to sell the 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,
-12-
<PAGE>
(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 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 or sub-advisor believes market
conditions warrant a temporary defensive position. Taking larger positions in
such short-term investments may serve as a means of preserving capital in
unfavorable market conditions. 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. The Fund anticipates that its portfolio turnover
rate in future years may exceed 100%, and investment changes will be made
whenever management deems them appropriate even if this results in a higher
portfolio turnover rate. 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
-13-
<PAGE>
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 150%.
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 MID CAP VALUE FUND
The following fundamental restrictions apply to the Berger Mid Cap
Value Fund. The Fund may not:
1. With respect to 75% of the Fund's total assets, purchase the
securities of any one issuer (except U.S. government securities) if immediately
after and as a result of such purchase (a) the value of the holdings of the Fund
in the securities of such issuer exceeds 5% of the value of the Fund's total
assets or (b) the Fund owns more than 10% of the outstanding voting securities
of such issuer.
2. Invest in any one industry (other than U.S. government
securities) 25% or more of the value of its total assets at the time of such
investment.
3. Borrow money, except from banks for temporary or emergency
purposes in amounts not to exceed 25% of the Fund's total assets (including the
amount borrowed) taken at market value, nor pledge, mortgage or hypothecate its
assets, except to secure permitted indebtedness and then only if such pledging,
mortgaging or hypothecating does not exceed 25% of the Fund's total assets taken
at market value. When borrowings exceed 5% of the Fund's total assets, the Fund
will not purchase portfolio securities.
4. Act as a securities underwriter (except to the extent the Fund
may be deemed an underwriter under the Securities Act of 1933 in disposing of a
security), issue senior securities (except to the extent permitted under the
Investment Company Act of 1940), invest in real estate (although it may purchase
shares of a real estate investment trust), or invest in commodities or 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.
-14-
<PAGE>
5. Make loans, except that the Fund may enter into repurchase
agreements and may lend portfolio securities in accordance with the Fund's
investment policies. The Fund does not, for this purpose, consider the purchase
of all or a portion of an issue of publicly distributed bonds, bank loan
participation agreements, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities, to be the making of a loan.
In applying the industry concentration investment restriction (no. 2
above),the Fund uses the industry groups used in the Data Monitor Portfolio
Monitoring System of William O'Neil & Co. Incorporated.
The trustees have adopted additional non-fundamental investment
restrictions for the Fund. These limitations may be changed by the trustees
without a shareholder vote. The non-fundamental investment restrictions include
the following:
1. The Fund may not purchase securities on margin from a broker or
dealer, except that the Fund may obtain such short-term credits as may be
necessary for the clearance of transactions, and may not make short sales of
securities, except that the Fund may make short sales if, at the time of the
short sale, the Fund owns or has the right to acquire an equivalent kind and
amount of the security being sold short at no additional cost (i.e., short sales
"against the box"). This limitation shall not prohibit or restrict the Fund
from entering into futures, forwards and options contracts or from making margin
payments and other deposits in connection therewith.
2. The Fund may not purchase the securities of any other investment
company, except by purchase in the open market involving no commission or profit
to a sponsor or dealer (other than the customary broker's commission).
3. The Fund may not invest in companies for the purposes of
exercising control of management.
4. The Fund may not purchase any security, including any repurchase
agreement maturing in more than seven days, which is not readily marketable, if
more than 15% of the net assets of the Fund, taken at market value at the time
of purchase would be invested in such securities.
5. Only for the purpose of hedging, the Fund may purchase and sell
financial futures, forward foreign currency exchange contracts and put and call
options, but no more than 5% of the Fund's net assets at the time of purchase
may be invested in initial margins for financial futures transactions and
premiums for options. The Fund may only write call options that are covered and
only up to 25% of the Fund's total assets.
6. The Fund may not purchase or sell securities on a when-issued or
delayed delivery basis, if as a result more than 5% of its total assets taken at
market value at the time of purchase would be invested in such securities.
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
-15-
<PAGE>
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 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
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<PAGE>
(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).
Prior thereto (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).
- ----------
* Interested person (as defined in the Investment Company Act of 1940) of the
Fund and/or of the Fund's advisor or sub-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 or sub-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.
-17-
<PAGE>
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:
-18-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
NAME AND POSITION AGGREGATE COMPENSATION FROM
WITH BERGER FUNDS
BERGER MID CAP VALUE FUND(1) ALL BERGER FUNDS(2)
- ------------------------------------------------------------------------------
<S> <C> <C>
Dennis E. Baldwin(3) $447 $45,100
- ------------------------------------------------------------------------------
William M.B. Berger(3),(4) $ 0 $ 0
- ------------------------------------------------------------------------------
Louis R. Bindner(3) $447 $41,200
- ------------------------------------------------------------------------------
Katherine A. Cattanach(3) $447 $45,100
- ------------------------------------------------------------------------------
Lucy Black Creighton(3),(6) $ 0 $41,244
- ------------------------------------------------------------------------------
Paul R. Knapp(3) $447 $43,300
- ------------------------------------------------------------------------------
Gerard M. Lavin(3),(4),(5) $ 0 $ 0
- ------------------------------------------------------------------------------
Harry T. Lewis(3) $447 $43,300
- ------------------------------------------------------------------------------
Michael Owen(3) $542 $54,767
- ------------------------------------------------------------------------------
William Sinclaire(3) $447 $39,700
- ------------------------------------------------------------------------------
</TABLE>
NOTES TO TABLE
(1) The Fund will not commence operations until July 31, 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 April 1, 1998, the officers and trustees of the Fund as a group
owned of record or beneficially no shares of the Fund.
-19-
<PAGE>
4. INVESTMENT ADVISOR AND SUB-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 $4
billion as of March 31, 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.
PERKINS, WOLF, MCDONNELL & COMPANY - SUB-ADVISOR
Perkins, Wolf, McDonnell & Company ("PWM"), 53 West Jackson Boulevard,
Suite 818, Chicago, Illinois 60604, has been engaged as the investment
sub-advisor for the Fund. PWM was organized in 1980 under the name Mac-Per-Wolf
Co. to operate as a securities broker-dealer. In September 1983, it changed its
name to Perkins, Wolf, McDonnell & Company. PWM is a member of the National
Association of Securities Dealers, Inc. (the "NASD") and, in 1984, became
registered as an investment adviser with the SEC. PWM also acts as sub-advisor
to the Berger Small Cap Value Fund.
Thomas M. Perkins and Robert H. Perkins, as co-investment managers,
are responsible for the day-to-day investment management of the Fund. Thomas
Perkins has been an investment manager since 1974 and joined PWM as a portfolio
manager in 1998. Robert Perkins has been an investment manager since 1970 and
serves as President and a director of PWM. Robert Perkins owns 49% of PWM.
Robert Perkins and Thomas Perkins are brothers. Gregory E. Wolf owns 20% of PWM
and serves as its Treasurer and a director.
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:
<TABLE>
<CAPTION>
FUND ADVISOR INVESTMENT ADVISORY FEE
<S> <C> <C>
Berger Mid Cap Value Fund Berger Associates (1) 0.75%
</TABLE>
(1) Fund is sub-advised by PWM. See text preceding and following table.
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
-20-
<PAGE>
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.
Under the Sub-Advisory Agreement between the advisor and the
sub-advisor for the Fund, the sub-advisor is responsible for day-to-day
investment management. The sub-advisor manages the investments and determines
what securities and other investments will be acquired, held or disposed of,
consistent with the investment objective and policies established by the
trustees. No fees are paid directly to the sub-advisor by the Fund. PWM, as
the sub-advisor of the Fund, receives from the advisor a fee at the annual rate
of 0.75% of the first $50 million of average daily net assets of the Fund,
0.375% of the next $50 million and 0.20% of any amount in excess of $100
million, subject to a minimum of $400,000 per year for the first 2-1/2 years.
The Sub-Advisory Agreement for the Fund 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 of the Fund who are not "interested persons"
(as that term is defined in the Investment Company Act of 1940) of the Fund or
the advisor or the sub-advisor. The Sub-Advisory Agreement is subject to
termination by the Fund or the sub-advisor on 60 days' written notice, and
terminates automatically in the event of its assignment and in the event of
termination of the related Investment Advisory Agreement.
OTHER ARRANGEMENTS BETWEEN BERGER ASSOCIATES AND PWM
Berger Associates and PWM entered into an Agreement, dated November
18, 1996, as amended April 8, 1998, under which, among other things, PWM agreed
that, so long as Berger Associates acts as the advisor to the Berger Mid Cap
Value Fund and PWM provides sub-advisory or other services in connection with
the Fund, PWM will not manage or provide advisory services to any registered
investment company that is in direct competition with the Fund.
Berger Associates and PWM have also agreed that if the Sub-Advisory
Agreement with PWM is terminated or not renewed by the trustees other than for
cause within the first 2-1/2 years of its effectiveness, Berger Associates and
PWM will enter into a consulting agreement for the remainder of the 2-1/2 year
period, under which PWM will provide consulting services to Berger Associates
with respect to the Fund, subject to any requisite approvals under the
Investment Company Act of 1940. Under the Consulting Agreement, PWM would
provide training and assistance to Berger Associates analysts and marketing
support appropriate to the Fund and for those services, Berger Associates would
pay PWM a fee at a rate equal to $400,000 annually less certain agreed amounts.
No part of the consulting fee would be borne by the Fund.
TRADE ALLOCATIONS
Investment decisions for the Fund and other accounts advised by the
Fund's advisor and sub-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 or sub-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 or sub-advisor will aggregate orders if it believes that coordination of
orders and
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the ability to participate in volume transactions will result in the best
overall combination of net price and execution.
RESTRICTIONS ON PERSONAL TRADING
Berger Associates permits its directors, officers, employees and other
access persons (as defined below) of Berger Associates ("covered persons") to
purchase and sell securities for their own accounts in accordance with
provisions governing personal investing in Berger Associates' Code of Ethics.
The Code requires all covered persons to conduct their personal securities
transactions in a manner which does not operate adversely to the interests of
the Fund or Berger Associates' other advisory clients. Directors and officers
of Berger Associates (including those who also serve as trustees of the Fund),
investment personnel and other designated covered persons deemed to have access
to current trading information ("access persons") are required to pre-clear all
transactions in securities not otherwise exempt under the Code. Requests for
authority to trade will be denied pre-clearance when, among other reasons, the
proposed personal transaction would be contrary to the provisions of the Code or
would be deemed to adversely affect any transaction then known to be under
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.
PWM has adopted a Code of Ethics which is substantially similar to the
Code adopted by Berger Associates.
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,
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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.
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
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<PAGE>
expenditures incurred by Berger Associates are more than the total of such
payments, the excess is not to be reimbursed to Berger Associates by the Fund.
From time to time the Fund may engage in activities which jointly
promote the sale of 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
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<PAGE>
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 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 or the sub-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 or sub-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 or sub-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 or sub-advisor in making investment
decisions for its other advisory accounts, and, conversely, information obtained
by reason of placement of brokerage business of such other accounts may be used
by the advisor or sub-advisor in rendering investment advice to the Fund.
Although such research services may be deemed to be of value to the advisor or
sub-advisor, they are not expected to decrease the expenses that the advisor or
sub-advisor would otherwise incur in performing its investment advisory services
for the 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
<TABLE>
<CAPTION>
<S> <C>
Minimum Initial Investment $2,000.00
Minimum Subsequent Investment $ 50.00
</TABLE>
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<PAGE>
To purchase shares in the Fund, simply complete the application form
enclosed with the Prospectus. Then mail it with a check payable to "Berger
Funds" to the Fund in care of DST Systems, Inc., the Fund's sub-transfer agent,
as follows:
Berger Funds
c/o DST Systems, Inc.
P.O. Box 419958
Kansas City, MO 64141
If a shareholder is adding to an existing account, shares may also be
purchased by placing an order by telephone call to the Fund at 1-800-551-5849 or
via 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
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<PAGE>
representative of market value may be valued at their fair value determined in
good faith pursuant to consistently applied procedures established by the
trustees.
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.
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<PAGE>
If a shareholder has elected to receive dividends and/or capital gain
distributions in cash and the U.S. Postal Service is unable to deliver checks to
the shareholder's address of record, or if a shareholder's checks remain
uncashed for six months, the 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
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<PAGE>
Commission as a result of which it is not reasonably practicable for the Fund to
dispose of securities owned by it or to determine the value of its net assets,
or for such other period as the Securities and Exchange Commission may by order
permit for the protection of shareholders of the Fund.
The Fund intends to redeem its shares only for cash, although it
retains the right to redeem its shares in-kind under unusual circumstances, in
order to protect the interests of the remaining shareholders, by the delivery of
securities selected from its assets at its discretion. The Fund is, however,
governed by Rule 18f-1 under the Investment Company Act of 1940 pursuant to
which the Fund is obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day period for any
one shareholder. For purposes of this threshold, each underlying account holder
whose shares are held of record in certain omnibus accounts is treated as one
shareholder. Should redemptions by any shareholder during any 90-day period
exceed such limitation, the Fund will have the option of redeeming the excess in
cash or in-kind. If shares are redeemed in-kind, the redeeming shareholder
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 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
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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 &
Poor's 400 Mid-
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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 May 21, 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 six 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 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
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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.
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
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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.
OTHER INFORMATION
Davis, Graham & Stubbs LLP, 370 Seventeenth Street, Denver, Colorado,
acts as counsel to the Fund.
Price Waterhouse 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 or sub-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 a
period of time
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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 May 29, 1998, are as follows:
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
Shares of Beneficial 115,246
Interest in Berger Small
Company Growth Fund
Shares of Beneficial 26,155
Interest in Berger New
Generation Fund
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<PAGE>
Shares of Beneficial 2,171
Interest in Berger
Balanced Fund
Shares of Beneficial 986
Interest in Berger
Select Fund
Shares of Beneficial 321
Interest in Berger
Mid Cap Growth Fund
Shares of Beneficial -0-
Interest in Berger
Mid Cap Value 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 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
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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.
The business of Perkins, Wolf, McDonnell & Company ("PWM"), sub-advisor
to the Fund, is also described in the Prospectus under the heading
"Organization of the Berger Fund Family -- Fund Organization and Expenses"
and in Section 4 of the Statement of Additional Information, which are
included in this Registration Statement. Information relating to the
business and other connections of the officers and directors of PWM (current
and for the past two years) is listed in Schedules A and D of PWM's Form ADV
(File No. 801-19974), as filed with the Securities and Exchange Commission on
July 22, 1997, and May 21, 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 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.:
C-3
<PAGE>
- --------------------------------------------------------------------------------
Name Positions and Positions and
Offices with Offices with
Underwriter Registrant
- --------------------------------------------------------------------------------
Edgar F. Allison President and None
Director
- --------------------------------------------------------------------------------
David G. Mertens Vice President and None
Director
- --------------------------------------------------------------------------------
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 Mr. Mertens is 1850 Parkway Place,
Suite 420, Marietta, GA 30067. The principal business address of each of the
other persons in the table above is 210 University Blvd., Suite 900, Denver, CO
80206.
(c) Not applicable.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
The accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules promulgated thereunder are
maintained as follows:
(a) Shareholder records are maintained by the Registrant's
sub-transfer agent, DST Systems, Inc., P.O. Box 419958, Kansas
City, MO 64141;
(b) Accounting records relating to cash and other money balances;
asset, liability, reserve, capital, income and expense accounts;
portfolio securities; purchases and sales; and brokerage
commissions are maintained by the Registrant's Recordkeeping and
Pricing Agent, Investors Fiduciary Trust Company ("IFTC"),
127 West 10th 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
C-4
<PAGE>
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
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
C-5
<PAGE>
be mailed and the reasonable expenses of the mailing, will, with reasonable
promptness, mail such material to all shareholders of record, unless within 5
business days after such tender the Trustees shall mail to such applicants and
file with the Securities and Exchange Commission (the "Commission"), together
with a copy of the material requested to be mailed, a written statement signed
by at least a majority of the Trustees to the effect that in their opinion
either such material contains untrue statements of fact or omits to state facts
necessary to make the statements contained therein not misleading, or would be
in violation of applicable law, and specifying the basis of such opinion.
4. If the Commission enters an order either refusing to sustain any
of the Trustees' objections or declaring that any objections previously
sustained by the Commission have been resolved by the applicants, the Trustees
will cause the Registrant to mail copies of such material to all shareholders of
record with reasonable promptness after the entry of such order and the renewal
of such tender.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this Amendment
to 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 June, 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 June 16, 1998
- --------------------------- Executive Officer)
and Director
Kevin R. Fay Vice President, June 16, 1998
- --------------------------- Secretary and Treasurer
Kevin R. Fay (Principal Financial
and Accounting Officer)
/s/ Dennis E. Baldwin Trustee June 16, 1998
- ---------------------------
Dennis E. Baldwin*
/s/ William M.B. Berger Trustee June 16, 1998
- ---------------------------
William M.B. Berger*
/s/ Louis R. Bindner Trustee June 16, 1998
- ---------------------------
Louis R. Bindner*
C-7
<PAGE>
/s/ Katherine A. Cattanach Trustee June 16, 1998
- ---------------------------
Katherine A. Cattanach*
/s/ Paul R. Knapp Trustee June 16, 1998
- ---------------------------
Paul R. Knapp*
/s/ Harry T. Lewis, Jr. Trustee June 16, 1998
- ---------------------------
Harry T. Lewis, Jr.*
/s/ Michael Owen Trustee June 16, 1998
- ---------------------------
Michael Owen*
/s/ William Sinclaire Trustee June 16, 1998
- ---------------------------
William Sinclaire*
Gerard M. Lavin
- ---------------------------
*By Gerard M. Lavin
Attorney-in-Fact
C-8
<PAGE>
BERGER INVESTMENT PORTFOLIO TRUST
EXHIBIT INDEX
<TABLE>
<CAPTION>
N-1A EDGAR
Exhibit Exhibit
No. No. Name of Exhibit
- --------------------- ----------- ----------------------------------------
<S> <C> <C>
(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
* Exhibit 5.6 EX-99.B5.6 Form of Investment Advisory Agreement
for Berger Mid Cap Value Fund
* Exhibit 5.7 EX-99.B5.7 Form of Sub-Advisory Agreement for
Berger Mid Cap Value Fund
* Exhibit 6 EX-99.B6 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
(9) Exhibit 9.2.4 Form of Administrative Services
Agreement for Berger Select Fund
<PAGE>
(9) Exhibit 9.2.5 Form of Administrative Services
Agreement for Berger Mid Cap Growth Fund
* Exhibit 9.2.6 EX-99.B9.2.6 Form of Administrative
Services Agreement for Berger Mid Cap
Value 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 Investment
Portfolio Trust on behalf of Berger Mid
Cap Growth Fund, effective December 31,
1997
<PAGE>
* Exhibit 10 EX-99.B10 Opinion and consent of Davis,
Graham & Stubbs LLP (for Berger Mid Cap
Value Fund)
** Exhibit 11 Consent of Price Waterhouse 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
(9) Exhibit 15.4 Rule 12b-1 Plan for Berger Select Fund
(9) Exhibit 15.5 Rule 12b-1 Plan for Berger Mid Cap
Growth Fund
* Exhibit 15.6 EX-99.B15.6 Rule 12b-1 Plan for Berger Mid Cap Value
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
(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 18 Not Applicable
- -------------------
<PAGE>
* Filed herewith.
** 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 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
<PAGE>
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.
</TABLE>
<PAGE>
EXHIBIT 5.6
INVESTMENT ADVISORY AGREEMENT
BERGER MID CAP VALUE FUND
(a Series of Berger Investment Portfolio Trust)
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this ______
day of ________, 1998, between BERGER ASSOCIATES, INC., a Delaware corporation
("Berger Associates"), and BERGER INVESTMENT PORTFOLIO TRUST, a Delaware
business trust (the "Trust"), with respect to the BERGER MID CAP VALUE FUND, a
series of the Trust (the "Fund").
RECITALS
A. The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares for public offering under the Securities Act of 1933, as
amended (the "1933 Act").
B. The Trust is authorized to create separate series of shares, each with
its own separate investment portfolio, one of such series created by the Trust
being the Fund.
C. The Trust and Berger Associates deem it mutually advantageous that
Berger Associates should assist the Trustees and officers of the Trust in the
management of the securities portfolio of the Fund.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints Berger Associates as
investment adviser and manager with respect to the Fund for the period and on
the terms set forth in this Agreement. Berger Associates hereby accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. INVESTMENT ADVISORY FUNCTIONS. Subject to the approval of the
Trustees of the Trust and, if required, the shareholders of the Fund, Berger
Associates is authorized to engage one or more sub-advisers in connection with
Berger Associates' duties and responsibilities under this Agreement, which
sub-advisers may be affiliates of Berger Associates. In its capacity as
investment adviser to the Fund, Berger Associates shall have the following
duties and responsibilities:
1
<PAGE>
(a) To manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine without
prior consultation with the Trust, what securities and other
assets of the Fund will be acquired, held, disposed of or loaned,
in conformity with the investment objective, policies and
restrictions and the other statements concerning the Fund in the
Trust's trust instrument, as amended from time to time (the
"Trust Instrument"), bylaws, and registration statements under
the 1940 Act and the 1933 Act, the Investment Advisers Act of
1940, as amended (the "Advisers Act"), the rules thereunder, and
all other applicable federal and state laws and regulations, and
the provisions of the Internal Revenue Code of 1986, as amended,
applicable to the Fund as a regulated investment company;
(b) To cause its officers to attend meetings and furnish oral or
written reports, as the Trust may reasonably require, in order to
keep the Trustees and appropriate officers of the Trust fully
informed as to the condition of the investment portfolio of the
Fund, the investment decisions of Berger Associates, and the
investment considerations which have given rise to those
decisions;
(c) To place orders for the purchase and sale of securities for
investments of the Fund and for other related transactions or to
supervise the purchase and sale of securities as directed by any
sub-adviser engaged by Berger Associates pursuant to the
authority granted in this Section 2; to give instructions to the
custodian (including any subcustodian) of the Fund as to
deliveries of securities to and from such custodian and receipt
and payments of cash for the account of the Fund, and advise the
Trust on the same day such instructions are given; to submit such
reports relating to the valuation of the Fund's assets and to
otherwise assist in the calculation of the net asset value of
shares of the Fund as may reasonably be requested; on behalf of
the Fund, to exercise such voting rights, subscription rights,
rights to consent to corporate action and any other rights
pertaining to the Fund's assets that may be exercised, in
accordance with any policy pertaining to the same that may be
adopted or agreed to by the Trustees of the Trust, or, in the
event that the Trust retains the right to exercise such voting
and other rights, to furnish the Trust with advice as to the
manner in which such rights should be exercised;
(d) To maintain all books and records required to be maintained by
Berger Associates pursuant to the 1940 Act and the rules and
regulations promulgated thereunder, as the same may be amended
from time to time,
2
<PAGE>
with respect to transactions on behalf of the Fund, and shall
furnish the Trustees with such periodic and special reports as
the Trustees reasonably may request. Berger Associates agrees
that all records which it maintains for the Fund or the Trust are
the property of the Trust, agrees to permit the reasonable
inspection thereof by the Trust or its designees and agrees to
preserve for the periods prescribed under the 1940 Act any
records which it maintains for the Trust and which are required
to be maintained under the 1940 Act, and further agrees to
surrender promptly to the Trust or its designees any records
which it maintains for the Trust upon request by the Trust; and
(e) At such times as shall be reasonably requested by the Trustees,
to provide the Trustees with economic, operational and investment
data and reports, including without limitation all information
and materials reasonably requested by or requested to be
delivered to the Trustees of the Trust pursuant to Section 15(c)
of the 1940 Act, and make available to the Trustees any economic,
statistical and investment services normally available to similar
investment company clients of Berger Associates.
3. FURTHER OBLIGATIONS. In all matters relating to the performance of
this Agreement, Berger Associates shall act in conformity with the Trust's Trust
Instrument, bylaws and currently effective registration statements under the
1940 Act and the 1933 Act and any amendments or supplements thereto (the
"Registration Statements") and with the written policies, procedures and
guidelines of the Fund, and written instructions and directions of the Trustees
of the Trust and shall comply with the requirements of the 1940 Act, the
Advisers Act, the rules thereunder, and all other applicable federal and state
laws and regulations. The Trust agrees to provide Berger Associates with copies
of the Trust's Trust Instrument, bylaws, Registration Statements, written
policies, procedures and guidelines, and written instructions and directions of
the Trustees, and any amendments or supplements to any of them at, or, if
practicable, before the time such materials become effective.
4. OBLIGATIONS OF TRUST. The Trust shall have the following obligations
under this Agreement:
(a) To keep Berger Associates continuously and fully informed as to
the composition of the investment portfolio of the Fund and the
nature of all of the Fund's assets and liabilities from time to
time;
(b) To furnish Berger Associates with a certified copy of any
financial statement or report prepared for the Fund by certified
or independent public accountants and with copies of any
financial statements or reports made to
3
<PAGE>
the Fund's shareholders or to any governmental body or securities
exchange;
(c) To furnish Berger Associates with any further materials or
information which Berger Associates may reasonably request to
enable it to perform its function under this Agreement; and
(d) To compensate Berger Associates for its services in accordance
with the provisions of Section 5 hereof.
5. COMPENSATION. The Trust shall pay to Berger Associates for its
services under this Agreement a fee, payable in United States dollars, at an
annual rate of 0.75% of the average daily net asset value of the Fund. This fee
shall be computed and accrued daily and payable monthly on the last day of each
month during which or part of which this Agreement is in effect. For the month
during which this Agreement becomes effective and the month during which it
terminates, however, there shall be an appropriate proration of the fee payable
for such month based on the number of calendar days of such month during which
this Agreement is effective.
6. EXPENSES.
(a) EXPENSES PAID BY THE TRUST. The Trust assumes and shall pay all
expenses incidental to its operations and business not specifically assumed or
agreed to be paid by Berger Associates hereunder or otherwise, including, but
not limited to, any compensation, fees or reimbursements which the Trust pays to
its Trustees who are not interested persons of Berger Associates; compensation
of the Fund's custodian, transfer agent, registrar and dividend disbursing agent
and other service providers; legal, accounting, audit and printing expenses;
administrative, clerical, recordkeeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution of portfolio
transactions (including any appropriate commissions paid to Berger Associates or
its affiliates for effecting exchange listed, over-the-counter or other
securities transactions); interest; all federal, state and local taxes
(including stamp, excise, income and franchise taxes); costs of stock
certificates and expenses of delivering such certificates to the purchasers
thereof; expenses of local representation in Delaware; expenses of shareholders'
meetings and of preparing, printing and distributing proxy statements, notices,
and reports to shareholders; expenses of preparing and filing reports and tax
returns with federal and state regulatory authorities; all expenses incurred in
complying with all federal and state laws and the laws of any foreign country
applicable to the issue, offer or sale of shares of the Fund, including, but not
limited to, all costs involved in preparing, printing and mailing prospectuses
and statements of additional information to shareholders of the Fund; and all
fees, dues and other expenses incurred by the Trust in connection with the
membership of the Trust in any trade association or other investment company
organization. To the extent that Berger Associates shall perform any of the
above described administrative and clerical functions, including transfer
4
<PAGE>
agency, registry, dividend disbursing, recordkeeping, bookkeeping, accounting
and blue sky monitoring and registration functions, and the preparation of
reports and returns, the Trust shall pay to Berger Associates compensation for,
or reimburse Berger Associates for its expenses incurred in connection with,
such services as Berger Associates and the Trust shall agree from time to time,
any other provision of this Agreement notwithstanding.
(b) EXPENSES PAID BY BERGER ASSOCIATES. Berger Associates shall pay all
its own costs and expenses incurred in rendering the services required under
this Agreement. In addition to such costs and expenses, Berger Associates shall
incur and pay the following expenses relating to the Fund's operations:
(i) Reasonable compensation, fees and related expenses of the
Trust's officers and Trustees, except for such Trustees who are not interested
persons of Berger Associates;
(ii) Rental of offices of the Trust; and
(iii) Fees of any sub-adviser engaged by Berger Associates pursuant
to the authority granted in Section 2 hereof.
7. BROKERAGE COMMISSIONS. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust to the contrary, Berger
Associates is authorized and directed to place Fund portfolio transactions only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates,
provided, however, that Berger Associates may pay a broker an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker would have charged for effecting that transaction if
Berger Associates determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker viewed in terms of either that particular transaction or
the overall responsibilities of Berger Associates. Berger Associates is also
authorized to consider sales of Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions. In placing portfolio
business with such broker-dealers, Berger Associates shall seek the best
execution of each transaction. Subject to the terms of this Agreement and the
applicable requirements and provisions of the law, including the 1940 Act and
the Securities Exchange Act of 1934, as amended, and in the event that Berger
Associates or an affiliate is registered as a broker-dealer, Berger Associates
may select a broker with which it or any of its affiliates or the Fund is
affiliated. Berger Associates or such affiliated broker may effect or execute
Fund portfolio transactions, whether on a securities exchange or in the
over-the-counter market, and receive separate compensation from the Fund
therefor. Notwithstanding the foregoing, the Trust shall retain the right to
direct the placement of all portfolio transactions, and the Trustees of the
Trust may establish policies or guidelines to be followed by Berger Associates
5
<PAGE>
in placing portfolio transactions for the Trust pursuant to the foregoing
provisions. Berger Associates shall report on the placement of portfolio
transactions in the prior fiscal quarter at each quarterly meeting of such
Trustees. To the extent consistent with applicable law, purchase or sell orders
for the Fund may be aggregated with simultaneous purchase or sell orders for
other clients of Berger Associates. Whenever Berger Associates simultaneously
places orders to purchase or sell the same security on behalf of the Fund and
one or more other clients of Berger Associates, such orders will be allocated as
to price and amount among all such clients in a manner reasonably believed by
Berger Associates to be fair and equitable to each client. The Trust recognizes
that in some cases, this procedure may adversely affect the results obtained for
the Fund.
8. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities, provided in
either case that sixty (60) days' advance written notice of termination be given
to Berger Associates at its principal place of business. This Agreement may be
terminated by Berger Associates at any time, without penalty, by giving sixty
(60) days' advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that, consistent with the terms of
the Trust's Trust Instrument, the Trust shall cease to use the name "Berger" in
connection with the Fund as soon as reasonably practicable following any
termination of this Agreement if Berger Associates does not continue to provide
investment advice to the Fund after such termination.
9. ASSIGNMENT. This Agreement shall terminate automatically in the event
of any assignment of this Agreement.
10. TERM. This Agreement shall continue in effect until April 30, 2000,
unless sooner terminated in accordance with its terms, and shall continue in
effect from year to year thereafter only so long as such continuance is
specifically approved at least annually by the vote of a majority of the
Trustees of the Trust who are not parties hereto or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on the
approval of the terms of such renewal, and by either the Trustees of the Trust
or the affirmative vote of a majority of the outstanding voting securities of
the Fund.
11. AMENDMENTS. This Agreement may be amended by the parties only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Fund or Berger
Associates and, (ii) if required by applicable law, by the affirmative vote of a
majority of the outstanding voting securities of the Fund.
12. ALLOCATION OF EXPENSES. The Trustees shall determine the basis for
making an appropriate allocation of the Trust's expenses (other than those
directly attributable to the Fund)
6
<PAGE>
between the Fund and any other series of the Trust and between the Fund and
other investment companies managed by Berger Associates.
13. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
14. LIMITATION OF LIABILITY OF BERGER ASSOCIATES. Berger Associates shall
not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder and except to the extent otherwise provided by law. As
used in this Section 14, "Berger Associates" shall include any affiliate of
Berger Associates performing services for the Trust contemplated hereunder and
directors, officers and employees of Berger Associates and such affiliates.
15. ACTIVITIES OF BERGER ASSOCIATES. The services of Berger Associates to
the Trust hereunder are not to be deemed to be exclusive, and Berger Associates
and its affiliates are free to render services to other parties, so long as its
services under this Agreement are not materially adversely affected or otherwise
impaired thereby. Nothing in this Agreement shall limit or restrict the right
of any director, officer or employee of Berger Associates to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar nature or a dissimilar
nature. It is understood that trustees, officers and shareholders of the Trust
are or may become interested in Berger Associates as directors, officers and
shareholders of Berger Associates, that directors, officers, employees and
shareholders of Berger Associates are or may become similarly interested in the
Trust, and that Berger Associates may become interested in the Trust as a
shareholder or otherwise.
16. CERTAIN DEFINITIONS. The terms "vote of a majority of the outstanding
voting securities", "assignment", "approved at least annually" and "interested
persons" when used herein, shall have the respective meanings specified in the
1940 Act, as now in effect or hereafter amended, and the rules and regulations
thereunder, subject to such orders, exemptions and interpretations as may be
issued by the Securities and Exchange Commission under said Act and as may be
then in effect. Where the effect of a requirement of the federal securities
laws reflected in any provision of this Agreement is made less restrictive by a
rule, regulation, order,
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interpretation or other authority of the Securities and Exchange Commission,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation, order, interpretation or other
authority.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
18. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized officers
to execute this Investment Advisory Agreement as of the date and year first
above written.
BERGER ASSOCIATES, INC.
By:_________________________
Gerard M. Lavin
President
BERGER INVESTMENT PORTFOLIO TRUST, with
respect to the Berger Mid Cap Value Fund
By:_________________________
Gerard M. Lavin
President
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EXHIBIT 5.7
SUB-ADVISORY AGREEMENT
BERGER MID CAP VALUE FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
This SUB-ADVISORY AGREEMENT (the "Agreement") is entered into effective as
of the _______ day of ___________, 1998, by and between BERGER ASSOCIATES, INC.,
a Delaware corporation ("Berger") and PERKINS, WOLF, MCDONNELL & COMPANY, a
Delaware corporation ("PWM").
WHEREAS, Berger has entered into an Investment Advisory Agreement (the
"Advisory Agreement") with Berger Investment Portfolio Trust, a Delaware
business trust (the "Trust") and an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), with respect to the Berger Mid Cap Value Fund, a series of the Trust (the
"Fund") pursuant to which Berger has agreed to provide investment advisory
services with respect to the Fund; and
WHEREAS, PWM is engaged in the business of rendering investment advisory
services and is registered as an investment adviser under the Investment
Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, Berger desires to retain PWM to furnish investment advisory
services with respect to the Fund, and PWM is willing to furnish such services;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. DUTIES OF PWM. Berger hereby engages the services of PWM as
subadviser in furtherance of the Advisory Agreement. PWM agrees to perform the
following duties, subject to the oversight of Berger and to the overall control
of the officers and the Board of Trustees (the "Trustees") of the Trust:
(a) PWM shall manage the investment operations of the Fund and the
composition of its investment portfolio, shall determine without prior
consultation with the Trust or Berger, what securities and other assets of the
Fund will be acquired, held, disposed of or loaned, and shall direct Berger with
respect to the execution of trades in connection with such determinations, in
conformity with the investment objectives, policies and restrictions and the
other statements concerning the Fund in the Trust's trust instrument, as amended
from time to time (the "Trust Instrument"), bylaws and registration statements
under the 1940 Act and the Securities Act of 1933, as amended (the "1933 Act"),
the Advisers Act, the rules thereunder and all other
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applicable federal and state laws and regulations, and the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable to the Fund
as a regulated investment company;
(b) PWM shall cause its officers to attend meetings and furnish oral
or written reports, as the Trust or Berger may reasonably require, in order to
keep Berger, the Trustees and appropriate officers of the Trust fully informed
as to the condition of the investment portfolio of the Fund, the investment
decisions of PWM, and the investment considerations which have given rise to
those decisions;
(c) PWM shall maintain all books and records required to be
maintained by PWM pursuant to the 1940 Act, the Advisers Act, and the rules and
regulations promulgated thereunder, as the same may be amended from time to
time, with respect to transactions on behalf of the Fund, and shall furnish the
Trustees and Berger with such periodic and special reports as the Trustees or
Berger reasonably may request. PWM hereby agrees that all records which it
maintains for the Fund or the Trust are the property of the Trust, agrees to
permit the reasonable inspection thereof by the Trust or its designees and
agrees to preserve for the periods prescribed under the 1940 Act and the
Advisers Act any records which it maintains for the Trust and which are required
to be maintained under the 1940 Act and the Advisers Act, and further agrees to
surrender promptly to the Trust or its designees any records which it maintains
for the Trust upon request by the Trust;
(d) At such times as shall be reasonably requested by the Trustees or
Berger, PWM shall provide the Trustees and Berger with economic, operational and
investment data and reports, including without limitation all information and
materials reasonably requested by or requested to be delivered to the Trustees
of the Trust pursuant to Section 15(c) of the 1940 Act, and shall make available
to the Trustees and Berger any economic, statistical and investment services
normally available to similar investment company clients of PWM; and
(e) PWM will provide to Berger for regulatory filings and other
appropriate uses materially accurate and complete information relating to PWM as
may reasonably be requested by Berger from time to time and, notwithstanding
anything herein to the contrary, PWM shall be liable to Berger for all damages,
costs and expenses, including without limitation reasonable attorneys' fees
(hereinafter referred to collectively as "Damages"), incurred by Berger as a
result of any material inaccuracies or omissions in such information provided by
PWM to Berger; provided, however, that PWM shall not be liable to the extent
that any Damages are based upon inaccuracies or omissions made in reliance upon
information furnished to PWM by Berger.
2. FURTHER OBLIGATIONS. In all matters relating to the performance of
this Agreement, PWM shall act in conformity with the Trust's Trust Instrument,
bylaws and currently effective registration statements under the 1940 Act and
the 1933 Act and any amendments or supplements thereto (the "Registration
Statements") and with the written policies, procedures and guidelines
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of the Fund, and written instructions and directions of the Trustees and Berger
and shall comply with the requirements of the 1940 Act, the Advisers Act, the
rules thereunder, and all other applicable federal and state laws and
regulations. Berger agrees to provide to PWM copies of the Trust's Trust
Instrument, bylaws, Registration Statement, written policies, procedures and
guidelines and written instructions and directions of the Trustees and Berger,
and any amendments or supplements to any of them at, or, if practicable, before
the time such materials become effective.
3. OBLIGATIONS OF BERGER. Berger shall have the following obligations
under this Agreement:
(a) To keep PWM continuously and fully informed (or cause the
custodian of the Fund's assets to keep PWM so informed) as to the composition of
the investment portfolio of the Fund and the nature of all of the Fund's assets
and liabilities from time to time;
(b) To furnish PWM with a certified copy of any financial statement
or report prepared for the Fund by certified or independent public accountants
and with copies of any financial statements or reports made to the Fund's
shareholders or to any governmental body or securities exchange;
(c) To furnish PWM with any further materials or information which
PWM may reasonably request to enable it to perform its function under this
Agreement; and
(d) To compensate PWM for its services in accordance with the
provisions of Section 4 hereof.
4. COMPENSATION. Berger shall pay to PWM for its services under this
Agreement a fee, payable in United States dollars, at an annual rate of 0.75% of
the first $50,000,000 of average daily net assets of the Fund, 0.375% of the
next $50,000,000 of average daily net assets of the Fund and 0.20% on any part
of the average daily net assets of the Fund in excess of $100,000,000; provided
that, notwithstanding the foregoing, during the first 2-1/2 years from the
effective date of this Agreement, the fee paid by Berger to PWM for its services
hereunder shall be at a rate not less than $400,000 per year, minus the amount
of all consulting fees paid or payable to PWM by Berger pursuant to that certain
Consulting Agreement, dated April 8, 1998, between Berger and PWM. Such fee
shall be computed and accrued daily and payable monthly as of the last day of
each month during which or part of which this Agreement is in effect. For the
month during which this Agreement becomes effective and the month during which
it terminates, however, there shall be an appropriate proration of the fee
payable for such month based on the number of calendar days of such month during
which this Agreement is effective.
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5. EXPENSES AND EXCLUDED EXPENSES. During the term of this Agreement,
Berger shall reimburse PWM for PWM's reasonable ordinary and necessary expenses
associated with maintaining a one-person office in which to perform its services
for the Fund under this Agreement and, subject to the prior approval of Berger,
for PWM's reasonable ordinary and necessary travel and other business expenses
incurred by PWM in performing its services hereunder. Other than the foregoing,
PWM shall pay all its own costs and expenses incurred in rendering its services
under this Agreement.
6. REPRESENTATIONS OF PWM. PWM hereby represents, warrants and covenants
to Berger as follows:
(a) PWM: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from performing the services contemplated by this Agreement; (iii) has met, and
will continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory organization necessary to be met in order
to perform the services contemplated by this Agreement; (iv) has the legal and
corporate authority to enter into and perform the services contemplated by this
Agreement; and (v) will immediately notify Berger of the occurrence of any event
that would disqualify PWM from serving as an investment adviser of an investment
company pursuant to Section 9(a) of the 1940 Act or otherwise, and of the
institution of any administrative, regulatory or judicial proceeding against PWM
that could have a material adverse effect upon PWM's ability to fulfill its
obligations under this Agreement.
(b) PWM has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide Berger with a
copy of such code of ethics, together with evidence of its adoption. Within 45
days after the end of the last calendar quarter of each year that this Agreement
is in effect, the president or a vice president of PWM shall certify to Berger
that PWM has complied with the requirements of Rule 17j-1 during the previous
year and that there has been no violation of PWM's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of Berger, PWM shall permit Berger, its
employees or its agents to examine the reports required to be made to PWM by
Rule 17j-1(c)(1) and all other records relevant to PWM's code of ethics.
(c) PWM has provided Berger with a copy of its Form ADV as most
recently filed with the U.S. Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC, furnish
a copy of such amendment to Berger.
(d) PWM will notify Berger of any change in the identity or control
of its shareholders owning a 10% or greater interest in PWM, or any change that
would constitute a change in control of PWM under the 1940 Act, prior to any
such change if PWM is aware, or
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should be aware, of any such change, but in any event as soon as any such change
becomes known to PWM.
7. REPRESENTATIONS OF BERGER. Berger hereby represents, warrants and
covenants to PWM as follows:
(a) Berger: (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act
from fulfilling its obligations under this Agreement; (iii) has met, and will
continue to meet for so long as this Agreement remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory organization necessary to be met in order
to fulfill its obligations under this Agreement; (iv) has the legal and
corporate authority to enter into and perform this Agreement; and (v) will
immediately notify PWM of the occurrence of any event that would disqualify
Berger from serving as an investment adviser of an investment company pursuant
to Section 9(a) of the 1940 Act or otherwise, and of the institution of any
administrative, regulatory or judicial proceeding against Berger that could have
a material adverse effect upon Berger's ability to fulfill its obligations under
this Agreement.
(b) Berger has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide PWM with a copy
of such code of ethics, together with evidence of its adoption.
(c) Berger has provided PWM with a copy of its Form ADV as most
recently filed with the U.S. Securities and Exchange Commission ("SEC") and
will, promptly after filing any amendment to its Form ADV with the SEC, furnish
a copy of such amendment to PWM.
(d) Berger will notify PWM of any change in the identity or control
of its shareholders owning a 10% or greater interest in Berger, or any change
that would constitute a change in control of Berger under the 1940 Act, prior to
any such change if Berger is aware, or should be aware, of any such change, but
in any event as soon as any such change becomes known to Berger.
8. TERM. This Agreement shall become effective as of the date first set
forth above and shall continue in effect until April 30, 2000, unless sooner
terminated in accordance with its terms, and shall continue in effect from year
to year thereafter only so long as such continuance is specifically approved at
least annually by the vote of a majority of the Trustees of the Trust who are
not parties hereto or interested persons of the Trust, Berger or PWM, cast in
person at a meeting called for the purpose of voting on the approval of the
terms of such renewal, and by either the Trustees of the Trust or the
affirmative vote of a majority of the outstanding voting
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securities of the Fund. Berger shall use its best efforts consistent with the
fiduciary obligations of all parties to obtain such annual approvals of this
Agreement.
9. TERMINATION. This Agreement may be terminated at any time, without
penalty, by the Trustees or by the shareholders of the Fund acting by vote of at
least a majority of its outstanding voting securities, provided in any such case
that 60 days' advance written notice of termination be given to PWM at its
principal place of business. This Agreement may also be terminated by Berger or
the Trust: (i) upon a material breach by PWM of any of the representations and
warranties set forth in Section 6 of this Agreement, if such breach shall not
have been cured within a 20-day period after notice of such breach; or (ii) if
PWM becomes unable to discharge its duties and obligations under this Agreement.
This Agreement may be terminated by PWM at any time, without penalty: (i) by
giving 60 days' advance written notice of termination to Berger and to the
Trust, or (ii) upon a material breach by Berger of any of the representations
and warranties set forth in Section 7 of this Agreement, if such breach shall
not have been cured within a 20-day period after notice of such breach. In
addition, this Agreement shall terminate, without penalty, upon the termination
of the Advisory Agreement.
10. ASSIGNMENT. This Agreement shall automatically terminate in the event
of its assignment.
11. AMENDMENTS. This Agreement may be amended by the parties only in a
written instrument signed by the parties to this Agreement and only if such
amendment is specifically approved (i) by a majority of the Trustees, including
a majority of the Trustees who are not interested persons of the Trust or
Berger, PWM or their affiliates, and (ii) if required by applicable law, by the
affirmative vote of a majority of the outstanding voting securities of the Fund.
12. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no Trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
13. LIMITATION OF LIABILITY OF PWM. Berger will not seek to hold PWM, and
PWM shall not be, liable for any error of judgment or mistake of law or for any
loss arising out of any investment or for any act or omission taken with respect
to the Fund, except for willful misfeasance, bad faith or gross negligence in
the performance of its duties, or by reason of
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reckless disregard of its obligations and duties hereunder and except to the
extent otherwise provided by law. As used in this section, "PWM" shall include
any affiliate of PWM performing services for the Fund contemplated hereunder and
directors, officers and employees of PWM and such affiliates.
14. ACTIVITIES OF PWM. The services of PWM hereunder are not to be deemed
to be exclusive, and PWM is free to render services to other parties, so long as
its services under this Agreement are not materially adversely affected or
otherwise impaired thereby. Nothing in this Agreement shall limit or restrict
the right of any director, officer or employee of PWM to engage in any other
business or to devote his or her time and attention in part to the management or
other aspects of any other business, whether of a similar or a dissimilar
nature. It is understood that Trustees, officers and shareholders of the Trust
are or may become interested in PWM as directors, officers and shareholders of
PWM, that directors, officers, employees and shareholders of PWM are or may
become similarly interested in the Trust, and that PWM may become interested in
the Trust as a shareholder or otherwise.
15. THIRD PARTY BENEFICIARY. The parties expressly acknowledge and agree
that the Trust is a third party beneficiary of this Agreement and that the Trust
shall have the full right to sue upon and enforce this Agreement in accordance
with its terms as if it were a signatory hereto.
16. NOTICES. Any notice or other communication required to be given
pursuant to this Agreement shall be deemed duly given if delivered personally or
by overnight delivery service or mailed by certified or registered mail, return
receipt requested and postage prepaid, or sent by facsimile addressed to the
parties at their respective addresses set forth below, or at such other address
as shall be designated by any party in a written notice to the other party.
(a) To Berger at:
Berger Associates, Inc.
210 University Boulevard
Denver, Colorado 80206
Attention: President
Phone: (303) 329-0200
Fax: (303) 394-4397
with a copy to:
Diane M. Bono, Esq.
Sonnenschein Nath & Rosenthal
4520 Main Street, 11th Floor
Kansas City, Missouri 64111
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Phone: (816) 932-4400
Fax: (816) 531-7545
(b) To PWM at:
Perkins, Wolf, McDonnell & Company
53 W. Jackson Boulevard
Suite 818
Chicago, Illinois 60604
Attention: President
Phone: (312) 922-0355
Fax: (312) 922-0418
with a copy to:
Leslie J. Parrette, Jr., Esq.
Blackwell Sanders Matheny Weary & Lombardi L.L.P.
2300 Main Street, Suite 1100
Kansas City, Missouri 64108
Phone: (816) 274-6800
Fax: (816) 274-6914
(c) To the Trust at:
Berger Investment Portfolio Trust
210 University Boulevard
Suite 900
Denver, Colorado 80206
with a copy to:
Lester R. Woodward, Esq.
Davis, Graham & Stubbs LLP
370 Seventeenth Street, Suite 4700
Denver, Colorado 80202
Phone: (303) 892-9400
Fax: (303) 892-7400
17. CERTAIN DEFINITIONS. As used in this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," "approved at least
annually," and "interested persons" shall have the respective meanings specified
in the 1940 Act, as now in effect or hereafter
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amended, and the rules and regulations thereunder, subject to such orders,
exemptions and interpretations as may be issued by the SEC under the 1940 Act
and as may be then in effect. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation, order, interpretation or other authority of
the SEC, whether of special or general application, such provision shall be
deemed to incorporate the effect of such rule, regulation, order, interpretation
or other authority.
18. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
19. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
20. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an originally, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers designated below as of the day and year first
above written.
BERGER ASSOCIATES, INC.
By:________________________________
Gerard M. Lavin
President
PERKINS, WOLF, MCDONNELL & COMPANY
By:________________________________
Robert H. Perkins
President
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EXHIBIT 6
DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT (the "Agreement") is made this ____ day of
________________, 1998, by and between BERGER INVESTMENT PORTFOLIO TRUST, a
business trust organized and existing under the laws of the State of Delaware
(the "Trust"), and BERGER DISTRIBUTORS, INC., a corporation organized and
existing under the laws of the State of Colorado (the "Distributor"). This
Agreement applies separately to each series of the Trust, whether now existing
or hereafter created, listed on Exhibit A hereto as it may be amended from time
to time (each a "Fund" and collectively the "Funds").
RECITALS
A. The Trust is engaged in business as an open-end management investment
company registered under the Investment Company Act of 1940, as amended (the
"1940 Act").
B. The Distributor is registered as a broker-dealer under the Securities
Exchange Act of 1934, as amended (the "1934 Act") and is registered as a
broker-dealer under the laws of each state of the United States and in each
other jurisdiction in which the Distributor engages in business to the extent
that the laws of such states and such jurisdictions require such registration,
and is a member of the National Association of Securities Dealers, Inc. (the
"NASD") (such registration and membership are referred to collectively as the
"Registrations").
C. The Trust and the Distributor desire the Distributor to act as the
principal underwriter for the public offering of the shares of beneficial
interest (the "Shares") of each Fund, whether now existing or hereafter created.
D. This Agreement effects an amendment of that certain Distribution
Agreement, originally entered into and dated the 31st day of March, 1997,
between the Trust and the Distributor.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. The Trust appoints the Distributor to act as distributor
of the Shares of each Fund.
2. TRUST TO FURNISH DOCUMENTS. The Trust shall furnish the Distributor
with copies of any registration statements, prospectuses or statements of
additional information pertaining to any Fund filed by the Trust with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act"), or the 1940 Act, together
<PAGE>
with any financial statements and exhibits included therein, and all amendments
or supplements thereto hereafter filed.
The Trust shall also furnish the Distributor with such other certificates
or documents as the Distributor may from time to time, in its discretion,
reasonably deem necessary or appropriate in order to perform its duties under
this Agreement properly.
3. SOLICITATION OF ORDERS FOR PURCHASE OF SHARES.
(a) Subject to the provisions of Sections 4 and 7 hereof, and to such
minimum purchase requirements as may from time to time be indicated in each
Fund's prospectus or statement of additional information, the Distributor is
authorized to solicit, as agent on behalf of the Trust, unconditional orders for
purchases of each Fund's Shares authorized for issuance and registered under the
1933 Act, provided that:
(1) The Distributor shall act solely as a disclosed agent on
behalf of and for the account of the Trust;
(2) The Distributor shall confirm or arrange with the transfer
agent for the Shares to confirm all purchases of the Shares. Such confirmation
shall conform to the requirements of the 1934 Act and the rules thereunder and
shall clearly state that the Distributor is acting as agent in the transaction;
(3) The Distributor shall have no liability for payment for
purchases of Shares it sells as agent, but will use reasonable efforts to assure
that each Fund receives payment for Shares purchased through the Distributor in
accordance with the requirements of applicable law and regulations; and
(4) Each order to purchase Shares of a Fund received by the
Distributor shall be subject to acceptance by the Trust and entry of the order
on such Fund's records or shareholder accounts and is not binding until so
accepted and entered.
The purchase price of a Fund's Shares to the public shall be the
public offering price described in Section 6 hereof.
(b) The Distributor shall use reasonable efforts (but only in states
and jurisdictions in which the Distributor may lawfully do so) to solicit from
investors unconditional orders to purchase Shares of each Fund.
(c) In exercising its authority and discharging its responsibilities
under this Section 3, the Distributor may enter into sales or servicing
agreements with securities dealers, investment advisers, financial institutions
and other industry professionals, provided that any such agreements shall comply
with all applicable laws and regulations and Rules of the NASD.
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<PAGE>
4. SOLICITATION OF ORDERS TO PURCHASE SHARES BY TRUST. The rights
granted to the Distributor shall be non-exclusive in that the Trust reserves the
right to otherwise solicit purchases from, and sell Shares to, investors,
including without limitation the right to issue Shares in connection with the
merger or consolidation of any other investment company, trust or personal
holding company with a Fund, or a Fund's acquisition, by the purchase or
otherwise, of all or substantially all of the assets of an investment company,
trust or personal holding company, or substantially all of the outstanding
shares or interests of any such entity.
5. NO COMPENSATION; PAYMENT OF EXPENSES. The Distributor will not be
entitled to any compensation with respect to its services under this Agreement.
The Distributor shall pay its own expenses incurred in the discharge of its
duties hereunder, but shall not be responsible to pay any expenses of the Trust
or any Fund, including without limitation, any charges of the Trust's transfer,
recordkeeping, dividend disbursing and redemption agents, if any; any expenses
of preparation, printing and mailing of confirmations; any expenses of
preparation and printing of annual or more frequent revisions of each Fund's
prospectus and statement of additional information and of supplying copies
thereof to shareholders; any expenses of registering and maintaining the
registrations of the Trust under the 1940 Act and the sale of the Trust's Shares
under the 1933 Act; and any expenses of registering or qualifying and
maintaining registrations or qualifications of each Fund and of the Shares for
sale under securities laws of various states or other jurisdictions and of
registration or qualification of the Trust and each Fund under all laws
applicable to the Trust or its business activities.
6. PUBLIC OFFERING PRICE. All solicitations by the Distributor pursuant
to this Agreement shall be for orders to purchase Shares of a Fund at the public
offering price. The public offering price for each accepted order for a Fund's
Shares will be the net asset value per Share next determined by the Trust after
it or its authorized agent or designee accepts such order. The net asset value
per Share of the Shares shall be determined in the manner provided in the
Trust's Trust Instrument and Bylaws as now in effect or as may be amended, and
as reflected in the then current prospectus and statement of additional
information pertaining to such Fund.
7. SUSPENSION OF SALES. If and whenever the determination of a Fund's
net asset value is suspended and until such suspension is terminated, no further
orders for Shares shall be accepted by the Trust except such unconditional
orders placed with the Trust and accepted by it before the suspension. In
addition, the Trust reserves the right to suspend sales of Shares of a Fund if,
in the judgment of the Trustees, it is in the best interest of the Fund to do
so, such suspension to continue for such period as may be determined by the
Trustees; and in that event, (i) at the direction of the Trust, the Distributor
shall suspend its solicitation of orders to purchase Shares of such Fund until
otherwise instructed by the Trust and (ii) no orders to purchase Shares of such
Fund shall be accepted by the Trust while such suspension remains in effect
unless otherwise directed by its Trustees.
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<PAGE>
8. SOLICITATION MATERIALS; AUTHORIZED REPRESENTATIONS.
(a) The Trust shall make available to the Distributor, without cost
to the Trust, such number of copies of each Fund's currently effective
prospectus and statement of additional information and reports to shareholders
and copies of all other information that the Distributor may reasonably request
for use in connection with the distribution of Shares.
(b) The Distributor is not authorized by the Trust to give with
respect to any Fund any information or to make any representations in connection
with the sale of Shares other than the information and representations contained
in the Trust's registration statement, or such Fund's prospectus or statement of
additional information, as amended or supplemented from time to time, or
contained in shareholder reports or other material pertaining to such Fund that
may be prepared by or on behalf of the Trust or approved by the Trust for the
Distributor's use.
9. REGISTRATION OF ADDITIONAL SHARES. The Trust hereby agrees to
register either (i) an indefinite number of Shares pursuant to Rule 24f-2 under
the 1940 Act, or (ii) a definite number of Shares as the Trust shall deem
advisable pursuant to Rule 24e-2 under the 1940 Act, or both. The Trust will,
in cooperation with the Distributor, take such action as may be necessary from
time to time to register or qualify the Shares of each Fund (so registered or
otherwise qualified for sale under the 1933 Act), in any state or jurisdiction
mutually agreeable to the Distributor and the Trust, and to maintain such
registration or qualification; provided, however, that nothing herein shall be
deemed to prevent the Trust from registering or qualifying the Shares without
approval of the Distributor in any state or jurisdiction it deems appropriate.
10. CONFORMITY WITH LAW. The Distributor agrees that in soliciting orders
to purchase Shares it shall duly conform in all respects with applicable federal
and state laws and with the rules and regulations of the NASD. The Distributor
will use its best efforts to maintain its Registrations in good standing during
the term of this Agreement and will promptly notify the Trust in the event of
(i) the suspension or termination of any of the Registrations, (ii) the
occurrence of any event that would disqualify the Distributor from acting as the
principal underwriter of the Trust or any of its Funds pursuant to Section 9(a)
of the 1940 Act or otherwise, or (iii) the institution of any administrative,
regulatory or judicial proceeding against the Distributor.
11. INDEPENDENT CONTRACTOR. The Distributor shall be an independent
contractor and none of its officers, directors, employees or representatives
shall be acting as an employee or other agent of the Trust in the performance of
the Distributor's duties hereunder. The Distributor shall be responsible for
its own conduct and the employment, control and conduct of its agents and
employees and for injury to such agents or employees or to others through its
agents and employees and agrees to pay or to insure that persons other than the
Trust will pay all compensation and taxes due with respect to the activities of
its agents and employees.
12. INDEMNIFICATION. The Distributor agrees to indemnify and hold
harmless the Trust and each of its Trustees, officers, employees and
representatives, and each person, if any,
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<PAGE>
who controls the Trust within the meaning of Section 15 of the 1933 Act, against
any and all losses, liabilities, damages, claims and expenses (including the
reasonable costs of investigating or defending any alleged loss, liability,
damage, claim or expense and reasonable legal counsel fees incurred in
connection therewith) to which the Trust or such Trustees, officers, employees,
representatives, or controlling person or persons may become subject under the
1933 Act, under any other statute, at common law, or otherwise, arising out of
the offer or sale of any Shares of any Fund or any other security to any person
which (i) may be based upon any wrongful act by the Distributor or any of the
Distributor's directors, officers, employees or representatives, or (ii) may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in a registration statement, prospectus, statement of additional
information, shareholder report or other information covering Shares of such
Fund filed or made public by the Trust or any amendment thereof or supplement
thereto or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon written
information furnished or confirmed by the Distributor to the Trust. In no
case is the Distributor's indemnity in favor of the Trust, or any person
indemnified, to be deemed to protect the Trust or such indemnified person
against any liability to which the Trust or such person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its or such person's duties or by reason of its or such person's
reckless disregard of its or such person's obligations and duties under this
Agreement. The Trust or any person indemnified, as the case may be, shall
notify the Distributor in writing of the claim within a reasonable time after
the summons or other first written notification giving information of the nature
of the claim is served upon the Trust or upon such person (or after the Trust or
such person shall have received notice of such service on any designated agent);
however, failure to so notify the Distributor of any such claim shall not
relieve the Distributor from any liability hereunder unless and to the extent
that its ability to defend against such claim is prejudiced by such failure, nor
from any liability that the Distributor may have to the Trust or any person
against whom such action is brought otherwise than on account of the
Distributor's indemnity agreement contained in this section.
The Distributor shall be entitled to participate, at its own expense, in
the defense or, if Distributor so elects, to assume the defense of any action
brought to enforce any such claim but, if the Distributor elects to assume the
defense, such defense shall be conducted by legal counsel chosen by the
Distributor and reasonably satisfactory to the persons indemnified who are
defendants in the action. In the event that the Distributor elects to assume
the defense of any such action and retain such legal counsel, persons
indemnified who are defendants in the action shall bear the fees and expenses of
any additional legal counsel retained by them. If the Distributor does not
elect to assume the defense of any such action, the Distributor shall reimburse
persons indemnified who are defendants in such action for the reasonable fees of
any legal counsel retained by them in such litigation.
The Trust agrees to indemnify and hold harmless the Distributor and each of
its directors, officers, employees and representatives, and each person, if any,
who controls the Distributor within the meaning of Section 15 of the 1933 Act,
against any and all losses, liabilities, damages, claims or expenses (including
the reasonable costs of investigating or defending any
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<PAGE>
alleged loss, liability, damage, claim or expenses and reasonable legal counsel
fees incurred in connection therewith) to which the Distributor or such of its
directors, officers, employees, representatives or controlling person or persons
may become subject under the 1933 Act, under any other statute, at common law,
or otherwise, arising out of the offer or sale of any Shares of any Fund to any
person which (i) may be based upon any wrongful act by the Trust or any of its
Trustees, officers, employees or representatives other than the Distributor, or
(ii) may be based upon any untrue statement or alleged untrue statement of a
material fact contained in a registration statement, prospectus, statement of
additional information, shareholder report or other information covering Shares
filed or made public by the Trust or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in reliance upon written
information furnished or confirmed by the Distributor to the Trust. In no case
is the Trust's indemnity in favor of the Distributor or any person indemnified
to be deemed to protect the Distributor or such indemnified person against any
liability to which the Distributor or such indemnified person would otherwise be
subject by reason of willful misfeasance, bad faith or gross negligence in the
performance of its or such person's duties or by reason of its or such person's
reckless disregard of its or such person's obligations and duties under this
Agreement. The Distributor or any person indemnified, as the case may be, shall
notify the Trust in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the nature of
the claim is served upon the Distributor or upon such person (or after the
Distributor or such person shall have received notice of such service on any
designated agent); however, failure to so notify the Trust of any such claim
shall not relieve the Trust from any liability hereunder unless and to the
extent that its ability to defend against such claim is prejudiced by such
failure, nor from any liability which the Trust may have to the Distributor or
any person against whom such action is brought otherwise than on account of the
Trust's indemnity agreement contained in this section.
The Trust shall be entitled to participate, at its own expense, in the
defense or, if the Trust so elects, to assume the defense of any action brought
to enforce such claim but, if the Trust elects to assume the defense, such
defense shall be conducted by legal counsel chosen by the Trust and reasonably
satisfactory to the persons indemnified who are defendants in the action. In
the event that the Trust elects to assume the defense of any such action and
retain such legal counsel, the persons indemnified who are defendants in the
action shall bear the fees and expenses of any additional legal counsel retained
by them. If the Trust does not elect to assume the defense of any such action,
the Trust shall reimburse the persons indemnified who are defendants in such
action for the reasonable fees and expenses of any legal counsel retained by
them in such litigation.
13. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective with respect to each Fund on the Effective Date specified on
Exhibit A hereto with respect to such Fund, and unless terminated as provided
herein, shall remain in effect until the Termination Date specified on Exhibit A
hereto with respect to such Fund, and shall continue thereafter from year to
year, but only so long as such continuance is specifically approved at least
annually (a) by a vote of a majority of the Trustees who are not interested
persons of the Distributor or of the Trust, voting in person at a meeting called
for the purpose of voting on such
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<PAGE>
approval, and (b) by the vote of either the Trustees or a majority of the
outstanding voting securities of the Fund. If the continuance of this Agreement
is not approved as to a Fund, this Agreement shall nonetheless continue with
respect to those Funds as to which such continuance has been approved. This
Agreement may be terminated with respect to an individual Fund at any time,
without the payment of any penalty (a) on 60 days' written notice, by the
Trustees or by a vote of a majority of the outstanding voting securities of such
Fund, or by the Distributor, or (b) immediately, on written notice by the
Trustees, in the event of termination or suspension of any of the Registrations.
This Agreement will automatically terminate in the event of its assignment.
In interpreting the provisions of this Section 13, the terms "assignment,"
"approved at least annually," "interested persons" and "vote of a majority of
the outstanding voting securities" shall have same meanings as when used in the
1940 Act (in each case as the 1940 Act is now in effect or hereafter may be
amended) and the rules and regulations thereunder, subject to such orders,
exemptions and interpretations as may be issued by the SEC under the 1940 Act
and as may be then in effect. Where the effect of a requirement of the federal
securities laws reflected in any provision of this Agreement is made less
restrictive by a rule, regulation, order, interpretation or other authority of
the SEC, whether of special or general application, such provisions shall be
deemed to incorporate the effect of such rule, regulation or order.
14. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by each party against which enforcement of the change, waiver,
discharge or termination is sought. If the Trust should at any time deem it
necessary or advisable in the best interests of a Fund that any amendment of
this Agreement be made in order to comply with the recommendations or
requirements of the SEC or any other governmental authority or to obtain any
advantage under state or federal or tax laws and notifies the Distributor of the
form of such amendment, and the reasons therefor, and if the Distributor should
decline to assent to such amendment, the Trust may immediately thereupon
terminate this Agreement as to that Fund.
15. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no Trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
16. NOTIFICATION BY THE TRUST. The Trust agrees to advise the Distributor
immediately:
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<PAGE>
(a) of any request by the SEC for amendments to the Trust's
registration statement insofar as it relates to any of the Funds, the prospectus
or the statement of additional information pertaining to any Fund or for
additional information,
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Trust's registration statement insofar as it
relates to any of the Funds, the prospectus or the statement of additional
information pertaining to any Fund or the initiation of any proceeding for that
purpose,
(c) of the occurrence of any material event which makes untrue any
statement made in the Trust's registration statement insofar as it relates to
any of the Funds, the prospectus or the statement of additional information
pertaining to any Fund or which requires the making of a change in order to make
the statements therein not misleading, and
(d) of all actions of the SEC with respect to any amendments to the
Trust's registration statement insofar as it relates to any of the Funds, the
prospectus or the statement of additional information pertaining to any Fund
which may from time to time be filed with the SEC under the 1933 Act.
17. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
18. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only, and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. If any provision of this Agreement shall be held
or made invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
19. NOTICE. Any notice required or permitted to be given by a party to
this Agreement or to any other party hereunder shall be deemed sufficient if
delivered in person or sent by registered or certified mail, postage prepaid,
addressed by the party giving notice to each such other party at the address
provided below or to the last address furnished by each such other party to the
party giving notice.
If to the Trust: 210 University Boulevard, #900
Denver, Colorado 80206
Attn: Secretary
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<PAGE>
If to
the Distributor: 210 University Boulevard, #900
Denver, Colorado 80206
Attn: Secretary
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
BERGER DISTRIBUTORS, INC.
By:
-------------------------------------------
BERGER INVESTMENT PORTFOLIO TRUST
By:
-------------------------------------------
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<PAGE>
EXHIBIT 9.2.6
ADMINISTRATIVE SERVICES AGREEMENT
BERGER MID CAP VALUE FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
THIS ADMINISTRATIVE SERVICES AGREEMENT (the "Agreement") is entered into
effective as of the _____ day of ___________, 1998, by and between BERGER
ASSOCIATES, INC. ("Berger Associates"), and BERGER INVESTMENT PORTFOLIO TRUST, a
Delaware business trust (the "Trust"), with respect to the BERGER MID CAP VALUE
FUND, a series of the Trust (the "Fund").
RECITALS
A. The Trust is a Delaware business trust and an open-end, management
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act").
B. The Fund is a series of the Trust for which Berger Associates acts as
investment adviser.
C. The parties desire that in addition to its duties as investment
adviser, Berger Associates provide certain administrative services to the Trust
with respect to the Fund, on the terms and conditions set forth herein.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. APPOINTMENT. The Trust hereby appoints Berger Associates as the
administrator of the Fund, to provide to the Fund, at Berger Associates' expense
except as specifically set forth below, all services specified herein, for the
period and on the terms set forth in this Agreement. Berger Associates hereby
accepts such appointment and agrees to render the services and assume the
responsibilities herein set forth, for the compensation herein provided. In
performing its services under this Agreement, Berger Associates shall comply
with all relevant provisions of the 1940 Act and all other applicable federal
and state laws and regulations.
2. SERVICES TO BE PROVIDED. Berger Associates shall provide the
following services to the Fund at Berger Associates' own expense:
(a) coordinating all matters relating to the operations of the Fund,
including any necessary coordination among the investment advisor, transfer
agent, dividend disbursing agent,
1
<PAGE>
fund accounting agent, accountants, attorneys and other parties performing
services or operational functions for the Fund;
(b) providing personnel and assistance necessary to maintain the
qualification and/or registration to sell shares under the federal securities
laws and in each state where Berger Associates has determined such qualification
and/or registration to be advisable;
(c) monitoring the Fund's compliance with (i) the Trust's trust
instrument, as amended from time to time (the "Trust Instrument"), bylaws and
currently effective registration statement under the Securities Act of 1933, as
amended (the "1933 Act") and the 1940 Act and any amendments or supplements
thereto ("Registration Statement"); (ii) the written policies, procedures and
guidelines of the Fund, and the written instructions from the Trustees of the
Trust; (iii) the requirements of the 1933 Act, the 1940 Act, the rules
thereunder, and all other applicable federal and state laws and regulations; and
(iv) the provisions of Subchapter M of the Internal Revenue Code, applicable to
the Fund as a regulated investment company;
(d) supervising the preparation of any or all registration statements
(including prospectuses and statements of additional information), tax returns,
proxy materials, financial statements, notices and reports for filings with
regulatory authorities and distribution to shareholders of the Fund;
(e) issuing certain correspondence to shareholders;
(f) maintaining or supervising the maintenance of certain books and
records;
(g) providing the Trust with adequate personnel, office space,
communications facilities and other facilities necessary for operation of the
Fund as contemplated by this Agreement; and
(h) preparing and rendering to the Trustees of the Trust such periodic and
special reports as the Trustees may reasonably request.
3. EXPENSES AND EXCLUDED EXPENSES. Berger Associates shall pay all its
own costs and expenses incurred in rendering the services required under this
Agreement. Notwithstanding any other provision hereof, it is expressly agreed
that Berger Associates shall not be responsible to pay, except as the parties
may otherwise agree, directly or on behalf of the Fund, any of the Fund's
expenses which shall remain the Trust's own obligation and responsibility to
pay.
4. COMPENSATION. The Trust shall pay to Berger Associates for the
services provided under this Agreement a fee, payable in United States dollars,
at an annual rate of 0.01% of the average daily net asset value of the Fund.
Such fee shall be computed and accrued daily and
2
<PAGE>
payable monthly on the last day of each month during which or part of which this
Agreement is in effect.
5. BOOKS AND RECORDS. Berger Associates hereby agrees that all records
which it maintains for the Fund or the Trust hereunder are the property of the
Trust, agrees to permit the reasonable inspection thereof by the Trust or its
designees and agrees to preserve for the periods prescribed under the 1940 Act
any records which it maintains for the Fund or the Trust and which are required
to be maintained under the 1940 Act. Berger Associates further agrees to
surrender promptly to the Trust or its designees any records which it maintains
for the Fund or the Trust upon request by the Trust.
6. TERM AND TERMINATION. This Agreement shall become effective as of the
date first set forth above and shall continue until terminated by either party
on 60 days' written notice to the other party. This Agreement may also be
terminated by the Trustees of the Trust at any time if Berger Associates becomes
unable to discharge its duties and obligations under this Agreement.
7. ASSIGNMENT AND AMENDMENTS. This Agreement shall not be assigned by
either party without the prior written consent of the other party to the
Agreement. This Agreement may be amended in writing by the parties, provided
that all such amendments shall be subject to the approval of the Trustees of the
Trust.
8. LIMITATION OF LIABILITY OF BERGER ASSOCIATES. Berger Associates shall
not be liable for any error of judgment or mistake of law or for any act or
omission taken with respect to the Fund, except for willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of
reckless disregard of its obligations and duties hereunder and except to the
extent otherwise provided by law. As used in this section, "Berger Associates"
shall include directors, officers and employees of Berger Associates.
9. ACTIVITIES OF BERGER ASSOCIATES. The services of Berger Associates
hereunder are not to be deemed to be exclusive, and Berger Associates is free to
render services to other parties, so long as its services under this Agreement
are not materially adversely affected or otherwise impaired thereby. Nothing in
this Agreement shall limit or restrict the right of any director, officer or
employee of Berger Associates to engage in any other business or to devote his
or her time and attention in part to the management or other aspects of any
other business, whether of a similar nature or a dissimilar nature.
10. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be
3
<PAGE>
enforceable against the assets held with respect to such series only, and not
against the assets of the Trust generally or against the assets held with
respect to any other series and further that no Trustee, officer or holder of
shares of beneficial interest of the Trust shall be personally liable for any of
the foregoing.
11. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To the extent that the applicable
laws of the State of Colorado conflict with the applicable provisions of the
1940 Act, the latter shall control.
12. MISCELLANEOUS. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the date first above written.
BERGER ASSOCIATES, INC.
By:
----------------------------
Gerard M. Lavin
President
BERGER INVESTMENT PORTFOLIO TRUST, with respect to the
series known as the Berger Mid Cap Value Fund
By:
----------------------------
Gerard M. Lavin
President
4
<PAGE>
EXHIBIT 10
DAVIS, GRAHAM & STUBBS LLP
A Limited Liability Partnership
Attorneys at Law
Suite 4700
370 - 17th Street
Denver, Colorado 80202
Telephone 303-892-9400
Facsimile 303-893-1379
June 12, 1998
Berger Investment Portfolio Trust
210 University Blvd., Suite 900
Denver, Colorado 80206
Re: Berger Mid Cap Value Fund
Ladies and Gentlemen:
We have acted as counsel to Berger Investment Portfolio Trust, a Delaware
business trust (the "Trust"), and are providing this opinion in connection with
the registration by the Trust of shares of beneficial interest, $.01 par value
(the "Shares"), of the Berger Mid Cap Value Fund, a series of the Trust,
described in Post-Effective Amendments No. 14 and 16 to the Registration
Statement on Form N1-A of the Trust (1933 Act File No. 33-69460; 1940 Act File
No. 811-8046), as filed with the Securities and Exchange Commission on April 15
and June 12, 1998 (the "Registration Statement").
In such connection, we have examined the Trust's Trust Instrument and
Bylaws, the proceedings of its Trustees relating to the authorization, issuance
and proposed sale of the Shares, and considered such other records and documents
and such factual and legal matters as we deemed appropriate for purposes of this
opinion.
Based on the foregoing, it is our opinion that the Shares have been duly
authorized and, when sold as contemplated in the Registration Statement, will be
validly issued, fully paid and non-assessable Shares of the Trust.
We hereby consent to all references to this firm in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute a consent under Section 7 of the
Securities Act of 1933, and in consenting to the references to our firm in the
Registration Statement, we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under Section 7 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
DAVIS, GRAHAM & STUBBS LLP
<PAGE>
EXHIBIT 15.6
RULE 12b-1 PLAN OF
BERGER MID CAP VALUE FUND
(A SERIES OF BERGER INVESTMENT PORTFOLIO TRUST)
1. THE PLAN. The Trustees of Berger Investment Portfolio Trust, a
Delaware business trust (the "Trust"), have adopted this Rule 12b-1 Plan (the
"Plan") pursuant to the terms of Rule 12b-1 under the Investment Company Act of
1940, as amended (the "Act"), with respect to the shares of the Trust's series
known as Berger Mid Cap Value Fund (the "Fund"). In accordance with the terms
of this Plan, the Trust may act as a "distributor" (as that term is used in said
Rule 12b-1) of shares of the Fund.
2. AUTHORIZED PAYMENTS. During each fiscal year of the Fund, the Trust
is hereby authorized to pay out of the assets of the Fund on a monthly basis, an
amount computed at an annual rate of twenty-five one-hundredths of one percent
(.25%) of the average daily net assets of the Fund during such fiscal year to
Berger Associates, Inc. ("Berger Associates") to finance activities primarily
intended to result in the sale of the Fund's shares, which shall include, but
not be limited to: payments made to, and costs incurred by, the Fund's
principal underwriter in connection with the distribution of the Fund's shares,
including payments made to and expenses of officers and registered
representatives of Berger Distributors, Inc.; payments made to and expenses of
other persons (including employees of Berger Associates) who are engaged in, or
provide support services in connection with, the distribution of the Fund's
shares, such as answering routine telephone inquiries and processing prospective
investor requests for information; compensation paid to securities dealers,
financial institutions and other organizations which render distribution and
administrative services in connection with the distribution of the Fund's
shares, including services to shareholders of the Fund and prospective
investors; costs related to the formulation and implementation of marketing and
promotional activities, including direct mail promotions and television, radio,
newspaper, magazine and other mass media advertising; costs of printing and
distributing prospectuses and reports to prospective shareholders of the Fund;
costs involved in preparing, printing and distributing sales literature for the
Fund; costs involved in obtaining whatever information, analyses and reports
with respect to marketing and promotional activities on behalf of the Fund that
Berger Associates deems advisable; and such other costs as may from time to time
be agreed upon by the Fund. Such payments shall be made by the Trust to Berger
Associates with respect to each fiscal year of the Fund without regard to the
actual distribution expenses incurred by Berger Associates in such year; I.E.,
if distribution expenditures incurred by Berger Associates are less than the
total of such payments in such year, the difference shall not be reimbursed to
the Trust by Berger Associates, and if distribution expenditures incurred by
Berger Associates are more than the total of such payments, the excess shall not
be reimbursed to Berger Associates by the Trust.
3. TRUSTEE APPROVAL. This Plan shall not take effect until it has been
approved, together with any related agreements, by votes of a majority of both
(a) the Trustees of the Trust and (b) those Trustees of the Trust who are not
"interested persons" of the Trust and the Fund (as defined in the Act) and have
no direct or indirect financial interest in the operation of this Plan or
<PAGE>
any agreements related to it (the "Rule 12b-1 Trustees"), cast in person at a
meeting (or meetings) called for the purpose of voting on this Plan and such
related agreements.
4. ANNUAL REAPPROVAL. Unless sooner terminated pursuant to paragraph 5,
this Plan shall continue in effect for so long as such continuance is
specifically approved at least annually in the manner provided for approval of
this Plan in paragraph 3.
5. TERMINATION OF PLAN. This Plan may be terminated at any time by a
vote of a majority of the Rule 12b-1 Trustees, or by vote of a majority of the
Fund's outstanding shares.
6. AMENDMENTS. This Plan may not be amended to increase materially the
amount of distribution expenses provided for in paragraph 2 hereof without
shareholder approval as provided in Rule 12b-1 under the Act (or any successor
provision), and no material amendment to the Plan shall be made unless approved
in the manner provided for approval of this Plan in paragraph 3 hereof.
7. QUARTERLY REPORTS. Any person authorized to direct the disposition of
monies paid or payable by the Trust on behalf of the Fund pursuant to this Plan
or any related agreements shall provide to the Trustees of the Trust, and the
Trustees shall review at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made. Unless
directed otherwise by the Trustees with respect to a particular expenditure or
type of expenditure, any expenditure made by Berger Associates which jointly
promotes the sale of shares of the Fund and the sale of shares of other
investment companies for which Berger Associates or its affiliate serves as
investment adviser or administrator, and which expenditures are not readily
identifiable as related to the Fund or one or more of such other investment
companies, shall be allocated to the Fund and such other investment companies on
a basis such that the Fund will be allocated only its proportional share of such
expenditures based upon the relative net assets of the Fund as compared to the
net assets of all such other investment companies thus promoted.
8. SELECTION AND NOMINATION OF TRUSTEES. While this Plan is in effect,
the selection and nomination of Trustees of the Trust who are not interested
persons (as defined in the Act) of the Fund shall be committed to the discretion
of the Trustees who are not interested persons of the Fund.
9. RECORDS. The Fund shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 7 hereof for a period of
not less than six years from the date of this Plan, or the agreements or such
reports, as the case may be, and shall preserve the Plan, agreement or report
the first two years in an easily accessible place.
10. LIMITATION ON PERSONAL LIABILITY. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. The Trust is a series trust and all debts,
liabilities, obligations and expenses incurred, contracted for or otherwise
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<PAGE>
existing with respect to a particular series shall be enforceable against the
assets held with respect to such series only, and not against the assets of the
Trust generally or against the assets held with respect to any other series and
further that no trustee, officer or holder of shares of beneficial interest of
the Trust shall be personally liable for any of the foregoing.
IN WITNESS WHEREOF, the adoption of this Rule 12b-1 Plan by the Trustees of
the Trust with respect to the Fund is hereby confirmed as of the day and year
set forth below.
BERGER INVESTMENT PORTFOLIO TRUST, with respect to
the series known as the Berger Mid Cap Value Fund
Date: , 1998 By
----------- ----------------------------------------
Gerard M. Lavin, President
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