<PAGE>
As filed with the Securities and Exchange Commission on September 27, 1996.
Registration No. 2-75677
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES /X/
ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO. __ / /
POST-EFFECTIVE AMENDMENT NO. 45 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /X/
ACT OF 1940
AMENDMENT NO. 46 /X/
--------------------
WESTCORE TRUST
(Exact Name of Registrant as Specified in Charter)
370 Seventeenth Street
Suite 2700
Denver, Colorado 80202
Registrant's Telephone Number: (303) 623-2577
W. BRUCE McCONNEL, III
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, Pennsylvania 19107-3496
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on September 30, 1996 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on January 1, 1996 pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Registrant has previously registered an indefinite number of its shares,
which include shares of Class B-1, G-1, H-1, I-1, J-1, S and X-1 under the
Securities Act of 1933, pursuant to Rule 24f-2 under the Investment Company Act
of 1940. Registrant's Rule 24f-2 Notice for its fiscal year ended May 31, 1996
was filed on July 29, 1996.
<PAGE>
CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933
Title of Amount of Proposed Proposed Amount of
Securities Shares Maximum Maximum Registration
Being Being Offering Aggregate Fee (1)
Registered Registered Price/Share Offering Price
Shares of Bene-
ficial Interest 1,169,897,634 NAV $1,244,110,228 $100
(1) Registrant had actual aggregate redemptions of $2,519,279,835 for its
fiscal year ended May 31, 1996; has used $1,264,123,959 for reductions pursuant
to Rule 24f-2(c) under the 1940 Act and has previously used no available
redemptions for reductions pursuant to Rule 24e-2(a) of the 1940 Act during the
current year. Registrant elects to use redemptions in the aggregate amount of
$1,243,820,228 (1,169,897,633 shares of beneficial interest) for reductions in
its current amendment. While no fee is required to register the 1,169,897,633
shares of beneficial interest, the Registrant has elected to register, for $100,
an additional $290,000 of shares of beneficial interest (1 share of beneficial
interest).
The Registrant has registered an indefinite number of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 Notice for
the Registrant's fiscal year ended May 31, 1996 was filed on July 29, 1996.
<PAGE>
The Prospectus and Statement of Additional Information for the Cash
Reserve Fund is incorporated by reference to Post-Effective Amendment No. 43 to
the Registrant's Registration Statement on Form N-1A filed with the Securities
and Exchange Commission on July 14, 1995.
<PAGE>
WESTCORE TRUST
MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity
Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt
Fund
Cross Reference Sheet
<TABLE>
FORM N-1A ITEM PROSPECTUS CAPTION
-------------- ------------------
<S> <C> <C>
1. Cover Page. . . . . . . . . Cover Page.
2. Synopsis. . . . . . . . . . Fund Highlights and Expense Information.
3. Condensed Financial
Information . . . . . . . . Financial Highlights and Performance Reporting.
4. General Description of
Registrant. . . . . . . . . Cover Page, Fund Highlights, The Funds
in Detail, Appendix - Information on Investment
Policies and Additional Risk Factors, and
Management of the Funds.
5. Management of the Fund. . . Management of the Funds.
5A. Management's Discussion
of Fund Performance . . . . Information is contained in Registrant's
Annual Report.
6. Capital Stock and Other
Securities. . . . . . . . . Shareholder's Manual for Investing in the
Westcore Funds, Distributions and Taxes, and
Management of the Funds.
7. Purchase of Securities
Being Offered . . . . . . . Shareholder's Manual for Investing in the Westcore
Funds and Management of the Funds.
8. Redemption or Repurchase . . Shareholder's Manual for Investing in the
Westcore Funds.
9. Pending Legal Proceedings. . Inapplicable.
</TABLE>
<PAGE>
WESTCORE TRUST
370 Seventeenth Street
Suite 2700
Denver, Colorado 80202
1-800-392-CORE (2673)
October 1, 1996
This Prospectus describes seven mutual funds (the "Funds") offered by Westcore
Trust ("Westcore" or the "Trust") including four equity funds, two taxable bond
funds and one tax-exempt bond fund, each with a different investment objective.
All Westcore Funds are no-load investments. This permits you to purchase and
sell shares of a Fund without a sales charge. If you enroll in our Automatic
Investment Plan, you can open your account for as little as $50 a month.
Otherwise, the minimum initial investment is normally $1,000.
Denver Investment Advisors LLC ("Denver Investment Advisors" or the "Investment
Adviser") serves as investment adviser to each Fund. Denver Investment Advisors
and its predecessors have over 38 years of investment management experience and
Denver Investment Advisors currently manages over $9.7 billion in assets for
clients such as corporations, insurance companies and individuals. ALPS Mutual
Funds Services, Inc. ("ALPS") serves as the Westcore Funds' distributor.
This Prospectus sets forth information that you should consider before
investing. Please read this Prospectus and keep it for future reference. It
contains important information including how each Fund invests and shareholder
services available to you. Additional information is contained in a Statement
of Additional Information ("SAI"), dated October 1, 1996, on file with the
Securities and Exchange Commission (the "SEC"). You may obtain a free copy of
the SAI by writing or calling Westcore at the address or telephone number shown
above. The SAI is incorporated by reference into this Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
<PAGE>
TABLE OF CONTENTS
FUND INFORMATION
Fund Highlights ................................................
Expense Information ............................................
Financial Highlights ...........................................
Fund Specifics .................................................
Investment Objectives and Policies ............................
Westcore Equity Funds ........................................
Westcore Bond Funds ..........................................
Fundamental Investment Limitations .............................
HOW TO INVEST
How to Open and Add to Your Account ............................
Minimum Investments ............................................
How to Exchange Fund Shares ....................................
How to Redeem Fund Shares ......................................
Price of Fund Shares ...........................................
Accounts Opened Through a Service Organization .................
General Account Policies .......................................
OTHER INFORMATION
Distributions and Taxes ........................................
Performance Reporting ..........................................
Management of the Funds ........................................
Inquiries ......................................................
SUPPLEMENTAL INFORMATION
Information on Investment Policies and
Additional Risk Factors .....................................
APPENDIX
Rating Categories .............................................. A-1
<PAGE>
FUND INFORMATION
FUND HIGHLIGHTS
This section provides you with a brief overview of the Westcore Funds and
summarizes each Fund's investment objectives. A detailed discussion of their
investment objectives, policies and risks begins on page __ and complete
information on how to purchase, exchange and redeem Fund shares begins on
page __.
WESTCORE EQUITY FUNDS
WESTCORE MIDCO GROWTH FUND -- seeks to maximize long-term capital
appreciation by investing primarily in medium-sized growth companies.
WESTCORE BLUE CHIP FUND -- seeks to maximize long-term total return by
investing in stocks of large companies headquartered in the United States.
WESTCORE GROWTH AND INCOME FUND -- seeks to maximize long-term total return
by investing in equity securities selected for their growth potential and
income-producing abilities.
WESTCORE SMALL-CAP OPPORTUNITY FUND -- seeks to maximize long-term capital
appreciation primarily through investments in domestic and foreign equity
securities of small-capitalization companies.
WESTCORE BOND FUNDS
WESTCORE LONG-TERM BOND FUND -- seeks to maximize long-term total rate of
return by investing primarily in investment grade bonds. The Fund expects
to have an average dollar-weighted maturity of at least 10 years.
WESTCORE INTERMEDIATE-TERM BOND FUND -- seeks current income with less
volatility of principal by investing primarily in investment grade bonds.
The Fund expects to have an average dollar-weighted maturity between 3 and 6
years.
WESTCORE COLORADO TAX-EXEMPT FUND -- seeks to provide income exempt from both
federal and Colorado state personal income taxes by emphasizing insured
Colorado municipal bonds with intermediate maturities.
WESTCORE FUNDS SPECTRUM
The spectrum below shows Denver Investment Advisors' current assessment of
the potential risk of the Westcore Funds relative to one another. The
spectrum is not indicative of the future volatility or performance of the
Funds and should not be used to compare the Funds to other mutual funds or
types of investments.
-3-
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
FUND CONSERVATIVE MODERATE AGGRESSIVE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Westcore MIDCO Growth Fund X
- ------------------------------------------------------------------------------------------------------------
Westcore Blue Chip Fund X
- ------------------------------------------------------------------------------------------------------------
Westcore Growth and Income Fund X
- ------------------------------------------------------------------------------------------------------------
Westcore Small-Cap Opportunity X
Fund
- ------------------------------------------------------------------------------------------------------------
Westcore Long-Term Bond Fund X
- ------------------------------------------------------------------------------------------------------------
Westcore Intermediate-Term Bond X
Fund
- ------------------------------------------------------------------------------------------------------------
Westcore Colorado Tax-Exempt Fund X
- ------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
EXPENSE INFORMATION
The tables and example below show you the various costs and expenses you will
bear directly or indirectly as an investor in the Westcore Funds. SHAREHOLDER
TRANSACTION EXPENSES are charges you pay when buying, exchanging or selling
shares of a Westcore Fund. The no-load Westcore Funds do not charge any
Shareholder Transaction Expenses. ANNUAL FUND OPERATING EXPENSES, which are
based on amounts incurred during the most recent fiscal year, restated to
reflect current expenses, are paid out of a Fund's assets and include fees for
portfolio management, maintenance of shareholder accounts, general Fund
administration, shareholder servicing, accounting and other services.
<TABLE>
WESTCORE WESTCORE
SMALL- WESTCORE INTER- WESTCORE
WESTCORE WESTCORE WESTCORE CAP LONG- MEDIATE- COLORADO
MIDCO BLUE GROWTH AND OPPOR- TERM TERM TAX-
GROWTH CHIP INCOME TUNITY BOND BOND EXEMPT
FUND FUND FUND FUND FUND FUND FUND
------- ------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
SHAREHOLDER TRANSACTION
EXPENSES None None None None None None None
ANNUAL OPERATING EXPENSES
(as a percentage of
average net assets)
Management Fees 0.65% 0.65% 0.65% 1.00% 0.45% 0.45% 0.00%(2)
12b-1 Fees None None None None None None None
All Other Expenses 0.50% 0.50%(1) 0.50%(1) 0.30%(1) 0.50%(1) 0.40%(1) 0.50%(1)
----- -------- -------- -------- -------- -------- --------
TOTAL OPERATING EXPENSES 1.15% 1.15%(1) 1.15%(1) 1.30%(1) 0.95%(1) 0.85%(1) 0.50%(1)
(after fee waivers and ----- -------- -------- -------- -------- -------- --------
expense reimbursements) ----- -------- -------- -------- -------- -------- --------
</TABLE>
_________________
EXAMPLE: Assume you invest $1,000, the annual return on each Fund is 5%, and
each Fund's annual operating expenses remain as listed above. The example below
shows the operating expenses that you would indirectly bear as an investor in
the Funds:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
One Year $12 $12 $12 $13 $10 $ 9 $ 5
Three Years 37 37 37 41 30 27 16
Five Years 64 64 64 72 53 47 28
Ten Years 140 140 140 158 117 105 63
</TABLE>
_________________
(1) The Administrators (and the Investment Adviser with respect to the Colorado
Tax Exempt Fund) have advised the Trust that they currently intend to waive
fees and reimburse expenses for the current fiscal year with respect to each
of the Funds so that the Total Operating Expenses of the MIDCO Growth, Blue
Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond,
Intermediate-Term Bond and Colorado Tax-Exempt Funds will not exceed 1.15%,
1.15%, 1.15%, 1.30%, 0.95%, 0.85% and 0.50%, respectively. Without such fee
waivers and expense reimbursements, the Total Operating Expenses of the Blue
Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond,
Intermediate-Term Bond and Colorado Tax-Exempt Bond Funds would be 1.20%
1.50%, 1.75%, 1.10%, 0.95% and 1.20%, respectively.
(2) Without advisory fee waivers, the advisory fee for the Colorado Tax-Exempt
Fund would be 0.50% of the Fund's average daily net assets.
The fee waivers and expense reimbursements reflected in the table are voluntary
and may be modified or terminated at any time without the Funds' consent.
If you own shares through certain Service Organizations (as described in the
section entitled "How to Invest") you may pay account charges in connection with
the maintenance of your account at the Service Organization. These account
charges are in addition to the expenses shown above.
For more complete descriptions of shareholder transaction expenses and the
Funds' operating expenses, see "How to Invest" and "Management Of The Funds" in
this Prospectus and the financial statements and related notes included in the
Statement of Additional Information.
THE EXAMPLE ILLUSTRATES THE EFFECT OF EXPENSES AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN THOSE SHOWN.
-5-
<PAGE>
FINANCIAL HIGHLIGHTS
The tables below provide supplementary information to each Fund's
financial statements contained in the Statement of Additional Information and
set forth certain information concerning the historic investment results of
Fund shares. The financial highlights are based on the financial statements
of each Fund, which have been audited by Deloitte & Touche LLP, the Trust's
independent auditors, except that the information in the Financial Highlights
of the Westcore MIDCO Growth Fund (except for total return) for the period
ended May 31, 1987 was audited by other auditors. You should read the tables
together with the financial statements and related notes included in the
Statement of Additional Information. Further information about the performance
of the Funds is available in the Annual Report to Shareholders. You may obtain
both the Statement of Additional Information and the Annual Report to
Shareholders free of charge by contacting ALPS or the Westcore Trust at
1-800-392-CORE (2673).
-6-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE MIDCO GROWTH FUND
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
For the Year Ended May 31,
-----------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989 1988 1987(1)
---- ---- ---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of $17.12 $ 16.09 $15.79 $14.38 $14.00 $11.57 $12.18 $ 9.82 $12.20 $10.00
period
- ----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.08) 0.00 0.00 0.04 0.06 0.07 0.24 0.19 0.03 0.20
Net realized and unrealized gain
(loss) on investments 6.58 1.56 1.34 2.48 1.84 3.16 1.32 2.52 (1.47) 2.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 6.50 1.56 1.34 2.52 1.90 3.23 1.56 2.71 (1.44) 2.20
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.32) (0.08) (0.24) (0.10) (0.28) 0.00
Distributions from net realized
gain on investments (0.72) (0.53) (1.03) (1.11) (1.20) (0.72) (1.93) (0.25) (0.66) 0.00
Return of Capital 0.00 0.00 (0.01) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends, distributions and
return of capital to shareholders (0.72) (0.53) (1.04) (1.11) (1.52) (0.80) (2.17) (0.35) (0.94) 0.00
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $22.90 $ 17.12 $16.09 $15.79 $14.38 $14.00 $11.57 $12.18 $9.82 $12.20
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Total return 38.62% 10.05% 8.37% 18.04% 14.09% 30.44% 15.33% 28.46% (13.09%) 26.53%(3)(4)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 $656,490 $401,760 $335,453 $231,595 $180,681 $131,420 $85,209 $81,948 $557 $439
omitted)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net 1.08% 0.94% 0.84% 0.83% 0.80% 0.78% 0.83% 0.80% 1.33% 0.00%(3)
assets
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets (0.42%) (0.03%) (0.09%) 0.04% 0.12% 0.58% 2.05% 1.21% 0.02% 2.52%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 1.10% 0.96% 0.87% 0.85% 0.85% 0.88% 0.88% 0.85% 2.20% 2.20%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets without (0.44%) (0.05%) (0.12%) 0.02% 0.07% 0.48% 2.00% 1.16% (0.85%) 0.32%(3)
fee waivers
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 62.83% 50.19% 52.05% 56.23% 48.17% 75.43% 86.62% 74.03% 91.57% 54.03%(3)
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations was on August 1, 1986.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $387,990,462 and $324,571,405, respectively.
(3) Annualized.
(4) Unaudited.
-7-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE BLUE CHIP FUND (formerly the Westcore Modern Value Equity Fund)
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
For the Year Ended May 31,
-----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989(1)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $14.70 $12.70 $13.87 $13.35 $12.68 $11.74 $11.10 $10.00
- ----------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.25 0.23 0.40 0.34 0.28 0.29 0.44 0.39
Net realized and unrealized gain
on investments 4.03 2.12 0.04 1.13 0.95 1.15 0.82 1.02
- ----------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 4.28 2.35 0.44 1.47 1.23 1.44 1.26 1.41
- ----------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income (0.27) (0.16) (0.43) (0.21) (0.35) (0.30) (0.46) (0.31)
Distributions from net realized gain
on investments (1.30) (0.19) (1.18) (0.74) (0.21) (0.20) (0.16) 0.00
- ----------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (1.57) (0.35) (1.61) (0.95) (0.56) (0.50) (0.62) (0.31)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $17.41 $14.70 $12.70 $13.87 $13.35 $12.68 $11.74 $11.10
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Total return 30.48% 19.03% 3.12% 11.62% 10.02% 13.08% 11.74% 14.42%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $68,286 $52,545 $36,674 $28,176 $30,572 $27,208 $25,857 $28,088
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.10% 1.01% 1.06% 0.99% 0.91% 0.84% 0.85% 0.88%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets 1.52% 1.78% 2.30% 2.37% 2.17% 2.65% 3.81% 3.54%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 1.25% 1.06% 1.09% 1.02% 0.97% 0.94% 0.90% 0.93%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets without fee
waivers 1.38% 1.73% 2.27% 2.34% 2.11% 2.55% 3.76% 3.49%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 65.11% 61.72% 41.32% 85.53% 123.91% 142.01% 158.54% 175.23%
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations occurred on the first day of this period.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $37,959,388 and $38,051,658, respectively.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE GROWTH AND INCOME FUND (FORMERLY the Westcore Equity Income Fund)
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
Westcore Equity Income Fund(1) For the Year Ended May 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989(2)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.50 $10.62 $11.51 $10.99 $10.10 $ 9.94 $10.43 $10.00
- ---------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.15 0.20 0.51 0.32 0.32 0.32 0.36 0.40
Net realized and unrealized gain (loss)
on investments 2.57 0.15 (0.30) 0.68 1.05 0.48 1.02 1.05
- ---------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 2.72 0.35 0.21 1.00 1.37 0.80 1.38 1.45
- ---------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income (0.24) (0.21) (0.54) (0.20) (0.43) (0.33) (0.37) (0.33)
Distributions from net realized gain
on investments (0.66) (0.26) (0.56) (0.28) (0.05) (0.31) (1.50) (0.69)
- ---------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.90) (0.47) (1.10) (0.48) (0.48) (0.64) (1.87) (1.02)
- ---------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $12.32 $10.50 $10.62 $11.51 $10.99 $10.10 $9.94 $10.43
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Total return 27.25% 3.73% 1.71% 9.41% 14.12% 9.07% 14.58% 15.98%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $25,387 $27,029 $42,644 $35,791 $25,128 $19,932 $16,583 $12,594
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.22% 1.17% 1.03% 0.99% 0.95% 0.90% 0.93% 0.97%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets 1.34% 2.09% 4.45% 2.75% 3.03% 3.51% 3.45% 3.75%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 1.51% 1.22% 1.06% 1.03% 1.02% 1.00% 0.96% 1.02%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets without fee
waivers 1.05% 2.04% 4.42% 2.71% 2.96% 3.41% 3.40% 3.70%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(3) 88.31% 81.14% 53.86% 61.24% 68.56% 64.94% 59.36% 100.22%
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Westcore Equity Income Fund is the former name of the Westcore Growth
and Income Fund. The Fund's name was changed as of January 1, 1996 to
reflect a different investment objective and different investment policies.
Prior to January 1, 1996, the Fund's investment objective was to seek
reasonable income through investments in income-producing securities. As
of January 1, 1996, the Fund's investment objective was revised to seek
long-term total return through capital appreciation and current income. A
new portfolio manager has managed the Fund since October 1995. Past
performance is not intended to be indicative or representative of future
performance.
(2) Commencement of operations was on the first day of this period.
(3) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $23,528,402 and $35,671,719, respectively.
-9-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE SMALL-CAP OPPORTUNITY FUND
(For a Fund Share Outstanding Throughout the Periods Indicated.)
For the Year Ended
------------------------------------
May 31, May 31, May 31,
1996 1995 1994(1)
------- ------- -------
Net asset value - beginning of period: $15.95 $14.97 $15.00
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.09 0.05
Net realized and unrealized gain
(loss) on investments 5.86 1.11 (0.05)
- -------------------------------------------------------------------------------
Total income from investment operations 5.90 1.20 0.00
- -------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS
Dividends from net investment income (0.06) (0.10) (0.03)
Distributions from net realized gain on
investments (0.44) (0.12) 0.00
- -------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.50) (0.22) (0.03)
- -------------------------------------------------------------------------------
Net asset value - end of period $21.35 $15.95 $14.97
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Total Return (3) 37.49% 8.15% (0.07%)(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $23,951 $9,703 $2,159
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratio of expenses to average net assets 1.30% 1.27% 1.38%(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 0.24% 0.61% 1.00%(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 2.20% 2.77% 6.56%(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Ratio of net investment income (loss) to
average net assets without fee waivers (0.67%) (0.89%) (4.18%)(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Portfolio turnover rate(2) 47.83% 59.17% 64.31%(3)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) The Fund commenced operations on December 28, 1993.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $14,769,419 and $7,829,753, respectively.
(3) Annualized.
-10-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE LONG-TERM BOND FUND
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
<CAPTION>
For the Year Ended May 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989(1)
---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $9.87 $9.22 $11.25 $10.60 $10.01 $10.11 $10.36 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.61 0.59 0.62 0.77 0.80 1.08 0.93 0.91
Net realized and unrealized gain (loss)
on investments (0.27) 0.66 (0.51) 0.99 0.56 0.04 (0.21) 0.33
- -------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.34 1.25 0.11 1.76 1.36 1.12 0.72 1.24
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.62) (0.60) (0.62) (0.78) (0.77) (1.11) (0.93) (0.88)
Distributions from net realized gain
on investments 0.00 0.00 (1.52) (0.33) 0.00 (0.11) (0.04) 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.62) (0.60) (2.14) (1.11) (0.77) (1.22) (0.97) (0.88)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $9.59 $9.87 $9.22 $11.25 $10.60 $10.01 $10.11 $10.36
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total return 3.41% 14.37% (0.25%) 17.40% 14.04% 11.87% 7.06% 13.03%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $25,070 $33,440 $26,962 $26,281 $30,800 $27,448 $18,113 $15,403
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.90% 0.94% 0.89% 0.77% 0.70% 0.65% 0.73% 0.73%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets 6.07% 6.54% 5.74% 6.63% 7.59% 8.29% 8.99% 8.93%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 1.07% 0.99% 0.92% 0.80% 0.74% 0.73% 0.78% 0.78%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets without fee waivers 5.90% 6.49% 5.71% 6.60% 7.55% 8.21% 8.94% 8.88%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 33.10% 25.09% 52.82% 79.16% 51.79% 81.13% 40.21% 68.94%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations occurred on the first day of this period.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $9,489,738 and $17,274,608, respectively.
-11-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE INTERMEDIATE-TERM BOND FUND
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
<CAPTION>
For the Year Ended May 31,
---------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991 1990 1989(1)
---- ---- ---- ---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.27 $10.02 $10.70 $10.14 $9.80 $9.91 $9.99 $10.00
- -------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.60 0.58 0.55 0.67 0.78 0.87 0.84 0.85
Net realized and unrealized gain (loss)
on investments (0.17) 0.27 (0.52) 0.53 0.39 (0.10) (0.08) (0.04)
- -------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.43 0.85 0.03 1.20 1.17 0.77 0.76 0.81
- -------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.60) (0.60) (0.53) (0.64) (0.83) (0.88) (0.84) (0.82)
Distributions from net realized gain
on investments 0.00 0.00 (0.18) 0.00 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.60) (0.60) (0.71) (0.64) (0.83) (0.88) (0.84) (0.82)
- -------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $10.10 $10.27 $10.02 $10.70 $10.14 $9.80 $9.91 $9.99
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Total return 4.26% 8.93% 0.10% 12.16% 12.42% 8.30% 7.82% 8.53%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $83,039 $97,619 $88,965 $99,469 $87,712 $68,958 $107,288 $110,962
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.81% 0.77% 0.68% 0.65% 0.61% 0.59% 0.59% 0.60%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets 5.78% 5.86% 5.03% 6.37% 7.73% 9.01% 8.32% 8.59%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 0.92% 0.80% 0.70% 0.67% 0.65% 0.65% 0.64% 0.65%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
to average net assets without fee waivers 5.67% 5.83% 5.00% 6.35% 7.69% 8.95% 8.27% 8.54%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(2) 71.97% 60.86% 65.04% 87.17% 53.92% 80.20% 71.42% 63.30%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations was on the first day of this period.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $61,945,342 and $78,767,790, respectively.
-12-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE COLORADO TAX-EXEMPT FUND
(For a Fund Share Outstanding Throughout the Periods Indicated.)
<TABLE>
<CAPTION>
For the Year Ended May 31,
----------------------------------------------
1996 1995 1994 1993 1992(1)
---- ---- ---- ---- -------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.70 $10.52 $10.71 $10.25 $10.00
- -------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.52 0.52 0.53 0.57 0.58
Net realized and unrealized gain (loss)
on investments (0.10) 0.20 (0.19) 0.46 0.23
- -------------------------------------------------------------------------------------------
Total income from investment operations 0.42 0.72 0.34 1.03 0.81
- -------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.51) (0.54) (0.53) (0.57) (0.56)
Distributions from net realized gain on
investments 0.00 0.00 0.00 0.00 0.00
- -------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.51) (0.54) (0.53) (0.57) (0.56)
- -------------------------------------------------------------------------------------------
Net asset value - end of period $10.61 $10.70 $10.52 $10.71 $10.25
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Total Return 3.97% 7.16% 3.22% 10.27% 8.36%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $13,922 $10,792 $10,553 $7,326 $4,511
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Ratio of expenses to average net assets 0.44% 0.42% 0.27% 0.22% 0.11%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Ratio of net investment income to
average net assets 4.87% 5.03% 4.98% 5.45% 5.84%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.43% 1.62% 1.59% 1.88% 1.65%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets without fee waivers 3.88% 3.83% 3.65% 3.79% 4.30%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
Portfolio turnover rate (2) 10.23% 3.15% 9.76% 1.82% 12.95%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
</TABLE>
(1) Commencement of operations was the first day of this period.
(2) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $5,353,679 and $1,127,047, respectively.
-13-
<PAGE>
FUND SPECIFICS -- INVESTMENT OBJECTIVES AND POLICIES
To help you decide which Westcore Fund is appropriate for you, this section
looks more closely at the Funds' investment objectives, policies and securities
in which they invest. You should carefully consider your own investment goals,
time horizon and risk tolerance before investing in a Fund. You should also
review carefully the section entitled "Supplemental Information -- Information
on Investment Policies and Additional Risk Factors" for a more detailed
discussion of the instruments in which the Funds may invest and their associated
risks. There can be no assurance that a Fund will achieve its investment
objective.
Upon notice to shareholders each Fund's investment objective and policies may be
changed by the Trust's Board of Trustees without the approval of shareholders.
In the event of a change, you may want to consider whether that Fund remains a
suitable investment for you.
WESTCORE EQUITY FUNDS
The Westcore Equity Funds are designed for long-term investors who can tolerate
the risks associated with investments in common stocks. They are most suitable
for investors with a long-term investment horizon. The following questions are
designed to help you better understand an investment in the Westcore Equity
Funds.
WHAT IS EACH WESTCORE EQUITY FUND'S INVESTMENT OBJECTIVE AND WHAT ARE ITS
PRIMARY INVESTMENTS?
- WESTCORE MIDCO GROWTH FUND seeks to maximize long-term capital
appreciation (rather than current income) by investing primarily in
common stocks. The Investment Adviser uses fundamental research
techniques to identify medium-sized growth companies it believes to
be attractive. The Investment Adviser believes medium-sized companies'
earnings may be greatly impacted by factors such as new products and
services, and more entrepreneurial management than those of large
companies. Medium-sized companies may also have better opportunities
for growth by gaining market share in the Investment Adviser's view
and, as a result, medium-sized company securities may tend to be less
volatile than the securities of smaller companies, while providing
higher returns than larger company stocks.
- WESTCORE BLUE CHIP FUND seeks a high level of long-term total return
through capital appreciation and current income consistent with
investment primarily in a diversified portfolio of large company
common stocks. The Investment Adviser uses a value-oriented approach
to identify large, established companies that may be underpriced. The
Investment Adviser believes that, due to their size, large companies
may benefit from attributes such as market dominance, substantial
financial resources and the opportunity to be global leaders in their
industries. These characteristics, in the Investment Adviser's view,
may result in increased stability for the company and a lower-risk
investment. The Investment Adviser combines a quantitative approach
with a qualitative research discipline to individually select and
invest in stocks of larger companies that it believes to be
undervalued and to have improving growth prospects, and to seek to
avoid investing in companies it believes are mature and lack
meaningful opportunities.
- WESTCORE GROWTH AND INCOME FUND seeks long-term total return through
capital appreciation and current income. The stocks purchased by this
Fund are generally large to medium in terms of market capitalization,
and are high quality, based on financial characteristics and management
capability, in the Investment Adviser's judgment. The Investment
Adviser uses fundamental research techniques in an effort to structure
the portfolio to generally have a dividend yield close to the yield on
the S&P 500 stock index, to have potential earnings growth higher than
the S&P 500, and a market risk level approximately equal to the
S&P 500.
- WESTCORE SMALL-CAP OPPORTUNITY FUND seeks to maximize long-term
capital appreciation primarily through diversified investments in
equity securities of small-capitalization companies. The Investment
Adviser uses a value-oriented style to identify small companies where
the stocks are believed to be attractively priced based on valuation
measures including lower price-to-earnings and lower price-to-book
value ratios. The Investment Adviser believes that this emphasis on
valuation produces a portfolio of stocks with strong potential for
price appreciation -- and lower volatility than is commonly associated
with small company stocks. The investment approach focuses on stock
selection and uses quantitative and qualitative research to identify
small company stocks which are undervalued where, in the Investment
Adviser's view, the fundamental business outlook and earnings potential
is becoming more attractive.
The following questions are designed to help you better understand an investment
in Westcore Funds.
IN WHAT TYPES OF SECURITIES DO THE WESTCORE EQUITY FUNDS INVEST?
- WESTCORE MIDCO GROWTH FUND primarily invests in medium-sized companies
which generally have market capitalizations of $250 million to $5
billion and revenues of $100 million to $6 billion at the time of
purchase. The Fund does not invest in companies that, at the time of
purchase, are ranked among the largest 100 companies in FORTUNE
MAGAZINE'S annual ranking of "The Largest U.S. Industrial and Service
Corporations" in terms of revenues or market capitalization. Up to 25%
of the Fund's assets may be invested in securities issued by foreign
companies, either directly (if the company is listed on a U.S.
exchange) or indirectly through American Depository Receipts ("ADRs").
During normal market conditions, the Fund invests at least 65% of its
total assets in companies with market capitalizations of at least
$250 million.
-14-
<PAGE>
- WESTCORE BLUE CHIP FUND invests primarily in approximately 50 common
stocks from a universe of the 300-400 largest dividend-paying companies
(ranked by either market capitalization or revenues) headquartered in
the United States. During normal market conditions, at least 65% of
the Fund's total assets will be invested in securities of these
securities.
- WESTCORE GROWTH AND INCOME FUND purchases common stocks primarily from
a universe of domestic companies that are selected for their growth
potential and established dividend-paying histories. During normal
market conditions, at least 65% of the Fund's total assets in
equity securities selected for their potential for capital appreciation
and their ability to produce above average earnings and dividend
growth.
- WESTCORE SMALL-CAP OPPORTUNITY FUND invests primarily in equity
securities of small-capitalization companies. During normal market
conditions, the Fund invests at least 65% of its total assets in the
equity securities of U.S. and foreign companies with capitalizations of
$1 billion or less. Equity securities include common stock, preferred
stock and securities convertible into common stock or preferred stock.
The remaining portion of the Fund's assets may be invested in
securities of companies with larger market capitalizations.
WHAT ARE THE OTHER INVESTMENT POLICIES OF THE WESTCORE EQUITY FUNDS?
Each Westcore Equity Fund may also invest in options and futures. The
Westcore MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds may
also invest in preferred stocks, warrants and foreign currency transactions.
Additionally, the Westcore MIDCO Growth, Growth and Income and Small-Cap
Opportunity Funds may invest up to 15% of their total assets in securities
convertible into common stock rated below investment grade (i.e., lower-rated
securities) or unrated securities determined to be of comparable quality.
The Westcore MIDCO Growth and Growth and Income Funds may also invest,
directly or indirectly, up to 25% of their respective total assets in
securities issued by foreign companies. There is no limitation on the amount
of the Westcore Small-Cap Opportunity Fund's total assets that may be held in
foreign securities.
Each Westcore Equity Fund may invest in short-term instruments such as U.S.
government obligations, money market instruments, repurchase agreements and
securities issued by other investment companies (within the limits prescribed
by the Investment Company Act of 1940, as amended ("1940 Act")). In
addition, each Fund may borrow money from banks and may enter into reverse
repurchase agreements for temporary purposes on a limited basis. Each Fund
may hold uninvested cash reserves (which would not earn income) pending
investment, to meet anticipated redemption requests or during temporary
defensive periods.
WHAT IS THE MAIN RISK OF INVESTING IN AN EQUITY FUND?
The fundamental risk associated with any equity fund is the risk that the value
of the stocks it holds might decrease. Stock values may fluctuate in response
to the activities of an individual company or in response to general market or
economic conditions. Historically, equity securities have provided greater
long-term returns and have entailed greater short-term risks than other
investment choices.
Although smaller or newer issuers are more likely to realize more substantial
growth than larger or more established issuers, they are more likely to suffer
more significant losses. Investments in such companies can be both more
volatile and more speculative.
For a discussion of risks related to such investments as lower rated
securities or "junk bonds," options and futures, foreign currency exchange
transactions and "derivative" instruments in general in which the Funds may
invest, see "Supplemental Information - Information on Investment Policies and
Additional Risk Factors."
WHICH WESTCORE EQUITY FUNDS ARE DIVERSIFIED AND WHAT DOES THAT MEAN?
All the Westcore Equity Funds are diversified. Diversification is a means of
reducing risk by investing a Fund's assets in a broad range of stocks or other
securities in various industries and economic sectors. Diversification does not
provide assurance against the possibility of loss.
-15-
<PAGE>
HOW DO THE WESTCORE EQUITY FUNDS TRY TO REDUCE RISK?
- Diversification of a Fund's assets reduces the effect of any single
holding on its overall portfolio value.
- The Funds may adjust the securities they hold to include issues which
are believed to involve less risk.
- A Fund may use futures, options and similar instruments to attempt to
hedge its portfolio against disadvantageous movements in securities
prices and interest rates. The Westcore MIDCO Growth, Growth and
Income and Small-Cap Opportunity Funds may use various currency
hedging techniques, including forward currency contracts, to manage
exchange rate risk when investing directly in foreign markets.
- To the extent that a Fund holds a large cash position, it may not
participate in market declines (or advances) to the same degree as a
fund that is more fully invested in common stocks.
WHAT IS MEANT BY "MARKET CAPITALIZATION?"
Market capitalization is the most commonly used measure of the size and value of
a company. It is computed by multiplying the current market price of a share of
the company's stock by the total number of its shares outstanding. Market
capitalization is an important investment criterion for the Westcore MIDCO
Growth, Blue Chip and Small-Cap Opportunity Funds.
WESTCORE BOND FUNDS
The following questions are designed to help you better understand an investment
in the Westcore Bond Funds.
WHAT ARE THE INVESTMENT OBJECTIVES OF THE WESTCORE BOND FUNDS?
- WESTCORE LONG-TERM BOND FUND seeks a high level of long-term total
rate of return (i.e., income plus capital appreciation).
- WESTCORE INTERMEDIATE-TERM BOND FUND seeks current income with
relatively small volatility of principal through investment in
investment grade securities and high quality money market instruments.
- WESTCORE COLORADO TAX-EXEMPT FUND seeks to provide investors with
income exempt from federal income taxes and Colorado state income
taxes consistent with safety and stability of principal.
WHAT ARE THE PRIMARY INVESTMENTS OF THE WESTCORE BOND FUNDS?
The Westcore Long-Term Bond and Intermediate-Term Bond Funds are diversified
funds that invest at least 65% of their total assets in a broad range of debt
obligations during normal market conditions. Debt obligations include fixed and
variable-rate bonds, asset-backed and mortgage-backed securities, zero coupon
bonds, debentures, obligations convertible into common stocks, obligations
issued or guaranteed by the U.S. government, its agencies or instrumentalities,
dollar-denominated debt obligations of foreign issuers including foreign
corporations and foreign governments, municipal obligations and money market
instruments.
The Westcore Colorado Tax-Exempt Fund is a non-diversified fund that invests
substantially all of its assets (i.e., at least 80%) in debt instruments issued
by or on behalf of the state of Colorado ("Colorado Obligations"), other states,
territories and possessions of the United States, the District of Columbia and
their respective authorities, agencies, instrumentalities and political
subdivisions ("Municipal Obligations"). The Fund normally
-16-
<PAGE>
will invest at least 65% of its total assets in Colorado Obligations. The
Colorado Tax-Exempt Fund currently intends to invest at least 75% of its
assets in Municipal Obligations covered by insurance policies.
WHAT ARE THE EXPECTED MATURITIES OF THE WESTCORE BOND FUNDS?
Except during temporary defensive periods or unusual market conditions, Denver
Investment Advisors expects that the average dollar-weighted portfolio
maturities of the Westcore Bond Funds will be as follows:
FUND AVERAGE DOLLAR-WEIGHTED MATURITY
Westcore Long-Term Bond Fund at least 10 years
Westcore Intermediate-Term Bond Fund 3-6 years
Westcore Colorado Tax-Exempt Fund 7-10 years
The following questions are designed to help you better understand an investment
in Westcore Funds.
WHAT IS THE INVESTMENT QUALITY OF THE ASSETS OF THE WESTCORE BOND FUNDS?
Debt obligations acquired by the Westcore Long-Term Bond and Intermediate-Term
Bond Funds will be at least investment grade at the time of purchase. Each
Fund's dollar-weighted average portfolio quality is expected to be "A" or
better.
Municipal Obligations acquired by the Colorado Tax-Exempt Fund will be rated in
one of the three highest investment grade categories at the time of purchase by
one or more rating agencies. The Fund may invest up to 10% of its total assets
in Colorado Obligations rated at the time of purchase in the fourth highest
investment grade category when acceptable Colorado Obligations with higher
ratings are unavailable for investment by the Fund. The Fund may invest in
unrated obligations only if Denver Investment Advisors determines they are
comparable in quality to instruments that meet the Fund's rating requirements.
If the rating of an obligation held by a Fund is reduced below the Fund's rating
requirements, the Investment Adviser will sell the obligation when it is in the
best interests of the Fund to do so.
For a description of ratings, please review the Appendix "Rating Categories."
DO THE WESTCORE BOND FUNDS INVEST IN ANY OTHER TYPES OF SECURITIES?
The Westcore Long-Term Bond and Intermediate-Term Bond Funds may invest in
obligations convertible into common stocks and may acquire common stocks,
warrants or other rights to buy shares only if they are attached to a
fixed-income obligation. Common stock received through the conversion of
convertible debt obligations will normally be sold in an orderly manner as
soon as possible. Each Fund may also invest in options and futures.
Additionally, each Fund may invest in short-term instruments including
repurchase agreements and securities issued by other investment companies
(within the limits prescribed by the 1940 Act).
The Westcore Colorado Tax-Exempt Fund may invest in short-term taxable money
market instruments, securities issued by other investment companies which invest
in taxable or tax-exempt money market instruments and U.S. Government
obligations.
During temporary defensive periods, each Fund may invest without limitation
in various short-term investments. The Funds also may borrow money from banks
and may enter into reverse repurchase agreements for temporary purposes on a
limited basis.
-17-
<PAGE>
IS AN INVESTMENT IN THE WESTCORE COLORADO TAX-EXEMPT FUND A TAX-FREE INVESTMENT?
Dividends paid by the Fund which are derived from interest on Colorado
Obligations, as well as certain other governmental issuers, will be exempt from
regular federal income taxes and Colorado state income taxes. Dividends derived
from interest on non-Colorado Obligations will be subject to Colorado state
income tax. Because the Fund may invest up to 20% of its net assets in private
activity bonds whose interest may be subject to the federal alternative minimum
tax, a portion of the dividends paid by the Fund may be treated as a tax
preference item for purposes of this tax.
See also "Taxes" in "Other Information" on page __.
The following questions are designed to help you better understand an investment
in Westcore Funds.
ARE THERE ANY INVESTMENT RISKS UNIQUE TO THE WESTCORE COLORADO TAX-EXEMPT FUND?
Because the Fund concentrates its investments in Colorado Obligations, it is
classified as a non-diversified fund for purposes of the 1940 Act. The Fund's
performance may be dependent upon fewer securities than is the case with a
diversified portfolio and the Fund may experience greater fluctuations in net
asset value. In addition, although the Fund does not presently intend to do so
on a regular basis, it may invest 25% or more of its NET assets in industrial
development bonds and in other Municipal Obligations, the interest on which is
paid solely from revenues of similar projects. To the extent that the Fund's
assets are concentrated in these types of Municipal Obligations and the Fund is
non-diversified, it will be more susceptible to economic, political and legal
developments than a diversified Fund with similar objectives whose assets are
not so concentrated.
HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT?
A fundamental risk associated with any fund that invests in fixed-income
securities is the risk that the value of the securities it holds will rise or
fall as interest rates change. Generally, a fixed-income security will
increase in value when interest rates fall and decrease in value when
interest rates rise. Longer-term securities are generally more sensitive to
interest rate changes than shorter-term securities, but they usually offer
higher yields to compensate investors for the greater risks. A bond fund's
average dollar-weighted maturity is a measure of how the fund will react to
interest rate changes.
WHAT IS MEANT BY A FUND'S "AVERAGE DOLLAR-WEIGHTED MATURITY?"
The stated maturity of a bond is the date when the issuer must repay the bond's
entire principal value to an investor, such as a Fund. A bond's term to
maturity is the number of years remaining to maturity. A bond fund does not
have a stated maturity, but it does have an average dollar-weighted maturity.
This is calculated by averaging the terms to maturity of bonds held by a Fund
with each maturity "weighted" according to the percentage of net assets it
represents.
The following questions are designed to help you better understand an investment
in Westcore Funds.
HOW DO THE WESTCORE BOND FUNDS ATTEMPT TO MANAGE INTEREST RATE RISK?
Each Fund may vary the average dollar-weighted maturity of its portfolio to
reflect its portfolio manager's analysis of interest rate trends and other
factors. A Fund's average dollar-weighted maturity will tend to be shorter
when its portfolio manager expects interest rates to rise and longer when its
portfolio manager expects interest rates to fall. The Westcore Long-Term
Bond and Intermediate-Term Bond Funds may also use futures, options and
similar instruments to manage interest rate risk.
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<PAGE>
WHAT IS MEANT BY "CREDIT QUALITY?"
Another fundamental risk associated with all bond funds is credit risk -- the
risk that an issuer will be unable to make principal and interest payments when
due. U.S. government securities are generally considered to be the safest type
of investment in terms of credit risk. Municipal Obligations generally rank
between U.S. government securities and corporate debt securities in terms of
credit safety. Corporate debt securities, particularly those rated below
investment grade, may present the highest credit risk.
HOW IS CREDIT QUALITY MEASURED?
Ratings published by nationally recognized rating agencies ("Rating Agencies"),
such as Standard & Poor's Ratings Group ("S&P") and Moody's Investors Service,
Inc. ("Moody's"), are widely accepted measures of credit risk. The lower a bond
issue is rated by an agency, the more credit risk it is considered to represent.
Lower rated bonds generally pay higher yields to compensate investors for the
greater risk.
IN GENERAL
WHAT POTENTIAL RISKS AND REWARDS MAY I EXPERIENCE IF I INVEST IN THE WESTCORE
FUNDS?
An investment in the Westcore Funds presents the potential rewards and risks
common to securities investments. The Westcore MIDCO Growth, Blue Chip, Growth
and Income and Small-Cap Opportunity Funds invest primarily in common stocks.
Although stocks historically have presented greater potential for capital
appreciation than debt obligations, they do not provide the same assurance of
income and may carry greater risk of loss. The value of an investment in the
Westcore Small-Cap Opportunity Fund, in particular, may experience significant
fluctuations over time due to the Fund's investments in smaller companies and in
convertible securities rated below investment grade which present greater
potential price volatility, i.e., the price may go up or down.
The market value of debt obligations held by the Westcore Funds will also
fluctuate, normally rising when interest rates fall and falling when interest
rates rise. The value of some debt obligations (such as collateralized mortgage
obligations, asset-backed securities, municipal leases and structured notes) may
be more volatile than other types of instruments.
Several of the Funds may invest in foreign securities that are considered
attractive by Denver Investment Advisors. In addition to being more costly,
foreign securities may be subject to potentially adverse political, governmental
and economic developments and changes in foreign currency exchange rates.
Each Fund may purchase certain derivative instruments which derive their value
from the performance of underlying assets, interest or currency exchange rates,
or indices. Derivative instruments present, to varying degrees, special market,
volatility, leveraging, liquidity, pricing and operations risks. See
"Supplemental Information -- Risk Factors Associated with Derivative
Instruments."
The Funds may lend their securities and enter into repurchase agreements and
reverse repurchase agreements with banks and broker/dealers that could
experience financial difficulties, and may make limited investments in illiquid
securities.
As the Funds' investment adviser, Denver Investment Advisors will evaluate the
rewards and risks presented by all securities purchased by the Funds and will
determine how they will be used in furtherance of the investment objectives of
the Funds. It is possible, however, that Denver Investment Advisors'
evaluations will prove to be inaccurate and, even when accurate, it is possible
that the Funds will incur losses.
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<PAGE>
FUNDAMENTAL INVESTMENT LIMITATIONS
WHAT ARE FUNDAMENTAL INVESTMENT LIMITATIONS?
Fundamental investment limitations are those investment limitations that a Fund
may not change without the approval of the holders of a majority of the Fund's
outstanding shares. Some are summarized in the tables on the facing page (a
complete list is set forth in the Statement of Additional Information).
The Westcore MIDCO Growth, Blue Chip, Growth and Income, Small-Cap Opportunity,
Long-Term Bond and Intermediate-Term Bond Funds may not:
- Purchase securities if more than 5% of a Fund's total assets will be
invested in the securities of any one issuer. However, up to 25% of
the Fund's total assets may be invested without regard to this 5%
limitation. Certain investments such as U.S. government securities
are not subject to this limitation.
- Make loans, except that each Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with
its investment objective and policies. Each Fund may also lend
portfolio securities in an amount not exceeding 30% of its total
assets.
The Westcore Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt
Funds may not:
- Borrow money or issue senior securities except that each Fund may
borrow from banks and enter into reverse repurchase agreements for
temporary purposes in amounts up to 10% of its total assets at the
time of such borrowing. No Fund may mortgage, pledge or hypothecate
any assets, unless it is in connection with a permissible borrowing
and the amounts do not exceed the lesser of the dollar amounts
borrowed or 10% of the Fund's total assets at the time of such
borrowing.
In addition, the Westcore Colorado Tax-Exempt Fund may not:
- Invest less than 80% of its net assets in securities the interest on
which is exempt from federal income tax, except during periods of
unusual market conditions. For purposes of this limitation only,
securities, the interest on which is treated as a specific tax
preference item under the federal alternative minimum tax, are
considered taxable.
- Make loans, except that the Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with
its investment objective and policies.
- Purchase securities if more than 5% of its total assets will be
invested in the securities of any one issuer. However, up to 50% of
the Fund's total assets may be invested without regard to the 5%
limitation as long as not more than 25% of the Fund's total assets are
invested in the securities of any one issuer. Certain investments
such as U.S. government securities are not subject to this limitation.
No Fund will purchase securities so long as its outstanding borrowings
(including reverse repurchase agreements) exceed 5% of its total assets.
If a percentage limitation or other statistical requirement is met at the time a
Fund makes an investment, a later change in the percentage due to a change in
the value of the Fund's portfolio securities generally will not constitute a
violation.
HOW TO INVEST
This section tells you how to purchase, exchange and redeem your shares. It
also explains various services and features offered in connection with your
account.
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<PAGE>
PLEASE CALL WESTCORE FUNDS AT 1-800-392-CORE (2673) IF YOU HAVE ANY QUESTIONS OR
NEED ANY INFORMATION.
ALPS Mutual Fund Services, Inc. is the distributor for Westcore Funds and
has its principal office at 370 Seventeenth Street, Suite 2700, Denver,
Colorado 80202.
HOW TO OPEN AND ADD TO YOUR ACCOUNT
You may open an account and purchase shares of the Westcore Funds by
completing an account application and returning it to Westcore with your
check made payable to Westcore/SSB. You may obtain an account application by
calling 1-800-392-CORE (2673).
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- --------------------------------------------------------------------------------
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
- --------------------------------------------------------------------------------
BY MAIL - Send a completed Account - Send a check or money
Application and a check order payable in U.S.
or money order payable dollars and drawn on a
in U.S. dollars and bank located in the
drawn on a bank located U.S. to Westcore Trust,
in the U.S. to Westcore P.O. Box 8319, Boston,
Trust, P.O. Box 8319, MA 02266-8319. Specify
Boston, MA 02266-8319. your account number and
the name of the Fund(s)
in which you are
investing.
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IN PERSON - Bring your completed - Bring your check or
Account Application and money order payable to
a check or money order Westcore/SSB, to
payable to Westcore/SSB, Westcore Trust, 370
to Westcore Trust, 370 Seventeenth Street,
Seventeenth Street, Suite 2700, Denver, CO
Suite 2700, Denver, CO 80202.
80202.
- --------------------------------------------------------------------------------
AUTOMATICALLY - Complete the Automatic - Complete at any time an
(from your Investment Plan Section Automatic Investment
bank account) of your new Account Plan application to
Application ($50 minimum have $50 or more
per transaction) and automatically withdrawn
return it to Westcore from your bank account
Trust, P.O. Box 8319, monthly , quarterly or
Boston, MA 02266-8319. annually.
- --------------------------------------------------------------------------------
BY WIRE - Call 1-800-392-CORE - Call 1-800-392-CORE
(2673) to receive wiring (2673) to receive
instructions. wiring instructions.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
MINIMUM INVESTMENTS
To open a new account $1,000
To open a new retirement or certain other accounts 250
To open a new account with an Automatic Investment
Plan 0
To add to any type of an account 50
The minimum investment requirements do not apply to reinvested dividends,
purchases by Service Organizations acting on behalf of their customers,
officers, trustees, directors, employees and retirees of the Trust,
Investment Adviser, Administrators or any direct or indirect subsidiary, or
any spouse, parent or child of any of these persons. Please Note: Third
party checks will not be accepted by Westcore for the purchase of shares of a
Fund.
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<PAGE>
HOW TO EXCHANGE FUND SHARES
You may exchange your Fund shares for shares of the other Funds or the Compass
Capital Money Market Portfolio.* Exchanges must be for at least $1,000 in value
per transaction. You should read the Prospectus for the Fund into which you are
exchanging. For further information on the exchange privilege, please call a
Westcore Investor Service Representative at 1-800-392-CORE (2673).
Westcore Trust may modify or terminate the exchange privilege, but will not
materially modify or terminate it without giving shareholders 60 days' notice.
- -----------------
* Compass Capital Money Market Portfolio is a no-load money market fund
advised by PNC Asset Management Group, Inc. and sub-advised by PNC
Institutional Management Corporation and distributed by Compass
Distributors, Inc.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HOW TO EXCHANGE SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY TELEPHONE - Call 1-800-392-CORE (2673) and give
the account name, account number, name
of Fund and amount of exchange ($1,000
minimum).
- --------------------------------------------------------------------------------
BY MAIL - Send a written request to Westcore
Trust, P.O. Box 8319, Boston, MA
02266-8319. Submit any share
certificates being exchanged, endorsed
for transfer.
- YOUR WRITTEN REQUEST MUST:
- be signed by each account owner; a
signature guarantee is required for
exchanges between accounts with unlike
registrations.
- state the number or dollar
amount of shares to be
exchanged ($1,000 minimum);
- include your account number
and tax identification number.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HOW TO REDEEM FUND SHARES
You may redeem your Fund shares on any business day. If you have any questions
on how to redeem your shares, please call a Westcore Investor Service
Representative at 1-800-392-CORE (2673).
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<PAGE>
Redemption proceeds generally will be sent by check to the shareholder(s) of
record at the address of record within 7 days after receipt of a valid
redemption request. If you have authorized the wire redemption service, your
redemption proceeds will be wired directly into your designated bank account
normally within 3 business days after receipt of a valid redemption request. If
you have selected the Systematic Withdrawal Plan, your redemption proceeds will
be electronically transferred to your designated bank account within 7 days
after withdrawal. If the shares being redeemed were purchased by check,
telephone or through the Automatic Investment Program, the Trust may delay
the mailing of your redemption check for up to 15 days from the date of
purchase to allow the purchase to clear.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
BY TELEPHONE - Call 1-800-392-CORE (2673) and give the
(available only if you account name, account number, name of Fund
checked the appropriate and amount of redemption ($1,000 minimum).
box on the Account
Application)
- Not available for
retirement accounts - If you do not have and would like to add
or shares held in the telephone redemption feature, send a
certificate form. written request to Westcore Trust, P.O.
Box 8319, Boston, MA 02266-8319. The request
must be signed (and signatures guaranteed)
by each account owner.
- The Trust may impose a dollar limit on
telephone redemptions.
- --------------------------------------------------------------------------------
IN PERSON - During normal business hours, bring your
written request to Westcore Trust, 370
Seventeenth Street, Suite 2700,
Denver, CO 80202.
- --------------------------------------------------------------------------------
BY MAIL - Send a written request to Westcore Trust,
P.O. Box 8319, Boston, MA 02266-8319.
Submit any share certificates being
redeemed, endorsed for transfer.
- Your written request must:
- be signed by each account owner; a
signature guarantee is required for any
redemption over $10,000 or any redemption
being mailed to any other address or payee
other than that which is on record.
- state the number or dollar amount of
shares to be redeemed;
- include your account number and tax
identification number.
- --------------------------------------------------------------------------------
BY WIRE - Call 1-800-CORE (2673) or write Westcore
(available only if you Trust, P.O. Box 8319, Boston, MA 02266-
checked the appropriate 8319. You will need to provide: account
box in the Account name and number; name of Fund; and amount
Application) of redemption ($1,000 minimum per
transaction if made by telephone).
- If you have already opened your account and
would like to have the wire redemption
feature, send a written request to Westcore
Trust, P.O. Box 8319, Boston, MA 02266-
8319. The request must be signed (and
signatures guaranteed) by each account
owner.
- --------------------------------------------------------------------------------
BY SYSTEMATIC WITHDRAWAL - Request quarterly or monthly withdrawals in
any multiple of $50. Call 1-800-392-CORE
(2673) for more information or a form.
- Participation requires a minimum of $10,000
in a Fund in order to initiate this Plan.
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- --------------------------------------------------------------------------------
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<PAGE>
PRICE OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the net asset
value ("NAV") next calculated after your request and payment is received in
proper form. A Fund's NAV is determined by the Administrators as of the close
of regular trading on the New York Stock Exchange (the "NYSE"), currently 4:00
p.m. (Eastern time), on each day that the NYSE is open. In order to receive a
day's price, your order must be received by the close of regular trading on the
NYSE on that day. If not, your request will be processed at the Fund's NAV at
the close of regular trading on the next day. To be in proper form, your order
must include your account number and must state the Fund shares you wish to
purchase, redeem or exchange.
In the case of participants in certain employee benefit plans investing in
certain Funds, their purchase orders will be processed at the NAV next
determined after the Service Organization acting on their behalf receives the
purchase order.
A Fund's NAV is calculated by dividing the total value of its investments and
other assets, less liabilities, by the total number of shares outstanding. Each
Fund's investments are valued at market value or, where market quotations are
not readily available, at fair value as determined in good faith by or under the
direction of the Board of Trustees. Debt securities with maturities of 60 days
or less are valued at amortized cost, which generally equals market value.
ACCOUNTS OPENED THROUGH A SERVICE ORGANIZATION
You may purchase or sell Fund shares through an account you have with Denver
Investment Advisors, any qualified broker/dealer, any bank or any other
institution (your "Service Organization"). Your Service Organization may charge
transaction fees on the purchase and/or sale of Fund shares and may require
different minimum initial and subsequent investments than Westcore. Service
Organizations may also impose other charges, restrictions or cut-off times
different from those applicable to shareholders who invest in Westcore directly.
A Service Organization may receive fees from the Trust or Denver Investment
Advisors for providing services to the Trust or its shareholders. Such services
may include, but are not limited to, shareholder assistance and communication,
transaction processing and settlement, account set-up and maintenance, tax
reporting and accounting. In certain cases, a Service Organization may elect to
credit against the fees payable by its customers all or a portion of the fees
received from the Trust or Denver Investment Advisors with respect to their
customers' assets invested in the Trust. The Service Organization, rather than
you, may be the shareholder of record of your Fund shares. Westcore is not
responsible for the failure of any Service Organization to carry out its
obligations to its customers.
GENERAL ACCOUNT POLICIES
If your account balance falls below $750 as a result of redemption and you do
not increase the amount to at least $750 within 60 days after notice, your
account may be closed and the proceeds sent to you.
You may choose to initiate certain transactions by telephone. Westcore Funds
and their agents will not be responsible for any losses resulting from
unauthorized transactions when procedures designed to verify the identity of
the caller are followed. It may be difficult to reach the Funds by telephone
during periods of unusual market activity. If this happens, you may redeem
your shares by mail as described above.
Westcore Funds or your Service Organization will send you a statement of your
account quarterly and a confirmation after every transaction that affects your
share balance or your account registration. A statement with tax information
will be mailed to you by January 31 of each year and filed with the Internal
Revenue Service. At least twice a year, you will receive financial statements
in the form of Annual and Semi-Annual Reports of the Funds.
-24
<PAGE>
Duplicate mailings of Fund materials to shareholders who reside at the same
address may be eliminated.
The Funds will issue share certificates upon written request only.
OTHER INFORMATION
DISTRIBUTIONS AND TAXES
A Fund's income from dividends and interest and any net realized short-term
capital gains are paid to shareholders as income dividends. A Fund realizes
capital gains whenever it sells securities for a higher price than it paid for
them. Net realized long-term gains are paid to shareholders as capital gain
dividends. A dividend will reduce the net asset value of a Fund share by the
amount of the dividend.
DISTRIBUTION SCHEDULE
When you open an account, you must specify on your Account Application whether
you want to receive your distributions in cash or reinvest them in the
distributing Fund or another Fund. You may change your distribution option at
any time by writing or calling 1-800-392-CORE (2673).
INCOME DIVIDENDS CAPITAL GAINS
---------------- -------------
Equity Funds Declared and paid Declared and paid
quarterly* in December
Bond Funds Declared and paid Declared and paid
monthly in December
____________________
* The Westcore MIDCO Growth Fund declares and pays income dividends in
December only.
TAXES
FEDERAL
As with any investment, you should consider the tax implications of an
investment in the Funds. The following briefly summarizes some of the
important tax considerations generally affecting the Funds and their
shareholders. You should consult your tax adviser with specific reference to
your own tax situation, including the applicability of any state and local
taxes. You will be advised at least annually regarding the federal tax
treatment of dividends paid to you.
Dividends paid by the Westcore Equity Funds and the Westcore Long-Term Bond
and Intermediate-Term Bond Funds will be subject to federal income tax,
whether they were paid in cash or reinvested in additional shares. Federal
income taxes for dividends paid to an IRA or other qualified retirement plan
are generally deferred. Income dividends will qualify for the dividends
received deduction for corporations to the extent of the total qualifying
dividends received by the distributing Fund from domestic corporations for
the year.
The Colorado Tax-Exempt Fund anticipates that substantially all of its income
dividends will be exempt from federal income tax (these dividends are known
as "exempt-interest dividends") although any dividends derived from
occasional taxable investments will be subject to federal income tax. In
addition, shareholders must treat the portion of dividends paid by the Fund
derived from interest received on certain private activity bonds as an item
of tax preference for purposes of the federal alternative minimum tax.
-25-
<PAGE>
Any capital gain dividend paid by a Fund will be taxable as a long-term
capital gain, no matter how long you have held the Fund's shares.
Any dividends declared by a Fund in October, November or December and payable
to shareholders of record during those months will be deemed to have been
paid by the Fund and received by shareholders on December 31 of the same year
even if the amounts are actually paid in January of the following year.
If you purchase Fund shares before the record date of a dividend, the entire
amount of the dividend, although in effect a return of capital, will be
subject to federal income taxes.
You may realize a taxable gain or loss when you redeem, transfer or exchange
shares of a Fund. If you hold shares for six months or less, and during that
time you receive a capital gain dividend, any loss you realize on the sale of
those shares will be treated as a long-term capital loss to the extent of the
earlier distribution.
Because each Fund intends to qualify as a "regulated investment company"
under the Internal Revenue Code (the "Code"), each Fund generally will not be
required to pay federal income taxes on its income and capital gains.
COLORADO STATE TAXES
Shareholders who are subject to Colorado state income tax will not be subject
to such tax on dividends paid by the Westcore Colorado Tax-Exempt Fund to the
extent that they qualify as exempt-interest dividends of a regulated
investment company under Section 852(b)(5) of the Code and are attributable
to any of the following:
- obligations of the State of Colorado or its political subdivisions
issued on or after May 1, 1980;
- obligations of the State of Colorado or its political subdivisions
issued prior to May 1, 1980 to the extent such interest is
specifically exempt from income taxation under the laws of Colorado
authorizing the issuance of such obligations;
- obligations of possessions and territories of the United States to the
extent federal law exempts such obligations from state taxes; or
- obligations of the United States or its possessions to the extent such
obligations are subject to federal income tax.
However, to the extent distributions are received that are not attributable to
the sources described above, such as distributions of short or long-term capital
gain, they will not be exempt from Colorado income tax.
There are no municipal income taxes in Colorado. Moreover, because shares of
the Westcore Colorado Tax-Exempt Fund are intangibles, they are not subject to
Colorado property tax. Shareholders of the Westcore Colorado Tax-Exempt Fund
should consult their tax advisers about other state and local tax consequences
of their investment in the Fund.
PERFORMANCE REPORTING
This section will help you understand various terms that are commonly used to
describe a Fund's performance. You may see references to these terms in
newsletters, advertisements and in media articles. Newsletters,
advertisements and other publications may include comparisons of a Fund's
performance to the performance of various indices and investments for which
reliable performance data are available and to averages, performance rankings
or other information compiled by recognized mutual fund statistical services.
-26-
<PAGE>
AGGREGATE TOTAL RETURN -- reflects income and capital
appreciation/depreciation and establishes a total percentage change
in the value of an investment in a Fund over a specified measuring period.
AVERAGE ANNUAL TOTAL RETURN -- represents the average annual percentage change
in the value of an investment in a Fund over a specified measuring period. It
is calculated by taking the aggregate total return for the measuring period and
determining what constant annual return would have produced the same aggregate
return. Average annual returns for more than one year tend to smooth out
variations in a Fund's return and are not the same as actual annual results.
Both methods of calculating total return assume that you have reinvested
dividends made by a Fund during the period in Fund shares.
YIELD -- shows the rate of income a Fund earns on its investments as a
percentage of its share price. It is calculated by dividing the Fund's net
investment income for a 30-day period by the product of the average daily number
of shares entitled to receive dividends and the Fund's NAV per share at the end
of the 30-day period. The result is then annualized. This represents the
amount you would earn if you remained invested in a Fund for a year and the Fund
continued to have the same yield for the year. Yield does not include changes
in NAV.
TAX-EQUIVALENT YIELD -- of the Westcore Colorado Tax-Exempt Fund shows the level
of the taxable yield needed to produce an after-tax yield equivalent to the
Fund's tax-free yield. It is calculated by increasing the Fund's yield by the
amount necessary to reflect the payment of federal and Colorado personal income
taxes at a stated tax rate. The Fund's tax-equivalent yield will always be
higher than its yield.
Any fees charged by your Service Organization directly to your account in
connection with an investment in a Fund will not be included in the Fund's
calculations of yield and/or total return.
Performance quotations of a Fund represent its past performance, and you
should not consider them representative of future results. The investment
return and principal value of an investment in a Fund will fluctuate so that
your shares, when redeemed, may be worth more or less than their original
cost. Since performance will fluctuate, you cannot necessarily compare an
investment in Fund shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed
yield for a stated period of time.
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES
The business and affairs of each Fund are managed under the direction of the
Trust's Board of Trustees. The Statement of Additional Information contains
information about the Board of Trustees.
INVESTMENT ADVISER
Denver Investment Advisors LLC ("Denver Investment Advisors") serves as the
investment adviser to the Funds. The Investment Adviser has its principal
offices at 1225 17th Street, 26th Floor, Denver, Colorado 80202. As of
September 1, 1996, Denver Investment Advisors had approximately $9.7 billion
in assets under active management. In addition to the Trust, Denver
Investment Advisors also advises or sub-advises two other investment company
portfolios, the Blue Chip Value Fund, Inc. and the PaineWebber Managed Assets
Trust-PaineWebber Capital Appreciation Fund.
Subject to the overall authority of the Trust's Board of Trustees, Denver
Investment Advisors has agreed to provide a continuous investment program for
the Funds, including investment research and management. These management
responsibilities include, among other things, furnishing economic and
statistical information as requested by the Trust's trustees and officers.
The Investment Adviser makes investment decisions for the Funds and places
orders for all purchases and sales of the Funds' portfolio securities.
-27-
<PAGE>
INVESTMENT PERSONNEL
Todger Anderson, CFA, President of Denver Investment Advisors, has been
primarily responsible for the day-to-day management of Westcore MIDCO Growth
Fund since its inception. Mr. Anderson has been a portfolio manager with
Denver Investment Advisors and its predecessor, Denver Investment Advisors,
Inc., since 1975. He received his B.A. from Colby College and his M.B.A.
from the University of Denver.
Varilyn K. Schock, CFA, a Vice President and Director of Quantitative
Strategies with Denver Investment Advisors, has been primarily responsible
for the day-to-day management of Westcore Blue Chip Fund since 1991 and
Westcore Small-Cap Opportunity Fund since its inception. Ms. Schock has been
with Denver Investment Advisors and its predecessor, Denver Investment
Advisors, Inc., since 1984 and has been a portfolio manager with the company
since 1987. She received her B.A. from the University of Denver.
Milford H. Schulhof, II, a Vice President of Denver Investment Advisors, has
been primarily responsible for the day-to-day management of Westcore Growth
and Income Fund since October 1995. Mr. Schulhof has been a Vice President
and portfolio manager with Denver Investment Advisors and its predecessor,
Denver Investment Advisors, Inc. since 1985. He received his B.S.B.A. from
Drake University and his M.B.A. from the University of Denver.
John R. Cormey, CFA, a Vice President of Denver Investment Advisors, has been
primarily responsible for the day-to-day management of Westcore Long-Term
Bond Fund and Intermediate-Term Bond Fund since 1991. Prior to managing
these Funds, Mr. Cormey was Vice President and Director of Quantitative
Research for the Investment Adviser. Mr. Cormey joined the company as a
security analyst in 1972. He received his B.S. from the University of
Colorado.
Robert O. Lindig is a Vice President of Denver Investment Advisors. He has
been primarily responsible for the day-to-day management of the Westcore
Colorado Tax-Exempt Fund since its inception. Mr. Lindig has 34 years
experience in the institutional bond market. Prior to his employment with
the Investment Adviser, Mr. Lindig was Vice President and Trust Officer of
First Interstate Bank of Denver, N.A. Mr. Lindig received his B.A. degree
from Dartmouth College and his M.B.A. from Columbia University.
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
Each Fund pays the Investment Adviser an advisory fee under the advisory
agreement. The fees are set forth below and are expressed as an annual
percentage of a Fund's average daily net assets:
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- --------------------------------------------------------------------------------
EFFECTIVE
ADVISORY FEES
CONTRACTUAL FOR THE YEAR
ADVISORY ENDED
FEES MAY 31, 1996
FEE SCHEDULE (%) (%)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Westcore MIDCO Growth Fund .65% .65%
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Westcore Blue Chip Fund .65% .55%
- --------------------------------------------------------------------------------
Westcore Growth and Income Fund .65% .47%
- --------------------------------------------------------------------------------
Westcore Small-Cap Opportunity Fund 1.00%(1) .21%
- --------------------------------------------------------------------------------
Westcore Long-Term Bond Fund .45% .36%
- --------------------------------------------------------------------------------
Westcore Intermediate-Term Bond Fund .45% .39%
- --------------------------------------------------------------------------------
Westcore Colorado Tax-Exempt Fund .50% .00%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) Although the fee payable by Westcore Small-Cap Opportunity Fund is higher
than the fee payable by the other Funds, the Investment Adviser believes
that it is within the range of fees payable by funds with comparable
investment objectives and policies.
The Investment Adviser may from time to time voluntarily waive all or any
portion of these fees and reimburse expenses of a Fund; however, it may modify
or discontinue this practice at any time.
CO-ADMINISTRATORS
ALPS and Denver Investment Advisors serve as co-administrators to the Funds (the
"Administrators"). As Administrators, they have agreed to: assist in
maintaining the Funds' office; furnish the Funds with clerical and certain other
services required by them; compile data for and prepare notices and semi-annual
reports to the SEC; prepare filings with state securities commissions;
coordinate federal and state tax returns; monitor each Fund's expense accruals;
monitor compliance with each Fund's investment policies and limitations; and
generally assist in each Fund's operations. The Administrators are entitled to
receive a fee from each Fund for administrative services, computed daily and
payable monthly, at the aggregate annual rate of .30% of each Fund's average
daily net assets. The Administrators may voluntarily waive all or any portion
of their administration fees from time to time.
Pursuant to a separate agreement, ALPS has agreed to maintain the financial
accounts and records of each Fund and to compute the net asset value and certain
other financial information relating to each Fund.
The Trust has agreed to reimburse Denver Investment Advisors for costs
incurred by Denver Investment Advisors for providing recordkeeping and
sub-accounting services to persons who beneficially own shares of a Fund
through omnibus accounts ("Beneficial Shares"). The amount reimbursed with
respect to a Fund will not exceed the lesser of the costs actually borne by
Denver Investment Advisors or the effective rate for transfer agency services
borne by a Fund without taking into account Beneficial Shares and applying
such rate to such Beneficial Shares. The Administrators are also authorized
to make payments from their administrative fees or other sources to persons
for providing services to a Fund or its shareholders.
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<PAGE>
TRANSFER AGENT
State Street Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts
02015, provides the Funds with transfer agency services in return for
compensation.
OTHER INFORMATION CONCERNING THE TRUST AND ITS SHARES
Westcore Trust was originally organized as a Maryland corporation on January
11, 1982. It was reorganized as a Massachusetts business trust on December
10, 1985.
The Trust's Amended and Restated Declaration of Trust authorizes the Board of
Trustees to classify or reclassify any unissued shares of the Trust into one
or more classes of shares. Pursuant to such authority, the Board has
authorized the issuance of an unlimited number of shares representing
interests in the Funds. No other classes or series of shares are currently
offered.
SHAREHOLDER MEETINGS
Westcore Trust does not presently intend to hold meetings of shareholders
except as required by the 1940 Act or other applicable law. Under the 1940
Act, the Board of Trustees is required to call a meeting of shareholders for
the purpose of voting upon the removal of any trustee or trustees when
requested in writing to do so by the record holders of at least 10% of the
outstanding shares. If a shareholders meeting is held, you will be entitled
to one vote for each full share you hold and proportionate fractional votes
for fractional shares you hold. It is contemplated that the shareholders of
each Fund will vote separately by Fund on matters pertaining to its
investment advisory agreement and any changes in its fundamental investment
limitations.
As of August 29, 1996, Wells Fargo Bank and its affiliated banks possessed,
on behalf of their underlying customer accounts, voting or investment power
with respect to a majority of all of the outstanding shares of Westcore
Trust, and the Bank of New York held as Trustee 29.61% of the outstanding
shares of the Westcore Small-Cap Opportunity Fund, and, therefore, under
the 1940 Act, they may be deemed to be a controlling person of the Trust
and Fund, respectively.
INQUIRIES
Please write or call Westcore Trust at the address or telephone number listed
on the cover of this Prospectus with any inquiries you may have regarding the
Funds.
-30-
<PAGE>
SUPPLEMENTAL INFORMATION
INFORMATION ON INVESTMENT POLICIES
AND ADDITIONAL RISK FACTORS
Denver Investment Advisors uses a range of different investments and investment
techniques in seeking to achieve a Fund's investment objective. All Funds do
not use all of the investments and investment techniques described below. The
Westcore MIDCO Growth, Blue Chip, Growth and Income and Small-Cap Opportunity
Funds are referred to collectively as the "Westcore Equity Funds." The Westcore
Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds are
referred to collectively as the "Westcore Bond Funds."
MUNICIPAL OBLIGATIONS (WESTCORE BOND FUNDS)
Municipal Obligations include: (i) "general obligation" securities which are
secured by the issuer's full faith, credit and taxing power; (ii) revenue
securities which are payable only from the revenues derived from a particular
facility or other specific revenue source such as the user of the facility
being financed; (iii) "moral obligation" securities which are normally issued
by special purpose public authorities; and (iv) private activity bonds (such
as bonds issued by industrial development authorities) which are usually
revenue securities issued by or for public authorities to finance a
privately-operated facility.
In many cases, the Internal Revenue Service has not ruled on whether the
interest received on a Municipal Obligation is tax-exempt and, accordingly,
purchases of these securities are based on the opinion of bond counsel to the
issuers at the time of issuance. The Funds and the Investment Adviser rely
on these opinions and will not review the bases for them.
SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN COLORADO OBLIGATIONS (WESTCORE
COLORADO TAX-EXEMPT FUND)
The Fund normally invests at least 65% of its total assets in Colorado
Obligations. If Colorado or any of its political subdivisions suffers
serious financial difficulties such that its ability to pay its obligations
might be jeopardized, the ability of such entities to market their
securities, and the value of the Fund, could be adversely affected.
U.S. GOVERNMENT OBLIGATIONS (ALL WESTCORE FUNDS)
Each Fund may invest in obligations issued or guaranteed by the U.S.
government, its agencies or instrumentalities. Direct obligations of the
U.S. government such as Treasury bills, notes and bonds are supported by its
full faith and credit. Indirect obligations issued by federal agencies and
government sponsored entities generally are not backed by the full faith and
credit of the U.S. Treasury. Some of these indirect obligations may be
supported by the right of the issuer to borrow from the Treasury; others are
supported by the discretionary authority of the U.S. government to purchase
the agency's obligations; still others are supported only by the credit of
the instrumentality.
MONEY MARKET INSTRUMENTS (ALL WESTCORE FUNDS)
Each Fund may invest from time to time in money market instruments such as
bank obligations, commercial paper and corporate bonds with remaining
maturities of 13 months or less. Bank obligations include bankers'
acceptances, certain negotiable certificates of deposit and time deposits
such as U.S. dollar-denominated instruments issued or supported by the credit
of U.S. or foreign banks. Commercial paper is a short-term debt obligation
with a maturity ranging from 1 to 270 days issued by banks, corporations and
other borrowers.
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<PAGE>
VARIABLE AND FLOATING RATE INSTRUMENTS (WESTCORE BOND FUNDS)
These Funds may purchase variable and floating rate demand instruments,
including variable amount master demand notes, issued by corporations,
industrial development authorities and governmental entities.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS (ALL WESTCORE FUNDS)
In a repurchase agreement, a Fund agrees to purchase portfolio securities
subject to the seller's agreement to repurchase them at a mutually agreed
upon date and price. Repurchase agreements involve the risk that the seller
will fail to repurchase the securities, as agreed. In that event, the Fund
will bear the risk of possible loss due to adverse market action or delays in
liquidating the underlying obligations. Repurchase agreements are considered
to be loans under the 1940 Act.
Each Fund may borrow money for temporary purposes by entering into reverse
repurchase agreements. Under these agreements, a Fund sells portfolio
securities to financial institutions and agrees to buy them back later at an
agreed upon time and price. Reverse repurchase agreements involve the risk
of counterparty default and possible loss of collateral held by the
counterparty.
LOWER-RATED SECURITIES (WESTCORE MIDCO GROWTH, GROWTH AND INCOME AND
SMALL-CAP OPPORTUNITY FUNDS)
Investments in issuers of securities rated below investment grade (commonly
known as "junk bonds") are considered to be more speculative than securities
rated investment grade and higher. There are particular risks associated
with these securities, including: (a) the relative youth and growth of the
market; (b) their greater sensitivity to interest rate and economic changes
which could negatively affect their value and the ability of issuers to make
principal and interest payments; (c) the relatively low trading market
liquidity for the securities which may adversely affect the price at which
they could be sold; (d) a greater risk of default or price changes due to
changes in the issuer's creditworthiness; and (e) the adverse impact that
legislation restricting lower-rated securities may have on their market.
SECURITIES LENDING (ALL WESTCORE FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND)
These Funds may lend their portfolio securities to institutional investors as
a means of earning additional income. Securities loans present risks of
delay in receiving collateral or in recovering the securities loaned or even
a loss of rights in the collateral if the borrower of the securities fails
financially. A loan will not be made if, as a result, the total amount of a
Fund's outstanding loans exceeds 30% of its total assets.
RESTRICTED SECURITIES (ALL WESTCORE FUNDS)
No Fund will knowingly invest more than 15% of the value of its net assets in
securities that are illiquid. Illiquid securities include repurchase
agreements, securities loans and time deposits that are not terminable within
7 days, certain municipal leases and certain securities that are not
registered under the securities laws. Pursuant to guidelines adopted by the
Board of Trustees, the Investment Adviser may determine that certain
securities that are not registered under the Securities Act of 1933 are not
illiquid and therefore are not subject to this 15% limitation. However,
there can be no assurance that a liquid market will exist for any security at
a particular time.
In addition, the purchase of such securities could have the effect of
increasing the level of illiquidity of the Funds during periods that
qualified institutional buyers become uninterested in purchasing these
restricted securities.
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<PAGE>
CONVERTIBLE SECURITIES (ALL WESTCORE FUNDS, OTHER THAN BLUE CHIP AND COLORADO
TAX-EXEMPT FUNDS)
These Funds may invest in convertible securities, including bonds and
preferred stocks, that may be converted into common stock at a specified
price or conversion ratio. The Funds use the same research intensive
approach and valuation techniques for selecting convertible securities as are
used for the selection of common stocks.
The value of a convertible security is influenced by both interest rates and
the value of the underlying common stock. Investments in convertible
securities, including in particular those with lower ratings, involve the
risk that the securities, when converted, may be worth less than the
prestated price.
ASSET-BACKED SECURITIES (WESTCORE BOND FUNDS, OTHER THAN COLORADO TAX-EXEMPT
FUND)
These Funds may purchase asset-backed securities which are securities backed
by installment sale contracts, credit card receivables or other assets. The
yield characteristics of asset-backed securities differ from traditional debt
securities. A major difference is that the principal amount of the
obligations may be prepaid at any time because the underlying assets (I.E.,
loans) generally may be prepaid at any time. The prepayment rate is
primarily a function of current market rates and conditions. In periods of
rising interest rates, the rate of prepayment tends to increase. During
periods of falling interest rates, the reinvestment of prepayment proceeds by
a Fund will generally be at a lower rate than the rate on the prepaid
obligation. Prepayments may also result in some loss of a Fund's principal
investment if any premiums were paid. As a result of these yield
characteristics, some high-yielding asset-backed securities may have less
potential for growth in value than conventional bonds with comparable
maturities. These characteristics may result in a higher level of price
volatility for these assets under certain market conditions.
Asset-backed securities are subject to greater risk of default during periods
of economic downturn than conventional debt instruments and the holder
frequently has no recourse against the entity that originated the security.
In addition, the secondary market for certain asset-backed securities may not
be as liquid as the market for other types of securities which could result
in the Funds' experiencing difficulty in valuing or liquidating such
securities.
MORTGAGE-RELATED SECURITIES (WESTCORE BOND FUNDS, OTHER THAN COLORADO
TAX-EXEMPT FUND)
These Funds may invest in mortgage-related securities issued or guaranteed by
U.S. government agencies and private issuers. They may include mortgage
pass-through certificates, which provide the holder with a pro rata interest
in the underlying mortgages, and collateralized mortgage obligations
("CMOs"), which provide the holder with a specified interest in the cash flow
of a pool of underlying mortgages or other mortgage-backed securities.
Issuers of CMOs frequently elect to be taxed as pass-through entities known
as real estate mortgage investment conduits ("REMICs"). CMOs are issued in
multiple classes, each with a specified fixed or floating interest rate and a
final distribution date.
Mortgage-related securities involve risks similar to those described above
under "Asset-Backed Securities" including prepayment risks. In addition,
CMOs may exhibit more price volatility and interest rate risk than other
types of mortgage-related obligations.
OPTIONS AND FUTURES (ALL WESTCORE FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND)
These Funds may buy put options and call options and write covered call and
secured put options on securities and securities indices. A put option gives
the buyer the right to sell, and the writer the obligation to buy, the
underlying security at the stated exercise price at any time prior to the
expiration date of the option. Writing a secured put option means that a
Fund maintains in a segregated account with its custodian cash or U.S.
Government securities in an amount not less than the exercise price of the
option at all times during the option period. A call option gives the buyer
the right to buy the underlying security at the stated exercise price at any
time prior to the expiration of the option. Writing a covered call option
means that a Fund owns or has the
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<PAGE>
right to acquire the underlying security subject to call at the stated
exercise price at all times during the option period. Options involving
securities indices provide the holder with the right to make or receive a
cash settlement upon exercise of the option based on movements in the index.
Options purchased by a Fund will not exceed 5%, and options written by a Fund
will not exceed 25%, of its net assets. All options will be listed on a
national securities exchange and issued by the Options Clearing Corporation.
These Funds may also invest to a limited extent in futures contracts and
options on futures contracts in order to reduce their exposure to movements
of security prices pending investment, for hedging purposes or to maintain
liquidity. Futures contracts obligate a Fund, at maturity, to take or make
delivery of certain securities or the cash value of a contract or securities
index. Each Fund may also purchase and sell call and put options on futures
contracts traded on an exchange or board of trade.
In accordance with regulations of the Commodity Futures Trading Commission, a
Fund's commodities transactions must constitute bona fide hedging or other
permissible transactions. In addition, a Fund may not engage in commodities
transactions if the sum of the amount of initial margin deposits and premiums
paid for related options, other than for bona fide hedging transactions,
would exceed 5% of its assets (after certain adjustments). In connection
with a position in a futures contract or related option, a Fund will create a
segregated account of liquid high-grade assets or will otherwise cover its
position in accordance with SEC requirements.
Options trading and futures transactions are highly specialized activities
and carry greater than ordinary investment risks. The primary risks
associated with the use of options and futures contracts are: (1) options
and futures may fail as hedging techniques where the price movements of the
securities underlying them do not follow the price movements of the portfolio
securities subject to the hedge; (2) a Fund will likely be unable to control
losses by closing its position in these investments where a liquid secondary
market does not exist; (3) losses from investing in futures transactions due
to unanticipated market movements are potentially unlimited; and (4) gains
and losses on investments in options and futures depend on the Investment
Adviser's ability to predict correctly the direction of securities prices,
interest rates and other economic factors.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS (WESTCORE EQUITY FUNDS, OTHER THAN BLUE
CHIP FUND)
Because these Funds may buy and sell securities and receive amounts
denominated in currencies other than the U.S. dollar, they may enter into
currency exchange transactions from time to time. A Fund will purchase
foreign currencies on a "spot" or cash basis at the prevailing rate in the
foreign currency exchange market or enter into forward foreign currency
exchange contracts. Under these contracts the Fund would agree with a
financial institution to purchase or sell a stated amount of a foreign
currency at a specified price, with delivery to take place at a specified
date in the future. Because there is a risk of loss to a Fund if the other
party does not complete the transaction, these contracts will be entered into
only with parties approved by the Fund's Board of Trustees.
A Fund may maintain "short" positions in forward foreign currency exchange
transactions whereby the Fund would agree to exchange currency that it
currently did not own for another currency at a future date and at a
specified price. This would be done in anticipation of a decline in the value
of the currency sold short relative to the other currency and not for
speculative purposes. In order to ensure that the short position is not used
to achieve leverage with respect to a Fund's investments, the Fund would
establish with its custodian a segregated account consisting of cash or
certain liquid high-grade debt securities equal in value to the market value
of the currency involved.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (ALL WESTCORE FUNDS)
Each Fund may purchase or sell securities on a "when-issued" or "forward
commitment" basis which involves a commitment by the Fund to purchase or sell
particular securities with payment and delivery taking place at a future
date. These transactions permit a Fund to lock-in a price or yield on a
security it owns or intends to purchase, regardless of future changes in
interest rates. The Fund would bear the risk, however, that the price or
yield obtained in a transaction may be less favorable than the price or yield
available in the market when the
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<PAGE>
delivery occurs. Because a Fund is required to set aside cash or liquid
high-grade debt obligations in a segregated account to satisfy these purchase
commitments, its liquidity and ability to manage its portfolio might be
affected during periods in which its commitments exceed 25% of the value of
its assets. The Funds do not intend to engage in when-issued purchases and
forward commitments for speculative purposes.
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES (ALL WESTCORE FUNDS)
Each Fund may invest in securities issued by other investment companies
subject to the requirements of applicable securities laws. When a Fund
invests in another investment company, it pays a pro rata portion of the
advisory and other expenses of that company as a shareholder of that company.
These expenses would be in addition to the Fund's own expenses.
FOREIGN SECURITIES (ALL WESTCORE FUNDS, OTHER THAN BLUE CHIP FUND)
There are risks and costs involved in investing in securities of foreign
issuers (including foreign governments), which are in addition to the usual
risks inherent in U.S. investments. Investments in foreign securities may
involve higher costs than investments in U.S. securities, including higher
transaction costs as well as the imposition of additional taxes by foreign
governments. Foreign investments may involve further risks associated with
the level of currency exchange rates, less complete financial information
about the issuer, less market liquidity and political instability. Future
political and economic developments, the possible imposition of withholding
taxes on interest income, the possible seizure or nationalization of foreign
holdings, the possible establishment of exchange controls or the adoption of
other governmental restrictions might adversely affect the payment of
principal and interest on foreign obligations. Moreover, foreign banks and
foreign branches of domestic banks may be subject to less stringent reserve
requirements and to different accounting, auditing and recordkeeping
requirements.
Investments in foreign securities may be in the form of American Depository
Receipts ("ADRs"), European Depository Receipts ("EDRs") and similar
securities. These securities may not be denominated in the same currency as
the securities they represent. ADRs are receipts typically issued by a
United States bank or trust company, and EDRs are receipts issued by a
European financial institution evidencing ownership of the underlying foreign
securities.
STAND-BY COMMITMENTS (WESTCORE COLORADO TAX-EXEMPT FUND)
The Fund may acquire stand-by commitments under which a dealer agrees to
purchase certain Municipal Obligations at the Fund's option at a price equal
to their amortized cost value plus interest. These commitments will be used
only to assist in maintaining the Fund's liquidity and not for trading
purposes.
PORTFOLIO TURNOVER (ALL WESTCORE FUNDS)
A Fund may sell a portfolio investment soon after it is purchased if the
Investment Adviser believes that a sale is consistent with the Fund's
investment objective. A high rate of portfolio turnover involves
correspondingly greater brokerage commission expenses, tax consequences
(including the possible realization of additional taxable capital gains and
income) and other transaction costs, which must be borne directly by the Fund
involved and ultimately by its shareholders.
RISK FACTORS ASSOCIATED WITH DERIVATIVE INSTRUMENTS (ALL WESTCORE FUNDS)
Each Fund may purchase certain "derivative" instruments as described above
under various headings. Derivative instruments are instruments that derive
value from the performance of underlying assets, interest or currency
exchange rates, or indices, and include, but are not limited to, futures
contracts, options, forward
-35-
<PAGE>
currency contracts and structured debt obligations (including collateralized
mortgage obligations and other types of asset-backed securities and various
floating rate instruments, including inverse floaters).
Derivative instruments present, to varying degrees, market risk that the
performance of the underlying assets, exchange rates or indices will decline;
credit risk that the dealer or other counterparty to the transaction will
fail to pay its obligations; volatility and leveraging risk that, if interest
or exchange rates change adversely, the value of the derivative instrument
will decline more rapidly than the assets, rates or indices on which it is
based; liquidity risk that a Fund will be unable to sell a derivative
instrument when it wants because of lack of market depth or market
disruption; pricing risk that the value of a derivative instrument (such as
an option) will not correlate exactly to the value of the underlying assets,
rates or indices on which it is based or may be difficult to determine
because of a lack of reliable objective information and an established
secondary market; and operations risk that loss will occur as a result of
inadequate systems and controls, human error or otherwise. Many of these
instruments are proprietary products that have been recently developed by
investment banking firms and it is uncertain how they will perform under
different economic and interest rate scenarios.
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<PAGE>
APPENDIX
RATING CATEGORIES
BOND
RATING EXPLANATION
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STANDARD & POOR'S AAA Highest rating; extremely strong capacity
RATINGS GROUP, DIVISION to pay interest and repay principal.
OF MCGRAW HILL
----------------------------------------------------
AA High quality; very strong capacity to pay
interest and repay principal.
----------------------------------------------------
A Strong capacity to pay interest and repay
principal; somewhat more susceptible to
the adverse effects of changing
circumstances and economic conditions.
----------------------------------------------------
BBB Adequate capacity to pay interest and
repay principal; normally exhibit adequate
protection parameters, but adverse
economic conditions or changing
circumstances more likely to lead to a
weakened capacity to pay interest and
repay principal than for higher rated
bonds.
----------------------------------------------------
BB, B, Predominantly speculative with respect to
CCC, CC, the issuer's capacity to meeting required
C interest and principal payments. BB-
lowest degree of speculation; C-the
highest degree of speculation. Quality
and protective characteristics outweighed
by large uncertainties or major risk
exposure to adverse conditions.
----------------------------------------------------
D In default.
----------------------------------------------------
----------------------------------------------------
MOODY'S INVESTORS Aaa Highest quality, smallest degree of
SERVICE, INC. investment risk.
----------------------------------------------------
Aa High quality; together with Aaa bonds,
they compose the high-grade bond group.
----------------------------------------------------
A Upper medium-grade obligations; some
favorable investment attributes.
----------------------------------------------------
Baa Medium-grade obligations; neither highly
protected nor poorly secured. Interest
and principal payments appear adequate for
the present but certain protective
elements may be lacking or may be
unreliable over any great length of time.
Some speculative characteristics.
----------------------------------------------------
Ba More uncertain, with speculative elements.
Questionable protection of interest and
principal payments.
----------------------------------------------------
B Lack characteristics of desirable
investment; potentially low assurance of
timely interest and principal payments or
maintenance of other contract terms over
time.
----------------------------------------------------
Caa Poor standing, may be in default; elements
of danger with respect to principal or
interest payments.
----------------------------------------------------
Ca Speculative in a high degree; may be in
default.
----------------------------------------------------
C Lowest-rated; extremely poor prospects of
ever attaining investment standing.
----------------------------------------------------
D In default.
----------------------------------------------------
----------------------------------------------------
<PAGE>
CROSS REFERENCE SHEET
MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity
Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt
Fund
Statement of Additional Information
<TABLE>
FORM N-1A PART B ITEM INFORMATION CAPTION
- --------------------- -------------------
<S> <C> <C>
10. Cover Page . . . . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents. . . . . . . . . . . . . . . . Table of Contents
12. General Information and History. . . . . . . . . Description of Shares
13. Investment Objectives and Policies . . . . . . . Investment Objectives, Policies
and Risk Factors
14. Management of Registrant . . . . . . . . . . . . Management
15. Control Persons and Principal. . . . . . . . . . Description of Shares
Holders of Securities
16. Investment Advisory and Other Services . . . . . Management
17. Brokerage Allocation and other Practices . . . . Investment Objectives,
Policies and Risk Factors
18. Capital Stock and Other Securities . . . . . . . Net Asset Value; Additional
Purchase and Redemption
Information; Description of Shares
19. Purchase, Redemption and Pricing . . . . . . . . Net Asset Value
of Securities Being Offered
Additional Purchase and Redemption Information
20. Tax Status . . . . . . . . . . . . . . . . . . . Additional Information
Concerning Taxes
21. Underwriters . . . . . . . . . . . . . . . . . . Not Applicable
22. Calculation of Performance Data. . . . . . . . . Additional Information on
Performance
23. Financial Statements . . . . . . . . . . . . . . Report of Independent Public
Accountant; Financial Statements
</TABLE>
<PAGE>
WESTCORE TRUST
Statement of Additional Information
for
MIDCO Growth Fund
Blue Chip Fund
Growth and Income Fund
Small-Cap Opportunity Fund
Long-Term Bond Fund
Intermediate-Term Bond Fund
Colorado Tax-Exempt Fund
October 1, 1996
TABLE OF CONTENTS
PAGE
----
THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . .
NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . .
DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL INFORMATION CONCERNING TAXES. . . . . . . . . . . . . . . . . . . .
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . .
EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS . . . . . . . . . . . . . .
MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . FS-1
This Statement of Additional Information is meant to be read in
conjunction with the Funds' Prospectus dated October 1, 1996, as the same is
revised from time to time, and is incorporated by reference in its entirety into
the Prospectus. Because this Statement of Additional Information is not itself
a prospectus, no investment in shares of the Funds should be made solely based
upon the information contained herein. Audited financial statements for the
Funds as of May 31, 1996 are attached hereto. Copies of the Funds' Prospectus
and financial statements may be obtained by calling 1-800-392-CORE (2673) or by
writing ALPS Mutual Funds Services, Inc. at 370 Seventeenth Street, Suite 2700,
Denver, Colorado 80202. Capitalized terms used but not defined herein have the
same meanings as in the Prospectus.
<PAGE>
THE TRUST
Westcore Trust (the "Trust") is a Massachusetts business trust which
was organized on December 10, 1985 as an open-end management investment company.
The Trust's predecessor was originally incorporated in Maryland on January 11,
1982.
The Trust is authorized to issue separate classes of shares
representing interests in separate investment portfolios. This Statement of
Additional Information pertains to the MIDCO Growth Fund, Blue Chip Fund, Growth
and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund, Intermediate-
Term Bond Fund and Colorado Tax-Exempt Fund (each, a "Fund" and collectively,
the "Funds"). The MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund and
Small-Cap Opportunity Fund are sometimes referred to as the "Equity Funds." The
Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund
are sometimes referred to as the "Bond Funds." For information concerning any
investment portfolios offered by the Trust, contact ALPS Mutual Fund Services,
Inc. ("ALPS") at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202 or
call 1-800-392-CORE (2673).
INVESTMENT OBJECTIVES AND POLICIES
The Prospectus for the Funds describes the Funds' investment
objectives. The following information supplements and should be read in
conjunction with the description of the investment objective and policies for
each Fund in the Prospectus.
PORTFOLIO TRANSACTIONS
Denver Investment Advisors LLC ("Denver Investment Advisors" or the
"Investment Adviser") serves as the investment adviser to the Funds pursuant to
an investment advisory agreement (the "Advisory Agreement").
Subject to the general supervision of the Trust's Board of Trustees
and the provisions of the Trust's Advisory Agreement relating to the Funds,
Denver Investment Advisors makes decisions with respect to and places orders for
all purchases and sales of portfolio securities for the Funds.
The annualized portfolio turnover rate for each Fund is calculated by
dividing the lesser of purchases or sales of portfolio securities for the year
by the monthly average value of the portfolio securities. The calculation
excludes all securities, including options, that have maturities or expiration
dates at the time of acquisition of one year or less. Portfolio turnover may
vary greatly from year to year as well as within a particular year, and may be
affected by cash requirements for redemption of shares and by requirements which
enable the Funds to receive favorable tax treatment. Portfolio turnover will
not be a limiting factor in making portfolio decisions, and each Fund may engage
in short-term trading to achieve its investment objective.
Transactions on U.S. stock exchanges involve the payment of negotiated
brokerage commissions. On exchanges on which commissions are negotiated, the
cost of transactions may vary among different brokers. During the fiscal years
ended May 31, 1996, 1995 and 1994, the Funds paid the following amounts in
brokerage commissions:
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BROKERAGE COMMISSIONS PAID
Year Ended Year Ended Year Ended
May 31, May 31, May 31,
Fund 1996 1995 1994
---- ---------- ---------- ----------
MIDCO Growth Fund $ 674,234 $ 394,695 $ 283,999
Blue Chip Fund 86,601 68,775 42,353
Growth and Income Fund 61,996 100,312 58,385
Intermediate-Term Bond Fund 2,343 0 0
Small-Cap Opportunity Fund 48,650 30,619 4,918
--------- --------- ---------
Aggregate Commissions $ 873,824 $ 594,401 $ 582,274
--------- --------- ---------
--------- --------- ---------
For the same periods the Long-Term Bond Fund and Colorado Tax-Exempt
Fund did not pay any brokerage commissions. During the fiscal years ended May
31,1996, 1995 and 1994, no brokerage commissions were paid by any Funds to an
affiliated broker of the Trust.
There is generally no stated commission in the case of portfolio
securities traded in the over-the-counter market, but the price includes an
undisclosed commission or mark-up. Securities purchased and sold by the Funds
are generally traded in the over-the-counter market on a net basis (i.e.,
without commission) through dealers, or otherwise involve transactions directly
with the issuer of an instrument. Transactions in the over-the-counter market
are generally principal transactions with dealers and the costs of such
transactions involve dealer spreads rather than brokerage commissions. With
respect to over-the-counter transactions, Denver Investment Advisors will
normally deal directly with the dealers who make a market in the securities
involved, except in those circumstances where better prices and execution terms
are available elsewhere or as described below. The cost of securities purchased
from underwriters includes an underwriting commission or concession, and the
prices at which securities are purchased from and sold to dealers include a
dealer's mark-up or mark-down.
The Funds may participate, if and when practicable, in bidding for the
purchase of portfolio securities directly from an issuer in order to take
advantage of the lower purchase price available to members of a bidding group.
A Fund will engage in this practice, however, only when the Investment Adviser,
in its sole discretion, believes such practice to be otherwise in the Fund's
interests.
The Advisory Agreement for the Funds provides that the Investment
Adviser will seek to obtain the best overall terms available in executing
portfolio transactions and selecting brokers or dealers. In assessing the best
overall terms available for any transaction, Denver Investment Advisors will
consider all factors it deems relevant, including the breadth of the market in
the security, the price of the security, the financial condition and execution
capability of the broker or dealer, and the reasonableness of the commission, if
any, both for the specific transaction and on a continuing basis. In addition,
the Advisory Agreement authorizes Denver Investment Advisors to cause any of the
Funds to pay a broker-dealer that furnishes brokerage and research services a
higher commission than that charged by another broker-dealer for effecting the
same transaction, provided that Denver Investment Advisors determines in good
faith that the commission is reasonable in relation to the value of the
brokerage and research services provided by the broker-dealer, viewed in terms
of that particular transaction or the overall responsibilities of Denver
Investment Advisors to the Fund. Such brokerage and research services might
consist of reports and statistics of specific companies or industries,
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general summaries of groups of stocks or bonds and their comparative earnings
and yields, or broad overviews of the stock, bond and government securities
markets and the economy.
Supplemental research information so received is in addition to, and
not in lieu of, services required to be performed by the Investment Adviser and
does not reduce the advisory fees payable by the Funds. The Trustees will
periodically review the commissions paid by the Funds to consider whether the
commissions paid over representative periods of time appear to be reasonable in
relation to the benefits inuring to the Funds. It is possible that certain of
the supplementary research or other services received will primarily benefit one
or more other investment companies or other accounts for which investment
discretion is exercised by the Investment Adviser. Conversely, a Fund may be
the primary beneficiary of the research or services received as a result of
portfolio transactions effected for such other account or investment company.
The Funds may from time to time purchase securities issued by the
Trust's regular broker/dealers (as defined in Rule 10b-1 under the Investment
Company Act of 1940, as amended (the "1940 Act") or their parents. As of
May 31, 1996, the Intermediate-Term Bond Fund held securities of the Trust's
regular broker/dealers (or their parents) that derive more than 15% of their
gross revenues from securities-related activities. As of that date, the Fund's
aggregate holdings of securities of Merrill Lynch & Co. was $1,101,305. Also as
of May 31, 1996, the MIDCO Growth, Blue Chip, Growth and Income, Small-Cap
Opportunity, Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt
Funds held securities of the Provident Institutional Funds in the amounts of
$25,039,069, $547,243, $812,281, $966,615, $19,360, $3,301,665 and $623,906,
respectively.
Portfolio securities will not be purchased from or sold to (and
savings deposits will not be made in and repurchase and reverse repurchase
agreements will not be entered into with) the Investment Adviser, ALPS or an
affiliated person (as the term is defined in the 1940 Act) acting as principal,
except to the extent permitted by the Securities and Exchange Commission (the
"SEC"). However, Denver Investment Advisors is authorized in allocating
purchase and sale orders for portfolio securities to broker/dealers and other
financial institutions (including institutions that are affiliated with the
Investment Adviser or principal underwriter) to take into account the sale of
Fund shares if Denver Investment Advisors believes that the quality of the
transaction and the amount of the commission are comparable to those of other
qualified brokerage firms. In addition, the Colorado Tax-Exempt Fund will not
purchase securities during the existence of any underwriting group or related
selling group of which ALPS, the Investment Adviser, or any affiliated person of
any of them, is a member, except to the extent permitted by the SEC. In certain
circumstances, the Funds may be at a disadvantage because of these limitations
in comparison with other investment companies which have similar investment
objectives but are not subject to such limitations.
Investment decisions for each Fund are made independently from those
for the other Funds and investment companies and accounts advised or managed by
the Investment Adviser. Such other investment companies and accounts also may
invest in the same securities as the Funds. When a purchase or sale of the same
security is made at substantially the same time on behalf of a Fund and another
investment company or account, the available securities will be allocated
between the Fund and the other purchaser in a manner which Denver Investment
Advisors believes to be equitable to both. In some instances, this may
adversely affect the price paid or received by a Fund or the size of the
position obtained by or disposed of by the Fund. To the extent permitted by
law, Denver Investment Advisors may aggregate the securities to be sold or
purchased for a Fund with those to be sold or purchased for other investment
companies or accounts in executing transactions.
MOODY'S AND S&P RATINGS
The ratings of ratings agencies represent their opinions as to the
quality of debt securities. It should be emphasized, however, that ratings are
general and are not absolute standards of quality, and debt securities with the
same maturity, interest rate and rating may have different yields while debt
securities of the
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same maturity and interest rate with different ratings may have the
same yield. Subsequent to purchase by a Fund, an issue of debt securities
may cease to be rated or its rating may be reduced below the minimum rating
required for purchase by a Fund. Denver Investment Advisors will consider
such an event in determining whether the Fund involved should continue to
hold the obligation.
The payment of principal and interest on most debt securities
purchased by the Funds will depend upon the ability of the issuers to meet their
obligations. An issuer's obligations under its debt securities are subject to
the provisions of bankruptcy, insolvency, and other laws affecting the rights
and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if
any, which may be enacted by federal or state legislatures extending the time
for payment of principal or interest, or both, or imposing other constraints
upon enforcement of such obligations or, in the case of governmental entities,
upon the ability of such entities to levy taxes. The power or ability of an
issuer to meet its obligations for the payment of interest and principal of its
debt securities may be materially adversely affected by litigation or other
conditions.
MUNICIPAL OBLIGATIONS (BOND FUNDS)
Municipal Obligations include "general obligation" securities,
"revenue" securities, private activity bonds and "moral obligation" securities.
General obligation securities are secured by the issuer's pledge of its full
faith, credit and taxing power. Revenue securities are payable only from the
revenues derived from a particular facility, the proceeds of a special excise
tax or another specific revenue source such as the user of the facility being
financed. Private activity bonds (E.G., bonds issued by industrial development
authorities) are issued by or on behalf of public authorities to finance various
privately-operated facilities. Such bonds are included within the term
"Municipal Obligations" only if the interest paid thereon is exempt from regular
federal income tax and, for the Colorado Tax-Exempt Fund, not treated as a
specific tax preference item under the federal alternative minimum tax. Private
activity bonds are in most cases revenue securities and are not payable from the
unrestricted revenues of the issuer. The credit quality of such bonds is
usually directly related to the credit standing of the corporate user of the
facility involved. Moral obligation securities are normally issued by special
purpose public authorities. If the issuer is unable to meet its debt service
obligations from current revenues, it may draw on a reserve fund, the
restoration of which is a moral commitment but not a legal obligation of the
state or municipality which created the issuer.
Certain of the Municipal Obligations held by the Colorado Tax-Exempt
Fund may be insured as to the timely payment of principal and interest. There
is no guarantee, however, that the insurer will meet its obligations in the
event of the issuer's default. In addition, such insurance will not protect
against market fluctuations caused by changes in interest rates and other
factors.
Although the Colorado Tax-Exempt Fund will invest most of its assets,
under normal circumstances, in intermediate-term Municipal Obligations, the Fund
may also purchase short-term General Obligation Notes, Tax Anticipation Notes,
Bond Anticipation Notes, Revenue Anticipation Notes, Tax-Exempt Commercial
Paper, Construction Loan Notes and other forms of short-term tax-exempt loans.
Such instruments are issued with a short-term maturity in anticipation of the
receipt of tax funds, the proceeds of bond placements or other revenues.
Within the types of Municipal Obligations described above there are
other categories, including municipal leases, which are often sold in the form
of certificates of participation. These obligations are issued by state and
local governments or authorities to finance the acquisition of equipment and
facilities. Certain of these obligations present the risk that a municipality
may not appropriate funds for the lease payments. Moreover, lease obligations
may be limited by municipal charter or other provisions that do not permit
acceleration of the lease obligation upon default. Because certificates of
participation are generally subject to redemption by the issuing municipal
entity under specified circumstances, they are not as liquid or marketable as
other types of Municipal Obligations and are generally valued at par or less
than par in the open market.
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There are variations in the quality of Municipal Obligations both
within a particular classification and between classifications, and the yields
on Municipal Obligations depend upon a variety of factors, including general
money market conditions, the financial condition of the issuer, general
conditions of the municipal bond market, the size of a particular offering, the
maturity of the obligation and the rating of the issue.
Payment on Municipal Obligations relating to certain projects may be
secured by mortgages or deeds of trust. In the event of a default, enforcement
of the mortgages or deeds of trust will be subject to statutory enforcement
procedures and limitations.
In the event of a foreclosure, collection of proceeds may be delayed
and may not be sufficient to pay the principal or accrued interest on the
defaulted Municipal Obligations.
STAND-BY COMMITMENTS (COLORADO TAX-EXEMPT FUND)
The Fund may acquire stand-by commitments with respect to Municipal
Obligations held in its portfolio. Under a stand-by commitment, a dealer or
bank agrees to purchase from the Fund, at the Fund's option, specified Municipal
Obligations at a specified price. The amount payable to the Fund upon its
exercise of a stand-by commitment is normally (i) the Fund's acquisition cost of
the Municipal Obligations (excluding any accrued interest which the Fund paid on
their acquisition), less any amortized market premium plus any amortized market
or original issue discount during the period the Fund owned the securities, plus
(ii) all interest accrued on the securities since the last interest payment date
during that period. Stand-by commitments may be sold, transferred or assigned
by the Fund only with the underlying instrument.
The Fund intends to enter into stand-by commitments only with dealers,
banks and broker-dealers which, in the Investment Adviser's opinion, present
minimal credit risks. The Fund's reliance upon the credit of these dealers,
banks and broker-dealers will be secured by the value of the underlying
Municipal Obligations that are subject to the commitment. In evaluating the
creditworthiness of the issuer of a stand-by commitment, the Investment Adviser
will review periodically the issuer's assets, liabilities, contingent claims and
other relevant financial information.
The Fund will acquire stand-by commitments solely to facilitate
portfolio liquidity and does not intend to exercise its rights thereunder for
trading purposes. The acquisition of a stand-by commitment would not affect the
valuation or assumed maturity of the underlying Municipal Obligations, which
would continue to be valued in accordance with the Fund's normal method of
valuation. Stand-by commitments acquired by the Fund would be valued at zero in
determining net asset value.
SPECIAL CONSIDERATIONS REGARDING INVESTMENTS IN COLORADO OBLIGATIONS (COLORADO
TAX-EXEMPT FUND)
The concentration of the Colorado Tax-Exempt Fund in securities issued
by governmental units of only one state exposes the Fund to risks greater than
those of a more diversified portfolio holding securities issued by governmental
units of different states and different regions of the country.
The Fund believes the information summarized below describes some of
the more significant developments relating to securities of (i) municipalities
or other political subdivisions or instrumentalities of the State of Colorado
(the "State") which rely, in whole or in part, on AD VALOREM real property taxes
and other general funds of such municipalities or political subdivisions or (ii)
the State. The sources of such information include the official publications of
the State, as well as other publicly available documents. The Fund has not
independently verified any of the information contained in such official
publications and other publicly available documents, but is not aware of any
facts which would render such information inaccurate.
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ECONOMIC FACTORS. Based on data published by the State of Colorado, Office of
State Planning and Budgeting as presented in the COLORADO ECONOMIC PERSPECTIVE,
FOURTH QUARTER, FISCAL YEAR 1966, JUNE 20, 1996 (the "Economic Report"), nearly
55% of non-agricultural employment in Colorado in 1995 was concentrated in the
retail and wholesale trade and service sectors, reflecting the importance of
tourism to the State's economy and of Denver as a regional economic and
transportation hub. The government and manufacturing sectors followed as the
next largest employment sectors in the State, representing approximately 16.5%
and 10.4%, respectively, of non-agricultural employment in the State in 1995.
The Office of Planning and Budgeting projects similar concentrations for
calendar years 1996 and 1997.
According to the Economic Report, the unemployment rate remained
unchanged with an average of 4.2% during both 1994 and 1995. Total retail sales
increased by 5.1% during 1995. Colorado continued to surpass the employment
growth rate of the U.S. with a 4.7% rate of growth for Colorado in 1995, as
compared with 2.3% for the nation as a whole. However, the rate of job growth
in Colorado is projected in the Economic Report to be lower in 1996 than 1995 as
a result of layoffs at various employers.
Personal income rose 7.7% in Colorado during 1995, as compared with an
increase of 6.1% for the nation as a whole.
RESTRICTIONS OF APPROPRIATIONS AND REVENUES. The State Constitution requires
that expenditures for any fiscal year not exceed revenues for such fiscal year.
By statute, the amount of State General Fund revenues available for
appropriation is based upon revenue estimates which, together with other
available resources, must exceed annual appropriations by the amount of the
unappropriated reserve (the "Unappropriated Reserve"). The Unappropriated
Reserve requirement for fiscal years 1991, 1992 and 1993 was set at 3% of total
appropriations from the General Fund. For fiscal years 1994 and thereafter, the
Unappropriated Reserve requirement is set at 4%. In addition to the
Unappropriated Reserve, a constitutional amendment approved by Colorado voters
in 1992 requires the State and each local government to reserve a certain
percentage of its fiscal year spending (excluding bonded debt service) for
emergency use (the "Emergency Reserve"). The minimum Emergency Reserve was set
at 1% for 1993 and 2% for 1994 and is set at 3% for 1995 and later years. For
fiscal year 1992 and thereafter, General Fund appropriations are also limited by
statute to an amount equal to the cost of performing certain required
reappraisals of taxable property plus an amount equal to the lesser of (i) 5% of
Colorado personal income or (ii) 106% of the total General Fund appropriations
for the previous fiscal year. This restriction does not apply to any General
Fund appropriations which are required as a result of a new federal law, a final
state or federal court order or moneys derived from the increase in the rate or
amount of any tax or fee approved by a majority of the registered electors of
the State voting at any general election. In addition, the statutory limit on
the level of General Fund appropriations may be exceeded for a given fiscal year
upon the declaration of a State fiscal emergency by the State General Assembly.
According to the Economic Report, the fiscal year 1995 ending General
Fund balance was $488.5 million, which was $262.4 million over the combined
Unappropriated Reserve and Emergency Reserve requirement. The 1994 fiscal year
ending General Fund balance was $405.1 million, or $234.0 million over the
required Unappropriated Reserve and Emergency Reserve. Based on the 1996
Economic Report estimates, the fiscal year 1996 ending General Fund balance is
expected to be approximately $315.2 million, or $158.6 million over the required
Unappropriated Reserve and Emergency Reserve.
On November 3, 1992, voters in Colorado approved a constitutional
amendment (the "Amendment") which, in general, became effective December 31,
1992, and restricts the ability of the State and local governments to increase
revenues and impose taxes. The Amendment applies to the State and all local
governments, including home rule entities ("Districts"). Enterprises, defined
as government-owned businesses
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authorized to issue revenue bonds and receiving under 10% of annual revenue
in grants from all Colorado state and local governments combined, are
excluded from the provisions of the Amendment.
The provisions of the Amendment are unclear and have required
judicial interpretation. Among other provisions, the Amendment requires
voter approval prior to tax increases, imposition of a new tax, creation of
debt, or mill levy or valuation for assessment ratio increases or a change of
tax policy resulting in a net revenue gain. The Amendment also limits
increases in government spending and property tax revenues to specified
percentages. The Amendment requires that District property tax revenues
yield no more than the prior year's revenues adjusted for inflation, voter
approved changes, and (except with regard to school districts) local growth
in property values according to a formula set forth in the Amendment. School
districts are allowed to adjust property tax revenue levies for changes in
student enrollment. Pursuant to the Amendment, local government spending is
to be limited by the same formula as the limitation for property tax
revenues. The Amendment limits increases in expenditures from the State
General Fund and program revenues (cash funds) to the growth in inflation
plus the percentage change in State population in the prior calendar year.
The bases for initial spending and revenue limits are fiscal year 1992
spending and 1991 property taxes collected in 1992. The bases for spending
and revenue limits for fiscal year 1994 and later years will be the prior
fiscal year's spending and property taxes collected in the prior calendar
year. Debt service changes, reductions and voter-approved revenue changes
are excluded from the calculation bases. The Amendment also prohibits new or
increased real property transfer tax rates, new State real property taxes and
local District income taxes.
Litigation concerning several issues relating to the Amendment has
been brought in the Colorado courts. The litigation has dealt with three
principal issues: (i) whether Districts can increase mill levies to pay debt
service on general obligation bonds without obtaining voter approval; (ii)
whether a multi-year lease-purchase agreement subject to annual appropriation
is an obligation which requires voter approval prior to execution of the
agreement; and (iii) what constitutes an "enterprise" which is excluded from the
provisions of the Amendment. In September 1994, the Colorado Supreme Court held
that Districts can increase mill levies to pay debt service on voter approved
general obligation bonds issued after the effective date of the Amendment; in
June 1995, the Colorado Supreme Court validated mill levy increases to pay
general obligation bonds issued prior to the Amendment provided that such bonds
or bonds issued to refund such bonds were voter approved. In late 1994, the
Colorado Court of Appeals held that multi-year lease-purchase agreements subject
to annual appropriation do not require voter approval. The time to file an
appeal in that case has expired. Finally, in May 1995, the Colorado Supreme
Court ruled that entities with the power to levy taxes may not themselves be
"enterprises" for purposes of the Amendment; however, the Court did not address
the issue of how valid enterprises may be created. Many Colorado local
governments interpret this decision to mean that a government with taxing power
cannot be an enterprise but that a business activity (such as a utility) owned
by such a government can be. Additional litigation in the "enterprise" arena
may be filed in the future to clarify these issues. Litigation is currently
pending before the Colorado Supreme Court as to whether voters can authorize a
government to keep and spend all revenues received in excess of the spending
limits. Other aspects of the spending limit are being litigated in district
court actions.
According to the Economic Report, for fiscal year 1994, general fund
revenues (adjusted for cash funds that are exempt from the Amendment) were
$3,681.4 million and program revenues (cash funds) were $1,703.7 million, for
revenues totaling $5,385.1 million. During calendar year 1994, population and
inflation grew at rates of 4.2% and 2.9%, respectively, for a combined total
limit of 7.1%. Accordingly, under the Amendment, increases in State
expenditures during the 1995 fiscal year could not exceed $5,767.5 million and
the actual 1995 general fund and program revenues of $5,757.3 million were under
the limit. The limitation for fiscal year 19965 is 7.0% over revenues during
the 1995 fiscal year; accordingly, 1996 fiscal year revenues cannot exceed
$6,160.3 million. Fiscal year 1996 revenues are
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estimated to be $6,087.2 million which is $73.2 million under the limitation.
The limitation for the 1997 fiscal year is currently projected to be 6.6%
which translates to a revenue limit of approximately $6,488.9 million for
fiscal year 1997.
There is also a statutory restriction on the amount of annual
increases in taxes that the various taxing jurisdictions in Colorado can levy
without electoral approval. This restriction does not apply to taxes levied to
pay general obligation debt.
COLORADO STATE FINANCES. As the State experienced revenue shortfalls in the
mid-1980s, it adopted various measures, including impoundment of funds by the
Governor, reduction of appropriations by the General Assembly, a temporary
increase in the sales tax, deferral of certain tax reductions and inter-fund
borrowings. According to State of Colorado Audited Finance Reports, under
generally accepted accounting principles, the State had unrestricted General
Fundending balances at June 30 of approximately $133.3 million in fiscal year
1992, $326.8 million in fiscal year 1993, $320.4 million in fiscal year 1994,
and $408.0 million in fiscal year 1995.
For fiscal year 1995, the following tax categories generated the
following percentages of the State's $3,996.4 million total revenues (accrual
basis): individual income taxes represented 52.7% of gross fiscal year 1995
receipts; sales, use, and other excise taxes represented 32.9% of gross
fiscal year 1995 receipts; and corporate income taxes represented 4.8% of
gross fiscal year 1995 receipts. For fiscal year 1996, General Fund revenues
of approximately $4,239.9 million and appropriations of approximately
$4,413.2 million are projected. The percentages of General Fund revenue
generated by type of tax for fiscal year 1996 are not expected to be
significantly different from fiscal year 1995 percentages.
DEBT. Under its constitution, the State of Colorado is not permitted to issue
general obligation bonds secured by the full faith and credit of the State.
However, certain agencies and instrumentalities of the State are authorized to
issue bonds secured by revenues from specific projects and activities. The
State enters into certain lease transactions which are subject to annual renewal
at the option of the State. In addition, the State is authorized to issue
short-term revenue anticipation notes. Local government units in the State are
also authorized to incur indebtedness. The major source of financing for such
local government indebtedness is an AD VALOREM property tax. In addition, in
order to finance public projects, local governments in the State can issue
revenue bonds payable from the revenues of a utility or enterprise or from the
proceeds of an excise tax, or assessment bonds payable from special assessments.
Colorado local governments can also finance public projects through leases which
are subject to annual appropriation at the option of the local government.
Local governments in Colorado also issue tax anticipation notes. The Amendment
requires prior voter approval for the creation of any multiple fiscal year debt
or other financial obligation whatsoever, except for refundings at a lower rate
or obligations of an enterprise.
Economic conditions in the State may have continuing effects on other
governmental units within the State (including issuers of the Colorado
obligations in the Fund), which, to varying degrees, have also experienced
reduced revenues as a result of recessionary conditions and other factors.
U.S. GOVERNMENT OBLIGATIONS (ALL FUNDS)
Each Fund may invest in obligations issued or guaranteed by the U.S.
Government, its agencies or instrumentalities. Examples of the types of U.S.
Government obligations that may be held by a Fund include, in addition to U.S.
Treasury bonds, notes and bills, the obligations of Federal Home Loan Banks,
Federal Farm Credit Banks, Federal Land Banks, the Federal Housing
Administration, Farmers Home Administration, Export-Import Bank of the United
States, Small Business Administration, Government National Mortgage Association,
Federal National Mortgage Association, General Services Administration, Student
Loan
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Marketing Association, Central Bank for Cooperatives, Federal Home Loan
Mortgage Corporation, Federal Intermediate Credit Banks and Maritime
Administration. Obligations of certain agencies and instrumentalities of the
U.S. Government, such as those of the Government National Mortgage Association,
are supported by the full faith and credit of the U.S. Treasury; others, such as
those of the Export-Import Bank of the United States, are supported by the right
of the issuer to borrow from the Treasury; others, such as those of the Federal
National Mortgage Association, are supported by the discretionary authority of
the U.S. Government to purchase the agency's obligations; still others, such as
those of the Student Loan Marketing Association, are supported only by the
credit of the instrumentality. No assurance can be given that the U.S.
Government would provide financial support to U.S. Government-sponsored
instrumentalities if it is not obligated to do so by law.
MONEY MARKET INSTRUMENTS (ALL FUNDS)
Each Fund may invest from time to time in "money market instruments"
such as bank obligations, commercial paper and corporate bonds with remaining
maturities of 13 months or less.
For the Equity funds, bank obligations include bankers' acceptances
and negotiable certificates of deposit issued by a U.S. bank, savings bank or
savings association that is a member of the Federal Reserve System or insured by
the Federal Deposit Insurance Corporation. For the Bond Funds, bank obligations
include bankers' acceptances, negotiable certificates of deposit and non-
negotiable time deposits, including U.S. dollar-denominated instruments issued
or supported by the credit of U.S. or foreign banks. Although the Bond Funds
will invest in obligations of foreign banks or foreign branches of U.S. banks
only where the Investment Adviser deems the instrument to present minimal credit
risks, these investments nevertheless entail risks that are different from those
of investments in domestic obligations of U.S. banks due to differences in
political, regulatory and economic systems and conditions. Investments in bank
obligations are limited to the obligations of financial institutions having more
than $1 billion in total assets at the time of purchase. Investments by the
Bond Funds in the obligations of foreign banks and foreign branches of U.S.
banks will not exceed 20% and 25%, respectively, of the Funds' total assets at
the time of purchase.
Commercial paper is a short-term debt obligation with a maturity
ranging from 1 to 270 days issued by banks, corporations and other borrowers.
Investments by a Fund in commercial paper and similar corporate obligations will
consist of issues that are rated within the highest rating category by one or
more Rating Agencies at the time of purchase and unrated paper determined by the
Investment Adviser at the time of purchase to be of comparable quality.
For the Colorado Tax-Exempt Fund, investments in money market
instruments, together with investments in other instruments (such as U.S.
Government obligations and repurchase agreements) that are subject to federal
income tax, will not exceed 20% of the total assets of the Fund except when made
for temporary defensive purposes. The Colorado Tax-Exempt Fund may also hold
uninvested cash reserves which do not earn income pending investment, during
temporary defensive periods or if, in the opinion of its Investment Adviser,
suitable tax-exempt obligations are unavailable. There is no percentage
limitation on the amount of assets which may be held uninvested by the Colorado
Tax-Exempt Fund.
VARIABLE AND FLOATING RATE INSTRUMENTS (BOND FUNDS)
These Funds may purchase variable and floating rate obligations as
described in the Prospectus. The Investment Adviser will consider the earning
power, cash flows and other liquidity ratios of the issuers and guarantors of
such obligations and, if the obligation is subject to a demand feature, will
monitor the issuer's financial ability to meet payment on demand.
Variable and floating rate demand instruments acquired by a Fund may
include participations in Municipal Obligations purchased from and owned by
financial institutions, primarily banks. Participation interests provide a Fund
with a specified undivided interest (up to 100%) in the underlying obligation
and the
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right to demand payment of the unpaid principal balance plus accrued
interest on the participation interest from the institution upon a specified
number of days' notice, not to exceed thirty days. Each participation interest
is backed by an irrevocable letter of credit or guarantee of a bank that the
Investment Adviser has determined meets the prescribed quality standards for the
Fund. The bank typically retains fees out of the interest paid on the
obligation for servicing the obligation, providing the letter of credit and
issuing the repurchase commitment.
While there may be no active secondary market with respect to a
particular variable or floating rate instrument purchased by the Funds, the
Funds may, from time to time as specified in the instrument, demand payment in
full of the principal or may resell the instrument to a third party. The
absence of an active secondary market, however, could make it difficult for a
Fund to dispose of an instrument if the issuer defaulted on its payment
obligation or during periods that the Fund is not entitled to exercise its
demand rights, and the Fund could, for these or other reasons, suffer a loss.
Variable and floating rate instruments with no active secondary market will be
included in the calculation of a Fund's illiquid assets. See "Restricted
Securities."
REPURCHASE AGREEMENTS (ALL FUNDS)
A Fund will enter into repurchase agreements only with financial
institutions deemed to be creditworthy by the Investment Adviser, pursuant to
guidelines established by the Trust's Board of Trustees. During the term of any
repurchase agreement, the Investment Adviser will monitor the creditworthiness
of the seller and the seller must maintain the value of the securities subject
to the agreement and held by the Fund as collateral at 101% of the repurchase
price.
Although the securities subject to repurchase agreements may bear
maturities exceeding 13 months, each Fund does not presently intend to enter
into repurchase agreements with deemed maturities in excess of seven days after
notice by the Fund. If in the future a Fund were to enter into repurchase
agreements with deemed maturities in excess of seven days, the Fund would do so
only if such investment, together with other illiquid securities, did not exceed
15% of the value of the Fund's net assets.
The repurchase price under repurchase agreements entered into by a
Fund generally equals the price paid by the Fund plus interest negotiated on the
basis of current short-term rates (which may be more or less than the rate on
the securities underlying the repurchase agreement). Securities subject to
repurchase agreements are held by the Funds' custodian or in the Federal
Reserve/Treasury book-entry system.
Repurchase agreements involve the risk that the seller will fail to
repurchase the securities, as agreed. In that event, the Fund will bear the
risk of possible loss due to adverse market action or delays in liquidating the
underlying obligations.
REVERSE REPURCHASE AGREEMENTS (ALL FUNDS)
When a Fund enters into a reverse repurchase agreement, it maintains
in a separate custodial account cash, U.S. Government obligations or other
liquid high-grade debt obligations that have a value at least equal to the
repurchase price.
Reverse repurchase agreements involve the risk that the value of
portfolio securities a Fund sells may decline below the price it must pay when
the transaction closes.
As reverse repurchase agreements are deemed to be borrowings by the
SEC, each Fund is required to maintain continuous asset coverage of 300%.
Should the value of a Fund's assets decline below 300% of borrowings, a Fund may
be required to sell portfolio securities within three days to reduce the Fund's
debt and restore 300% asset coverage.
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LOWER-RATED SECURITIES (MIDCO GROWTH, GROWTH AND INCOME AND SMALL-CAP
OPPORTUNITY FUNDS)
While any investment carries some risk, certain risks associated with
lower-rated securities (commonly referred to as "junk bonds") are different than
those for investment grade securities. The risk of loss through default is
greater because lower-rated securities are usually unsecured and are often
subordinate to an issuer's other obligations. If an issuer of a security held
by a Fund defaults, the Fund may incur additional expenses to seek recovery.
Additionally, the issuers of these securities frequently have high debt levels
and are thus more sensitive to difficult economic conditions, individual
corporate developments and rising interest rates. Consequently, the market
price of these securities may be quite volatile and may result in wider
fluctuations in a Fund's net asset value per share.
In certain circumstances it may be difficult to determine a security's
fair value due to a lack of reliable objective information. This may occur
where there is no established secondary market for the security or the security
is thinly traded. As a result, a Fund's valuation of a security and the price
it is actually able to obtain when it sells the security could differ.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may adversely affect the value and liquidity of
lower-rated securities held by the Funds, especially in a thinly-traded market.
Illiquid or restricted securities held by the Funds may involve special
registration responsibilities, liabilities, costs and valuation difficulties.
The ratings of Rating Agencies evaluate the safety of a lower-rated
security's principal and interest payments, but do not address market value
risk. Because the ratings of the Rating Agencies may not always reflect current
conditions and events, the Investment Adviser continuously monitors the issuers
of lower-rated securities held in a Fund's portfolio for their ability to make
required principal and interest payments. If a security undergoes a rating
revision, the Fund involved may continue to hold the security if the Investment
Adviser decides this is appropriate.
SECURITIES LENDING (EQUITY AND BOND FUNDS)
Each of these Funds may lend its portfolio securities to institutional
investors as a means of earning additional income. Such loans must be
continuously secured by certain liquid, high-grade collateral equal at all times
to at least the market value of the securities loaned. Securities loans will be
made only to borrowers deemed by the Investment Adviser to present minimal
credit risks and when, in its judgment, the income to be earned from the loan
justifies the possible risks.
When a Fund lends its securities, it continues to receive interest or
dividends on the securities loaned and may simultaneously earn interest on the
collateral received from the borrower or from the investment of cash collateral
in readily marketable, high-quality, short-term obligations. Although voting
rights, or rights to consent, attendant to securities on loan pass to the
borrower, these loans may be called at any time and will be called if a material
event affecting the investment were to occur.
RESTRICTED SECURITIES (ALL FUNDS)
No Fund will knowingly invest more than 15% of the value of its net
assets in securities that are illiquid. Securities that are not registered
under the Securities Act of 1933 but that may be purchased by institutional
buyers under Rule 144A are subject to this limitation unless the Investment
Adviser under the supervision of the Board determines that a liquid trading
market exists.
Rule 144A allows for a broader institutional trading market for
securities otherwise subject to restriction on resale to the general public.
Rule 144A establishes a "safe harbor" from the registration requirements of the
Securities Act of 1933 for resales of certain securities to qualified
institutional buyers. The
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Investment Adviser believes that the market for certain restricted securities
such as institutional commercial paper may expand further as a result of this
regulation and the development of automated systems for the trading,
clearance and settlement of unregistered securities of domestic and foreign
issuers, such as the PORTAL System sponsored by the NASD.
The Investment Adviser monitors the liquidity of restricted securities
in each of the Funds' portfolios under the supervision of the Board of Trustees.
In reaching liquidity decisions, the Investment Adviser will consider such
factors as: (a) the frequency of trades and quotes for the security; (b) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (c) dealer undertakings to make a market in the
security; and (d) the nature of the security and the nature of the marketplace
trades (E.G., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of the transfer).
RIGHTS OFFERINGS AND WARRANTS TO PURCHASE (EQUITY AND BOND FUNDS)
These Funds may participate in rights offerings and may purchase
warrants. These instruments are privileges enabling the owners to subscribe to
and purchase a specified number of shares of the issuing corporation at a
specified price during a specified period of time. Subscription rights normally
have a short life span to expiration. The purchase of rights or warrants
involves the risk that the Fund involved could lose the purchase value of a
right or warrant if the right to subscribe to additional shares is not exercised
prior to the expiration of the rights and warrants. Also, the purchase of
rights or warrants involves the risk that the effective price paid for them,
when added to the subscription price of the related security, may exceed the
value of the subscribed security's market price. This could occur when there is
no movement in the level of the underlying security. A Fund will not invest
more than 5% of its total assets in rights or warrants, or more than 2% of its
total assets in rights or warrants not listed on the New York or American Stock
Exchanges. Rights or warrants acquired by a Fund in units or attached to other
securities are not subject to this restriction.
ASSET-BACKED SECURITIES (BOND FUNDS)
These Funds may purchase asset-backed securities issued by either
governmental or non-governmental entities which represent a participation in, or
are secured by and payable from, a stream of payments generated by particular
assets, most often a pool of assets similar to one another. Primarily, these
securities do not have the benefit of the same security interest in the
underlying collateral. Payment on asset-backed securities of private issues is
typically supported by some form of credit enhancement, such as a letter of
credit, surety bond, limited guaranty, or subordination. Assets generating such
payments will consist of such instruments as motor vehicle installment purchase
obligations and credit card receivables. Credit card receivables are generally
unsecured and the debtors are entitled to the protection of a number of state
and federal consumer laws, many of which have given debtors the right to set off
certain amounts owed on the credit cards, thereby reducing the balance due. The
Funds may also invest in other types of asset-backed securities that may be
available in the future.
The calculation of the average weighted maturity of asset-backed
securities is based on estimates of average life.
Asset-backed securities are generally issued as pass-through
certificates, which represent undivided fractional ownership interests in an
underlying pool of assets, or as debt instruments, which are also known as
collateralized obligations, and are generally issued as the debt of a special
purpose entity organized solely for the purpose of owning such assets and
issuing such debt. Asset-backed securities are often backed by a pool of assets
representing the obligations of a number of different parties. Payments of both
interest and principal on the securities are typically made monthly, thus in
effect "passing through" monthly payments made
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by the individual borrowers on the assets that underlie the securities, net
of any fees paid to the issuer or guarantor of the securities.
Asset-backed securities are considered an industry for industry
concentration purposes.
In general, the collateral supporting asset-backed securities is of
shorter maturity than mortgage-related securities. Like other fixed-income
securities, when interest rates rise the value of an asset-backed security
generally will decline; however, when interest rates decline, the value of an
asset-backed security with prepayment features may not increase as much as that
of other fixed-income securities.
MORTGAGE-RELATED SECURITIES (BOND FUNDS)
MORTGAGE BACKED SECURITIES GENERALLY. Mortgage backed securities held
by the Bond Funds represent an ownership interest in a pool of residential
mortgage loans. These securities are designed to provide monthly payments of
interest and principal to the investor. The mortgagor's monthly payments to his
lending institution are "passed-through" to an investor such as the Funds.
Most issuers or poolers provide guarantees of payments, regardless of whether or
not the mortgagor actually makes the payment. The guarantees made by issuers or
poolers are supported by various forms of credit, collateral, guarantees or
insurance, including individual loan, title, pool and hazard insurance purchased
by the issuers or poolers so that they can meet their obligations under the
policies. Mortgage backed securities issued by private issuers or poolers,
whether or not such securities are subject to guarantees, may entail greater
risk than securities directly or indirectly guaranteed by the U.S. Government.
Interests in pools of mortgage backed securities differ from other
forms of debt securities, which normally provide for periodic payment of
interest in fixed amounts with principal payments at maturity or specified call
dates. Instead, these securities provide a monthly payment which consists of
both interest and principal payments. In effect, these payments are a
"pass-through" of the monthly payments made by the individual borrowers on their
residential mortgage loans, net of any fees paid. Additional payments are
caused by repayments resulting from the sale of the underlying residential
property, refinancing or foreclosure net of fees or costs which may be incurred.
Some mortgage backed securities are described as "modified pass-through". These
securities entitle the holders to receive all interest and principal payments
owed on the mortgages in the pool, net of certain fees, regardless of whether or
not the mortgagors actually make the payments.
The Bond Funds may purchase mortgage-related securities that are
secured by entities such as Government National Mortgage Association ("GNMA"),
Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage
Corporation ("FHLMC"), commercial banks, trusts, financial companies, finance
subsidiaries of industrial companies, savings and loan associations, mortgage
banks and investment banks.
There are a number of important differences among the agencies and
instrumentalities of the U.S. Government that issue mortgage-related securities
and among the securities that they issue. Mortgage-related securities include
GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are
guaranteed as to the timely payment of principal and interest by GNMA and such
guarantee is backed by the full faith and credit of the United States. GNMA is
a wholly-owned U.S. Government corporation within the Department of Housing and
Urban Development. GNMA certificates also are supported by the authority of
GNMA to borrow funds from the U.S. Treasury to make payments under its
guarantee. Mortgage-related securities also include FNMA guaranteed Mortgage
Pass-Through Certificates (also known as "Fannie Maes") which are solely the
obligations of the FNMA, are not backed by or entitled to the full faith and
credit of the United States and are supported by the right of the issuer to
borrow from the Treasury. FNMA is a government-sponsored organization owned
entirely by private stockholders. Fannie Maes are guaranteed as to timely
payment of principal and interest by FNMA. Mortgage-related securities include
FHLMC Mortgage
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Participation Certificates (also known as "Freddie Macs" or "Pcs"). FHLMC is
a corporate instrumentality of the United States, created pursuant to an Act
of Congress, which is owned entirely by Federal Home Loan Banks. Freddie
Macs are not guaranteed and do not constitute a debt or obligation of the
United States or of any Federal Home Loan Bank. Freddie Macs entitle the
holder to timely payment of interest, which is guaranteed by the FHLMC.
FHLMC guarantees either ultimate collection or timely payment of all
principal payments on the underlying mortgage loans. When FHLMC does not
guarantee timely payment of principal, FHLMC may remit the amount due on
account of its guarantee of ultimate payment of principal at any time after
default on an underlying mortgage, but in no event later than one year after
it becomes payable.
UNDERLYING MORTGAGES. Pools consist of whole mortgage loans or
participations in loans. The majority of these loans are made to purchasers of
one to four family homes. The terms and characteristics of the mortgage
instruments are generally uniform within a pool but may vary among pools. For
example, in addition to fixed-rate, fixed-term mortgages, the Bond Funds may
purchase pools of variable rate mortgages ("VRM"), growing equity mortgages
("GEM"), graduated payment mortgages ("GPM") and other types where the principal
and interest payment procedures vary. VRM's are mortgages which reset the
mortgage's interest rate periodically with changes in open market interest
rates. To the extent that a Portfolio is actually invested in VRM's, its
interest income will vary with changes in the applicable interest rate on pools
of VRM's. GPM and GEM pools maintain constant interest rates, with varying
levels of principal repayment over the life of the mortgage. These different
interest and principal payment procedures should not impact the Portfolios' net
asset value since the prices at which these securities are valued will reflect
the payment procedures.
All poolers apply standards for qualification to local lending
institutions which originate mortgages for the pools. Poolers also establish
credit standards and underwriting criteria for individual mortgages included in
the pools. In addition, some mortgages included in pools are insured through
private mortgage insurance companies.
Each Fund may invest in multiple class pass-through securities,
including CMOs and REMIC Certificates. These multiple class securities may be
issued or guaranteed by U.S. Government agencies or instrumentalities, including
GNMA, FNMA and FHLMC, or issued by trusts formed by private originators of, or
investors in, mortgage loans. In general, CMOs and REMICs are debt obligations
of a legal entity that are collateralized by, and multiple class pass-through
securities represent direct ownership interests in, a pool of residential
mortgage loans or mortgage pass-through securities (the "Mortgage Assets"), the
payments on which are used to make payments on the CMOs or multiple pass-through
securities. Investors may purchase beneficial interests in REMICs, which are
known as "regular" interests or "residual" interests, which in general are
junior and more volatile than regular interests. The Funds do not intend to
purchase residual interests. Pools created by non-governmental issuers
generally offer a higher rate of interest than government and government-related
pools because there are no direct or indirect government guarantees of payments
in the former pools. However, timely payment of interest and principal of these
pools is supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance purchased by the issuer. The
insurance and guarantees are issued by governmental entities, private insurers
and the mortgage poolers. There can be no assurance that the private insurers
or mortgage poolers can meet their obligations under the policies.
Although certain mortgage-related securities are guaranteed by a third
party or are otherwise similarly secured, the market value of the security,
which may fluctuate, is not so secured. If a Fund purchases a mortgage-related
security at a premium, that amount may be lost if there is a decline in the
market value of the security whether resulting from increases in interest rates
or prepayment of the underlying mortgage collateral. As with other
interest-bearing securities, the prices of such securities are inversely
affected by changes in interest rates. However, though the value of a
mortgage-related security may decline when interest rates rise, the converse is
not necessarily true because mortgages underlying securities are prone to
prepayment in periods of declining interest rates. For this and other reasons,
a mortgage-related security's maturity may be shortened by unscheduled
prepayments on underlying mortgages and, therefore, it is not possible to
accurately predict the security's return to a Fund. Mortgage-related securities
provide regular payments consisting of
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interest and principal. No assurance can be given as to the return a Fund
will receive when these amounts are reinvested. The compounding effect from
reinvestment of monthly payments received by the Funds will increase their
respective yields to shareholders, compared to bonds that pay interest
semi-annually.
CMOs may involve additional risks other than those found in other
types of mortgage-related obligations. During periods of rising interest rates,
CMOs may lose their liquidity as CMO market makers may choose not to repurchase,
or may offer prices, based on current market conditions, which are unacceptable
to the Fund based on the Fund's analysis of the market value of the security.
As new types of mortgage-backed securities are developed and offered
in the market, the Trust may consider making investments in such new types of
securities.
OPTIONS (EQUITY AND BOND FUNDS)
Each Fund, other than the Colorado Tax-Exempt Fund, may purchase put
and call options and may write covered call and secured put options issued by
the Options Clearing Corporation which are traded over-the-counter or are listed
on a national securities exchange. Such options may relate to particular
securities or to various stock or bond indexes, except that a Fund may not write
covered call options on an index. A Fund may also invest in index futures
contracts and options on index futures contracts for hedging purposes. A Fund
may not purchase options or purchase or sell futures contracts or options on
futures contracts unless immediately after any such transaction the aggregate
amount of premiums paid for put options and the amount of margin deposits on its
existing futures positions do not exceed 5% of its total assets. Purchasing
options is a specialized investment technique that may entail the risk of a
complete loss of the amounts paid as premiums to the writer of the option.
In order to close out call or put option positions, the Fund will be
required to enter into a "closing purchase transaction" -- the purchase of a
call or put option (depending upon the position being closed out) on the same
security with the same exercise price and expiration date as the option that it
previously wrote. When a portfolio security subject to a call option is sold, a
Fund will effect a closing purchase transaction to close out any existing call
option on that security. If a Fund is unable to effect a closing purchase
transaction, it will not be able to sell the underlying security until the
option expires or a Fund delivers the underlying security upon exercise.
By writing a covered call option, a Fund forgoes the opportunity to
profit from an increase in the market price of the underlying security above the
exercise price except insofar as the premium represents a profit. In addition,
a Fund is not able to sell the underlying security until the option expires or
is exercised or the Fund effects a closing purchase transaction by purchasing an
option of the same series. If a Fund writes a secured put option, it assumes
the risk of loss should the market value of the underlying security decline
below the exercise price of the option. The use of covered call and secured put
options will not be a primary investment technique of a Fund. If the Investment
Adviser is incorrect in its forecast for the underlying security or other
factors when writing options, a Fund would be in a worse position than it would
have been had the options not been written.
In contrast to an option on a particular security, an option on an
index provides the holder with the right to make or receive a cash settlement
upon exercise of the option. The amount of this settlement will be equal to the
difference between the closing price of the index at the time of exercise and
the exercise price of the option expressed in dollars, times a specified
multiple.
When a Fund purchases a put or call option, the premium paid by it is
recorded as an asset of the Fund. When a Fund writes an option, an amount equal
to the net premium (the premium less the commission) received by the Fund is
included in the liability section of the Fund's statement of assets and
liabilities as a deferred credit. The amount of this asset or deferred credit
will be subsequently marked-to-
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market to reflect the current value of the option purchased or written. The
current value of the traded option is the last sale price or, in the absence
of a sale, the average of the closing bid and asked prices. If an option
purchased by a Fund expires unexercised, the Fund realizes a loss equal to
the premium paid. If a Fund enters into a closing sale transaction on an
option purchased by it, the Fund will realize a gain if the premium received
by the Fund on the closing transaction is more than the premium paid to
purchase the option, or a loss if it is less. If an option written by a Fund
expires on the stipulated expiration date or if a Fund enters into a closing
purchase transaction, it will realize a gain (or loss if the cost of a
closing purchase transaction exceeds the net premium received when the option
is sold) and the deferred credit related to such option will be eliminated.
If an option written by a Fund is exercised, the proceeds of the sale will be
increased by the net premium originally received and the Fund will realize a
gain or loss.
As noted in the Prospectus, there are several risks associated with
transactions in options on securities. For example, there are significant
differences between the securities and options markets which could result in an
imperfect correlation between the markets, causing a given transaction not to
achieve its objectives. In addition, a liquid secondary market for particular
options, whether traded over-the-counter or on a national securities exchange
("National Securities Exchange") may be absent for reasons which include the
following: there may be insufficient trading interest in certain options;
restrictions may be imposed by a National Securities Exchange on opening
transactions, closing transactions or both; trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; unusual or unforeseen circumstances may
interrupt normal operations on a National Securities Exchange; the facilities of
a National Securities Exchange or the Options Clearing Corporation may not at
all times be adequate to handle current trading volume; or one or more National
Securities 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 National Securities Exchange (or in that class or series of options) would
cease to exist, although outstanding options that had been issued by the Options
Clearing Corporation as a result of trades on that National Securities Exchange
would continue to be exercisable in accordance with their terms. A Fund will
likely be unable to control losses by closing its position where a liquid
secondary market does not exist. Moreover, regardless of how much the market
price of the underlying security increases or decreases, the option buyer's risk
is limited to the amount of the original investment for the purchase of the
option. However, options may be more volatile than their underlying securities,
and therefore, on a percentage basis, an investment in options may be subject to
greater fluctuation than an investment in the underlying securities.
A decision as to whether, when and how to use options involves the
exercise of skill and judgment, and even a well-conceived transaction may be
unsuccessful to some degree because of market behavior or unexpected events.
FUTURES AND RELATED OPTIONS (EQUITY AND BOND FUNDS)
These Funds may invest in futures contracts and related options
(including, but not limited to, interest rate futures contracts and index
futures contracts). For a detailed description of futures contracts and related
options, see Appendix B to this Statement of Additional Information.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS (MIDCO GROWTH, GROWTH AND INCOME AND
SMALL-CAP OPPORTUNITY FUNDS)
A forward foreign currency exchange contract is an obligation by the
Fund to purchase or sell a specific currency at a specified price and future
date, which may be any fixed number of days from the date of the contract.
These contracts establish an exchange rate at a future date and are transferable
in the interbank market conducted directly between currency traders (usually
large commercial banks) and their customers. These contracts generally have no
deposit requirement and are traded at a net price without commission. Neither
spot transactions nor forward foreign currency exchange contracts eliminate
fluctuations in the prices of
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a Fund's portfolio securities or in foreign exchange rates or prevent loss if
the prices of these securities should decline.
Forward foreign currency exchange contracts allow a Fund to hedge the
currency risk of portfolio securities denominated in a foreign currency. This
technique permits the assessment of the merits of a security to be considered
separately from the currency risk. It is thereby possible to focus on the
opportunities presented by the security apart from the currency risk. Although
these contracts are of short duration, generally between one and twelve months,
they frequently are rolled over in a manner consistent with a more long-term
currency decision. Although foreign currency hedging transactions tend to
minimize the risk of loss due to a decline in the value of the hedged currency,
at the same time they tend to limit any potential gain that might be realized
should the value of the hedged currency increase. The precise matching of the
forward contract amounts and the value of the securities involved will not
generally be possible because the future value of these securities in foreign
currencies will change as a consequence of market movements in the value of
those securities between the date the forward contract is entered into and the
date it matures. The projection of currency market movements is extremely
difficult, and the successful execution of a hedging strategy is highly
uncertain.
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (ALL FUNDS)
When a Fund agrees to purchase securities on a when-issued basis or
enters into a forward commitment to purchase securities, its custodian will set
aside cash or certain liquid high-grade debt obligations equal to the amount of
the purchase or the commitment in a separate account. Normally, the custodian
will set aside portfolio securities to meet this requirement. The market value
of the separate account will be monitored and in the event of a decline, the
Fund will be required to place additional assets in the separate account in
order to ensure that the value of the account remains equal to the amount of the
Fund's commitments. In the case of a forward commitment to sell portfolio
securities, the Fund's custodian will hold the portfolio securities themselves
in a segregated account while the commitment is outstanding.
The Funds will enter into these transactions only with the intention
of completing them and actually purchasing or selling the securities involved.
However, if deemed advisable as a matter of investment strategy, a Fund may
dispose of or renegotiate a commitment after it is entered into, and may sell
securities it has committed to purchase before those securities are delivered to
the Fund on the settlement date. In these cases the Fund may realize a capital
gain or loss.
When a Fund engages in when-issued and forward commitment
transactions, it relies on the other party to consummate the trade. Failure of
the other party to do so may result in the Fund's incurring a loss or missing an
opportunity to obtain a price considered to be advantageous.
The value of the securities underlying a when-issued or forward
commitment transaction, and any subsequent fluctuations in their value, are
taken into account when determining a Fund's net asset value starting on the day
the Fund agrees to purchase the securities. The Fund does not earn interest on
the securities until they are paid for and delivered on the settlement date.
When a Fund makes a forward commitment to sell securities it owns, the proceeds
to be received upon settlement are included in the Fund's assets, and
fluctuations in the value of the underlying securities are not reflected in the
Fund's net asset value as long as the commitment remains in effect.
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES (ALL FUNDS)
Each Fund may invest up to 10% of its total assets in securities
issued by other investment companies; however, the Colorado Tax-Exempt Fund
may only invest in investment companies which invest in high-quality,
short-term taxable instruments or tax-exempt instruments and which determine
their net asset value
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per share on the amortized cost or penny-rounding method. Securities issued by
other investment companies may be acquired by the Funds within the limits
prescribed by the 1940 Act.
INVESTMENT LIMITATIONS
A Fund may not change the following investment limitations without the
approval of a majority of the holders of the Fund's outstanding shares (as
defined under "Miscellaneous" below).
No Fund may:
1. Purchase or sell real estate, except that each Fund may purchase
securities of issuers which deal in real estate and may purchase securities
which are secured by interests in real estate.
2. Purchase securities of companies for the purpose of exercising
control.
3. Acquire any other investment company or investment company
security except in connection with a merger, consolidation, reorganization or
acquisition of assets or where otherwise permitted by the 1940 Act.
4. Act as an underwriter of securities within the meaning of the
Securities Act of 1933 except insofar as the Fund might be deemed to be an
underwriter upon disposition of portfolio securities acquired within the
limitation on purchases of restricted securities and except to the extent that
the purchase of obligations directly from the issuer thereof in accordance with
the Fund's investment objective, policies and limitations may be deemed to be
underwriting.
5. Write or sell put options, call options, straddles, spreads, or
any combination thereof, except for transactions in options on securities,
futures contracts and options on futures contracts. (This exception does not
apply to the Colorado Tax-Exempt Fund).
6. Borrow money or issue senior securities, except that each Fund
may borrow from banks and enter into reverse repurchase agreements for temporary
purposes in amounts up to 10% of the value of its total assets at the time of
such borrowing; or mortgage, pledge or hypothecate any assets, except in
connection with any such borrowing and in amounts not in excess of the lesser of
the dollar amounts borrowed or 10% of the value of a Fund's total assets at the
time of such borrowing. No Fund will purchase securities while its borrowings
(including reverse repurchase agreements) in excess of 5% of its total assets
are outstanding. Securities held in escrow or separate accounts in connection
with a Fund's investment practices described in this Statement of Additional
Information or the Prospectus are not deemed to be pledged for purposes of this
limitation.
None of the Equity or Bond Funds may:
1. Purchase securities of any one issuer (other than securities
issued or guaranteed by the U.S. Government, its agencies or instrumentalities)
if, immediately after such purchase, more than 5% of the value of the Fund's
total assets would be invested in the securities of such issuer, or more than
10% of the issuer's outstanding voting securities would be owned by the Fund or
the Trust, except that up to 25% of the value of the Fund's total assets may be
invested without regard to these limitations.
2. Make loans, except that each Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies and may lend portfolio securities in an amount
not exceeding 30% of its total assets.
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3. Purchase securities on margin, make short sales of securities or
maintain a short position, except that (a) this investment limitation shall not
apply to each Fund's transactions in futures contracts and related options, and
(b) each Fund may obtain short-term credit as may be necessary for the clearance
of purchases and sales of portfolio securities.
4. Purchase or sell commodity contracts, or invest in oil, gas or
mineral exploration or development programs, except that each Fund may, to the
extent appropriate to its investment objective, purchase publicly traded
securities of companies engaging in whole or in part in such activities, and may
enter into futures contracts and related options.
5. Purchase any securities that would cause 25% or more of the
Fund's total assets at the time of purchase to be invested in the securities of
one or more issuers conducting their principal business activities in the same
industry, provided that (a) there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government, its agencies or instrumentalities;
(b) wholly-owned finance companies will be considered to be in the industries of
their parents if their activities are primarily related to financing the
activities of the parents; and (c) utilities will be divided according to their
services, for example, gas, gas transmission, electric and gas, electric and
telephone will each be considered a separate industry.
The Colorado Tax-Exempt Fund may not:
1. Invest less than 80% of its net assets in securities the interest
on which is exempt from federal income tax, except during periods of unusual
market conditions. For purposes of this investment limitation, securities the
interest on which is treated as a specific tax preference item under the federal
alternative minimum tax are considered taxable.
2. Make loans, except that the Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance with its
investment objective and policies.
3. Purchase securities of any one issuer if, immediately after such
purchase, more than 5% of the value of the Fund's total assets would be invested
in the securities of such issuer, except that (a) up to 50% of the value of the
Fund's total assets may be invested without regard to this 5% limitation
provided that no more than 25% of the value of the Fund's total assets are
invested in the securities of any one issuer and (b) this 5% limitation does not
apply to securities issued or guaranteed by the U.S. Government, its agencies,
authorities, instrumentalities or political subdivisions. For purposes of this
limitation, a security is considered to be issued by the governmental entity (or
entities) whose assets and revenues back the security, or, with respect to a
private activity bond that is backed only by the assets and revenues of a
nongovernmental user, such nongovernmental user. In certain circumstances, the
guarantor of a guaranteed security may also be considered to be an issuer in
connection with such guarantee, except that a guarantee of a security shall not
be deemed to be a security issued by the guarantor when the value of all
securities issued and guaranteed by the guarantor, and owned by the Fund, does
not exceed 10% of the value of the Fund's total assets.
4. Purchase any securities, except securities issued (as defined in
the preceding investment limitation) or guaranteed by the United States, any
state, territory or possession of the United States, the District of Columbia
or any of their authorities, agencies, instrumentalities or political
sub-divisions, which would cause 25% or more of the value of the Fund's total
assets at the time of purchase to be invested in the securities of issuers
conducting their principal business activities in the same industry.
5. Purchase securities on margin, make short sales of securities or
maintain a short position, except that the Fund may obtain short-term credit as
may be necessary for the clearance of purchases and sales of portfolio
securities.
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6. Purchase or sell commodity contracts (including futures
contracts) or invest in oil, gas or mineral exploration or development programs,
except that the Fund may, to the extent appropriate to its investment objective,
purchase publicly traded securities of companies engaging in whole or in part in
such activities.
* * *
In order to permit the sale of shares of a Fund in certain states, the
Trust may make commitments with respect to that Fund that are more restrictive
than its investment policies listed above and in the Prospectus. To permit the
sale of shares of the Equity and Bond Funds in Ohio, Texas and Wisconsin and the
sale of shares of the Equity funds in Arkansas and Vermont, the Trust has agreed
to the following additional restrictions with respect to those Funds:
1. None of the Equity and Bond Funds will purchase securities in excess
of 5% of its respective total assets of unseasoned issuers, including
their predecessors, which have been in operation for less than three
years, and equity securities of issuers which are not readily
marketable.
2. None of the Equity and Bond Funds will purchase securities in excess
of 10% of its respective total assets in securities of issuers which
that Fund is restricted from selling to the public without
registration under the Securities Act of 1933, excluding restricted
securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid by the
Trust's Board of Trustees based upon the trading markets for the
securities.
3. None of the Equity and Bond Funds will effect any brokerage
transaction in its respective portfolio securities with any
broker-dealer affiliated directly or indirectly with its investment
adviser or manager, unless the transactions, including the frequency
thereof, the receipt of commissions payable in connection therewith,
and the selection of the affiliated broker-dealer effecting the
transactions, is not unfair or unreasonable to the shareholders of
the Fund. Each Fund will comply with SEC Rule 17e-1 under the 1940
Act relating to transactions with affiliated broker-dealers.
4. None of the Equity and Bond Funds will invest more than 5% of its net
assets in warrants, of which not more than 2% may be warrants which
are not listed on the New York or American Stock Exchange.
5. None of the Equity and Bond Funds will lend portfolio securities
unless collateral values are continuously maintained at no less than
100% by "marking to market" daily and the practice is fair, just and
equitable as determined by a finding that adequate provision has been
made for margin calls, termination of the loan, reasonable servicing
fees (including finders' fees), voting rights, dividend rights,
shareholder approval and disclosure, and the loan is within the
limitations approved by the SEC.
6. None of the Equity and Bond Funds will invest in oil, gas or mineral
leases.
7. None of the Equity and Bond Funds will invest in real estate limited
partnership interests.
8. None of the Equity and Bond Funds will invest more than 5% of its net
assets in options, and they will only purchase put and call options
listed on a national securities exchange and issued by the Options
Clearing Corporation. Each Fund will write only covered options.
9. The MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds
will not invest more than 15% of their respective net assets in
lower-rated convertible securities.
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In order to permit the sale of shares of the Equity and Bond Funds in
Ohio, the Trust has also agreed that no Equity or Bond Fund will purchase or
retain the securities of any issuer if the officers or trustees of the Trust,
the Investment Adviser, or managers owning beneficially one-half of one percent
of the securities of such issuer together own beneficially more than 5% of the
securities of that issuer.
In order to permit the sale of shares of the Equity and Bond Funds in
Wisconsin, the Trust has also agreed that no Equity or Bond Fund will invest in
restricted securities, excluding restricted securities eligible for resale
pursuant to Rule 144A under the Securities Act of 1933, that have been
determined to be liquid by the issuer's board of directors or trustees based
upon the trading markets for the securities, if by reason thereof the value of
the Fund's investment in such securities would exceed 5% of its total assets.
To permit the sale of shares of the Bond Funds in Arkansas, the Trust
has agreed that no Bond Fund will purchase securities in excess of 10% of its
total assets in securities of issuers which the Fund is restricted from selling
to the public without registration under the Securities Act of 1933, excluding
restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933 that have been determined to be liquid by the Trust's
Board of Trustees based upon the trading markets for the securities.
Should the Trust determine that the above commitments or any other
commitment made to permit the sale of a Fund's shares in any state are no longer
in the best interests of that Fund, the Trust will revoke the commitment by
terminating sales of that Fund's shares in the state involved.
NET ASSET VALUE
The net asset value per share of each Fund is calculated as set forth
in the Prospectus and is calculated separately from the net asset value of the
other Funds. For purposes of such calculation, "assets belonging to" a Fund
consist of the consideration received upon the issuance of shares of the
particular Fund together with all income, earnings, profits and proceeds derived
from the investment thereof, including any proceeds from the sale, exchange, or
liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds, and a portion of any general assets of the Trust
not belonging to a particular investment portfolio that are allocated to that
Fund by the Trust's Board of Trustees. The Board of Trustees may allocate such
general assets in any manner it deems fair and equitable. Each Fund is charged
with the direct liabilities and expenses of that Fund and with a share of the
general liabilities and expenses of the Trust. Allocations of general assets
and general liabilities and expenses of the Trust to a particular Fund will be
made in accordance with generally accepted accounting principles. Subject to
the provisions of the Declaration of Trust, determinations by the Board of
Trustees as to the direct and allocable liabilities, and the allocable portion
of any general assets, with respect to a particular Fund are conclusive.
Securities that are traded on a recognized stock exchange are valued at the
last sale price occurring prior to the close of regular trading on the New
York Stock Exchange (currently 4:00 Eastern Time). Securities for which there
were no transactions are valued at the mean of the bid and asked prices.
Securities that are traded on the NASDAQ National Market and the
Over-the-counter market, where last sales prices are available are valued at
the last sales price. If no last sale price is available, then the securities
are valued at the mean of the bid and asked prices.
Foreign securities that are traded on a foreign stock exchange are valued at
the official closing price on the principal exchange. In instances where the
official closing price is not available, the foreign securities are valued at
the last sale price occurring prior to the valuation time determined by a
portfolio pricing service approved by the Board of Trustees to value such
types of securities.
Long-term instruments, including corporate, government and mortgage-backed
securities, having a remaining maturity of greater than 60 days are valued at
the evaluated mean between the bid and ask prices as determined on the
valuation date by a portfolio pricing service approved by the Board of
Trustees to value such types of securities.
Municipal securities are valued at the evaluated bid price as determined on
the valuation date by a portfolio pricing service approved by the Board of
Trustees to value such types of securities.
Restricted securities, securities for which market quotations are not readily
available from the portfolio pricing service, and other assets are valued at
fair value by the Co-Administrators under the supervision of the Board of
Trustees. In computing net asset value, the Co-Administrators will "mark to
market" the current value of a Fund's open futures contracts and options.
Securities have a remaining maturity of 60 days or less are valued at amortized
cost which approximates market value.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Shares in the Funds are sold on a continuous basis by ALPS.
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Under the 1940 Act, a Fund may suspend the right of redemption or
postpone the date of payment for shares during any period when (a) trading on
the New York Stock Exchange (the "Exchange") is restricted by applicable rules
and regulations of the SEC; (b) the Exchange is closed for other than customary
weekend and holiday closings; (c) the SEC has by order permitted such
suspension; or (d) an emergency exists as determined by the SEC. (The Funds may
also suspend or postpone the recordation of the transfer of their shares upon
the occurrence of any of the foregoing conditions.)
Each Fund may redeem shares involuntarily if it appears appropriate to
do so in light of its responsibilities under the 1940 Act or to reimburse the
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder or to collect any charge
relating to a transaction effected for the benefit of a shareholder which is
applicable to Fund shares as provided in the Prospectus from time to time.
The Trust has filed an election pursuant to Rule 18f-1 under the 1940
Act which provides that each portfolio of the Trust is obligated to redeem
shares solely in cash up to $250,000 or 1% of such portfolio's net asset value,
whichever is less, for any one shareholder within a 90-day period. Any
redemption beyond this amount may be made in proceeds other than cash.
A Fund may make payment for redemption in securities or other property
if it appears appropriate to do so in light of the Fund's responsibilities under
the 1940 Act. Shareholders who receive a redemption in kind may incur
additional costs when they convert the securities or property received to cash
and may receive less than the redemption value of their shares, particularly
where the securities are sold prior to maturity.
RETIREMENT PLANS -- EQUITY FUNDS AND BOND FUNDS
PROFIT-SHARING PLAN. The Trust has available a profit-sharing plan
(including a 401(k) option) (the "Profit-Sharing/401(k) Plan") for use by both
self-employed individuals (sole proprietorships and partnerships) and
corporations who wish to use shares of the Funds as a funding medium for a
retirement plan qualified under the Internal Revenue Code ("Code").
The Code provides certain tax benefits for contributions by a
self-employed individual or corporation to the Profit-Sharing/401(k) Plan.
For example, contributions to the Plan are deductible (subject to certain
limits) and the contributions and earnings thereon are not taxed until
distributed. However, distribution of amounts from the Profit-Sharing/401(k)
Plan to a participant before the participant attains age 59 1/2 will (with
certain exceptions) result in an additional 10% tax on the amount included in
the participant's gross income.
INDIVIDUAL RETIREMENT ACCOUNT. The Trust has available a plan (the
"IRA") for use by individuals with compensation for services rendered (including
earned income from self-employment) who wish to use shares of the Funds as a
funding medium for individual retirement saving. However, except for rollover
contributions, an individual who has attained, or will attain, age 70 1/2 before
the end of the taxable year may only contribute to an IRA for his or her
nonworking spouse under age 70 1/2.
The individual's IRA assets (and earnings thereon) may generally not
be withdrawn (without the individual's incurring an additional 10% tax on the
amount included in the individual's gross income) until age 59 1/2. Earnings
on amounts contributed to the IRA are not taxed until distributed.
The Funds also permit certain employers (including self-employed
individuals) to make contributions to employees' IRAs if the employer
establishes a Simplified Employee Pension ("SEP") plan and/or a Salary Reduction
SEP ("SARSEP"). A SEP permits an employer to make discretionary contributions
to all of its employees' IRAs (employees who have not met certain eligibility
criteria may be excluded) equal to
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a uniform percentage of each employees' compensation (subject to certain
limits). If an employer (including a self-employed individual) establishes a
SARSEP, employees may defer a percentage of their compensation --pre-tax --
to IRAs (subject to certain limits). The Code provides certain tax benefits
for contributions by an employer, pursuant to a SEP and/or SARSEP, to an
employee's IRA. For example, contributions to an employee's IRA pursuant to
a SEP and/or SARSEP are deductible (subject to certain limits) and the
contributions and earnings thereon are not taxed until distributed.
In both the Profit-Sharing/401(k) Plan and the IRA, distributions of
net investment income and capital gains will be automatically reinvested.
The foregoing brief descriptions are not complete or definitive
explanations of the Profit-Sharing/401(k) Plan or IRA available for investment
in the Funds. Any person who wishes to establish a retirement plan account may
do so by contacting ALPS directly. The complete Plan documents and applications
will be provided to existing or prospective shareholders upon request, without
obligation. The Trust recommends that investors consult their attorneys or tax
advisors to determine if the retirement programs described herein are
appropriate for their needs.
DESCRIPTION OF SHARES
The Trust is a Massachusetts business trust. Under the Trust's
Declaration of Trust, the beneficial interest in the Trust may be divided into
an unlimited number of full and fractional transferable shares. The Amended and
Restated Declaration of Trust authorizes the Board of Trustees to classify or
reclassify any unissued shares of the Trust into one or more additional classes
by setting or changing in any one or more respects, their respective
designations, preferences, conversion or other rights, voting powers,
restrictions, limitations, qualifications and terms and conditions of
redemption. Pursuant to such authority, the Board of Trustees has authorized
the issuance of twenty-four classes of shares, each class representing interests
in a separate investment portfolio. The Trustees may similarly classify or
reclassify any particular class of shares into one or more series.
Each share of the Trust has no par value, represents an equal
proportionate interest in a Fund, and is entitled to such dividends and
distributions of the income earned on the Fund's assets as are declared at the
discretion of the Trustees. Shares of the Funds have no preemptive rights and
only such conversion or exchange rights as the Board of Trustees may grant in
its discretion. When issued for payment as described in the Prospectus, a
Fund's shares will be fully paid and nonassessable by the Trust. In the event
of a liquidation or dissolution of the Trust or an individual Fund, shareholders
of a particular Fund would be entitled to receive the assets available for
distribution belonging to the Fund, and a proportionate distribution, based upon
the relative net asset values of the Trust's respective investment portfolios,
of any general assets not belonging to any particular portfolio which are
available for distribution. Shareholders of a Fund are entitled to participate
in the net distributable assets of the Fund on liquidation, based on the number
of shares of the Fund they hold.
Shareholders of the Funds will vote together in the aggregate and not
separately on a Fund-by-Fund basis, except as otherwise required by law or when
the Board of Trustees determines that the matter to be voted upon affects only
the interests of the shareholders of a particular Fund. Rule 18f-2 under the
1940 Act provides that any matter required to be submitted to the holders of the
outstanding voting securities of an investment company such as the Trust shall
not be deemed to have been effectively acted upon unless approved by the holders
of a majority of the outstanding shares of each Fund affected by the matter. A
Fund is affected by a matter unless it is clear that the interests of each Fund
in the matter are substantially identical or that the matter does not affect any
interest of the Fund. Under the Rule, the approval of an investment advisory
agreement or any change in a fundamental investment policy would be effectively
acted upon with respect to a Fund only if approved by a majority of the
outstanding shares of such Fund. However, the Rule also provides that the
ratification of the appointment of independent public accountants, the approval
of principal underwriting
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contracts and the election of trustees may be effectively acted upon by
shareholders of the Trust voting without regard to particular Funds.
There will normally be no meetings of shareholders for the purpose of
electing trustees unless and until such time as less than a majority of the
trustees holding office have been elected by shareholders, at which time the
trustees then in office will call a shareholders meeting for the election of
trustees. Shares of the Trust have noncumulative voting rights and,
accordingly, the holders of more than 50% of the Trust's outstanding shares
(irrespective of class) may elect all of the trustees. The Amended and Restated
Declaration of Trust provides that meetings of the shareholders of the Trust
shall be called by the Trustees upon the written request of shareholders owning
at least 10% of the outstanding shares entitled to vote. Except as set forth
above, the Trustees shall continue to hold office and may appoint successor
trustees.
The Amended and Restated Declaration of Trust authorizes the Board of
Trustees, without shareholder approval (unless otherwise required by applicable
law), to: (a) sell and convey the assets belonging to a class of shares to
another management investment company for consideration which may include
securities issued by the purchaser and, in connection therewith, to cause all
outstanding shares of such class to be redeemed at a price which is equal to
their net asset value and which may be paid in cash or by distribution of the
securities or other consideration received from the sale and conveyance; (b)
sell and convert the assets belonging to a class of shares into money and, in
connection therewith, to cause all outstanding shares of such class to be
redeemed at their net asset value; or (c) combine the assets belonging to a
class of shares with the assets belonging to one or more other classes of shares
if the Board of Trustees reasonably determines that such combination will not
have a material adverse effect on the shareholders of any class participating in
such combination and, in connection therewith, to cause all outstanding shares
of any such class to be redeemed or converted into shares of another class of
shares at their net asset value. However, the exercise of such authority may be
subject to certain restrictions under the 1940 Act. The Board of Trustees may
authorize the termination of any class of shares after the assets belonging to
such class have been distributed to its shareholders.
ADDITIONAL INFORMATION CONCERNING TAXES
The following summarizes certain additional tax considerations
generally affecting the Funds and their shareholders that are not described in
the Funds' Prospectus. No attempt is made to present a detailed explanation of
the tax treatment of the Funds or their shareholders, and the discussion here
and in the Funds' Prospectus are not intended as a substitute for careful tax
planning and is based on tax laws and regulations which are in effect on the
date hereof; such laws and regulations may be changed by legislative or
administrative action. Investors should consult their tax advisors with
reference to their own situation.
FEDERAL - ALL FUNDS
Each Fund is treated as a separate corporate entity under the Code and
intends to qualify as a regulated investment company for each of its taxable
years. Qualification as a regulated investment company requires, among other
things, that a Fund distribute to its shareholders an amount equal to at least
the sum of 90% of its investment company taxable income (if any) and 90% of its
tax-exempt interest income (if any) net of certain deductions for a taxable
year. In general, a Fund's investment company taxable income will be its
taxable income (including interest and short-term capital gains) subject to
certain adjustments and excluding the excess of any net long-term capital gain
for the taxable year over the net short-term capital loss, if any, for such
year. Each Fund intends to distribute substantially all of its investment
company taxable income and net tax-exempt income each taxable year. Such
distributions by the Equity and Bond Funds will be taxable as ordinary income to
their shareholders who are not currently exempt from federal income taxes,
whether such income is received in cash or reinvested in additional shares.
(Federal income taxes for distributions to an IRA or to a qualified retirement
plan are deferred under the Code.)
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In addition, in order to qualify as a regulated investment company,
each Fund must satisfy certain requirements with respect to the source of its
income for a taxable year. At least 90% of the gross income of each Fund must
be derived from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stocks, securities or foreign
currencies, and other income (including, but not limited to, gains from options,
futures, or forward contracts) derived with respect to the Fund's business of
investing in such stock, securities or currencies. The Treasury Department may
by regulation exclude from qualifying income foreign currency gains which are
not directly related to the Fund's principal business of investing in stock or
securities, or options and futures with respect to stock or securities. Any
income derived by a Fund from a partnership or trust is treated for this purpose
as derived with respect to the Fund's business of investing in stock, securities
or currencies only to the extent that such income is attributable to items of
income which would have been qualifying income if realized by the Fund in the
same manner as by the partnership or trust.
Another requirement for qualification as a regulated investment
company under the Code is that less than 30% of a Fund's gross income for a
taxable year must be derived from gains realized on the sale or other
disposition of the following investments held for less than three months: (1)
stock and securities (as defined in Section 2(a)(36) of the 1940 Act); (2)
options, futures and forward contracts other than those on foreign currencies;
and (3) foreign currencies (and options, futures and forward contracts on
foreign currencies) that are not directly related to a Fund's principal business
of investing in stock and securities (and options and futures with respect to
stocks and securities). Interest (including original issue discount and accrued
market discount) received by a Fund upon maturity or disposition of a security
held for less than three months will not be treated as gross income derived from
the sale or other disposition of such security within the meaning of this
requirement. However, any other income which is attributable to realized market
appreciation will be treated as gross income from the sale or other disposition
of securities for this purpose. See Appendix B -- "Accounting and Tax
Treatment" for a general discussion of the federal tax treatment of futures
contracts, related options thereon and other financial instruments, including
their treatment under the 30% test.
Substantially all of each Fund's net realized long-term capital gains,
if any, will be distributed at least annually to Fund shareholders. A Fund will
generally have no tax liability with respect to such gains and the distributions
will be taxable to Fund shareholders who are not currently exempt from federal
income taxes as long-term capital gains, regardless of how long the shareholders
have held Fund shares and whether such gains are received in cash or reinvested
in additional shares.
Each Fund will designate any distribution of long-term capital gains
as a capital gain dividend in a written notice mailed to shareholders within 60
days after the close of its taxable year. Shareholders should note that, upon
the sale or exchange of Fund shares, if the shareholder has not held such shares
for more than six months, any loss on the sale or exchange of those shares will
be treated as long term capital loss to the extent of the capital gain dividends
received with respect to the shares.
Ordinary income of individuals is taxable at a maximum nominal rate of
39.6%, but because of limitations on itemized deductions otherwise allowable and
the phase-out of personal exemptions, the maximum effective marginal rate of tax
for some taxpayers may be higher. An individual's long term capital gains are
taxable at a maximum nominal rate of 28%. For corporations, long term capital
gains and ordinary income are both taxable at a maximum average rate of 35% (a
maximum effective marginal rate of 39% applies in the case of corporations
having taxable income between $100,000 and $335,000).
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). Each Fund intends to make sufficient
distributions or deemed distributions of its ordinary taxable income and any
capital gain net income prior to the end of each calendar year to avoid
liability for this excise tax.
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If for any taxable year a Fund does not qualify for tax treatment as a
regulated investment company, all of the taxable income of the Fund will be
subject to tax at regular corporate rates, without any deduction for
distributions to shareholders, and the Fund's distributions to shareholders
(whether or not derived from interest on Municipal Obligations) will be taxable
as ordinary dividends to the extent of the current and accumulated earnings and
profits of the particular Fund. Such distributions will be eligible for the
dividends received deduction in the case of corporate shareholders.
STATE - ALL FUNDS
Depending upon the extent of each Fund's activities in states and
localities in which its offices are maintained, in which its agents or
independent contractors are located or in which they are otherwise deemed to be
conducting business, a Fund may be subject to the tax laws of such states or
localities. In addition, in those states and localities which have income tax
laws, the treatment of the Funds and their shareholders under such laws may
differ from their treatment under federal income tax laws.
ADDITIONAL FEDERAL TAX CONSIDERATIONS FOR THE COLORADO TAX-EXEMPT FUND
As described above and in the Prospectus, the Colorado Tax-Exempt Fund
is designed to provide investors with income exempt from regular federal income
tax and Colorado personal income tax. See above for general federal income tax
considerations. The Fund is not intended to constitute a balanced investment
program and is not designed for investors seeking capital appreciation or
maximum tax-exempt income irrespective of fluctuations in principal. Shares of
the Fund would not be suitable for tax-exempt institutions and may not be
suitable for retirement plans qualified under Section 401 of the Code, H.R. 10
plans and IRAs, because such plans and accounts are generally tax-exempt and,
therefore, not only would not gain any additional benefit from the Fund's
dividends being tax-exempt, but those dividends would be ultimately taxable to
the beneficiaries when distributed to them. In addition, the Fund may not be an
appropriate investment for entities which are "substantial users" of facilities
financed by private activity bonds or "related persons" thereof. "Substantial
user" is defined under Treasury Regulations to include a non-exempt person who
regularly uses a part of such facilities in his trade or business and whose
gross revenues derived with respect to the facilities financed by the issuance
of bonds are more than 5% of the total revenues derived by all users of such
facilities, or who occupies more than 5% of the usable area of such facilities
or for whom such facilities or a part thereof were specifically constructed,
reconstructed or acquired. "Related persons" include certain related natural
persons, affiliated corporations, a partnership and its partners and an S
Corporation and its shareholders.
In accordance with the Code, the Fund intends to distribute
substantially all of its net tax-exempt income (such distributions are known as
"exempt-interest dividends") and investment company taxable income (if any) each
taxable year. Exempt-interest dividends may be treated by shareholders as items
of interest excludable from their gross income under Section 103(a) of the Code.
The percentage of total dividends paid by the Fund with respect to any taxable
year which qualify as exempt-interest dividends will be the same for all
shareholders receiving dividends during the year. In order for the Fund to pay
exempt-interest dividends with respect to any taxable year, among other things,
at least 50% of the aggregate value of the Fund's portfolio at the close of each
quarter of its taxable year must consist of exempt-interest obligations. After
the close of its taxable year, each Fund will notify each shareholder of the
portion of the dividends paid by the Fund to the shareholder with respect to
such year which constitutes an exempt-interest dividend. However, the aggregate
amount of dividends so designated cannot exceed the excess of the amount of
interest exempt from tax under Section 103 of the Code received by the Fund
during the taxable year over any amounts disallowed as deductions under Sections
265 and 171(a)(2) of the Code.
If a shareholder holds Fund shares for six months or less, any loss on
the sale or exchange of those shares will be disallowed to the extent of the
amount of exempt-interest dividends received with respect to the shares. The
Treasury Department, however, is authorized to issue regulations reducing the
period to not less than the greater of 31 days or the period between regular
distributions where the investment company
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<PAGE>
regularly distributes at least 90% of its net tax-exempt interest. No such
regulations had been issued as of the date of this Statement of Additional
Information.
If the Fund should hold certain private activity bonds issued after
August 7, 1986, shareholders must include, as an item of tax preference, the
portion of dividends paid by the Fund that is attributable to interest on such
bonds in their federal alternative minimum taxable income for purposes of
determining liability (if any) for the alternative minimum tax applicable to
individuals and corporations and the environmental tax applicable to
corporations. Corporate shareholders must also take all exempt-interest
dividends into account in determining certain adjustments for federal
alternative minimum and environmental tax purposes. Shareholders receiving
Social Security benefits should note that all exempt-interest dividends will be
taken into account in determining the taxability of such benefits.
MANAGEMENT OF THE FUNDS
TRUSTEES AND OFFICERS
The names of the trustees and officers of the Trust, their ages, addresses,
principal occupations during the past five years and other affiliations are set
forth below:
Principal Occupations
Position with During Past 5 Years and
Name, Age and Address the Trust Other Affiliations
- --------------------- ------------- -----------------------
JACK D. HENDERSON, 69 (1) Chairman, Trustee Attorney, Jack D. Henderson,
1600 Broadway Attorney-at-Law; prior thereto
Suite 1410 partner of the law firm of
Denver, Colorado 80202 Clanahan, Tanner, Downing &
Knowlton, P.C., Denver, Colorado
from July 1990 through October
1995; Trustee of Pacifica Funds
Trust through August 1996;
Trustee, Pacific American Fund
through September 1994.
McNEIL S. FISKE, 62 Trustee Chairman of the Board, MacCourt
P.O. Box 6154 Products; Director, Principal
Littleton, Colorado 80121 Occupations Scientific Software
Corporation through December 31,
1994.
JAMES B. O'BOYLE, 68 Trustee Business Consultant; Trustee of
6115 West Mansfield Pacific American Fund through
Avenue, #239 September 1994.
Denver, Colorado 80235
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<PAGE>
Principal Occupations
Position with During Past 5 Years and
Name, Age and Address the Trust Other Affiliations
- --------------------- ------------- -----------------------
ROBERT L. STAMP, 64 Trustee Retired since April, 1995;
6855 So. Depew Street prior thereto Vice President
Littleton, Colorado 80217 of Finance, Treasurer and
Assistant Secretary, The Gates
Corporation; Vice President,
The Gates Rubber Company;
Director of Gates Credit Union;
Trustee of Pacific American
Fund through September 1994.
LYMAN E. SEELY, 78 Trustee Retired.
14795 Northeast
Lawnview Circle
Aurora, Oregon 97002
KENNETH V. PENLAND, 54 President Chairman and Chief Executive
Denver Investment Advisors LLC Officer, Denver Investment
1225 17th Street- 26th Fl. Advisors LLC (and its
Denver, CO 80202 predecessor) since March 1985;
Chairman, Blue Chip Value Fund.
MARK POUGNET, 35 Treasurer Chief Financial Officer for ALPS
ALPS Mutual Funds Services, Inc. Mutual Funds Services, Inc.;
370 17th Street Vice President, Assistant
Suite 2700 Secretary and Assistant
Denver, Colorado 80202 Treasurer of the Sefton Funds;
Treasurer, First Funds.
W. BRUCE McCONNEL, III, 53 Secretary Partner of the law firm of
Drinker Biddle & Reath Drinker Biddle & Reath,
1345 Chestnut Street Philadelphia, Pennsylvania.
Philadelphia, Pennsylvania
19107-3496
_____________
1 Mr. Henderson is considered to be an "interested person" of the Trust as
defined in the 1940 Act.
------------
The trustees are responsible for major decisions relating to each
Fund's objective, policies and techniques. The trustees also supervise the
operation of the Funds by their officers and review the investment decisions of
the officers although they do not actively participate on a regular basis in
making such decisions.
Each trustee receives an annual fee of $12,000 plus $500 for each
Board meeting attended and reimbursement of expenses incurred in attending
meetings. The Chairman of the Board is entitled to receive an additional $4,000
per annum for services in such capacity. The following chart provides certain
information about the trustee fees paid by the Trust for the fiscal year ended
May 31, 1996:
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<PAGE>
- -----------------------------------------------------------------------------
PENSION OR
RETIREMENT ESTIMATED
AGGREGATE BENEFITS ANNUAL AGGREGATE
COMPENSATION ACCRUED AS BENEFITS COMPENSATION
NAME OF PERSON/ FROM THE PART OF FUND UPON FROM THE FUND
POSITION TRUST EXPENSES RETIREMENT COMPLEX*
- -----------------------------------------------------------------------------
JACK D. HENDERSON, $20,500 $0 $0 $20,500
Chairman
- -----------------------------------------------------------------------------
McNEIL S. FISKE, $15,500** $0 $0 $15,500
Trustee
- -----------------------------------------------------------------------------
JAMES B. O'BOYLE, $16,500 $0 $0 $16,500
Trustee
- -----------------------------------------------------------------------------
ROBERT L. STAMP, $16,500** $0 $0 $16,500
Trustee
- -----------------------------------------------------------------------------
LYMAN E. SEELY, $15,500 $0 $0 $15,500
Trustee
- -----------------------------------------------------------------------------
* Fund Complex includes funds with a common investment adviser or an adviser
which is an affiliated person.
** All of this amount has been deferred at the election of Messrs. Fiske and
Stamp .
Denver Investment Advisors, of which Mr. Penland, President of the
Trust, is a member, receives compensation as Adviser and co-administrator.
ALPS, of which Mr. Pougnet, Treasurer of the Trust, is employed as Chief
Financial Officer, receives compensation from the Trust as Distributor and co-
administrator.
Drinker Biddle & Reath, of which Mr. McConnel, Secretary of the Trust,
is a partner, receives legal fees as counsel to the Trust. The trustees and
officers of the Trust, as a group, owned less than 1% of the outstanding shares
of each Fund as of June 30, 1996.
SHAREHOLDER AND TRUSTEE LIABILITY
Under Massachusetts law, shareholders of a business trust may, under
certain circumstances, be held personally liable as partners for the obligations
of the trust. However, the Amended and Restated Declaration of Trust provides
that shareholders shall not be subject to any personal liability in connection
with the assets of the Trust for the acts or obligations of the Trust, and that
every note, bond, contract, order or other undertaking made by the Trust shall
contain a provision to the effect that the shareholders are not personally
liable thereunder. The Amended and Restated Declaration of Trust provides for
indemnification out of the trust property of any shareholder held personally
liable solely by reason of his or her being or having been a shareholder and not
because of his or her acts or omissions or some other reason. The Amended and
Restated Declaration of Trust also provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust, and shall satisfy any judgment thereon.
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<PAGE>
Thus, the risk of a shareholder's incurring financial loss on account of
shareholder liability is limited to circumstances in which the Trust itself
would be unable to meets its obligations.
The Amended and Restated Declaration of Trust further provides that
all persons having any claim against the trustees or the Trust shall look solely
to the Trust property for payment; that no trustee, officer or agent of the
Trust shall be personally liable for or on account of any contract, debt, tort,
claim, damage, judgment or decree arising out of or connected with the
administration or preservation of the Trust property or the conduct of any
business of the Trust; and that no trustee shall be personally liable to any
person for any action or failure to act except by reason of his or her own bad
faith, willful misfeasance, gross negligence or reckless disregard of his or her
duties as trustee. With the exception stated, the Amended and Restated
Declaration of Trust provides that a trustee is entitled to be indemnified
against all liabilities and expense reasonably incurred by him in connection
with the defense or disposition of any proceeding in which he may be involved or
with which he may be threatened by reason of his being or having been trustee,
and that the trustees will indemnify representatives and employees of the Trust
to the same extent that trustees are entitled to indemnification.
INVESTMENT ADVISER
Denver Investment Advisors serves as investment adviser to the Funds
pursuant to an Advisory Agreement. In the Advisory Agreement, the Investment
Adviser has agreed to provide a continuous investment program for each Fund and
to pay all expenses incurred by it in connection with its advisory activities,
other than the cost of securities and other investments, including brokerage
commissions and other transaction charges, if any, purchased or sold for the
Funds.
As indicated in the Prospectus, Denver Investment Advisors permits
investment and other personnel to purchase and sell securities for their own
accounts, including securities that may be held by the Funds, in accordance with
Denver Investment Advisors' policy regarding personal investing by principals,
officers and employees of Denver Investment Advisors. The Denver Investment
Advisors' policy requires all principals, officers and employees to pre-clear
all transactions in securities not otherwise exempt under the policy. In
addition to pre-clearance, the policy subjects principals, officers and
employees of Denver Investment Advisors to various trading restrictions and
reporting obligations. All reportable transactions are reviewed for compliance
with Denver Investment Advisors' policy. The provisions of the policy are
administered by and subject to exceptions authorized by Denver Investment
Advisors.
Prior to March 31, 1996, First Interstate of Denver, N.A. served as
investment adviser, and Denver Investment Advisors served as sub-adviser, to the
MIDCO Growth, Blue Chip, Growth and Income, Long-Term Bond, Intermediate-Term
Bond and Colorado Tax-Exempt Funds. Prior to March 31, 1996, First Interstate
Capital Management, Inc. ("FICM") served as investment adviser and Denver
Investment Advisors served as sub-adviser to the Growth and Income and
Intermediate-Term Bond Funds.
The following table summarizes the advisory fees paid by the Funds and
any advisory fee waivers for the last three fiscal years of each Fund:
-31-
<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
May 31, 1996 May 31, 1995 May 31, 1994
- ------------------------------------------------------------------------------------------------
Advisory Waiver of Advisory Waiver of Advisory Waiver of
Fund Name Fees Fees Fees Fees Fees Fees
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MIDCO Growth Fund $3,558,326 $0 $2,529,123 $0 $1,963,711 $0
Blue Chip Fund 339,161 59,499 271,890 0 210,009 0
Growth and 129,876 49,319 271,513 0 277,664 0
Income Fund
Small-Cap 36,740 136,791 0 73,894 0(1) 7,275(1)
Opportunity Fund
Long-Term Bond Fund 102,736 32,618 124,337 0 133,451 0
Intermediate-Term 350,333 58,864 407,813 0 499,968 0
Bond Fund
Colorado Tax- 0 56,823 0 51,298 0 45,269
Exempt Fund
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced investment operations on December 28, 1993.
For the fiscal years ended May 31,1996, 1995 and 1994, the investment
advisers reimbursed additional expenses for the Funds as follows:
Year Ended Year Ended Year Ended
Fund Name May 31, 1996 May 31, 1995 May 31, 1994
--------- ------------ ------------ ------------
Small-Cap
Opportunity Fund $0 $20,200 $22,115(1)
Colorado Tax-Exempt
Fund $22,238 65,533 68,401
_______________
(1) The Fund commenced investment operations on December 28, 1993.
First Interstate Bank of Denver, N.A. and FICM each paid 90% of the
advisory fees received by them for the Growth and Income Fund and Intermediate-
Term Bond Fund to Denver Investment Advisors pursuant to the Sub-Advisory
Agreements each formerly had in effect with respect to such Funds.
The Investment Adviser has agreed that if, in any fiscal year, the
expenses borne by a Fund exceed the applicable expense limitations imposed by
the securities regulations of any state in which shares of
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<PAGE>
the Fund are registered or qualified for sale to the public, it will
reimburse the Fund for any excess to the extent required by such regulations.
To the Trust's knowledge, as of the date of this Statement of Additional
Information the most restrictive expense limitations for any fiscal year
imposed by state securities regulations which were applicable to the Funds
were as follows: two and one-half percent of the first $30 million of
average net assets, two percent of the next $70 million of average net
assets, and one and one-half percent of the remaining average net assets.
During the fiscal year ended May 31, 1996, no expense reimbursement was
required.
Denver Investment Advisors also performs investment advisory services
for the Blue Chip Value Fund, Inc. and the Paine Webber Managed Assets Trust-
Paine Webber Capital Appreciation Fund, two other investment company portfolios.
Investment decisions for each account managed by Denver Investment Advisors,
including the Funds, are made independently from those for any other account
that is or may in the future become managed by Denver Investment Advisors or its
affiliates. If, however, a number of accounts managed by Denver Investment
Advisors are contemporaneously engaged in the purchase or sale of the same
security, the available securities or investments may be allocated in a manner
believed by Denver Investment Advisors to be equitable to each account. In some
cases, this procedure may adversely affect the price paid or received by a Fund
or the size of the position obtainable for or disposed of by a Fund.
Each account managed by Denver Investment Advisors has its own
investment objective and policies and is managed accordingly by a particular
portfolio manager or team of portfolio managers. As a result, from time to time
two or more different managed accounts may pursue divergent investment
strategies with respect to investments or categories of investments.
The current Advisory Agreement for the MIDCO Growth, Blue Chip, Growth
and Income, Small-Cap Opportunity and Long Term Bond Funds became effective on
March 31, 1995, and the current Advisory Agreement for the Colorado Tax-Exempt
Fund became effective on October 1, 1995. The Advisory Agreement will continue
in effect until September 30, 1997 and thereafter from year to year so long as
such continuance is approved annually by a majority of the Funds' Trustees who
are not parties to the Advisory Agreement or interested persons of any such
party, and by either a majority of the outstanding voting shares or the trustees
of the Funds. The Advisory Agreement i) may be terminated without the payment
of any penalty by the Fund or Denver Investment Advisors on 60 days' written
notice; ii) terminates automatically in the event of its assignment; and iii)
generally, may not be amended without the approval by vote of a majority of the
outstanding voting securities of such Fund.
The Agreement provides that the Investment Adviser shall not be liable
for any error of judgment or mistake of law or for any loss suffered by the
Funds in connection with its performance of services pursuant to the Advisory
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful
misfeasance, bad faith or gross negligence on the part of the Investment Adviser
in the performance of its duties or from its reckless disregard of its duties
and obligations under the Advisory Agreement.
Denver Investment Advisors, as co-administrator, also provides
administrative services to the Funds pursuant to an Administration Agreement and
has agreed to pay all expenses incurred by it in connection with its
administrative activities.
DISTRIBUTOR
ALPS acts as the distributor of the Funds' shares pursuant to a
Distribution Agreement with the Trust (the "Distributor"). Shares are sold on a
continuous basis by ALPS as agent of the Funds, and ALPS has agreed to use its
best efforts to solicit orders for the sale of Fund shares, although it is not
obliged to sell any particular amount of shares. As Distributor, ALPS pays the
cost of printing and distributing prospectuses
-33-
<PAGE>
to persons who are not shareholders of the Funds (excluding preparation and
printing expenses necessary for the continued registration of the Funds'
shares) and of printing and distributing all sales literature. ALPS is not
entitled to any compensation for its services as Distributor. For the fiscal
years ended May 31, 1996, 1995 and 1994, ALPS received $10,614.23, $108,459 and
$296,811.77, respectively, in underwriting commissions with respect to all
the investment portfolios offered by the Trust.
ADMINISTRATORS, BOOKKEEPING AND PRICING AGENT
ALPS and Denver Investment Advisors, as co-administrators (the
"Administrators"), provide administrative services to the Funds as described in
the Prospectus pursuant to an Administration Agreement, and have agreed to pay
all expenses they incur in connection with their administrative activities.
Under the Administration Agreement, the Administrators are not liable for any
error of judgment or mistake of law or for any loss suffered by the Funds in
connection with the performance of the agreement, except a loss resulting from
willful misfeasance, bad faith or gross negligence on the part of the
Administrators in the performance of their duties or from their reckless
disregard of their duties and obligations under the agreement. Prior to the
current Administration Agreement, which became effective on October 1, 1995,
ALPS served as sole Administrator to the Funds.
In addition to the services it provides as co-administrator, ALPS has
agreed, pursuant to a separate Bookkeeping and Pricing Agreement, to maintain
the financial accounts and records of the Funds and to compute the net asset
value and certain other financial information of the Funds. Under the
Bookkeeping and Pricing Agreement, ALPS is not liable for any error of judgment
or mistake of law or for any loss suffered by the Funds, except for a loss
resulting from willful misfeasance, bad faith or negligence on the part of ALPS
in the performance of its duties under the Agreement.
The following table summarizes the administration fees paid by the
Funds and any administration fee waivers for the last three fiscal years:
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<PAGE>
<TABLE>
- -------------------------------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
May 31, 1996 May 31, 1995 May 31, 1994
- -------------------------------------------------------------------------------------------------------
Administration Waiver Administration Waiver Administration Waiver
Fund Name Fees of Fees Fees of Fees Fees of Fees
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MIDCO Growth $1,230,673 $ 0 $194,548 $ 0 $151,055 $ 0
Fund
Blue Chip Fund 133,355 4,948 20,914 0 16,155 0
Growth and 52,174 4,873 20,885 0 21,359 0
Income Fund
Small-Cap
Opportunity Fund
39,056 1,806 2,787 908 0(1) 364(1)
Long-Term Bond 58,951 3,520 13,815 0 14,828 0
Fund
Intermediate-Term 178,366 10,539 45,313 0 55,552 0
Bond Fund
Colorado Tax- 467 24,766 3,624 1,506 744 3,890
Exempt Fund
- -------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on December 28, 1993.
CUSTODIAN AND TRANSFER AGENT
Wells Fargo (the "Custodian") serves as custodian of the assets of each
of the Funds pursuant to a custody agreement (the "Custody Agreement").
Under the Custody Agreement, the Custodian has agreed to hold the Funds'
assets in safekeeping and collect and remit the income thereon, subject to
the instructions of each Fund. The Custodian may, at its own expense, open
and maintain a custody account or accounts on behalf of any Fund with other
banks or trust companies, provided that the Custodian shall remain liable for
the performance of all of its duties under the Custody Agreement
notwithstanding any delegation.
For its services as custodian, the Custodian is entitled to receive
compensation based on the aggregate market value of the portfolio securities
of the Funds that are held by Wells Fargo as custodian: .02% on the first $50
million of average net assets; .018% on the next $50 million; .013% on the
next $100 million; .01% on the next $300 million; and .005% on assets in
excess of $500 million. The minimum annual custody fee payable by each Fund
is $500. In addition, the Custodian, as custodian, is entitled to certain
transaction charges at the rate of $20 for each transaction involving a
domestic security, $25 for each transaction involving a foreign security, $45
per option (including issuance of an escrow receipt), and to reimbursement
for its out-of-pocket expenses in connection with the above services. For
the fiscal years ended May 31,1996, 1995 and 1994 the Custodian waived all of
its custodial fees in the following amounts:
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<PAGE>
- -------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
Fund Name May 31, 1996 May 31, 1995 May 31, 1994
- -------------------------------------------------------------------------------
MIDCO Growth Fund $131,399 $87,850 $85,151
Blue Chip Fund 24,180 20,142 9,302
Growth and Income 22,966 24,014 12,174
Fund
Small Cap 18,793 16,558 6,045
Opportunity Fund
Long-Term Bond 14,196 13,006 9,091
Fund
Intermediate-Term Bond 30,844 28,132 25,119
Fund
Colorado Tax-Exempt 8,353 5,552 2,511
Fund
- -------------------------------------------------------------------------------
State Street Bank and Trust Company ("State Street") serves as Transfer
Agent for each Fund. As Transfer Agent, State Street has, among other
things, agreed to: (a) issue and redeem shares of the Funds; (b) make
dividend and other distributions to shareholders of the Funds; (c) effect
transfers of shares; (d) mail communications to shareholders of the Funds,
including reports to shareholders, dividend and distribution notices, and
proxy materials for meetings of shareholders; and (e) maintain shareholder
accounts. Under the Transfer Agency Agreement, State Street receives from
the Trust a fee based upon each shareholder account and is reimbursed for
out-of-pocket expenses.
EXPENSES
Operating expenses borne by the Funds include taxes, interest, fees and
expenses of its trustees and officers, SEC fees, state securities
qualification fees, advisory fees, administrative fees, charges of the Funds'
custodian, shareholder services agent and accounting services agent, certain
insurance premiums, outside auditing and legal expenses, costs of preparing
and printing prospectuses for regulatory purposes and for distribution to
existing shareholders, costs of shareholder reports and meetings and any
extraordinary expenses. The Funds also pay for brokerage fees, commissions
and other transaction charges (if any) in connection with the purchase and
sale of portfolio securities.
AUDITORS
Deloitte & Touche LLP, 555 Seventeenth Street, Suite 3600, Denver,
Colorado 80202, serves as independent auditors for the Funds. The financial
statements contained herein are so included in reliance upon the report of
Deloitte & Touche LLP given upon their authority as experts in accounting and
auditing.
COUNSEL
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<PAGE>
Drinker Biddle & Reath (of which Mr. McConnel, Secretary of the Trust, is
a partner), 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496,
serves as counsel to the Trust and will pass upon certain legal matters
relating to the Funds.
ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS
From time to time, the yields, tax-equivalent yields, effective yields
and the total return of a Fund may be quoted in advertisements, shareholder
reports or other communications to shareholders. Performance information is
generally available by calling ALPS at 1-800-392-CORE (2673).
YIELD CALCULATIONS - BOND FUNDS
Each yield is calculated by dividing the net investment income per share
(as described below) earned by a Fund during a 30-day (or one month) period by
the net asset value per share on the last day of the period and annualizing the
result on a semi-annual basis by adding one to the quotient, raising the sum to
the power of six, subtracting one from the result and then doubling the
difference. A Fund's net investment income per share earned during the period
is based on the average daily number of shares outstanding during the period
entitled to receive dividends and includes dividends and interest earned during
the period minus expenses accrued for the period, net of reimbursements. This
calculation can be expressed as follows:
a-b 6
Yield = 2 [(----- + 1) - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the
period that were entitled to receive dividends.
d = net asset value per share on the last day of the period.
For the purpose of determining net investment income earned during the
period (variable "a" in the formula), dividend income on equity securities held
by a Fund is recognized by accruing 1/360 of the stated dividend rate of the
security each day that the security is in the Fund. Interest earned on any debt
obligations held by a Fund is calculated by computing the yield to maturity of
each obligation held by the Fund based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, the purchase price (plus actual accrued interest), and dividing the
result by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by the Fund. For purposes of this calculation, it is assumed that each month
contains 30 days. The maturity of an obligation with a call provision is the
next call date on which the obligation reasonably may be expected to be called
or, if none, the maturity date. With respect to debt obligations purchased at a
discount or premium, the formula generally calls for amortization of the
discount or premium. The amortization schedule will be adjusted monthly to
reflect changes in the market values of such debt obligations.
Interest earned on tax-exempt obligations that are issued without
original issue discount and have a current market discount is calculated by
using the coupon rate of interest instead of the yield to maturity. In the case
of tax-exempt obligations that are issued with original issue discount but which
have discounts based on current market value that exceed the then-remaining
portion of the original issue discount (market discount),
-37-
<PAGE>
the yield to maturity is the imputed rate based on the original issue
discount calculation. On the other hand, in the case of tax-exempt
obligations that are issued with original issue discount but which have
discounts based on current market value that are less than the then-remaining
portion of the original issue discount (market premium), the yield to
maturity is based on the market value.
With respect to mortgage or other receivables-backed obligations which
are expected to be subject to monthly payments of principal and interest ("pay
downs"), (a) gain or loss attributable to actual monthly pay downs are accounted
for as an increase or decrease to interest income during the period; and (b) a
Fund may elect either (i) to amortize the discount and premium or the remaining
security, based on the cost of the security, to the weighted average maturity
date, if such information is available, or to the remaining term of the
security, if any, if the weighted average date is not available, or (ii) not to
amortize discount or premium on the remaining security.
Undeclared earned income will be subtracted from the net asset value
per share (variable "d" in the formula). Undeclared earned income is the net
investment income which, at the end of the base period, has not been declared as
a dividend, but is reasonably expected to be and is declared as a dividend
shortly thereafter.
Based on the foregoing calculations, the yields of the Funds for the
30-day period ended May 31, 1996 (after fee waivers) were as follows:
Fund 30-Day Yield
---- ------------
Long-Term Bond Fund 6.35%
Intermediate-Term Bond Fund 5.53%
Colorado Tax-Exempt Fund 4.72%
"TAX-EQUIVALENT" YIELD CALCULATIONS - COLORADO TAX-EXEMPT FUND
The Fund's "tax-equivalent" yield is computed by: (a) dividing the
portion of the Fund's yield that is exempt from both federal and Colorado state
income taxes by one minus a stated combined federal and state income tax rate;
(b) dividing the portion of the Fund's yield that is exempt from federal income
tax only by one minus a stated federal income tax rate, and (c) adding the
figures resulting from (a) and (b) above to that portion, if any, of the Fund's
yield that is not exempt from federal income tax.
Based on the foregoing calculations, the yield and tax-equivalent
yield of the Fund for the 30-day period ended May 31, 1996 (after fee waivers)
were 4.72% and 7.08%, respectively.
Tax-Equivalent Yield is based upon the combined state and federal tax
rate assumptions of 33% (assuming a 28% federal tax rate and a 5% Colorado tax
rate) for the Colorado Tax-Exempt Fund.
TOTAL RETURN CALCULATIONS
Each Fund computes its average annual total returns by determining the
average annual compounded rates of return during specified periods that equate
the initial amount invested to the ending redeemable value of such investment.
This is done by dividing the ending redeemable value of a hypothetical
-38-
<PAGE>
$1,000 initial payment by $1,000 and raising the quotient to a power equal to
one divided by the number of years (or fractional portion thereof) covered by
the computation and subtracting one from the result. This calculation can be
expressed as follows:
ERV 1/n
T = [(-----) - 1]
P
Where: ERV = ending redeemable value at the end of the period covered
by the computation of a hypothetical $1,000 payment made
at the beginning of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of
years.
The Funds compute their aggregate total return by determining the
aggregate rates of return during specified periods that likewise equate the
initial amount invested to the ending redeemable value of such investment. The
formula for calculating aggregate total return is as follows:
ERV
T = [(----- - 1)]
P
The calculations of average annual total return and aggregate total
return assume the reinvestment of all dividends and capital gain distributions
on the reinvestment dates during the period and includes all recurring fees
charged by the Trust to all shareholder accounts. The ending redeemable value
(variable "ERV" in each formula) is determined by assuming complete redemption
of the hypothetical investment and the deduction of all nonrecurring charges at
the end of the period covered by the computations.
Based on the foregoing calculations, the average annual total return
(after fee waivers) for the year ended May 31, 1996, for the five year period
ended May 31, 1996 and for the periods since commencement of the Funds'
respective operations were as follows:
Five Since Inception
Year Ended Years Ended to
Fund May 31, 1996 May 31, 1996 May 31, 1996
---- ------------ ------------ ---------------
MIDCO Growth Fund (1) 38.62% 17.35% 16.69%
Blue Chip
Fund(2) 30.48% 14.48% 13.95%
Growth and Income
Fund(2)(5) 27.25% 10.88% 11.73%
Small-Cap
Opportunity Fund(3) 37.49% N/A 17.76%
Long-Term Bond
Fund(2) 3.41% 9.57% 9.96%
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<PAGE>
Intermediate-Term
Bond Fund(2) 4.26% 7.46% 7.74%
Colorado Tax-Exempt
Fund(4) 3.97% 6.56% 6.56%
________________________
(1) Commenced Operations on August 1, 1986.
(2) Commenced Operations on June 1, 1988.
(3) Commenced Operations on January 3, 1994.
(4) Commenced Operations on June 1, 1991.
(5) The Growth and Income Fund was formerly known as the Equity Income Fund.
The Fund's name was changed on January 1, 1996 to reflect a different
objective and policies. Prior to January 1, 1996, the Fund's objective was
to seek reasonable income through investments in income-producing
securities. On January 1, 1996, the Fund's objective was revised to seek
long-term total return through capital appreciation and current income
through investments in equity securities. A new portfolio manager has
managed the Fund since October 1995. Past performance is not intended to
be indicative or representative of future performance.
The Funds may also from time to time include in advertisements, sales
literature, communications to shareholders and other materials (collectively,
"Materials") a total return figure that more accurately compares a Fund's
performance with other measures of investment return. For example, in comparing
a Fund's total return with data published by Lipper Analytical Services, Inc.,
CDA Investment Technologies, Inc. or Weisenberger Investment Company Service, or
with the performance of an index, a Fund may calculate its aggregate total
return for the period of time specified in the Materials by assuming the
investment of $10,000 in shares of a Fund and assuming the reinvestment of all
dividends and distributions. Percentage increases are determined by subtracting
the initial value of the investment from the ending value and by dividing the
remainder by the beginning value.
The Funds may also from time to time include discussions or
illustrations of the effects of compounding in Materials. "Compounding" refers
to the fact that, if dividends or other distributions on an investment in a Fund
are paid in the form of additional shares of the Fund, any future income or
capital appreciation of the Fund would increase the value, not only of the
original investment, but also of the additional shares received through
reinvestment. As a result, the value of the investment in the Fund would
increase more quickly than if dividends or other distributions had been paid in
cash.
In addition, the Funds may also include in Materials discussions
and/or illustrations of the potential investment goals of a prospective
investor, investment management strategies, techniques, policies or investment
suitability of a Fund (such as value investing, market timing, dollar cost
averaging, asset allocation, constant ratio transfer, automatic account
rebalancing, the advantages and disadvantages of investing in tax-deferred and
taxable investments), economic conditions, the relationship between sectors of
the economy and the economy as a whole, various securities markets, the effects
of inflation and historical performance of various asset classes, including but
not limited to, stocks, bonds and Treasury securities. From time to time,
Materials may summarize the substance of information contained in shareholder
reports (including the investment composition of a Fund), as well as the views
of the adviser as to current market, economic, trade and interest rate trends,
legislative, regulatory and monetary developments, investment strategies and
related matters believed to be of relevance to a Fund. The Funds may also
include in Materials charts, graphs or drawings which compare the investment
objective, return potential, relative stability and/or growth possibilities of
the
-40-
<PAGE>
Funds and/or other mutual funds, or illustrate the potential risks and
rewards of investment in various investment vehicles, including but not limited
to, stocks, bonds, Treasury securities and shares of a Fund and/or other mutual
funds. Materials may include a discussion of certain attributes or benefits to
be derived by an investment in a Fund and/or other mutual funds, shareholder
profiles and hypothetical investor scenarios, timely information on financial
management, tax and retirement planning and investment alternatives to
certificates of deposit and other financial instruments. Such Materials may
include symbols, headlines or other material which highlight or summarize the
information discussed in more detail therein.
MISCELLANEOUS
As used in this Statement of Additional Information and the Funds'
Prospectus, a "majority of the outstanding shares" of a Fund or a class of
shares means, with respect to the approval of an investment advisory agreement,
a distribution plan or as a change in a fundamental investment policy, the
lesser of (1) 67% of the shares of the particular Fund or class represented at a
meeting at which the holders of more than 50% of the outstanding shares of such
Fund or class are present in person or by proxy, or (2) more than 50% of the
outstanding shares of such Fund or class.
As of August 29, 1996, the following shareholders owned more than 5%
of the outstanding shares of the Funds listed below:
MIDCO GROWTH FUND
<TABLE>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
Div & Co. 39.72% 11,454,654.6730 $246,733,261.66
Reinvest Account
c/o Wells Fargo Bank
Attn: Mutual Fund Group
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Northern Trust Company 5.44% 1,569,120.3240 $33,798,851.78
FBO The E-Systems Inc Unique Asse
P.O.Box 92956
Chicago, IL 60675-2956
BLUE CHIP FUND
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
Div & Co. - Reinvest Account 72.13% 2,633,258.4280 $45,292,044.96
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Tanfir & Co. 11.58% 422,656.4240 $ 7,269,690.49
Fiaz Trust Controllers
P.O. Box 53437, Dept. 972
Phoenix, AZ 85072-3437
</TABLE>
-41-
<PAGE>
GROWTH AND INCOME FUND
<TABLE>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
Div. & Co. 26.99% 546,419.5770 $ 6,671,783.04
Reinvest Account
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Dake & Co. 14.71% 297,748.5250 $ 3,635,509.49
Cash Account
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 5825
Denver, CO 80217-5825
Wells Fargo Bank 11.40% 230,790.2900 $ 2,817,949.44
ChoiceMaster 401K Plan
Omnibus Account
P.O. Box 9800
Calabasas, CA 91372-0800
Tanfir & Co. 8.17% 165,393.4290 $ 2,019,453.77
Attn: Mutual Fund Desk
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
SMALL-CAP OPPORTUNITY FUND
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
Bank of New York as TTEE 29.61% 338,465.0640 $ 6,938,533.81
for Brooklyn Union Gas
Employee Benefit Trust
One Wall Street
New York, NY 10286-0001
Trussal & Co. 16.95% 193,766.7120 $ 3,972,217.60
FBO Sinai Hospital
Pension Plan 415794505
P.O. Box 771072
Detroit, MI 48277-1072
Div & Co. - Reinvest Account 15.66% 178,996.3470 $ 3,669,425.11
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
</TABLE>
-42-
<PAGE>
<TABLE>
<S> <C> <C> <C>
Tanfir & Co. 6.95% 79,449.1890 $ 1,628,708.37
Fiaz Trust Controllers
P.O. Box 53437, Dept. 972
Phoenix, AZ 85072-3437
Wells Fargo Bank 5.98% 68,382.6860 $ 1,401,845.06
ChoiceMaster 401K Plan
Omnibus Account
P.O. Box 9800
Calabasas, CA 91372-0800
LONG-TERM BOND FUND
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
Div. & Co. 82.97% 2,254,416.7590 $21,574,768.38
Reinvest Account
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
INTERMEDIATE-TERM BOND FUND
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
Div & Co Reinvest Account 67.97% 5,517,137.8570 $55,723,092.36
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Tanfir & Co. 13.24% 1,074,443.1530 $10,851,875.85
Attn: Mutual Fund Desk
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Dake & Co. Cash Account 5.48% 444,618.9310 $ 4,490,651.20
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 5825
Denver, CO 80217-5825
</TABLE>
-43-
<PAGE>
COLORADO TAX-EXEMPT FUND
<TABLE>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
Div & Co. 15.33% 226,392.7770 $ 2,422,402.71
Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 53433, Dept. 959
Phoenix, AZ 85072-3433
Dake & Co. 14.10% 208,278.1290 $ 2,228,575.98
Cash Account
c/o Wells Fargo Bank
Attn: Shirley Williams
P.O. Box 5825
Denver, CO 80217-5825
Colorado National Bank 8.88% 131,099.0480 $ 1,402,759.81
FBO Joe Bishop
Mutual Fund Department
P.O. Box 64010
St. Paul, MN 55164-0010
Dennis E. Larkin 7.52% 111,085.9350 $ 1,188,619.50
Constance M. Larkin
3233 So. Niagara St.
Denver, CO 80224-2825
Charles Schwab & Co., Inc. 7.31% 107,897.6440 $ 1,154,504.79
Special Account for the Exclusive
Benefit of Customers
Attn: Mutual Funds
101 Montgomery Street
San Francisco, CA 94104-4122
John E. Fuller 6.05% 89,387.2450 $ 956,443.52
c/o Fuller & Co.
1515 Arapahoe St., Suite 1600
Denver, CO 80202-2116
Tanfir & Co. 5.56% 82,124.5470 $ 878,732.65
Attn: Mutual Fund Desk
P.O. Box 53436, Dept. 959
Phoenix, AZ 85072-3436
Cherry Trust & Co. 5.14% 75,869.3010 $ 811,801.52
3033 E. 1st Ave.
Denver, CO 80206-5617
</TABLE>
___________________________
* All above-listed shares of the MIDCO Growth Fund, Blue Chip Fund, Growth
and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund,
Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund were beneficially
owned by the record owners named above, except that the shares owned of
record by Tanfir & Co. and Div & Co. were beneficially owned by First
Interstate Bank of Arizona, N.A., the shares owned of record by Firnap &
Co. were beneficially owned by First Interstate Bank of Oregon, N.A., and
the shares owned of record by Dake & Co. were beneficially owned by First
Interstate Bank of Denver, N.A.
-44-
<PAGE>
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current assessment of
the likelihood of timely payment of debt considered short-term in the relevant
market. The following summarizes the rating categories used by Standard and
Poor's for commercial paper:
"A-1" - Issue's degree of safety regarding timely payment is strong.
Those issues determined to possess extremely strong safety characteristics are
denoted "A-1+."
"A-2" - Issue's capacity for timely payment is satisfactory. However,
the relative degree of safety is not as high as for issues designated "A-1."
"A-3" - Issue has an adequate capacity for timely payment. It is,
however, somewhat more vulnerable to the adverse effects of changes and
circumstances than an obligation carrying a higher designation.
"B" - Issue has only a speculative capacity for timely payment.
"C" - Issue has a doubtful capacity for payment.
"D" - Issue is in payment default.
Moody's commercial paper ratings are opinions of the ability of
issuers to repay punctually promissory obligations not having an original
maturity in excess of 9 months. The following summarizes the rating categories
used by Moody's for commercial paper:
"Prime-1" - Issuer or related supporting institutions are considered
to have a superior capacity for repayment of short-term promissory obligations.
Prime-1 repayment capacity will normally be evidenced by the following
characteristics: leading market positions in well established industries; high
rates of return on funds employed; conservative capitalization structures with
moderate reliance on debt and ample asset protection; broad margins in earning
coverage of fixed financial charges and high internal cash generation; and well
established access to a range of financial markets and assured sources of
alternate liquidity.
"Prime-2" - Issuer or related supporting institutions are considered
to have a strong capacity for repayment of short-term promissory obligations.
This will normally be evidenced by many of the characteristics cited above but
to a lesser degree. Earnings trends and coverage ratios, while sound, will be
more subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternative
liquidity is maintained.
"Prime-3" - Issuer or related supporting institutions have an
acceptable capacity for repayment of short-term promissory obligations. The
effects of industry characteristics and market composition may be more
pronounced. Variability in earnings and profitability may result in changes in
the level of debt protection measurements and the requirement for relatively
high financial leverage. Adequate alternate liquidity is maintained.
"Not Prime" - Issuer does not fall within any of the Prime rating
categories.
A-1
<PAGE>
The three rating categories of Duff & Phelps for investment grade
commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps
employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating
category. The following summarizes the rating categories used by Duff & Phelps
for commercial paper:
"D-1+" - Debt possesses highest certainty of timely payment.
Short-term liquidity, including internal operating factors and/or access to
alternative sources of funds, is outstanding, and safety is just below
risk-free U.S. Treasury short-term obligations.
"D-1" - Debt possesses very high certainty of timely payment.
Liquidity factors are excellent and supported by good fundamental protection
factors. Risk factors are minor.
"D-1-" - Debt possesses high certainty of timely payment. Liquidity
factors are strong and supported by good fundamental protection factors. Risk
factors are very small.
"D-2" - Debt possesses good certainty of timely payment. Liquidity
factors and company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good. Risk
factors are small.
"D-3" - Debt possesses satisfactory liquidity, and other protection
factors qualify issue as investment grade. Risk factors are larger and subject
to more variation. Nevertheless, timely payment is expected.
"D-4" - Debt possesses speculative investment characteristics.
Liquidity is not sufficient to ensure against disruption in debt service.
Operating factors and market access may be subject to a high degree of
variation.
"D-5" - Issuer has failed to meet scheduled principal and/or interest
payments.
Fitch short-term ratings apply to debt obligations that are payable on
demand or have original maturities of up to three years. The following
summarizes the rating categories used by Fitch for short-term obligations:
"F-1+" - Securities possess exceptionally strong credit quality.
Issues assigned this rating are regarded as having the strongest degree of
assurance for timely payment.
"F-1" - Securities possess very strong credit quality. Issues
assigned this rating reflect an assurance of timely payment only slightly less
in degree than issues rated "F-1+."
"F-2" - Securities possess good credit quality. Issues assigned this
rating have a satisfactory degree of assurance for timely payment, but the
margin of safety is not as great as the "F-1+" and "F-1" categories.
"F-3" - Securities possess fair credit quality. Issues assigned this
rating have characteristics suggesting that the degree of assurance for timely
payment is adequate; however, near-term adverse changes could cause these
securities to be rated below investment grade.
"F-S" - Securities possess weak credit quality. Issues assigned this
rating have characteristics suggesting a minimal degree of assurance for timely
payment and are vulnerable to near-term adverse changes in financial and
economic conditions.
"D" - Securities are in actual or imminent payment default.
Fitch may also use the symbol "LOC" with its short-term ratings to
indicate that the rating is based upon a letter of credit issued by a commercial
bank.
A-2
<PAGE>
Thomson BankWatch short-term ratings assess the likelihood of an
untimely or incomplete payment of principal or interest of unsubordinated
instruments having a maturity of one year or less which is issued by United
States commercial banks, thrifts and non-bank banks; non-United States banks;
and broker-dealers. The following summarizes the ratings used by Thomson
BankWatch:
"TBW-1" - This designation represents Thomson BankWatch's highest
rating category and indicates a very high degree of likelihood that principal
and interest will be paid on a timely basis.
"TBW-2" - This designation indicates that while the degree of safety
regarding timely payment of principal and interest is strong, the relative
degree of safety is not as high as for issues rated "TBW-1."
"TBW-3" - This designation represents the lowest investment grade
category and indicates that while the debt is more susceptible to adverse
developments (both internal and external) than obligations with higher ratings,
capacity to service principal and interest in a timely fashion is considered
adequate.
"TBW-4" - This designation indicates that the debt is regarded as
non-investment grade and therefore speculative.
IBCA assesses the investment quality of unsecured debt with an
original maturity of less than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for short-term debt ratings:
"A1+" - Obligations supported by the highest capacity for timely
repayment.
"A1" - Obligations are supported by a strong capacity for timely
repayment.
"A2" - Obligations are supported by a satisfactory capacity for timely
repayment, although such capacity may be susceptible to adverse changes in
business, economic or financial conditions.
"A3" - Obligations are supported by a satisfactory capacity for timely
repayment. Such capacity is more susceptible to adverse changes in business,
economic or financial conditions than for obligations in higher categories.
"B" - Obligations for which the capacity for timely repayment is
susceptible to adverse changes in business, economic or financial conditions.
"C" - Obligations for which there is an inadequate capacity to ensure
timely repayment.
"D" - Obligations which have a high risk of default or which are
currently in default.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - This designation represents the highest rating assigned by
Standard & Poor's to a debt obligation and indicates an extremely strong
capacity to pay interest and repay principal.
"AA" - Debt is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only in small degree.
A-3
<PAGE>
"A" - Debt is considered to have a strong capacity to pay interest and
repay principal although such issues are somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher-rated categories.
"BBB" - Debt is regarded as having an adequate capacity to pay
interest and repay principal. Whereas such issues normally exhibit 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 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 outweighed by large uncertainties or major risk exposures to adverse
conditions.
"BB" - Debt has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The "BB"
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.
"B" - Debt has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
"CCC" - Debt has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The "CCC" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"B" or "B-" rating.
"CC" - This rating is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.
"C" - This rating is typically applied to debt subordinated to senior
debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating
may be used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
"CI" - This rating is reserved for income bonds on which no interest
is being paid.
"D" - Debt is in payment default. This rating is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S & P believes such payments
will be made during such grace period. "D" rating is also used upon the filing
of a bankruptcy petition if debt service payments are jeopardized.
PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories.
"r" - This rating is attached to highlight derivative, hybrid, and
certain other obligations that S & P believes may experience high volatility or
high variability in expected returns due to non-credit risks. Examples of such
obligations are: securities whose principal or interest return is indexed to
equities, commodities, or currencies; certain swaps and options; and interest
only and principal only mortgage securities.
A-4
<PAGE>
The following summarizes the ratings used by Moody's for corporate and
municipal long-term debt:
"Aaa" - Bonds are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edged." 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 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 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 considered 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," "B," "Caa," "Ca," and "C" - Bonds that possess one of these
ratings provide questionable protection of interest and principal ("Ba"
indicates some speculative elements; "B" indicates a general lack of
characteristics of desirable investment; "Caa" represents a poor standing; "Ca"
represents obligations which are speculative in a high degree; and "C"
represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in
default.
Con. (---) - Bonds for which the security depends upon the completion
of some act or the fulfillment of some condition are rated conditionally. These
are bonds secured by (a) earnings of projects under construction, (b) earnings
of projects unseasoned in operation experience, (c) rentals which begin when
facilities are completed, or (d) payments to which some other limiting condition
attaches. Parenthetical rating denotes probable credit stature upon completion
of construction or elimination of basis of condition.
Moody's applies numerical modifiers 1, 2 and 3 in each generic
classification from "Aa" to "B" in its bond rating system. The modifier 1
indicates that the issuer 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 issuer ranks at the lower end of its generic rating category.
The following summarizes the long-term debt ratings used by Duff &
Phelps for corporate and municipal long-term debt:
"AAA" - Debt is considered to be of the highest credit quality. The
risk factors are negligible, being only slightly more than for risk-free U.S.
Treasury debt.
"AA" - Debt is considered of high credit quality. Protection factors
are strong. Risk is modest but may vary slightly from time to time because of
economic conditions.
"A" - Debt possesses protection factors which are average but
adequate. However, risk factors are more variable and greater in periods of
economic stress.
"BBB" - Debt possesses below average protection factors but such
protection factors are still considered sufficient for prudent investment.
Considerable variability in risk is present during economic cycles.
A-5
<PAGE>
"BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these
ratings is considered to be below investment grade. Although below investment
grade, debt rated "BB" is deemed likely to meet obligations when due. Debt
rated "B" possesses the risk that obligations will not be met when due. Debt
rated "CCC" is well below investment grade and has considerable uncertainty as
to timely payment of principal, interest or preferred dividends. Debt rated
"DD" is a defaulted debt obligation, and the rating "DP" represents preferred
stock with dividend arrearages.
To provide more detailed indications of credit quality, the "AA," "A,"
"BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within these major categories.
The following summarizes the highest four ratings used by Fitch for
corporate and municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest
credit quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably foreseeable
events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is very
strong, although not quite as strong as bonds rated "AAA." Because bonds rated
in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable
future developments, short-term debt of these issuers is generally rated "F-1+."
"A" - Bonds considered to be investment grade and of high credit
quality. The obligor's ability to pay interest and repay principal is
considered to be strong, but may be more vulnerable to adverse changes in
economic conditions and circumstances than bonds with higher ratings.
"BBB" - Bonds considered to be investment grade and of satisfactory
credit quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have an adverse impact on these
bonds, and therefore, impair timely payment. The likelihood that the ratings of
these bonds will fall below investment grade is higher than for bonds with
higher ratings.
"BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that possess
one of these ratings are considered by Fitch to be speculative investments. The
ratings "BB" to "C" represent Fitch's assessment of the likelihood of timely
payment of principal and interest in accordance with the terms of obligation for
bond issues not in default. For defaulted bonds, the rating "DDD" to "D" is an
assessment of the ultimate recovery value through reorganization or liquidation.
To provide more detailed indications of credit quality, the Fitch
ratings from and including "AA" to "C" may be modified by the addition of a plus
(+) or minus (-) sign to show relative standing within these major rating
categories.
IBCA assesses the investment quality of unsecured debt with an
original maturity of more than one year which is issued by bank holding
companies and their principal bank subsidiaries. The following summarizes the
rating categories used by IBCA for long-term debt ratings:
"AAA" - Obligations for which there is the lowest expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial such that adverse changes in business, economic or financial
conditions are unlikely to increase investment risk substantially.
"AA" - Obligations for which there is a very low expectation of
investment risk. Capacity for timely repayment of principal and interest is
substantial. Adverse changes in business, economic or financial conditions may
increase investment risk albeit not very significantly.
A-6
<PAGE>
"A" - Obligations for which there is a low expectation of investment
risk. Capacity for timely repayment of principal and interest is strong,
although adverse changes in business, economic or financial conditions may lead
to increased investment risk.
"BBB" - Obligations for which there is currently a low expectation of
investment risk. Capacity for timely repayment of principal and interest is
adequate, although adverse changes in business, economic or financial conditions
are more likely to lead to increased investment risk than for obligations in
higher categories.
"BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of
these ratings where it is considered that speculative characteristics are
present. "BB" represents the lowest degree of speculation and indicates a
possibility of investment risk developing. "C" represents the highest degree of
speculation and indicates that the obligations are currently in default.
IBCA may append a rating of plus (+) or minus (-) to a rating to
denote relative status within major rating categories.
Thomson BankWatch assesses the likelihood of an untimely repayment of
principal or interest over the term to maturity of long term debt and preferred
stock which are issued by United States commercial banks, thrifts and non-bank
banks; non-United States banks; and broker-dealers. The following summarizes
the rating categories used by Thomson BankWatch for long-term debt ratings:
"AAA" - This designation represents the highest category assigned by
Thomson BankWatch to long-term debt and indicates that the ability to repay
principal and interest on a timely basis is extremely high.
"AA" - This designation indicates a very strong ability to repay
principal and interest on a timely basis with limited incremental risk compared
to issues rated in the highest category.
"A" - This designation indicates that the ability to repay principal
and interest is strong. Issues rated "A" could be more vulnerable to adverse
developments (both internal and external) than obligations with higher ratings.
"BBB" - This designation represents Thomson BankWatch's lowest
investment grade category and indicates an acceptable capacity to repay
principal and interest. Issues rated "BBB" are, however, more vulnerable to
adverse developments (both internal and external) than obligations with higher
ratings.
"BB," "B," "CCC," and "CC," - These designations are assigned by
Thomson BankWatch to non-investment grade long-term debt. Such issues are
regarded as having speculative characteristics regarding the likelihood of
timely payment of principal and interest. "BB" indicates the lowest degree of
speculation and "CC" the highest degree of speculation.
"D" - This designation indicates that the long-term debt is in
default.
PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may
include a plus or minus sign designation which indicates where within the
respective category the issue is placed.
Municipal Note Ratings
A Standard and Poor's rating reflects the liquidity concerns and
market access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's Ratings Group for municipal
notes:
A-7
<PAGE>
"SP-1" - The issuers of these municipal notes exhibit very strong or
strong capacity to pay principal and interest. Those issues determined to
possess overwhelming safety characteristics are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory
capacity to pay principal and interest.
"SP-3" - The issuers of these municipal notes exhibit speculative
capacity to pay principal and interest.
Moody's ratings for state and municipal notes and other short-term
loans are designated Moody's Investment Grade ("MIG") and variable rate demand
obligations are designated Variable Moody's Investment Grade ("VMIG"). Such
ratings recognize the differences between short-term credit risk and long-term
risk. The following summarizes the ratings by Moody's Investors Service, Inc.
for short-term notes:
"MIG-1"/"VMIG-1" - Loans bearing this designation are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.
"MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality,
with margins of protection ample although not so large as in the preceding
group.
"MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable
quality, with all security elements accounted for but lacking the undeniable
strength of the preceding grades. Liquidity and cash flow protection may be
narrow and market access for refinancing is likely to be less well established.
"MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate
quality, carrying specific risk but having protection commonly regarded as
required of an investment security and not distinctly or predominantly
speculative.
"SG" - Loans bearing this designation are of speculative quality and
lack margins of protection.
Fitch and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
A-8
<PAGE>
APPENDIX B
As stated in the Prospectus, the Equity and Bond Funds may enter into
futures contracts and options for hedging purposes. Such transactions are
described in this Appendix.
I. INTEREST RATE FUTURES CONTRACTS.
USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established
in both the cash market and the futures market. In the cash market, bonds are
purchased and sold with payment for the full purchase price of the bond being
made in cash, generally within five business days after the trade. In the
futures market, only a contract is made to purchase or sell a bond in the future
for a set price on a certain date. Historically, the prices for bonds
established in the futures markets have tended to move generally in the
aggregate in concert with the cash market prices and have maintained fairly
predictable relationships. Accordingly, the Funds may use interest rate futures
as a defense, or hedge, against anticipated interest rate changes and not for
speculation. As described below, this would include the use of futures contract
sales to protect against expected increases in interest rates and futures
contract purchases to offset the impact of interest rate declines.
The Funds presently could accomplish a similar result to that which it
hopes to achieve through the use of futures contracts by selling bonds with long
maturities and investing in bonds with short maturities when interest rates are
expected to increase, or conversely, selling short-term bonds and investing in
long-term bonds when interest rates are expected to decline. However, because
of the liquidity that is often available in the futures market the protection is
more likely to be achieved, perhaps at a lower cost and without changing the
rate of interest being earned by the Funds, through using futures contracts.
DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate
futures contract sale would create an obligation by a Fund, as seller, to
deliver the specific type of financial instrument called for in the contract at
a specific future time for a specified price. A futures contract purchase would
create an obligation by a Fund, as purchaser, to take delivery of the specific
type of financial instrument at a specific future time at a specific price. The
specific securities delivered or taken, respectively, at settlement date, would
not be determined until at or near that date. The determination would be in
accordance with the rules of the exchange on which the futures contract sale or
purchase was made.
Although interest rate futures contracts by their terms call for
actual delivery or acceptance of securities, in most cases the contracts are
closed out before the settlement date without the making or taking of delivery
of securities. Closing out a futures contract sale is effected by a Fund
entering into a futures contract purchase for the same aggregate amount of the
specific type of financial instrument and the same delivery date. If the price
of the sale exceeds the price of the offsetting purchase, a Fund is immediately
paid the difference and thus realizes a gain. If the offsetting purchase price
exceeds the sale price, a Fund pays the difference and realizes a loss.
Similarly, the closing out of a futures contract purchase is effected by the
Fund entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, a Fund realizes a gain, and if the purchase price
exceeds the offsetting sale price, a Fund realizes a loss.
Interest rate futures contracts are traded in an auction environment
on the floors of several exchanges -principally, the Chicago Board of Trade and
the Chicago Mercantile Exchange and the New York Futures Exchange. The Fund
would deal only in standardized contract's on recognized exchanges. Each
exchange guarantees performance under contract provisions through a clearing
corporation, a nonprofit organization managed by the exchange membership.
A public market now exists in futures contracts covering various
financial instruments including long-term Treasury Bonds and Notes; Government
National Mortgage Association (GNMA) modified pass-through mortgage-backed
securities; three-month Treasury Bills; and ninety-day commercial paper. A Fund
may trade in any futures contract for which there exists a public market,
including, without limitation, the foregoing instruments.
B-1
<PAGE>
II. STOCK INDEX FUTURES CONTRACTS.
GENERAL. A stock index assigns relative values to the stocks included
in the index and the index fluctuates with changes in the market values of the
stocks included. Some stock index futures contracts are based on broad market
indexes, such as the Standard & Poor's 500 or the New York Stock Exchange
Composite Index. In contrast, certain exchanges offer futures contracts on
narrower market indexes, such as the Standard & Poor's 100 or indexes based on
an industry or market segment, such as oil and gas stocks. Futures contracts
are traded on organized exchanges regulated by the Commodity Futures Trading
Commission. Transactions on such exchanges are cleared through a clearing
corporation, which guarantees the performance of the parties to each contract.
A Fund will sell index futures contracts in order to offset a decrease
in market value of its securities that might otherwise result from a market
decline. A Fund may do so either to hedge the value of its portfolio as a
whole, or to protect against declines, occurring prior to sales of securities,
in the value of the securities to be sold. Conversely, a Fund will purchase
index futures contracts in anticipation of purchases of securities. In a
substantial majority of these transactions, a Fund will purchase such securities
upon termination of the long futures position, but a long futures position may
be terminated without a corresponding purchase of securities.
In addition, a Fund may utilize stock index futures contracts in
anticipation of changes in the composition of its holdings. For example, in the
event that a Fund expects to narrow the range of industry groups represented in
its holdings it may, prior to making purchases of the actual securities,
establish a long futures position based on a more restricted index, such as an
index comprised of securities of a particular industry group. A Fund may also
sell futures contracts in connection with this strategy, in order to protect
against the possibility that the value of the securities to be sold as part of
the restructuring of its portfolio will decline prior to the time of sale.
III. FUTURES CONTRACTS ON FOREIGN CURRENCIES.
A futures contract on foreign currency creates a binding obligation on
one party to deliver, and a corresponding obligation on another party to accept
delivery of, a stated quantity of a foreign currency, for an amount fixed in
U.S. dollars. Foreign currency futures may be used by a Fund to hedge against
exposure to fluctuations in exchange rates between the U.S. dollar and other
currencies arising from multinational transactions.
IV. MARGIN PAYMENTS.
Unlike when a Fund purchases or sells a security, no price is paid or
received by a Fund upon the purchase or sale of a futures contract. Initially,
a Fund will be required to deposit with the broker or in a segregated account
with a Fund's custodian an amount of cash or cash equivalents, the value of
which may vary but is generally equal to 10% or less of the value of the
contract. This amount is known as initial margin. The nature of initial margin
in futures transactions is different from that of margin in security
transactions in that futures contract margin does not involve the borrowing of
funds by the customer to finance the transactions. Rather, the initial margin
is in the nature of a performance bond or good faith deposit on the contract
which is returned to a Fund upon termination of the futures contract assuming
all contractual obligations have been satisfied. Subsequent payments, called
variation margin, to and from the broker, will be made on a daily basis as the
price of the underlying instrument fluctuates making the long and short
positions in the futures contract more or less valuable, a process known as
"marking-to-market." For example, when a Fund has purchased a futures contract
and the price of the contract has risen in response to a rise in the underlying
instruments, that position will have increased in value and a Fund will be
entitled to receive from the broker a variation margin payment equal to that
increase in value. Conversely, where a Fund has purchased a futures contract
and the price of the futures contract has declined in response to a decrease in
the underlying instruments, the position would be less valuable and a Fund would
be required to make a variation margin payment to the broker. At any time prior
to expiration of the futures contract, Denver Investment Advisors may elect to
close the position by taking an opposite position, subject to the availability
of a secondary market, which will operate to terminate a Fund's position in the
futures contract. A final determination of variation margin is then made,
additional cash is required to be paid by or released to a Fund, and a Fund
realizes a loss or gain.
B-2
<PAGE>
V. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS.
There are several risks in connection with the use of futures by a
Fund as a hedging device. One risk arises because of the imperfect correlation
between movements in the price of the future and movements in the price of the
securities which are the subject of the hedge. The price of the future may move
more than or less than the price of the securities being hedged. If the price
of the future moves less than the price of the securities which are the subject
of the hedge, the hedge will not be fully effective but, if the price of the
securities being hedged has moved in an unfavorable direction, a Fund would be
in a better position than if it had not hedged at all. If the price of the
securities being hedged has moved in a favorable direction, this advantage will
be partially offset by the loss on the future. If the price of the future moves
more than the price of the hedged securities, a Fund involved will experience
either a loss or gain on the future which will not be completely offset by
movements in the price of the securities which are the subject of the hedge. To
compensate for the imperfect correlation of movements in the price of securities
being hedged and movements in the price of futures contracts, a Fund may buy or
sell futures contracts in a greater dollar amount than the dollar amount of
securities being hedged if the volatility over a particular time period of the
prices of such securities has been greater than the volatility over such time
period of the future, or if otherwise deemed to be appropriate by Denver
Investment Advisors. Conversely, a Fund may buy or sell fewer futures contracts
if the volatility over a particular time period of the prices of the securities
being hedged is less than the volatility over such time period of the futures
contract being used, or if otherwise deemed to be appropriate by Denver
Investment Advisors. It is also possible that, where a Fund has sold futures to
hedge its portfolio against a decline in the market, the market may advance and
the value of securities held by a Fund may decline. If this occurred, a Fund
would lose money on the future and also experience a decline in value in its
portfolio securities.
Where futures are purchased to hedge against a possible increase in
the price of securities or a currency before a Fund is able to invest its cash
(or cash equivalents) in securities (or options) in an orderly fashion, it is
possible that the market may decline instead; if a Fund then concludes not to
invest in securities or options at that time because of concern as to possible
further market decline or for other reasons, a Fund will realize a loss on the
futures contract that is not offset by a reduction in the price of securities
purchased.
In addition to the possibility that there may be an imperfect
correlation, or no correlation at all, between movements in the futures and the
securities being hedged, the price of futures may not correlate perfectly with
movement in the cash market due to certain market distortions. Rather than
meeting additional margin deposit requirements, investors may close futures
contracts through off-setting transactions which could distort the normal
relationship between the cash and futures markets. Second, with respect to
financial futures contracts, the liquidity of the futures market depends on
participants entering into off-setting 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 thus producing distortions. Third, from
the point of view of speculators, the deposit requirements in the futures market
are less onerous than margin requirements in the securities market. Therefore,
increased participation by speculators in the futures market may also cause
temporary price distortions. Due to the possibility of price distortion in the
futures market, and because of the imperfect correlation between the movements
in the cash market and movements in the price of futures, a correct forecast of
general market trends or interest rate movements by Denver Investment Advisors
may still not result in a successful hedging transaction over a short time
frame.
Positions in futures may be closed out only on an exchange or board of
trade which provides a secondary market for such futures. Although the Funds
intend to purchase or sell futures only on exchanges or boards of trade where
there appear to be active secondary markets, there is no assurance that a liquid
secondary market on any exchange or board of trade will exist for any particular
contract or at any particular time. In such event, it may not be possible to
close a futures investment position, and in the event of adverse price
movements, the Funds would continue to be required to make daily cash payments
of variation margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contract can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will in fact correlate with the price movements in the futures
contract and thus provide an offset on a futures contract.
B-3
<PAGE>
Further, it should be noted that the liquidity of a secondary market
in a futures contract may be adversely affected by "daily price fluctuation
limits" established by commodity exchanges which limit the amount of fluctuation
in a futures contract price during a single trading day. Once the daily limit
has been reached in the contract, no trades may be entered into at a price
beyond the limit, thus preventing the liquidation of open futures positions.
The trading of futures contracts is also subject to the risk of trading halts,
suspensions, exchange or clearing house equipment failures, government
intervention, insolvency of a brokerage firm or clearing house or other
disruptions of normal trading activity, which could at times make it difficult
or impossible to liquidate existing positions or to recover excess variation
margin payments.
Successful use of futures by the Funds is also subject to Denver
Investment Advisor's ability to predict correctly movements in the direction of
the market. For example, if a Fund has hedged against the possibility of a
decline in the market adversely affecting securities held in its portfolio and
securities prices increase instead, a Fund will lose part or all of the benefit
to the increased value of its securities which it has hedged because it will
have offsetting losses in its futures positions. In addition, in such
situations, if a Fund has insufficient cash, it may have to sell securities to
meet daily variation margin requirements. Such sales of securities may be, but
will not necessarily be, at increased prices which reflect the rising market. A
Fund may have to sell securities at a time when it may be disadvantageous to do
so.
VI. OPTIONS ON FUTURES CONTRACTS.
The Funds may purchase options on the futures contracts described
above. A futures option gives the holder, in return for the premium paid, the
right to buy (call) from or sell (put) to the writer of the option a futures
contract at a specified price at any time during the period of the option. Upon
exercise, the writer of the option is obligated to pay the difference between
the cash value of the futures contract and the exercise price. Like the buyer
or seller of a futures contract, the holder, or writer, of an option has the
right to terminate its position prior to the scheduled expiration of the option
by selling, or purchasing, an option of the same series, at which time the
person entering into the closing transaction will realize a gain or loss.
Investments in futures options involve some of the same considerations
that are involved in connection with investments in futures contracts (for
example, the existence of a liquid secondary market). In addition, the purchase
or sale 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
option purchased. Depending on the pricing of the option compared to either the
futures contract upon which it is based, or upon the price of the securities
being hedged, an option may or may not be less risky than ownership of the
futures contract or such securities. In general, the market prices of options
can be expected to be more volatile than the market prices on the underlying
futures contract. Compared to the purchase or sale of futures contracts,
however, the purchase of call or put options on futures contracts may frequently
involve less potential risk to the Funds because the maximum amount at risk is
the premium paid for the options (plus transaction costs). The writing of an
option on a futures contract involves risks similar to those risks relating to
the sale of futures contracts. Although permitted by their fundamental
investment policies, the Funds do not currently intend to write futures options
during the current fiscal year, and will not do so in the future absent any
necessary regulatory approvals.
VII. ACCOUNTING AND TAX TREATMENT.
Accounting for futures contracts and options will be in accordance
with generally accepted accounting principles.
Generally, futures contracts held by the Funds at the close of the
Funds' taxable year will be treated for federal income tax purposes as sold
for their fair market value on the last business day of such year, a process
known as "mark-to-market." Forty percent of any gain or loss resulting from
such constructive sale will be treated as short-term capital gain or loss and
sixty percent of such gain or loss will be treated as long-term capital gain
or loss without regard to the length of time a Fund holds the futures
contract ("the 40-60 rule"). The amount of any capital gain or loss actually
realized by a Fund in a subsequent sale or other disposition of those futures
contracts will be adjusted to reflect any capital gain or loss taken into
account by a Fund in a prior year as a result of the constructive sale of the
contracts. With respect to
B-4
<PAGE>
futures contracts to sell, which will be regarded as parts of a "mixed
straddle" because their values fluctuate inversely to the values of specific
securities held by a Fund, losses as to such contracts to sell will be
subject to certain loss deferral rules which limit the amount of loss
currently deductible on either part of the straddle to the amount thereof
which exceeds the unrecognized gain (if any) with respect to the other part
of the straddle, and to certain wash sales regulations. Under short sales
rules, which will also be applicable, the holding period of the securities
forming part of the straddle will (if they have not been held for the
long-term holding period) be deemed not to begin prior to termination of the
straddle. With respect to certain futures contracts, deductions for interest
and carrying charges will not be allowed. Notwithstanding the rules described
above, with respect to futures contracts to sell which are properly
identified as such, a Fund may make an election which will exempt (in whole
or in part) those identified futures contracts from being treated for federal
income tax purposes as sold on the last business day of a Fund's taxable
year, but gains and losses will be subject to such short sales, wash sales,
loss deferral rules and the requirement to capitalize interest and carrying
charges. Under temporary regulations, a Fund would be allowed (in lieu of
the foregoing) to elect either (1) to offset gains or losses from portions
which are part of a mixed straddle by separately identifying each mixed
straddle to which such treatment applies, or (2) to establish a mixed
straddle account for which gains and losses would be recognized and offset on
a periodic basis during the taxable year. Under either election, the 40-60
rule will apply to the net gain or loss attributable to the futures
contracts, but in the case of a mixed straddle account election, no more than
50% of any net gain may be treated as long-term and no more than 40% of any
net loss may be treated as short-term. Options on futures contracts generally
receive federal tax treatment similar to that described above.
Certain foreign currency contracts entered into by the Funds may be
subject to the "mark-to-market" process. If the Fund makes a Capital Asset
Election with respect to such contracts, the contracts will be subject to the
40-60 rule, described above. Otherwise, such gain or loss will be treated as
100% ordinary gain or loss. To receive such federal income tax treatment, a
foreign currency contract must meet the following conditions: (1) the contract
must require delivery of a foreign currency of a type in which regulated futures
contracts are traded or upon which the settlement value of the contract depends;
(2) the contract must be entered into at arm's length at a price determined by
reference to the price in the interbank market; and (3) the contract must be
traded in the interbank market. The Treasury Department has broad authority to
issue regulations under the provisions respecting foreign currency contracts.
As of the date of this Statement of Additional Information, the Treasury has not
issued any such regulations. Foreign currency contracts entered into by a Fund
may result in the creation of one or more straddles for federal income tax
purposes, in which case certain loss deferral, short sales, and wash sales rules
and the requirement to capitalize interest and carrying charges may apply.
Some investments may be subject to special rules which govern the
federal income tax treatment of certain transactions denominated in terms of a
currency other than the U.S. dollar or determined by reference to the value of
one or more currencies other than the U.S. dollar. The types of transactions
covered by the special rules include the following: (i) the acquisition of, or
becoming the obligor under, a bond or other debt instrument (including, to the
extent provided in Treasury regulations, preferred stock); (ii) the accruing of
certain trade receivables and payables; and (iii) the entering into or
acquisition of any forward contract, futures contract, option and similar
financial instrument. However, regulated futures contracts and non-equity
options are generally not subject to the special currency rules if they are or
would be treated as sold for their fair market value at year-end under the
"mark-to-market" rules, unless an election is made to have such currency rules
apply. The disposition of a currency other than the U.S. dollar by a U.S.
taxpayer is also treated as a transaction subject to the special currency rules.
With respect to transactions covered by the special rules, foreign currency gain
or loss is calculated separately from any gain or loss on the underlying
transaction and is normally taxable as ordinary gain or loss. A taxpayer may
elect to treat as capital gain or loss foreign currency gain or loss arising
from certain identified forward contracts, futures contracts and options that
are capital assets in the hands of the taxpayer and which are not part of a
straddle. In accordance with Treasury regulations, certain transactions subject
to the special currency rules that are part of a "section 988 hedging
transaction" (as defined in the Code and the Treasury regulations) will be
integrated and treated as a single transaction or otherwise treated consistently
for purposes of the Code. "Section 988 hedging transactions" are not subject to
the mark-to-market or loss deferral rules under the Code. It is anticipated
that some of the non-U.S. dollar denominated investments and foreign currency
contracts that a Fund may make or may enter into will be subject to the special
currency rules described above. Gain or loss attributable to the foreign
currency component of transactions engaged
B-5
<PAGE>
in by the Funds which are not subject to special currency rules (such as
foreign equity investments other than certain preferred stocks) will be
treated as capital gain or loss and will not be segregated from the gain or
loss on the underlying transaction.
Under the federal income tax provisions applicable to regulated
investment companies, less than 30% of a company's gross income must be derived
from gains realized on the sale or other disposition of securities held for less
than three months. With respect to futures contracts and other financial
instruments subject to the "mark-to-market" rules, the Internal Revenue Service
has ruled in private letter rulings that a gain realized from such a futures
contract or financial instrument will be treated as being derived from a
security held for three months or more (regardless of the actual period for
which the contract or instrument is held) if the gain arises as a result of a
constructive sale under the "mark-to-market" rules, and will be treated as being
derived from a security held for less than three months only if the contract or
instrument is terminated (or transferred) during the taxable year (other than by
reason of the mark-to-market rules) and less than three months have elapsed
between the date the contract or instrument is acquired and the termination
date. In determining whether the 30% test is met for a taxable year, increases
and decreases in the value of the Funds' futures contracts and other investments
that qualify as part of a "designated hedge," as defined in the Code, may be
netted.
B-6
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1996
<TABLE>
<CAPTION>
MIDCO Blue Small-Cap Growth Intermediate- Long-Term Colorado
Growth Chip Opportunity and Income Term Bond Bond Tax-Exempt
Fund Fund Fund Fund Fund Bond Fund Fund
------ ------ ----------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value
(cost-see below) $656,390,094 $64,866,114 $24,419,849 $25,124,097 $81,973,963 $23,720,558 $14,127,978
-see accompanying statements
Receivable for investments sold 1,869,370 3,264,256 0 335,479 0 935,733 0
Dividends and interest receivable 237,048 146,036 30,925 66,313 1,196,046 424,990 286,217
Shares of beneficial
interest sold 1,869,463 85,379 150 20,002 100,606 21,366 0
Organizational costs, net of
accumulated amortization 0 0 44,988 0 0 0 0
Prepaid and other assets 18,805 9,504 135,484 6,637 7,971 7,258 228
----------------------------------------------------------------------------------------------------------------------------------
Total Assets 660,384,780 68,371,289 24,631,396 25,552,528 83,278,586 25,109,905 14,414,423
----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Investments purchased 2,323,824 0 646,210 108,435 0 0 477,556
Accrued investment
advisory fee 358,675 19,087 6,850 6,657 23,857 4,263 0
Shares of beneficial
interest redeemed 735,548 5,495 0 3,583 136,684 2,610 0
Other payables 477,007 61,135 27,324 46,450 79,409 32,773 15,127
----------------------------------------------------------------------------------------------------------------------------------
Total Liabilities 3,895,054 85,717 680,384 165,125 239,950 39,646 492,683
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
Paid-in capital $400,526,857 $46,689,253 $18,314,380 $19,256,535 $85,686,095 $24,576,997 $13,764,214
(Over)/Undistributed net
investment income (3,130,644) 184,414 478 (143,956) 85,280 29,351 11,725
Accumulated net realized
gain (loss) from investment
transactions 34,853,163 4,515,794 488,710 1,137,541 (1,801,911) 336,455 (9,885)
Net unrealized appreciation
(depreciation) of investments 224,240,350 16,896,111 5,147,444 5,137,283 (930,828) 127,456 155,686
----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER SHARE
Net Assets $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740
----------------------------------------------------------------------------------------------------------------------------------
Shares of beneficial
interest outstanding 28,664,400 3,921,359 1,121,773 2,060,170 8,224,633 2,615,248 1,311,574
----------------------------------------------------------------------------------------------------------------------------------
Net asset value and redemption
price per share $22.90 $17.41 $21.35 $12.32 $10.10 $9.59 $10.61
----------------------------------------------------------------------------------------------------------------------------------
COST OF INVESTMENTS $432,149,744 $47,970,003 $19,272,405 $19,986,814 $82,904,791 $23,593,102 $13,972,292
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
FS-1
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
MIDCO GROWTH FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Shares Market Value*
- ---------------- -------------
COMMON STOCKS 96.17%
- -----------------------------------------------------------------
CAPITAL GOODS 17.40%
- -----------------------------------------------------------------
AEROSPACE & DEFENSE 0.94%
- -----------------------------------------------------------------
101,800 General Motors Corp Class H $6,184,350
------------
COMPUTER HARDWARE 0.93%
- -----------------------------------------------------------------
97,200 Sun Microsystems Inc 6,087,150
------------
COMPUTER SERVICES & SOFTWARE 7.22%
- -----------------------------------------------------------------
21,000 American Management Systems Inc 598,500
79,000 Broderbund Software Inc ** 3,327,875
102,000 Compuserve Corp 2,524,500
126,607 First Data Corp 10,096,908
4,800 Harbinger Corp 115,200
162,900 Informix Corp** 3,705,975
38,400 Intuit ** 1,996,800
84,300 Macromedia Inc 3,593,288
42,000 McAfee Associates Inc 1,554,000
334,425 Oracle Systems Corp ** 11,077,828
57,200 PSINet Inc 829,400
50,400 Sterling Commerce Inc 2,211,300
43,000 Sybase Inc 994,375
49,700 Synopsys Inc ** 2,224,075
72,100 Technology Solutions Co 2,550,538
------------
47,400,562
------------
ELECTRONICS 3.72%
- -----------------------------------------------------------------
104,325 Analog Devices Inc ** 2,881,978
99,200 MEMC Electronics Materials Inc** 4,910,400
98,000 Microchip Technology Inc** 2,523,500
78,100 Millipore Corp 3,426,638
92,800 SCI Systems Inc** 4,176,000
83,900 Sierra Semi-Conductor Corp 1,237,525
60,800 Solectron Corp 2,637,200
75,800 Xilinx Inc ** 2,634,050
------------
24,427,291
------------
ENGINEERING & CONSTRUCTION 1.40%
- -----------------------------------------------------------------
105,100 Foster Wheeler Corp 4,676,950
91,200 Ionics Inc 4,514,400
------------
9,191,350
------------
NETWORKING 2.51%
- -----------------------------------------------------------------
207,100 3 Com Corp ** 10,199,675
35,200 Ascend Communications Inc 2,354,000
135,850 Bay Networks Inc** 3,939,650
------------
16,493,325
------------
OTHER-CAPITAL GOODS 0.68%
- -----------------------------------------------------------------
56,500 Greenfield Industries Inc $2,132,875
45,000 OEA Inc** 1,845,000
22,350 Wabash National Corp 455,381
------------
4,433,256
------------
TOTAL CAPITAL GOODS
(Cost $81,315,760) 114,217,284
------------
CONSUMER CYCLICAL 43.79%
- -----------------------------------------------------------------
AUTOMOTIVE 0.67%
- -----------------------------------------------------------------
50,200 APS Holdings Corp Class A** 1,104,400
72,200 Gentex Corp ** 3,267,050
------------
4,371,450
------------
BUILDING RELATED 0.76%
- -----------------------------------------------------------------
56,800 Fleetwood Enterprises Inc 1,711,100
110,200 Newell Co 3,306,000
------------
5,017,100
------------
CONSUMER PRODUCTS 1.08%
- -----------------------------------------------------------------
143,300 Callaway Golf Co 4,316,913
59,000 Duracell International Inc 2,750,875
------------
7,067,788
------------
CONSUMER SERVICES 6.24%
- -----------------------------------------------------------------
504,255 CUC International Inc ** 18,657,435
333,700 Loewen Group Inc 9,593,875
95,300 Sylvan Learning Systems Inc 3,692,875
236,900 USA Waste Services Inc** 6,988,550
36,700 United Waste Systems Inc** 2,023,088
------------
40,955,823
------------
CONSUMER SOFT GOODS 0.51%
- -----------------------------------------------------------------
118,300 Warnaco Group Inc Class A 3,356,763
------------
HOTELS/LEISURE 8.24%
- -----------------------------------------------------------------
203,900 Brinker International Inc 3,415,325
516,800 HFS Inc 32,235,400
165,600 La Quinta Inns Inc 5,216,400
74,300 MGM Grand Inc 3,380,650
94,200 Mirage Resorts Inc** 5,357,625
282,100 Prime Hospitality Corp ** 4,513,600
------------
54,119,000
------------
-----------------------------------------------------------------------------
FS-2
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
MIDCO GROWTH FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ---------------- -------------
MEDIA-PUBLISHING 6.40%
- -----------------------------------------------------------------
160,700 Evergreen Media Corp Class A $6,428,000
389,900 Home Shopping Network Inc 5,604,813
479,625 Infinity Broadcasting Co Class A** 13,069,781
416,600 National Education Corp 7,759,175
25,000 Scholastic Corp 1,556,250
78,050 Tele Communications Liberty Media 2,341,500
299,100 Westwood One Inc** 5,234,250
------------
41,993,769
------------
RETAIL 8.70%
- -----------------------------------------------------------------
216,200 AutoZone Inc ** 7,594,025
190,800 Bed Bath & Beyond Inc** 5,366,250
44,800 Caseys General Stores Inc 1,058,400
216,100 Consolidated Stores Corp ** 8,184,788
46,400 Discount Auto Parts Inc** 1,194,800
348,733 Dollar General Corp 9,677,341
256,600 General Nutrition Cos 3,977,300
84,500 Intimate Brands Inc 1,827,313
146,600 Kohls Corp ** 4,856,125
113,500 Lowes Companies Inc 3,887,375
54,600 Nordstrom Inc 2,784,600
169,375 Office Depot Inc ** 4,340,234
7,900 Pier 1 Imports Inc 124,425
75,800 Sports Authority Inc ** 2,255,050
------------
57,128,026
------------
TELECOMMUNICATIONS 10.63%
- -----------------------------------------------------------------
52,600 ADC Telecommunications Inc ** 2,419,600
39,300 Adtran Inc** 2,716,613
88,100 Comcast Corp Class A 1,530,738
44,000 Fore Systems Inc** 3,564,000
155,600 Intelcom Group Inc 4,123,400
22,900 Intermedia Communication Co 801,500
35,000 LCI International Inc** 1,115,625
288,200 MFS Communications Inc ** 10,014,950
29,400 Nokia Corp 1,278,900
105,000 Paging Network Inc ** 2,362,500
32,800 QUALCOMM Inc 1,785,550
79,000 Spectrian Corp** 1,560,250
114,400 Stratacom Inc 6,220,500
28,900 Sync Research Inc 505,750
87,400 U.S. Robotics Corp** 8,018,950
7,800 Uniphase Corp 508,950
40,500 Vodafone Group PLC ADR 1,604,813
402,380 WorldCom Inc** 19,666,322
------------
69,798,911
------------
OTHER-CONSUMER CYCLICAL 0.56%
- -----------------------------------------------------------------
133,150 Unifi Inc 3,694,913
------------
TOTAL CONSUMER CYCLICAL
(Cost $175,820,950) 287,503,543
------------
- -----------------------------------------------------------------
CONSUMER STAPLES 18.75%
- -----------------------------------------------------------------
DRUGS & HEALTHCARE 6.87%
- -----------------------------------------------------------------
65,700 Arrow International Inc $2,669,062
57,100 Biochemical Pharmaceuticals Inc** 2,626,600
55,500 Biogen Inc 3,357,750
35,800 Biomet Inc 501,200
90,900 Centocor Inc** 3,215,587
130,100 Guidant Corp 7,545,800
68,200 IDEXX Labs Corp 2,966,700
56,700 Nellcor Puritan Bennet** 3,090,150
162,000 North American Vaccine Inc ** 3,665,250
54,800 Northfield Labs Inc** 924,750
88,800 Physio-Controls Intl 1,720,500
122,200 Sequus Pharmaceuticals** 2,612,025
221,700 Sybron Corp Del ** 6,013,612
93,732 Watson Pharmaceuticals Inc ** 4,217,940
------------
45,126,926
------------
FOOD, BEVERAGES, & TOBACCO 0.26%
- -----------------------------------------------------------------
50,900 Richfood Holdings Inc 1,705,150
------------
HEALTHCARE SERVICES 11.62%
- -----------------------------------------------------------------
65,100 Access Health Inc 3,547,950
37,100 American Oncology
Resources Corp** 1,743,700
48,700 HBO & Co 6,081,412
29,100 HCIA Inc 1,884,225
247,700 Health Management Association
Inc Class A 8,545,650
74,000 Healthsource Inc 1,674,250
112,500 Healthsouth Corp 3,937,500
131,300 MedPartners\Mullikin 3,069,137
676,400 Oxford Health Plans Inc ** 31,959,900
116,650 Phycor Inc** 6,328,262
37,900 Physician Reliance Network 1,989,750
45,600 Total Renal Care Holdings 1,881,000
37,200 U.S. Healthcare Inc 2,018,100
29,300 United Healthcare Corp 1,607,838
------------
76,268,674
------------
TOTAL CONSUMER STAPLES
(Cost $74,114,137) 123,100,750
------------
CREDIT SENSITIVE 6.13%
- -----------------------------------------------------------------
BANKS 0.46%
- -----------------------------------------------------------------
28,000 Cullen Frost Bankers Inc 1,442,000
45,900 Norwest Corp 1,600,762
------------
3,042,762
------------
- -----------------------------------------------------------------
- -----------------------------------------------------------------------------
FS-3
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
MIDCO GROWTH FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ---------------- -------------
FINANCIAL SERVICES 3.66%
- -----------------------------------------------------------------
96,050 Advanta Corp Class B $4,994,600
45,800 Credit Acceptance Corp** 916,000
55,100 MGIC Investment Corp Wisconsin 3,237,125
488,513 Mercury Financial Co 6,106,413
153,400 Olympic Financial Ltd** 3,624,075
141,000 Schwab Charles Corp 3,419,250
188,300 World Acceptance Corp ** 1,694,700
------------
23,992,163
------------
INSURANCE 1.45%
- -----------------------------------------------------------------
84,988 AFLAC Inc 2,560,248
90,405 Frontier Insurance Group Inc 3,107,672
95,050 Mutual Risk Management Ltd 3,813,881
------------
9,481,801
------------
UTILITIES-ELECTRIC 0.56%
- -----------------------------------------------------------------
133,497 AES Corp 3,704,543
------------
TOTAL CREDIT SENSITIVE
(Cost $26,304,553) 40,221,269
------------
INTERMEDIATE GOODS
& SERVICES 10.10%
- -----------------------------------------------------------------
BUSINESS SERVICES 1.59%
- -----------------------------------------------------------------
56,600 Accustaff Inc 1,782,900
49,300 Alternative Resources Corp** 1,898,050
179,600 Medaphis Corp ** 6,779,900
------------
10,460,850
------------
CHEMICAL 2.66%
- -----------------------------------------------------------------
152,800 Airgas Inc ** 3,189,700
34,200 Cytec Industries Inc** 3,060,900
43,100 IMC Global Inc 1,578,537
36,100 Olin Corp 3,339,250
79,700 Praxair Inc 3,237,812
71,000 Union Carbide Corp 3,061,875
------------
17,468,074
------------
ENERGY EQUIPMENT & SERVICES 2.58%
- -----------------------------------------------------------------
236,700 Input/Output Inc ** 9,556,762
213,600 Philip Environmental Inc 1,869,000
62,900 Production Operators Corp 2,295,850
77,400 Tidewater Inc 3,192,750
------------
16,914,362
------------
ENERGY PRODUCERS 1.90%
- -----------------------------------------------------------------
201,500 Apache Corp 5,767,937
275,200 Parker & Parsley Petroleum Co 6,708,000
------------
12,475,937
------------
PAPER & PACKAGING 0.25%
- -----------------------------------------------------------------
41,000 Bowater Inc $1,614,375
------------
TRANSPORTATION 1.12%
- -----------------------------------------------------------------
165,075 Comair Holdings Inc 4,333,219
111,100 Southwest Airlines Co 3,041,362
------------
7,374,581
------------
TOTAL INTERMEDIATE GOODS & SERVICES
(Cost $49,555,275) 66,308,179
------------
TOTAL COMMON STOCKS
(Cost $407,110,675) 631,351,025
------------
WARRANTS 0.00%
- -----------------------------------------------------------------
71 WESTWOOD ONE INC WARRANTS
(Cost $0) 0
------------
MUTUAL FUNDS 3.81%
- -----------------------------------------------------------------
24,953,323 PROVIDENT INSTITUTIONAL TEMP FUND
(Cost $25,039,069) 25,039,069
------------
TOTAL INVESTMENTS
(Cost $432,149,744) 99.98% $656,390,094
Other Assets in Excess
of Liabilities 0.02% 99,632
-------------------------
NET ASSETS 100.00% $656,489,726
-------------------------
-------------------------
* SEE NOTE 1 TO FINANCIAL STATEMENTS.
** DENOTES NON-INCOME PRODUCING SECURITY.
-----------------------------------------------------------------------------
FS-4
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
BLUE CHIP FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Shares Market Value*
- ---------------- -------------
COMMON STOCKS 94.19%
- -----------------------------------------------------------------
CAPITAL GOODS 8.51%
- -----------------------------------------------------------------
AEROSPACE & DEFENSE 4.23%
- -----------------------------------------------------------------
14,850 McDonnell Douglas Corp $1,499,850
12,700 United Technologies Corp 1,389,063
------------
2,888,913
------------
COMPUTER - SYSTEMS 2.03%
- -----------------------------------------------------------------
13,010 International Business Machines 1,388,818
------------
COMPUTER - SOFTWARE & SERVICES 2.25%
- -----------------------------------------------------------------
21,135 Computer Associates International Inc 1,537,571
------------
TOTAL CAPITAL GOODS
(Cost $3,038,000) 5,815,302
------------
CONSUMER CYCLICAL 15.93%
- -----------------------------------------------------------------
ENTERTAINMENT 2.03%
- -----------------------------------------------------------------
46,600 Carnival Corp Class A 1,386,350
------------
HARDWARE & TOOLS 2.04%
- -----------------------------------------------------------------
33,800 Black & Decker Corp 1,390,025
------------
HOTELS - MOTELS 2.49%
- -----------------------------------------------------------------
15,800 Hilton Hotels Corp 1,702,450
------------
RETAIL STORES -
GENERAL MERCHANDISE 7.12%
- -----------------------------------------------------------------
16,100 Dayton Hudson Corp 1,642,200
51,000 Gap Stores Inc 1,714,875
29,550 Sears Roebuck & Co 1,503,356
------------
4,860,431
------------
RETAIL STORES -
SPECIALTY APPAREL 2.25%
- -----------------------------------------------------------------
37,900 Melville Corp 1,539,688
------------
TOTAL CONSUMER CYCLICALS
(Cost $7,716,765) 10,878,944
------------
CONSUMER STAPLES 22.77%
- -----------------------------------------------------------------
BEVERAGES - SOFT DRINKS 2.37%
- -----------------------------------------------------------------
48,660 Pepsico Inc 1,617,945
------------
DRUGS 4.35%
- -----------------------------------------------------------------
22,100 Pfizer Inc 1,563,575
24,000 Schering Plough Corp 1,407,000
------------
2,970,575
------------
FOOD 6.02%
- -----------------------------------------------------------------
36,100 Dole Food Inc $1,362,775
50,200 IBP Inc 1,374,225
41,200 Sara Lee Corp 1,375,050
------------
4,112,050
------------
HEALTHCARE DIVERSIFIED 2.12%
- -----------------------------------------------------------------
16,990 Bristol Myers Squibb Co 1,450,521
------------
HEALTHCARE (HMO'S) 2.01%
- -----------------------------------------------------------------
25,300 US Healthcare Inc 1,372,525
------------
RETAIL STORES - DRUG 2.14%
- -----------------------------------------------------------------
49,700 Rite Aid Corp 1,459,938
------------
RETAIL STORES - FOOD CHAINS 1.72%
- -----------------------------------------------------------------
34,030 Giant Food Inc Class A 1,174,035
------------
TOBACCO 2.04%
- -----------------------------------------------------------------
42,240 UST Inc 1,393,920
------------
TOTAL CONSUMER STAPLES
(Cost $11,478,636) 15,551,509
------------
CREDIT SENSITIVE 26.81%
- -----------------------------------------------------------------
INVESTMENT BANKING/
BROKERAGE 2.17%
- -----------------------------------------------------------------
35,750 Traveler's Group Inc 1,483,625
------------
MAJOR REGIONAL BANKS 8.70%
- -----------------------------------------------------------------
28,600 Bank of Boston Corp 1,426,425
29,450 Bank of New York Inc 1,527,719
24,240 First Union Corp 1,481,670
18,600 Nationsbank Corp 1,508,925
------------
5,944,739
------------
MONEY CENTER BANKS 2.17%
- -----------------------------------------------------------------
21,150 Chase Manhattan Corp 1,480,500
------------
NATURAL GAS 2.18%
- -----------------------------------------------------------------
36,350 Coastal Corp 1,490,350
------------
PROPERTY - CASUALTY INSURANCE 1.99%
- -----------------------------------------------------------------
84,800 USF&G Corp 1,356,800
------------
TELECOMMUNICATIONS 2.21%
- -----------------------------------------------------------------
35,560 Sprint Corp 1,506,855
------------
UTILITIES-ELECTRIC 7.39%
- -----------------------------------------------------------------
45,100 Central & South West Corp 1,245,887
73,850 Edison International 1,218,525
43,030 General Public Utilities Corp 1,441,505
52,020 Ohio Edison Co 1,137,938
------------
5,043,855
------------
TOTAL CREDIT SENSITIVE
(Cost $14,752,434) 18,306,724
------------
- -----------------------------------------------------------------------------
FS-5
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
BLUE CHIP FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ------ -------------
INTERMEDIATE GOODS &
SERVICES 20.16%
- -----------------------------------------------------------------
ALUMINUM 1.88%
- -----------------------------------------------------------------
20,820 Aluminum Co of America $1,283,032
-------------
CHEMICALS 3.64%
- -----------------------------------------------------------------
17,350 Eastman Chemical Co 1,162,450
23,250 Hercules Inc 1,319,437
-------------
2,481,887
-------------
CHEMICALS - DIVERSIFIED 2.24%
- -----------------------------------------------------------------
29,560 PPG Industries Inc 1,529,730
-------------
MISCELLANEOUS 4.17%
- -----------------------------------------------------------------
21,890 Harris Corp 1,414,641
18,000 Loew's Corp 1,435,500
-------------
2,850,141
-------------
OIL (INTEGRATED -
DOMESTIC) 2.12%
- -----------------------------------------------------------------
29,300 Tosco Corp 1,450,350
-------------
OIL (INTEGRATED -
INTERNATIONAL) 4.15%
- -----------------------------------------------------------------
17,040 Exxon Corp 1,444,140
12,300 Mobil Corp 1,388,362
-------------
2,832,502
-------------
PHOTOGRAPHY/IMAGERY 1.96%
- -----------------------------------------------------------------
18,000 Eastman Kodak Co 1,338,750
-------------
TOTAL INTERMEDIATE GOODS & SERVICES
(Cost $10,436,925) 13,766,392
-------------
TOTAL COMMON STOCKS
(Cost $47,422,760) 64,318,871
-------------
MUTUAL FUNDS 0.80%
- -----------------------------------------------------------------
542,519 Provident Institutional Temp Fund
(Cost $547,243) 547,243
-------------
TOTAL INVESTMENTS
(COST $47,970,003) 94.99% $64,866,114
Other Assets in Excess
of Liabilities 5.01% 3,419,458
---------------------------
NET ASSETS 100.00% $68,285,572
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Shares Market Value*
- ------ -------------
COMMON STOCKS 93.76%
- -----------------------------------------------------------------
BASIC INDUSTRIES 6.09%
- -----------------------------------------------------------------
COMMERCIAL CONSTRUCTION 1.61%
- -----------------------------------------------------------------
17,495 Granite Construction Inc $387,077
-----------
PAPER & WOOD 1.29%
- -----------------------------------------------------------------
8,240 Rayonier Inc 309,000
-----------
RUBBER & PLASTICS 1.73%
- -----------------------------------------------------------------
12,900 Tredegar Industries Inc 412,800
STEEL 1.46%
- -----------------------------------------------------------------
5,570 Texas Industries Inc 348,821
-----------
TOTAL BASIC INDUSTRIES
(Cost $1,044,197) 1,457,698
-----------
CAPITAL GOODS 8.22%
- -----------------------------------------------------------------
CONSTRUCTION EQUIPMENT 3.75%
- -----------------------------------------------------------------
12,820 AGCO Corp 386,202
6,460 JLG Industries Inc 511,147
-----------
897,349
-----------
MISCELLANOUS PRODUCTION
GOODS 4.47%
- -----------------------------------------------------------------
12,416 Commercial Metals Co 389,552
7,670 Pittway Corp Class A 370,078
11,660 Smith A O Corp 311,905
-----------
1,071,535
-----------
TOTAL CAPITAL GOODS
(Cost $1,207,720) 1,968,884
-----------
CONSUMER CYCLICAL 10.68%
- -----------------------------------------------------------------
APPAREL 1.45%
- -----------------------------------------------------------------
7,480 Springs Industries Inc 346,885
-----------
CONSUMER DURABLES 1.60%
- -----------------------------------------------------------------
35,200 Interco Inc New 382,800
-----------
MISCELLANEOUS 4.75%
- -----------------------------------------------------------------
13,400 Anthony Industries Inc 400,325
21,170 Oneida Ltd 367,829
21,200 Russ Berrie & Co 368,350
-----------
1,136,504
-----------
RESIDENTIAL CONSTRUCTION 2.89%
- -----------------------------------------------------------------
13,980 Continental Homes
Holding Corp 344,257
32,670 NVR Inc 347,119
-----------
691,376
-----------
TOTAL CONSUMER CYCLICAL
(Cost $2,227,853) 2,557,565
-----------
*See note 1 to financial statements.
-----------------------------------------------------------------------------
FS-6
<PAGE>
- -----------------------------------------------------------------
WESTCORE ANNUAL REPORT
- -----------------------------------------------------------------
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ------ -------------
CONSUMER STAPLES 10.42%
- -----------------------------------------------------------------
DRUGS & MEDICAL PRODUCTS 5.71%
- -----------------------------------------------------------------
7,380 Bio Radiology Labs
Inc Class A** $380,070
12,420 Datascope Corp** 220,455
42,100 Health Images Inc 405,212
12,020 Sola International Inc 363,605
------------
1,369,342
------------
FOOD/AGRICULTURE 2.96%
- -----------------------------------------------------------------
21,750 Ben & Jerrys Homemade Inc Class A 348,000
27,455 J&J Snack Foods Corp** 360,347
------------
708,347
------------
MISCELLANEOUS 1.75%
- -----------------------------------------------------------------
17,000 Paragon Trade Brands 418,625
------------
TOTAL CONSUMER STAPLES
(Cost $2,157,637) 2,496,314
------------
ENERGY 5.21%
- -----------------------------------------------------------------
OIL & NATURAL GAS 5.21%
- -----------------------------------------------------------------
10,630 Diamond Shamrock Inc 349,461
18,150 Global Industrial
Technologies Inc 335,775
32,660 Pride Petroleum Services Inc** 563,385
------------
TOTAL ENERGY
(Cost $826,880) 1,248,621
------------
FINANCIALS 12.22%
- -----------------------------------------------------------------
BANKS/SAVINGS & LOANS 4.72%
- -----------------------------------------------------------------
2,980 Baybanks Inc 321,840
7,630 Deposit Guaranty Corp 345,257
5,365 MAF Bancorp 130,766
13,710 North Fork Bancorporation Inc 334,181
------------
1,132,044
------------
INSURANCE 5.56%
- -----------------------------------------------------------------
14,450 Fremont General Corp 344,994
13,370 PXRE Corp 334,250
14,510 Paul Revere Corp 397,211
8,050 Selective Insurance Group Inc 255,588
------------
1,332,043
------------
MISCELLANEOUS 1.94%
- -----------------------------------------------------------------
17,675 Money Store Inc 463,969
------------
TOTAL FINANCIALS
(Cost $2,045,722) 2,928,056
------------
INTERMEDIATE GOODS &
SERVICES 22.03%
- -----------------------------------------------------------------
BUSINESS SERVICES 6.31%
- -----------------------------------------------------------------
29,620 Aviall Inc $296,200
16,555 Bell Industries Inc** 364,218
15,160 Comdisco Inc 416,900
15,520 Standard Register CO 434,560
------------
1,511,878
------------
MEDICAL & DENTAL 3.07%
- -----------------------------------------------------------------
20,870 Bindley Western Industries Inc 357,399
14,560 Universal Health Services Inc** 378,560
------------
735,959
------------
RETAIL 7.44%
- -----------------------------------------------------------------
63,273 General Host Corp 213,546
8,100 Long's Drug Stores Corp 347,288
13,288 Proffitt's Inc 488,334
24,030 Shopko Stores Inc 363,454
13,800 Waban Inc 369,150
------------
1,781,772
------------
SANITATION 2.23%
- -----------------------------------------------------------------
18,135 USA Waste Services Inc** 534,983
------------
TRAVEL/RECREATION 2.98%
- -----------------------------------------------------------------
11,100 Marcus Corp 288,600
26,460 Prime Hospitality Corp** 423,360
------------
711,960
------------
TOTAL INTERMEDIATE GOODS & SERVICES
(Cost $3,929,007) 5,276,552
------------
TECHNOLOGY 12.03%
- -----------------------------------------------------------------
AEROSPACE 4.72%
- -----------------------------------------------------------------
30,570 ECC International Corp 275,130
9,310 Tech System Corp 317,704
7,610 Thiokol Corp 312,961
7,360 Watkins Johnson Co 225,400
------------
1,131,195
------------
COMPUTER & OFFICE 4.53%
- -----------------------------------------------------------------
14,050 Evans & Sutherland Computers 330,175
11,200 Marshall Industries 351,400
15,510 Western Digital Corp** 403,260
------------
1,084,835
------------
- -----------------------------------------------------------------------------
FS-7
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
SMALL-CAP OPPORTUNITY FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ------ -------------
COMMUNICATION 2.78%
- ------------------------------------------------------------------
30,060 Digital Systems International Inc $665,077
------------
TOTAL TECHNOLOGY
(Cost $2,269,507) 2,881,107
------------
TRANSPORTATION 2.46%
- ------------------------------------------------------------------
AIR TRANSPORTATION 2.46%
- ------------------------------------------------------------------
16,620 Harper Group Inc 340,710
31,940 Worldcorp Inc 247,535
------------
TOTAL TRANSPORTATION
(Cost $647,413) 588,245
------------
UTILITIES 4.40%
- ------------------------------------------------------------------
ELECTRIC & GAS 4.40%
- ------------------------------------------------------------------
11,440 Central Hudson Gas & Electric Corp 341,770
8,200 Cilcorp Inc 349,525
20,960 Southwest Gas Corp 361,560
------------
TOTAL UTILITIES
(Cost $952,517) 1,052,855
------------
TOTAL COMMON STOCKS
(Cost $17,308,453) 22,455,897
------------
MUTUAL FUNDS 4.04%
- ------------------------------------------------------------------
962,344 Provident Institutional Temp Fund,
(Cost $966,615) 966,615
------------
Face Amount
SHORT- TERM U.S. GOVERNMENT
TREASURIES 4.16%
- ------------------------------------------------------------------
$1,000,000 U.S. Treasury Bill, 5.045%, 06/20/96
(Cost $997,337) 997,337
------------
TOTAL INVESTMENTS 101.96% $24,419,849
(Cost $19,272,405)
Liabilities in Excess
of Other Assets -1.96% (468,837)
-------------------------------
TOTAL NET ASSETS 100.00% $23,951,012
-------------------------------
GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Shares Market Value*
- ------ -------------
COMMON STOCKS 83.17%
- ------------------------------------------------------------------
CAPITAL GOODS 15.91%
- ------------------------------------------------------------------
AEROSPACE/DEFENSE 3.16%
- ------------------------------------------------------------------
5,400 General Motors Corp Class H $328,050
12,000 Goodrich B F & Co 475,500
------------
803,550
------------
COMPUTER HARDWARE 1.47%
- ------------------------------------------------------------------
3,500 Hewlett Packard Co 373,625
------------
COMPUTER SERVICES 2.38%
- ------------------------------------------------------------------
10,700 General Motors Corp Class E 603,212
------------
CONSTRUCTION 1.12%
- ------------------------------------------------------------------
6,400 Foster Wheeler Corp 284,800
------------
ELECTRICAL EQUIPMENT 2.48%
- ------------------------------------------------------------------
7,600 General Electric Co 628,900
------------
ELECTRONICS 1.66%
- ------------------------------------------------------------------
1,800 Intel Corp 135,900
6,500 Millipore Corp 285,187
------------
421,087
------------
OTHER- CAPITAL GOODS 3.64%
- ------------------------------------------------------------------
9,700 Greenfield Industries Inc 366,175
13,600 OEA Inc 557,600
------------
923,775
------------
TOTAL CAPITAL GOODS 4,038,949
(Cost $ 2,979,127) ------------
CONSUMER CYCLICALS 17.46%
- ------------------------------------------------------------------
BUILDING RELATED 0.47%
- ------------------------------------------------------------------
4,000 Fleetwood Enterprises 120,500
------------
BUSINESS SERVICES 2.83%
- ------------------------------------------------------------------
5,100 Manpower Inc 196,350
12,000 Omnicom Group Inc 523,500
------------
719,850
------------
CONSUMER PRODUCTS 2.95%
- ------------------------------------------------------------------
2,600 Duracell International Inc 121,225
6,900 Gillette Co 407,962
2,500 Procter & Gamble Inc 219,687
------------
748,874
------------
CONSUMER SERVICES 1.45%
- ------------------------------------------------------------------
12,800 Loewen Group Inc 368,000
------------
*See note 1 to financial statements.
**Denotes non-income producing security.
-----------------------------------------------------------------------------
FS-8
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ------ -------------
CONSUMER SOFT GOODS 0.84%
- ------------------------------------------------------------------
7,500 Warnaco Group Inc $212,812
-------------
HOTELS/LEISURE 1.70%
- ------------------------------------------------------------------
1,200 Hilton Hotels Inc 129,300
9,600 La Quinta Inns Inc 302,400
-------------
431,700
-------------
RETAIL 5.30%
- ------------------------------------------------------------------
8,600 Caseys General Stores Inc 203,175
14,625 Dollar General Corp 405,844
5,400 Home Depot Inc 276,075
9,000 Intimate Brands 194,625
5,200 Nordstrom Inc 265,200
-------------
1,344,919
-------------
TELECOMMUNICATIONS 1.15%
- ------------------------------------------------------------------
1,700 Nokia Corp ADR 73,950
5,500 Vodafone Group PLC ADR 217,937
-------------
291,887
-------------
OTHER- CONSUMER CYCLICAL 0.77%
- ------------------------------------------------------------------
6,500 Newell Co 195,000
-------------
TOTAL CONSUMER CYCLICAL
(Cost $ 3,795,383) 4,433,542
-------------
CONSUMER STAPLES 7.14%
- ------------------------------------------------------------------
DRUGS & HEALTHCARE 1.93%
- ------------------------------------------------------------------
4,500 Guidant Corp 261,000
3,900 Schering Plough Corp 228,638
-------------
489,638
-------------
FOOD, BEVERAGE & TOBACCO 5.21%
- ------------------------------------------------------------------
3,700 CPC International Inc 255,763
11,000 Coca Cola Co 506,000
14,800 Pepsico Inc 492,100
2,100 Richfood Holdings Inc 70,350
-------------
1,324,213
-------------
TOTAL CONSUMER STAPLES 1,813,851
(Cost $ 1,387,843) -------------
CREDIT SENSITIVE 31.18%
- ------------------------------------------------------------------
BANKS 4.34%
- ------------------------------------------------------------------
7,600 Charter One Financial Inc 276,450
7,700 Cullen Frost Bankers Inc 396,550
12,300 Norwest Corp 428,963
-------------
1,101,963
-------------
FINANCIAL SERVICES 8.15%
- ------------------------------------------------------------------
7,000 Advanta Corp Class B $364,000
6,600 Household International Inc 457,050
9,300 MBNA Corp 284,813
4,600 MGIC Investment
Corp Wisconsin 270,250
55,350 Mercury Financial Co 691,875
-------------
2,067,988
-------------
HEALTHCARE SERVICES 1.18%
- ------------------------------------------------------------------
5,500 U.S. Healthcare Inc 298,375
-------------
INSURANCE 3.19%
- ------------------------------------------------------------------
15,400 Frontier Insurance Group Inc 529,375
11,000 GCR Holdings LTD 280,500
-------------
809,875
-------------
REAL ESTATE INVESTMENT TRUST 1.39%
- ------------------------------------------------------------------
15,500 Healthcare Realty Trust 352,625
-------------
UTILITIES- ELECTRIC 3.19%
- ------------------------------------------------------------------
13,496 AES Corp 374,514
16,600 Illinova Corp 435,750
-------------
810,264
-------------
UTILITIES- GAS 4.91%
- ------------------------------------------------------------------
8,800 Enron Corp 352,000
7,800 KN Energy Inc 263,250
12,100 Panenergy Corp 388,713
7,400 Questar Corp 242,350
-------------
1,246,313
-------------
UTILITIES- TELEPHONE 4.83%
- ------------------------------------------------------------------
12,000 Cincinnati Bell Inc 637,500
13,800 GTE Corp 589,950
-------------
1,227,450
-------------
TOTAL CREDIT SENSITIVE
(Cost $ 6,150,255) 7,914,853
-------------
INTERMEDIATE GOODS
& SERVICES 11.47%
- ------------------------------------------------------------------
AIRLINES 1.10%
- ------------------------------------------------------------------
5,400 Comair Holdings Inc 141,750
5,000 Southwest Airlines 136,875
-------------
278,625
-------------
CHEMICALS 1.76%
- ------------------------------------------------------------------
5,800 PPG Industries Inc 300,150
3,400 Union Carbide Corp 146,625
-------------
446,775
-------------
- -----------------------------------------------------------------------------
FS-9
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Shares Market Value*
- ------ -------------
ENERGY PRODUCERS 3.58%
- ----------------------------------------------------------------------
7,000 Apache Corp $200,375
4,600 Mobil Corp 519,225
7,800 Parker & Parsley Petroleum Co 190,125
-----------
909,725
-----------
ENERGY EQUIPMENT 1.89%
- ----------------------------------------------------------------------
7,700 Production Operators Corp 281,050
4,800 Tidewater Inc 198,000
-----------
479,050
-----------
TRANSPORTATION 3.14%
- ----------------------------------------------------------------------
3,400 Burlington Northern Santa Fe 288,150
5,500 CSX Corp 272,250
3,400 Union Pacific Corp 238,425
-----------
798,825
-----------
TOTAL INTERMEDIATE GOODS & SERVICES
(Cost $ 2,592,277) 2,913,000
-----------
TOTAL COMMON STOCKS
(Cost $ 16,904,885) 21,114,195
-----------
Face Amount
- -----------
CONVERTIBLE DEBENTURES 12.59%
- ----------------------------------------------------------------------
COMPUTER SERVICES/SOFTWARE 2.96%
- ----------------------------------------------------------------------
$400,000 First Financial Management
Corp, ** 5.00%, 12/15/99 751,808
-----------
HEALTHCARE SERVICES 1.09%
- ----------------------------------------------------------------------
250,000 Phycor Inc SDCV, **
4.50%, 2/15/03 277,188
-----------
ELECTRONICS 1.16%
- ----------------------------------------------------------------------
250,000 Analog Devices SDCV, **
3.50%, 12/1/00 295,000
-----------
ENERGY EQUIPMENT 1.13%
- ----------------------------------------------------------------------
200,000 Philip Environmental Inc SDCV, **
6.00%, 10/15/00 286,000
-----------
HOTELS 4.42%
- ----------------------------------------------------------------------
200,000 HFS Inc, ** 4.50%, 10/01/99 689,500
300,000 Prime Hospitality, **7.00%, 4/15/02 433,125
-----------
1,122,625
-----------
MEDIA-PUBLISHING 1.83%
- ----------------------------------------------------------------------
500,000 National Education Corp, **
6.50%, 5/15/11 465,000
-----------
TOTAL CONVERTIBLE DEBENTURES
(Cost $ 2,269,648) 3,197,621
-----------
MUTUAL FUNDS 3.20%
- ----------------------------------------------------------------------
810,186 Provident Institutional Temp Fund
(Cost $ 812,281) $812,281
-----------
TOTAL INVESTMENTS 98.96% $25,124,097
(Cost $ 19,986,814)
Assets in Excess of Other
Liabilities 1.04% 263,306
----------------------------
NET ASSETS 100.00% $25,387,403
----------------------------
*See note 1 to financial statements.
**Convertible to common stock.
-----------------------------------------------------------------------------
FS-10
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM BOND FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Face Amount Market Value*
- ----------- -------------
CORPORATE BONDS 47.79%
- ---------------------------------------------------------------------------
ASSET BACKED 4.48%
- ---------------------------------------------------------------------------
$405,293 ALPS 94 1 Pass-Through Certificates
Ser A, 7.150%, 09/15/04 $408,004
750,000 Conti Mortgage Home Equity
Loan Trust, 7.95%, 04/15/10 763,777
812,395 Equicredit Corp Home Equity Loan
Trust Ser 1994-1, 5.80%, 03/15/09 787,511
1,000,000 Premier Auto Trust Ser 95-2-A5,
7.15%, 02/04/99 1,012,629
750,000 World Omni Auto Ser 95-A
6.05%, 11/25/01 749,549
-----------
TOTAL ASSET BACKED
(Cost $3,754,517) 3,721,470
-----------
FINANCIAL 12.79%
- ---------------------------------------------------------------------------
OPERATORS OF NON-RESIDENTIAL
BUILDINGS 1.14%
- ---------------------------------------------------------------------------
Kimco Realty Corp MTN,
1,000,000 6.83%, 11/14/05 946,100
-----------
PERSONAL CREDIT INSTITUTIONS 1.19%
- ---------------------------------------------------------------------------
1,000,000 General Motors Acceptance Corp
MTN, 6.65%, 05/24/00 986,653
-----------
REAL ESTATE INVESTMENT TRUST 5.25%
- ---------------------------------------------------------------------------
550,000 Camden Property Trust,
6.625%, 05/15/01 518,136
700,000 Developers Diversified Realty
Corp, 7.625%, 05/15/00 695,392
420,000 Nationwide Health Properties
MTN, 6.93%, 12/18/01 403,146
1,000,000 New Plan Realty Trust,
7.75%, 04/06/05 1,003,986
800,000 Price REIT Inc,
7.25%, 11/01/00 771,707
1,000,000 Weingarten Realty Investors Trust
MTN, 7.22%, 06/01/05 969,800
-----------
4,362,167
-----------
SAVINGS & LOAN HOLDING COMPANIES -
FEDERALLY CHARTERED 2.53%
- ---------------------------------------------------------------------------
1,500,000 Golden West Financial Corp,
8.375%, 04/15/02 1,580,085
500,000 World Savings and Loan,
10.25%, 10/01/97 523,239
-----------
2,103,324
-----------
SECURITIES BROKERS, DEALERS &
FLOTATION COS 1.33%
- ---------------------------------------------------------------------------
$1,130,000 Merrill Lynch Corp MTN,
6.50%, 04/01/01 $1,101,305
-----------
STATE COMMERCIAL BANKS 1.35%
- ---------------------------------------------------------------------------
1,150,000 Chemical Bank NY NY,
7.00%, 6/01/05 1,117,751
-----------
TOTAL FINANCIAL
(Cost $10,795,085) 10,617,300
-----------
INDUSTRIAL 23.72%
- ---------------------------------------------------------------------------
BOOKS - PUBLISHING OR
PUBLISHING & PRINTING 1.02%
- ---------------------------------------------------------------------------
1,000,000 Golden Books Publishing Co,
7.65%, 09/15/02 847,500
-----------
BROADCAST - MEDIA 3.30%
- ---------------------------------------------------------------------------
1,100,000 Cox Communications Inc,
6.375%, 06/15/00 1,076,633
1,500,000 TKR Cable I Cable Notes,
10.50%, 10/30/07, Callable
10/30/99 @ 105.25 1,665,000
-----------
2,741,633
-----------
CABLE & OTHER PAY
TELEVISION SERVICES 2.77%
- ---------------------------------------------------------------------------
2,375,000 Telecommunications Inc,
8.00%, 08/01/05 2,301,468
-----------
COOKIES & CRACKERS 1.19%
- ---------------------------------------------------------------------------
1,000,000 RJR Nabisco Inc,
8.00%, 07/15/01 986,160
-----------
ELECTRONIC & OTHER
ELECTRICAL EQUIPTMENT 1.33%
- ---------------------------------------------------------------------------
1,150,000 Rockwell International Corp,
6.625%, 06/01/05 1,102,089
-----------
INDUSTRIAL ORGANIC
CHEMICALS 0.94%
- ---------------------------------------------------------------------------
750,000 International Specialty Products,
Inc., 9.00%, 03/01/99 777,019
-----------
METALS - MISC 1.16%
- ---------------------------------------------------------------------------
1,000,000 CSR America Inc,
6.875%, 07/21/05 967,190
-----------
- ----------------------------------------------------------------------------
FS-11
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM BOND FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Face Amount Market Value*
- ----------- --------------
MOTION PICTURE & VIDEO TAPE
PRODUCTION 2.59%
- ---------------------------------------------------------------------------
Time Warner Entertainment Co:
$1,000,000 9.625%, 05/01/02 $1,096,376
1,000,000 8.875%, 10/01/12 1,055,304
-----------
2,151,680
-----------
NEWSPAPER - PUBLISHING OR PUBLISHING
& PRINTING 2.83%
- ---------------------------------------------------------------------------
1,500,000 News America Holdings, Inc
8.625%, 02/01/03 1,587,103
750,000 The New York Times Co,
7.625%, 03/15/05 764,567
-----------
2,351,670
-----------
PHARMACEUTICAL PREPARATIONS 3.19%
- ---------------------------------------------------------------------------
1,700,000 Bayer Corp,
6.50%, 10/01/02 (1) 1,648,490
1,000,000 Upjohn Co MTN Ser-A,
6.25%, 02/02/98 996,793
-----------
2,645,283
-----------
RETAIL DEPARTMENT STORES 1.03%
- ---------------------------------------------------------------------------
1,000,000 K Mart Corp,
8.125%, 12/01/06 857,500
-----------
SEARCH, DETECTION, NAVIGATION, GUIDANCE
AERONAUTICAL SYSTEMS 0.90%
- ---------------------------------------------------------------------------
790,000 Raytheon Co,
6.50%, 07/15/05 749,084
-----------
SERVICES - MISCELLANEOUS, AMUSEMENT
& RECREATION 1.47%
- ---------------------------------------------------------------------------
1,250,000 Walt Disney Co,
6.375%, 03/30/01 1,220,616
-----------
TOTAL INDUSTRIAL
(Cost $19,957,486) 19,698,892
-----------
TRANSPORTATION 4.26%
- ---------------------------------------------------------------------------
AIR TRANSPORTATION, SCHEDULED 4.26%
- ---------------------------------------------------------------------------
896,208 American Airlines,
9.71%, 01/02/07 976,509
500,000 Continental Airlines,
7.75%, 07/02/15 503,350
1,060,740 Jet Equipment Trust Ser 95-B,
7.83%, 02/15/15 (1) 1,049,071
962,137 United Airlines Pass Through
Certificates 95-A1, 9.02%, 04/19/12 1,011,003
-----------
TOTAL TRANSPORTATION
(Cost $3,431,949) 3,539,933
-----------
UTILITIES 2.54%
- ---------------------------------------------------------------------------
ELECTRIC SERVICES 1.47%
- ---------------------------------------------------------------------------
$1,250,000 Central Maine Power Co,
6.25%, 11/01/98 $1,222,530
-----------
ELECTRIC & OTHER SERVICES
COMBINED 1.07%
- ---------------------------------------------------------------------------
1,000,000 Long Island Lighting Co,
7.125%, 06/01/05 883,380
-----------
TOTAL UTILITIES
(Cost $2,221,628) 2,105,910
-----------
TOTAL CORPORATE BONDS
(Cost $40,160,665) 39,683,505
-----------
MORTGAGE-BACKED
SECURITIES 0.72%
- ---------------------------------------------------------------------------
577,587 Collateralized Mortgage Securities
Corp, 8.75%, 04/20/19
(Cost $567,842) 596,162
-----------
U.S. GOVERNMENT TREASURIES 46.23%
- ---------------------------------------------------------------------------
U.S. Treasury Notes:
3,000,000 8.00%, 01/15/97 3,043,125
1,000,000 7.875%, 01/15/98 1,025,936
4,000,000 7.875%, 04/15/98 4,115,000
3,000,000 6.125%, 05/15/98 2,994,375
5,000,000 6.875%, 08/31/99 5,053,125
4,000,000 7.75%, 11/30/99 4,148,744
3,000,000 7.125%, 02/29/00 3,052,500
3,300,000 6.875%, 03/31/00 3,331,964
2,200,000 6.75%, 04/30/00 2,211,000
2,000,000 6.125%, 09/30/00 1,963,122
1,000,000 5.625%, 11/30/00 961,875
2,000,000 7.75%, 02/15/01 2,088,122
3,000,000 6.25%, 02/15/03 2,919,375
500,000 6.50%, 08/15/05 487,031
U.S. Treasury Bills:
1,000,000 06/20/96 997,337
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $38,874,619) 38,392,631
-----------
Shares
- ------
MUTUAL FUNDS 3.98%
- ---------------------------------------------------------------------------
3,286,473 Provident Institutional Temp Fund
(Cost $3,301,665) 3,301,665
-----------
TOTAL INVESTMENTS 98.72% $81,973,963
(Cost $82,904,791)
Other Assets in Excess
of Other Liabilities 1.28% 1,064,673
--------------------------
NET ASSETS 100.00% $83,038,636
--------------------------
--------------------------
*See note 1 to financial statements.
(1) Restricted security- see Note 6 of Notes to Financial
Statements
-----------------------------------------------------------------------------
FS-12
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
LONG-TERM BOND FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Face Amount Market Value*
- ----------- --------------
CORPORATE BONDS 48.36%
- ---------------------------------------------------------------------------
FINANCIAL 17.73%
- ---------------------------------------------------------------------------
FINANCIAL SERVICES 0.91%
- ---------------------------------------------------------------------------
$250,000 Leucadia National Corp,
7.75%, 08/15/13 $227,356
-----------
FIRE MARINE & CASUALTY
INSURANCE 2.14%
- ---------------------------------------------------------------------------
600,000 Zurich Reinsurance Center Holdings,
7.125%, 10/15/23 536,517
-----------
LIFE INSURANCE 3.14%
- ---------------------------------------------------------------------------
500,000 Lincoln National Insurance Co,
9.125%, 10/01/24 534,784
250,000 Security Benefit Life,
8.75%, 05/15/16 252,325
-----------
787,109
-----------
MULTI LINE INSURANCE 0.91%
- ---------------------------------------------------------------------------
250,000 Principal Mutual Life Insurance Co,
7.875%, 03/01/24(1) 228,958
-----------
OPERATORS OF NON-RESIDENTIAL
BUILDINGS 5.40%
- ---------------------------------------------------------------------------
400,000 Kimco Realty Corp,
6.83%, 11/14/05 378,440
250,000 New Plan Realty Trust,
7.75%, 04/06/05 250,997
500,000 Property Trust of America,
6.875%, 02/15/08 470,111
250,000 Rouse Co,
8.50%, 01/15/03 255,455
-----------
1,355,003
-----------
REAL ESTATE INVESTMENT TRUSTS 3.13%
- ---------------------------------------------------------------------------
150,000 Camden Property Trust,
6.625%, 05/15/01 141,310
140,000 Nationwide Health Property Mtn,
6.93%, 12/18/01 134,382
275,000 Price REIT Inc,
7.25%, 11/01/00 265,274
250,000 Weingarten Realty Investors Trust
MTN, 7.22%, 06/01/05 242,450
-----------
783,416
-----------
SAVINGS INSTITUTIONS-
FEDERALLY CHARTED 2.10%
- ---------------------------------------------------------------------------
500,000 Golden West Financial Corp,
8.375%, 04/15/02 526,695
-----------
TOTAL FINANCIAL
(Cost $4,523,687) 4,445,054
-----------
INDUSTRIAL 23.98%
- ---------------------------------------------------------------------------
BOOKS, PUBLISHING OR PUBLISHING
& PRINTING 0.85%
- ---------------------------------------------------------------------------
$250,000 Golden Books Publishing,
7.65%, 09/15/02 $211,875
-----------
BROADCAST MEDIA 1.54%
- ---------------------------------------------------------------------------
400,000 Cox Communications Inc,
7.625%, 06/15/25 386,516
-----------
CABLE & OTHER PAY TELEVISION
SERVICES 3.09%
- ---------------------------------------------------------------------------
Telecommunications Inc,
800,000 8.00%, 08/01/05 775,231
-----------
DAIRY PRODUCTS 1.61%
- ---------------------------------------------------------------------------
500,000 Borden Inc,
7.875%, 02/15/23 404,115
-----------
INDUSTRIAL ORGANIC CHEMICALS 2.07%
- ---------------------------------------------------------------------------
500,000 International Specialty Products,
Inc., 9.00%, 03/01/99 518,012
-----------
SERVICES - MISCELLANEOUS, AMUSEMENT
& RECREATION 2.11%
- ---------------------------------------------------------------------------
550,000 Walt Disney Co,
6.75%, 03/30/06 528,559
-----------
MISCELLANEOUS CHEMICAL
PRODUCTS 1.52%
- ---------------------------------------------------------------------------
400,000 Lubrizol Corp,
7.25%, 06/15/25 382,196
-----------
NATURAL GAS TRANSMISSION 1.24%
- ---------------------------------------------------------------------------
250,000 Coastal Corp,
10.75%, 10/01/10 311,382
-----------
NEWSPAPERS - PUBLISHING OR
PUBLISHING & PRINTING 2.17%
- ---------------------------------------------------------------------------
500,000 News America Holdings Inc,
9.25%, 02/01/13 543,308
-----------
PERIODICALS - PUBLISHING OR
PUBLISHING & PRINTING 3.11%
- ---------------------------------------------------------------------------
750,000 Time Warner Inc,
9.125%, 01/15/13 780,026
-----------
PHARMACEUTICAL PREPARATIONS 2.13%
- ---------------------------------------------------------------------------
550,000 Bayer Corp,
6.50%, 10/01/02(1) 533,335
-----------
- ----------------------------------------------------------------------------
FS-13
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
LONG-TERM BOND FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Face Amount Market Value*
- ----------- --------------
RETAIL - DEPARTMENT STORES 1.56%
- ---------------------------------------------------------------------------
$500,000 Kmart Corp,
7.95%, 02/01/23 $391,250
-----------
SEARCH, DETECTION, NAVIGATION,
GUIDENCE, AERONAUTICAL SYSTEMS 0.98%
- ---------------------------------------------------------------------------
260,000 Raytheon Co,
6.50%, 07/15/05 246,534
-----------
TOTAL INDUSTRIAL
(Cost $6,155,170) 6,012,339
-----------
TRANSPORTATION 4.71%
- ---------------------------------------------------------------------------
AIR TRANSPORTATION - SCHEDULED 4.71%
- ---------------------------------------------------------------------------
500,000 AMR Corp,
10.00%, 04/15/21 588,523
343,758 Jet Equipment Trust 95-B,
7.83%, 02/15/15(1) 339,977
240,534 United Airlines Pass-Through
Certificates, 9.02%, 04/19/12 252,751
-----------
TOTAL TRANSPORTATION
(Cost $1,082,392) 1,181,251
-----------
UTILITIES 1.94%
- ---------------------------------------------------------------------------
ELECTRIC AND OTHER SERVICES
COMBINED 1.94%
- ---------------------------------------------------------------------------
550,000 Long Island Lighting Co,
7.125%, 06/01/05 485,859
-----------
TOTAL UTILITIES
(Cost $537,640) 485,859
-----------
TOTAL CORPORATE BONDS
(Cost $12,298,889) 12,124,503
-----------
U.S. GOVERNMENT TREASURIES 46.18%
- ---------------------------------------------------------------------------
U.S. TREASURY BONDS/NOTES/BILLS 34.69%
- ---------------------------------------------------------------------------
U.S. Treasury Bonds:
1,000,000 9.375%, 02/15/06 1,176,250
1,000,000 7.50%, 11/15/16 1,035,311
1,000,000 8.875%, 02/15/19 1,188,750
1,000,000 8.50%, 02/15/20 1,149,375
1,500,000 7.875%, 02/15/21 1,620,000
1,400,000 8.125%, 08/15/21 1,553,125
U.S. Treasury Notes,
1,000,000 6.25%, 02/15/03 973,125
-----------
8,695,936
-----------
U.S. GOVERNMENT ZERO COUPON
STRIPS 11.49%
- ---------------------------------------------------------------------------
$2,000,000 02/15/04 $1,187,104
5,000,000 08/15/11 1,693,655
-----------
2,880,759
-----------
TOTAL U.S. GOVERNMENT TREASURIES
(Cost $11,274,853) 11,576,695
-----------
Shares
------
MUTUAL FUNDS 0.08%
- ---------------------------------------------------------------------------
16,532 Provident Institutional Temp Fund 19,360
(Cost $19,360)) -----------
TOTAL INVESTMENTS
(Cost $23,593,102) 94.62% $23,720,558
Other Assets
in Excess of Liabilities 5.38% 1,349,701
-------------------------
NET ASSETS 100.00% $25,070,259
-------------------------
-------------------------
* See Note 1 to financial statements
(1) Restricted Security- See Note 6 of Notes to Financial Statements
-----------------------------------------------------------------------------
FS-14
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
COLORADO TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Bond Rating Market
Face Amount Moody's/S&P(+) Value*
- ----------- ---------------------------
CERTIFICATES OF PARTICIPATION 2.23%
- ---------------------------------------------------------------------------
$100,000 Colorado State Board of Agriculture
Certificate of Participation
CSU Research Foundation Master
Lease Purchase Agreement,
6.45%, 11/01/01, Optional
05/01/99 @ 101.00, MBIA Aaa/AAA $105,195
100,000 State of Colorado Certificate
of Participation Master Lease
Purchase Agreement,
5.25%, 11/01/99, AMBAC Aaa/AAA 102,283
100,000 Lakewood, Jefferson County,
Public Building Authority,
Certificate of Participation,
Lease Purchase Agreement
5.625%, 12/01/99, MBIA Aaa/AAA 102,597
-----------
TOTAL CERTIFICATES OF PARTICIPATION
(Cost $300,771) 310,075
-----------
GENERAL OBLIGATION BONDS 62.17%
- ---------------------------------------------------------------------------
COUNTY/CITY/SPECIAL DISTRICT/
SCHOOL DISTRICT 62.17%
- ---------------------------------------------------------------------------
100,000 Adams & Arapahoe Counties
School District 29-J 5.40%, 12/01/09,
Optional 12/01/06 @ 100.00, MBIA Aaa/AAA 98,625
100,000 Adams & Arapahoe Counties
School District 28J 5.75%,
12/01/06, MBIA Aaa/AAA 103,751
100,000 Adams County School District 12,
7.25%, 12/15/09, Prerefunded
12/15/99 @ 100.00 NR/A+ 108,697
225,000 Alamosa & Conejos Counties
School District Re-11J
4.9%, 12/01/07, Optional
12/01/05 @ 100.00, MBIA Aaa/AAA 214,159
100,000 Arapahoe County School
District 1, 4.85%, 11/01/04, F5A Aaa/AAA 98,128
125,000 Arapahoe County School
District 2, 6.75%, 12/01/04,
Optional 12/01/99 @ 101.00 A/NR 132,336
250,000 Arapahoe County School District
6, 5.50%, 12/01/06 Aa/AA 254,995
250,000 Basalt & Rural Fire Protection District,
Eagle & Pitkin Counties,
5.20%, 12/01/15, Optional
12/01/06 @ 100.00, AMBAC Aaa/AAA 233,172
250,000 Brighton, Adams County,
6.625%, 12/01/11, Optional
12/01/01 @ 101.00, MBIA Aaa/AAA 266,395
25,000 Boulder & Gilpin Counties
Valley School District Re-2,
5.55%, 12/01/03 A-1/AA 25,693
$150,000 Boulder Library, 7.30%,
10/01/08, Prerefunded
10/01/98 @ 100.00 Aaa/AA $160,051
Boulder, Larimer & Weld
Counties, St. Vrain Valley,
School District Re-1J:
100,000 5.50%, 12/15/04, Optional
12/15/02 @ 101.00, MBIA Aaa/AAA 102,878
175,000 5.80%, 12/15/07, Optional
12/15/02 @ 101.00, MBIA Aaa/AAA 180,579
100,000 6.00%, 12/15/10, Optional
12/15/02 @ 101.00, MBIA Aaa/AAA 102,819
125,000 Colorado Springs, El Paso County
6.60%, 09/01/00, Prerefunded
09/01/99 @ 100.00 NR/AAA 132,797
250,000 Clear Creek County School
District Re-1, 5.40%, 12/01/11,
Optional 12/01/05 @ 100.00, MBIA Aaa/AAA 243,200
250,000 Douglas & Elbert Counties
School District Re-1,
6.15%, 12/15/08, Optional
12/15/04 @ 101.00, MBIA Aaa/AAA 263,257
250,000 Douglas & Elbert Counties
School District Re-1, 5.75%,
12/15/05, Optional 12/15/01
@ 101.00, FGIC Aaa/AAA 259,215
Eagle, Garfield & Routt Counties
School District 50-J:
125,000 6.60%, 12/01/99, Prerefunded
12/01/98 @ 100.00, FGIC Aaa/AAA 131,806
85,000 5.60%, 12/01/01, FGIC Aaa/AAA 88,544
200,000 5.75%, 12/01/03, Optional
12/01/02 @ 100.00, FGIC Aaa/AAA 209,026
125,000 El Paso County School District 3,
6.20%, 12/15/00, Optional
12/15/98 @ 101.00, MBIA Aaa/AAA 130,607
125,000 El Paso County School District
49, 6.75%, 12/01/04, Optional
12/01/00 @ 100.00, MBIA Aaa/AAA 133,252
125,000 Fruita, Mesa County,
6.40%, 10/01/00, Optional
10/01/97 @ 100.00, AMBAC Aaa/AAA 127,727
250,000 Garfield, Eagle & Pitkin Counties
School District Re-1, 6.60%,
12/15/14, Prerefunded 06/15/04
@ 101.00, MBIA Aaa/AAA 276,978
625,000 Goldsmith Metropolitan District
Arapahoe & Denver Counties,
6.50%, 12/01/03, Optional
12/01/99 @ 101.00, MBIA Aaa/AAA 660,225
100,000 Gunnison & Saquache
Counties School District
Re-1J, 5.15%, 12/01/10, Optional
12/15/06 @ 100.00, MBIA Aaa/AAA 94,925
- ----------------------------------------------------------------------------
FS-15
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
COLORADO TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
May 31, 1996 (continued)
Bond Rating Market
Face Amount Moody's/S&P(+) Value*
- ----------- ---------------------------
Jefferson County School
District R-1:
$100,000 5.10%, 12/15/99, AMBAC Aaa/AAA $102,072
100,000 5.75%, 12/15/03, Optional
12/15/02 @ 101.00, AMBAC Aaa/AAA 105,109
500,000 5.90%, 12/15/04, Optional
12/15/02 @ 101.00, AMBAC Aaa/AAA 526,160
125,000 Larimer County Poudre School
District R-1, 7.00%, 12/15/08,
Prerefunded 12/15/01 @ 101.00 NR/NR 138,873
250,000 Larimer, Weld & Boulder Counties,
Thompson School District R-2J
6.05%, 12/15/08, Optional
12/15/04 @ 100.00, MBIA Aaa/AAA 262,563
100,000 Longmont, Boulder County,
5.15%, 09/01/99, MBIA Aaa/AAA 101,787
105,000 Morgan County School District
Re-3, 6.45%, 12/01/98 A/NR 110,195
Northglenn, Adams County Water:
150,000 6.70%, 11/01/01, Optional
11/01/96 @ 101.00, MBIA Aaa/AAA 152,772
250,000 5.50%, 12/01/06, Optional
12/01/04 @ 101.00, FSA Aaa/AAA 255,400
100,000 Otero County, East Otero
School District R-1
5.05%, 12/15/09, Optional
12/15/05 @ 100.00, FSA Aaa/AAA 94,617
100,000 Pitkin County School District Re-1,
5.50%, 11/15/00, AMBAC Aaa/AAA 103,180
125,000 Poudre Valley Hospital District,
Larimer County, 6.80%,
11/15/02, Prerefunded
11/15/98 @ 101.00 NR/AAA 133,443
250,000 Pueblo, Pueblo County Limited
Tax, 6.00%, 06/01/16, Optional
06/01/06 @ 100.00, MBIA Aaa/AAA 250,185
75,000 Routt County School District
Re-2, 5.00%, 12/01/05, Optional
12/01/03 @ 100.00, FGIC Aaa/AAA 73,667
375,000 San Miguel County School District
R-1, 5.50%, 12/01/12, Optional
12/01/05 @ 101.00, MBIA Aaa/AAA 364,706
100,000 Summit County School District
Re-1 5.20%, 12/01/12, Optional
12/01/06 @ 101.00, FGIC Aaa/AAA 94,168
125,000 Thornton, Adams County,
5.75%, 12/01/04, Optional
12/01/02 @ 101.00, FGIC Aaa/AAA 130,843
Thornton, Adams County Water:
25,000 7.40%, 12/01/98, FGIC Aaa/AAA 26,836
125,000 7.40%, 12/01/98, Prerefunded
12/01/96 @ 102.00, FGIC Aaa/AAA 129,749
$100,000 Thorton, Adams County
Water, 5.20%, 12/01/99, FGIC Aaa/AAA $102,374
135,000 Three Lakes Water & Sanitation
District, Grand County Limited
Tax, 6.00%, 06/01/00 Optional
06/01/97 @ 101.00, MBIA Aaa/AAA 137,931
100,000 Willows Water District,
Arapahoe County, 6.40%,
12/01/98, Optional 12/01/96
@ 100.00, MBIA Aaa/AAA 100,168
100,000 Windsor & Severance Library
District, Weld County, 5.30%,
12/15/15, Optional 12/15/06
@ 100.00, AMBAC Aaa/AAA 93,753
100,000 Woodland Park, Teller County,
6.30%, 07/01/08, Optional
07/01/00 @ 101.00, FGIC Aaa/AAA 104,244
125,000 Woodmoor Water & Sanitation
District 1 El Paso County, 6.20%,
12/01/00, Optional 12/01/96
@ 100.00, MBIA Aaa/AAA 126,398
-----------
TOTAL GENERAL OBLIGATION BONDS
(Cost $8,549,601) 8,655,030
-----------
REVENUE BONDS 32.60%
- ----------------------------------------------------------------------------
EDUCATION 2..70%
- ----------------------------------------------------------------------------
100,000 Auraria Higher Education
Center Student Fee, 5.25%,
05/01/10, Optional 05/01/06
@ 101.00, AMBAC Aaa/AAA 96,083
70,000 Colorado State Board of Agriculture
CSU Auxiliary Facilities
7.70%, 09/01/06, Optional
09/01/96 @ 101.00, MBIA Aaa/AAA $71,317
100,000 State of Colorado Department of
Higher Education
State Board for Community Colleges
& Occupational Education, 5.20%,
11/01/03, Optional 11/01/02
@ 100.00, AMBAC Aaa/AAA 101,137
100,000 University of Colorado Board of
Regents Auxiliary Facilities,
6.50%, 06/01/01, Prerefunded
06/01/00 @ 101.00 A1/NR 107,249
----------
375,786
----------
-----------------------------------------------------------------------------
FS-16
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
COLORADO TAX-EXEMPT FUND
STATEMENT OF INVESTMENTS
May 31, 1996
Bond Rating Market
Face Amount Moody's/S&P(+) Value*
- ----------- ---------------------------
HOSPITALS 2.47%
- ---------------------------------------------------------------------------
$100,000 Poudre Valley Hospital
District, Larimer County, 5.80%,
12/01/98, ETM, AMBAC Aaa/AAA $103,611
250,000 Poudre Valley Hospital District,
Larimer County, 4.75%,
12/01/05, Optional 12/01/03
@ 101.00, AMBAC Aaa/AAA 240,743
----------
344,354
----------
PUBLIC FACILITES 1.54%
- ---------------------------------------------------------------------------
200,000 Denver Metropolitan Major
League Baseball Stadium
District Sales Tax, 6.25%, 10/01/02,
Prerefunded 10/01/01 @ 101.00,
FGIC Aaa/AAA 215,040
----------
SPECIAL TAX 13.15%
- ----------------------------------------------------------------------------
250,000 Boulder Urban Renewal
Authority Tax Increment, 6.00%,
03/01/02, Optional 03/01/00
@ 101.00, MBIA Aaa/AAA 261,992
250,000 Breckenridge, Summit County
Excise Tax, 5.20%,
12/01/01, Optional 12/01/00
@ 100.00, MBIA Aaa/AAA 255,632
100,000 Commerce City, Adams
County Sales Tax, 5.375%,
08/01/07, Optional 08/01/03
@ 101.00, MBIA Aaa/AAA 100,243
150,000 Delta County Sales Tax Revenue,
4.75%, 06/01/01, FSA Aaa/AAA 149,735
500,000 Fort Collins, Larimer County
Sales & Use Tax, 4.90%,
06/01/01, FGIC Aaa/AAA 502,420
150,000 Lafayette, Boulder County,
Sales & Use Tax, 6.40%, 11/15/04,
Prerefunded 11/15/01 @ 100.00,
AMBAC Aaa/AAA 163,685
250,000 Silverthorne, Summit County Sales
Tax, 5.625%, 04/15/13, Optional
04/15/05 @ 100.00, FSA Aaa/AAA 247,965
Thornton, Adams County, Sales
and Use Tax:
100,000 4.95%, 09/01/04, Optional
09/01/02 @ 101.00, FGIC Aaa/AAA 99,458
50,000 5.15%, 09/01/06, Optional 09/01/03
@ 100.00, FGIC Aaa/AAA 49,662
----------
1,830,792
----------
TRANSPORTATION 4.25%
- ---------------------------------------------------------------------------
Regional Transportation District
RTD Sales Tax:
$100,000 7.00%, 11/01/98, FGIC Aaa/AAA $106,224
500,000 5.375%, 11/01/10, Optional
11/01/03 @ 101.00, FGIC Aaa/AAA 485,100
----------
591,324
----------
UTILITY 8.49%
- ---------------------------------------------------------------------------
75,000 Boulder Water & Sewer,
5.75%, 12/01/06, Optional
12/01/02 @ 100.00 Aa/AA 76,919
250,000 Central Weld County Water
District, 5.25%, 12/01/05,
Optional 12/01/03 @
100.00, MBIA Aaa/AAA 251,848
100,000 Colorado Springs Utilities
Systems, 6.40%, 11/15/02,
Optional 11/15/01 @ 102.00 Aa/AA 108,466
250,000 Fort Collins, Larimer County
Wastewater Utility Enterprise,
5.375%, 12/01/09, Optional
12/01/05 @ 100.00, FGIC Aaa/AAA 245,883
100,000 Glenwood Springs, Garfield
County Water & Sewer, 4.70%,
12/01/05, Optional
12/01/01 @ 100.00, AMBAC Aaa/AAA 96,245
200,000 Lafayette, Boulder County
Sewer, 4.95%, 09/01/05, FGIC Aaa/AAA 198,084
Metropolitan Denver Sewer
Disposal District 1:
100,000 6.10%, 04/01/99, Optional
10/01/96 @ 101.00 A1/AA 101,782
50,000 6.10%, 04/01/99, Prerefunded
10/01/96 @ 101.00 A1/AA 50,884
50,000 Ute Water Conservancy District,
Mesa County, 7.60%, 06/15/01,
Prerefunded 06/15/97
@ 100.00, AMBAC Aaa/AAA 51,560
----------
1,181,671
----------
TOTAL REVENUE BONDS
(Cost $4,498,014) 4,538,967
----------
Shares
------
MUTUAL FUNDS 4.48%
- ---------------------------------------------------------------------------
622,574 Provident Institutional
Municipal Fund
(Cost $623,906) 623,906
----------
TOTAL INVESTMENTS
(Cost $13,972,292) 101.48% $14,127,978
Liabilities in Excess of
Other Assets (1.48%) (206,238)
-------------------------
NET ASSETS 100.00% $13,921,740
-------------------------
*See note 1 to financial statements.
(+) Unaudited
- ----------------------------------------------------------------------------
FS-17
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1996
<TABLE>
<CAPTION>
MIDCO Blue Small-Cap Growth Intermediate- Long-Term Colorado
Growth Chip Opportunity and Income Term Bond Tax-Exempt
Fund Fund Fund Fund Bond Fund Fund Fund
---------- ---------- ----------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends $1,930,771 $1,476,810 $204,711 $650,651 $0 $0 $0
Interest 1,736,446 134,234 62,123 60,928 5,992,888 2,096,493 603,936
- ----------------------------------------------------------------------------------------------------------------------------------
Total Income 3,667,217 1,611,044 266,834 711,579 5,992,888 2,096,493 603,936
- ----------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment advisory fee 3,558,326 398,660 173,531 179,195 409,197 135,354 56,823
Administrative fee 1,230,673 138,303 40,862 57,047 188,905 62,471 25,233
Fund accounting 177,787 30,483 32,387 31,712 42,767 32,660 33,289
Legal 164,604 29,770 8,362 9,828 37,522 13,435 2,956
Audit 13,821 8,751 7,813 8,813 12,313 7,750 3,179
Custodian 131,399 24,180 18,793 22,966 30,844 14,196 8,353
Amortization of organization
costs 0 0 17,759 0 0 0 10,829
Transfer agency 335,745 45,546 38,465 61,864 42,346 24,395 13,575
Printing 117,473 26,332 10,233 7,099 14,096 5,831 1,040
Insurance 23,602 2,083 517 1,446 3,938 1,398 429
Registration 47,563 17,460 20,274 15,023 25,889 5,886 857
Trustee fee 25,517 3,413 1,049 1,506 4,913 4,989 399
Reorganization 150,451 14,753 5,114 12,725 17,864 6,892 4,850
Distribution/administration
assistance - retail 21,061 0 704 2,601 1,677 0 0
Other 64,607 25,600 7,657 6,726 5,681 6,916 770
- ----------------------------------------------------------------------------------------------------------------------------------
Total Expenses 6,062,629 765,334 383,520 418,551 837,952 322,173 162,582
Expenses waived by:
Investment advisor 0 (59,499) (136,791) (49,319) (58,864) (32,618) (56,823)
Custodian (131,399) (24,180) (18,793) (22,966) (30,844) (14,196) (8,353)
Administrator 0 (4,948) (1,806) (4,873) (10,539) (3,520) (24,766)
Expenses reimbursed by
Investment advisor 0 0 0 0 0 0 (22,238)
- ----------------------------------------------------------------------------------------------------------------------------------
Net Expenses 5,931,230 676,707 226,130 341,393 737,705 271,839 50,402
- ----------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME
(LOSS) (2,264,013) 934,337 40,704 370,186 5,255,183 1,824,654 553,534
- ----------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) from
investment transactions 53,405,690 8,541,198 1,021,344 3,440,453 849,471 810,714 (7,226)
- ----------------------------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of
investments:
Beginning of period 97,968,007 10,123,581 693,860 2,440,998 1,160,831 1,519,743 295,433
End of period 224,240,350 16,896,111 5,147,444 5,137,283 (930,828) 127,456 155,686
- ----------------------------------------------------------------------------------------------------------------------------------
Net change in unrealized
appreciation (depreciation) 126,272,343 6,772,530 4,453,584 2,696,285 (2,091,659) (1,392,287) (139,747)
- ----------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS 179,678,033 15,313,728 5,474,928 6,136,738 (1,242,188) (581,573) (146,973)
- ----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $177,414,020 $16,248,065 $5,515,632 $6,506,924 $4,012,995 $1,243,081 $406,561
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
FS-18
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MIDCO Growth Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
------------------- ---------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment loss $(2,264,013) $(169,107)
Net realized gain on investments 53,405,690 1,443,760
Net unrealized appreciation 126,272,343 37,597,019
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 177,414,020 38,871,672
- ---------------------------------------------------------------------------------------------------------------------
Distributions to shareholders from net realized gain on investments
Institutional class (19,218,923) (11,450,951)
Retail class 0 (685,566)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 158,195,097 26,735,155
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets derived from
institutional class beneficial interest transactions - Note 2 101,245,432 41,013,312
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from
retail class beneficial interest transactions - Note 2 (30,387,017) 7,925,300
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 229,053,512 75,673,767
NET ASSETS:
Beginning of period 427,436,214 351,762,447
- ---------------------------------------------------------------------------------------------------------------------
End of period (including over distributed net investment
income of ($3,130,644) and ($866,631), respectively) $656,489,726 $427,436,214
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS
Blue Chip Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
------------------- ---------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $934,337 $743,795
Net realized gain on investments 8,541,198 1,045,955
Net unrealized appreciation 6,772,530 6,095,272
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 16,248,065 7,885,022
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (976,769) (498,807)
Distributions to shareholders from net realized gain on investments (4,826,591) (622,592)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 10,444,705 6,763,623
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Shares sold 17,435,317 21,451,091
Shares issued in reinvestment of dividends 5,209,936 1,004,437
- ---------------------------------------------------------------------------------------------------------------------
22,645,253 22,455,528
Shares redeemed (17,349,667) (13,348,260)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from beneficial interest transactions 5,295,586 9,107,268
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 15,740,291 15,870,891
NET ASSETS:
Beginning of period 52,545,281 36,674,390
- ---------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net
investment income of $184,414 and $226,846, respectively) $68,285,572 $52,545,281
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
FS-19
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Small-Cap
Opportunity Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
------------------- ---------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $40,704 $43,350
Net realized gain (loss) on investments 1,021,344 (111,091)
Net unrealized appreciation 4,453,584 680,840
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 5,515,632 613,099
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income
Institutional class (48,100) (35,513)
Retail class (895) (2,821)
Distributions to shareholders from net realized gain on investments
Institutional class (421,504) (66,448)
Retail class 0 (6,502)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 5,045,133 501,815
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Net increase in net assets derived from
institutional class beneficial interest transactions - Note 2 9,334,752 7,089,788
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from
retail class beneficial interest transactions - Note 2 (1,065,766) 389,185
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 13,314,119 7,980,788
NET ASSETS:
Beginning of period 10,636,893 2,656,105
- ---------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment
income of $478 and $8,769, respectively) $23,951,012 $10,636,893
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS Growth and Income Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
FROM INVESTMENT ACTIVITIES 1996 1995
------------------- ---------------------
<S> <C> <C>
Net investment income $370,186 $863,093
Net realized gain (loss) on investments 3,440,453 (1,036,420)
Net unrealized appreciation 2,696,285 779,981
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 6,506,924 606,654
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income
Institutional class (518,985) (834,009)
Retail class (21,581) (70,652)
Distributions to shareholders from net realized gain on investments
Institutional class (1,458,171) (1,003,450)
Retail class 0 (94,567)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities 4,508,187 (1,396,024)
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Net decrease in net assets derived from
institutional class beneficial interest transactions - Note 2 (5,892,042) (14,255,191)
- ---------------------------------------------------------------------------------------------------------------------
Net decrease in net assets derived from
retail class beneficial interest transactions - Note 2 (4,128,687) (118,398)
- ---------------------------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS (5,512,542) (15,769,613)
NET ASSETS:
Beginning of period 30,899,945 46,669,558
- ---------------------------------------------------------------------------------------------------------------------
End of period (including (over)/undistributed net investment income
of ($143,956) and $26,424, respectively) $25,387,403 $30,899,945
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
----------------------------------------------------------------------------
FS-20
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Intermediate-Term Bond Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
------------------- --------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $5,255,183 $5,308,012
Net realized gain (loss) on investments 849,471 (1,790,451)
Net unrealized appreciation (depreciation) (2,091,659) 4,569,545
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 4,012,995 8,087,106
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income
Institutional class (5,220,333) (5,349,712)
Retail class (52,026) (140,002)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities (1,259,364) 2,597,392
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Net increase (decrease) in net assets derived from
institutional class beneficial interest transactions - Note 2 (13,314,494) 6,124,220
- ---------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets derived from
retail class beneficial interest transactions - Note 2 (2,577,091) 562,082
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (17,150,949) 9,283,694
NET ASSETS:
Beginning of period 100,189,585 90,905,891
- ---------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $85,280 and $102,456, respectively) $83,038,636 $100,189,585
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
STATEMENT OF CHANGES IN NET ASSETS Long-Term Bond Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
-------------------- --------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $1,824,654 $1,808,619
Net realized gain (loss) on investments 810,714 (307,479)
Net unrealized appreciation (depreciation) (1,392,287) 2,584,530
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 1,243,081 4,085,6701
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (1,851,721) (1,816,108)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities (608,640) 2,269,562
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Shares sold 6,252,499 10,155,539
Shares issued in reinvestment of dividends 1,672,703 1,662,861
- ---------------------------------------------------------------------------------------------------------------------
7,925,202 11,818,400
Shares redeemed (15,686,515) (7,609,598)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from beneficial interest transactions (7,761,313) 4,208,802
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (8,369,953) 6,478,364
NET ASSETS:
Beginning of period 33,440,212 26,961,848
- ---------------------------------------------------------------------------------------------------------------------
End of period (including undistributed net investment income
of $29,351 and $56,418, respectively) $25,070,259 $33,440,212
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
FS-21
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Colorado Tax-Exempt Fund
------------------------------------------
For the Year Ended May 31,
------------------------------------------
1996 1995
--------------------- -------------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES
Net investment income $553,534 $516,588
Net realized loss on investments (7,226) (12)
Net unrealized appreciation (depreciation) (139,747) 213,154
- ---------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from operations 406,561 729,730
- ---------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from net investment income (540,156) (535,461)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from investment activities (133,595) 194,269
- ---------------------------------------------------------------------------------------------------------------------
FROM BENEFICIAL INTEREST TRANSACTIONS
Shares sold 3,597,527 1,234,996
Shares issued in reinvestment of dividends 347,227 324,646
- ---------------------------------------------------------------------------------------------------------------------
3,944,754 1,559,642
Shares redeemed (681,115) (1,515,481)
- ---------------------------------------------------------------------------------------------------------------------
Change in net assets derived from beneficial interest transactions 3,263,639 44,161
- ---------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 3,130,044 238,430
NET ASSETS:
Beginning of period 10,791,696 10,553,266
- ---------------------------------------------------------------------------------------------------------------------
End of period (including (over)/undistributed net investment income
of $11,725 and ($1,653), respectively) $13,921,740 $10,791,696
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
FS-22
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
MIDCO Growth Fund
--------------------------------------------------
Institutional Shares
--------------------------------------------------
For the Period Ended May 31,
--------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $17.12 $16.09 $15.79 $14.38 $14.00
- ------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.08) 0.00 0.00 0.04 0.06
Net realized and unrealized gain (loss) on
investments 6.58 1.56 1.34 2.48 1.84
- ------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 6.50 1.56 1.34 2.52 1.90
- ------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.32)
Distributions from net realized gain on
investments (0.72) (0.53) (1.03) (1.11) (1.20)
Return of Capital (0.00) (0.00) (0.01) (0.00) (0.00)
- ------------------------------------------------------------------------------------------------------
Total dividends, distributions, and return of capital
to shareholders (0.72) (0.53) (1.04) (1.11) (1.52)
- ------------------------------------------------------------------------------------------------------
Net asset value - end of period $22.90 $17.12 $16.09 $15.79 $14.38
- ------------------------------------------------------------------------------------------------------
Total return (2) 38.62% 10.05% 8.37% 18.04% 14.09%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $656,490 $401,760 $335,453 $231,595 $180,681
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.08% 0.94% 0.84% 0.83% 0.80%
- ------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (0.42%) (0.03%) (0.09%) 0.04% 0.12%
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.10% 0.96% 0.87% 0.85% 0.85%
- ------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets without fee waivers (0.44%) (0.05%) (0.12%) 0.02% 0.07%
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 62.83% 50.19% 52.05% 56.23% 48.17%
- ------------------------------------------------------------------------------------------------------
<CAPTION>
MIDCO Growth Fund
--------------------------------
Retail Shares
--------------------------------
For the
Period Ended
May 31
--------------------------------
1996** 1995 1994*
---------- -------- ----------
<S> <C> <C> <C>
Net asset value - beginning of period $17.10 $16.10 $17.33
- ----------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.01) (0.03) (0.01)
Net realized and unrealized gain (loss) on
investments 3.12 1.56 (0.19)
- ----------------------------------------------------------------------------------
Total income (loss) from investment operations 3.11 1.53 (0.20)
- ----------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.00) (0.00) 0.00
Distributions from net realized gain on
investments (0.00) (0.53) (1.02)
Return of Capital (0.00) (0.00) (0.01)
- ----------------------------------------------------------------------------------
Total dividends, distributions, and return of capital
to shareholders (0.00) (0.53) (1.03)
- ----------------------------------------------------------------------------------
Net asset value - end of period $20.21 $17.10 $16.10
- ----------------------------------------------------------------------------------
Total return (2) 18.19% 9.78% (1.88%)(3)
- ----------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $30,827 $25,677 $16,309
- ----------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.16%(3) 1.19% 1.10%(3)
- ----------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets (0.24%)(3)(0.28%) (0.37%)(3)
- ----------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.17%(3) 1.21% 1.13%(3)
- ----------------------------------------------------------------------------------
Ratio of net investment income (loss) to average
net assets without fee waivers (0.26%)(3)(0.30%) (0.40%)(3)
- ----------------------------------------------------------------------------------
Portfolio turnover rate (1) 62.83% 50.19% 52.05%
- ----------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $387,990,462 and $324,571,405, respectively.
(2) Sales charges are not reflected in total return.
(3) Annualized.
* For the period October 11, 1993 (inception of offering) to May 31, 1994.
** For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
FS-23
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
Blue Chip Fund
---------------------------------------------------------------------------------------
For the Year
Ended May 31,
---------------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $14.70 $12.70 $13.87 $13.35 $12.68 $11.74
- ------------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.25 0.23 0.40 0.34 0.28 0.29
Net realized and unrealized gain on
investments 4.03 2.12 0.04 1.13 0.95 1.15
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 4.28 2.35 0.44 1.47 1.23 1.44
- ----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.27) (0.16) (0.43) (0.21) (0.35) (0.30)
Distributions from net realized gain on
investments (1.30) (0.19) (1.18) (0.74) (0.21) (0.20)
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (1.57) (0.35) (1.61) (0.95) (0.56) (0.50)
- ----------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $17.41 $14.70 $12.70 $13.87 $13.35 $12.68
- ----------------------------------------------------------------------------------------------------------------------------------
Total return 30.48% 19.03% 3.12% 11.62% 10.02% 13.08%
- ----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $68,286 $52,545 $36,674 $28,176 $30,572 $27,208
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.10% 1.01% 1.06% 0.99% 0.91% 0.84%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.52% 1.78% 2.30% 2.37% 2.17% 2.65%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.25% 1.06% 1.09% 1.02% 0.97% 0.94%
- ----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net
assets without fee waivers 1.38% 1.73% 2.27% 2.34% 2.11% 2.55%
- ----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 65.11% 61.72% 41.32% 85.53% 123.91% 142.01%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by
taking the lesser of purchases or sales of portfolio securities
(excluding securities with a maturity date of one year or less at the
time of acquisition) for a period and dividing it by the monthly
average of the market value of such securities during the period.
Purchases and sales of investment securities (excluding short-term
securities) for the period ended May 31, 1996 were $37,959,388 and
$38,051,658, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
FS-24
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
Small-Cap Opportunity Fund
-------------------------------------------------------------------------------------
Institutional Shares Retail Shares
--------------------------------------------------------------------------------------
For the For the
Period Ended Period Ended
May 31 May 31
--------------------------------------------------------------------------------------
1996 1995 1994* 1996** 1995 1994*
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $15.95 $14.97 $15.00 $15.95 $14.96 $15.00
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.09 0.05 0.01 0.06 0.03
Net realized and unrealized gain (loss) on
investments 5.86 1.11 (0.05) 2.25 1.11 (0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 5.90 1.20 0.00 2.26 1.17 (0.01)
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.06) (0.10) (0.03) (0.02) (0.06) (0.03)
Distributions from net realized gain on
investments (0.44) (0.12) 0.00 0.00 (0.12) 0.00
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.50) (0.22) (0.03) (0.02) (0.18) (0.03)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $21.35 $15.95 $14.97 $18.19 $15.95 $14.96
- -----------------------------------------------------------------------------------------------------------------------------------
Total return (2) 37.49% 8.15% (0.07%)(3) 14.14% 7.96% (0.22%)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $23,951 $9,703 $2,159 $1,072 $934 $497
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.30% 1.27% 1.38%(3) 1.48%(3) 1.51% 1.63%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 0.24% 0.61% 1.00%(3) 0.16%(3) 0.37% 0.64%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 2.20% 2.77% 6.56%(3) 2.53%(3) 3.10% 6.81%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets without fee waivers (0.67%) (0.89%) (4.18%)(3) (0.89%)(3) (1.22%) (4.54%)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 47.83% 59.17% 64.31%(3) 47.83% 59.17% 64.31%(3)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $14,769,419 and $7,829,753, respectively.
(2) Sales charges are not reflected in total return.
(3) Annualized.
* For the period December 28, 1993 (inception of Fund) to May 31, 1994.
** For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
FS-25
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
Growth and Income Fund
-----------------------------------------------------------
Institutional Shares
-----------------------------------------------------------
For the Year Ended May 31,
-----------------------------------------------------------
1996 1995 1994 1993 1992
---------- -------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period: $10.50 $10.62 $11.51 $10.99 $10.10
------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.15 0.20 0.51 0.32 0.32
Net realized and unrealized gain (loss) on
investments 2.57 0.15 (0.30) 0.68 1.05
------------------------------------------------------------------------------------------------------
Total income (loss) from investment operations 2.72 0.35 0.21 1.00 1.37
------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.24) (0.21) (0.54) (0.20) (0.43)
Distributions from net realized gain on
investments (0.66) (0.26) (0.56) (0.28) (0.05)
------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.90) (0.47) (1.10) (0.48) (0.48)
------------------------------------------------------------------------------------------------------
Net asset value - end of period $12.32 $10.50 $10.62 $11.51 $10.99
------------------------------------------------------------------------------------------------------
Total return (2) 27.25% 3.73% 1.71% 9.41% 14.12%
------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $25,387 $27,029 $42,644 $35,791 $25,128
------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.22% 1.17% 1.03% 0.99% 0.95%
------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.34% 2.09% 4.45% 2.75% 3.03%
------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.51% 1.22% 1.06% 1.03% 1.02%
------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 1.05% 2.04% 4.42% 2.71% 2.96%
------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 88.31% 81.14% 53.86% 61.24% 68.56%
------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
Retail Shares
--------------------------
For the
Period Ended
May 31,
--------------------------
1996** 1995 1994*
------ ------- -------
<S> <C> <C> <C>
Net asset value - beginning of period: $10.51 $10.63 $11.65
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.19 0.15
Net realized and unrealized gain (loss) on
investments 0.72 0.14 (0.45)
- --------------------------------------------------------------------------------
Total income (loss) from investment operations 0.77 0.33 (0.30)
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.06) (0.19) (0.16)
Distributions from net realized gain on
investments 0.00 (0.26) (0.56)
- --------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.06) (0.45) (0.72)
- --------------------------------------------------------------------------------
Net asset value - end of period $11.22 $10.51 $10.63
- --------------------------------------------------------------------------------
Total return (2) 7.35% 3.48% (4.20%)(3)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
- --------------------------------------------------------------------------------
Net assets, end of period (000) $3,921 $3,871 $4,026
- --------------------------------------------------------------------------------
Ratio of expenses to average
net assets 1.58%(3) 1.41% 1.25%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 1.40%(3) 1.86% 2.12%(3)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.61%(3) 1.47% 1.27%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 1.37%(3) 1.80% 2.09%(3)
- --------------------------------------------------------------------------------
Portfolio turnover rate (1) 88.31% 81.14% 53.86%
- --------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $23,528,402 and $35,671,719, respectively.
(2) Sales charges are not reflected in total return.
(3) Annualized.
* For the period October 11, 1993 (inception of offering) to May 31, 1994.
** For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
FS-26
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
Intermediate-Term Bond Fund
--------------------------------------------------
Institutional Shares
--------------------------------------------------
For the Year Ended May 31,
--------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.27 $10.02 $10.70 $10.14 $9.80
- ------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.60 0.58 0.55 0.67 0.78
Net realized and unrealized gain (loss) on
investments (0.17) 0.27 (0.52) 0.53 0.39
- ------------------------------------------------------------------------------------------------------
Total income from investment operations 0.43 0.85 0.03 1.20 1.17
- ------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.60) (0.60) (0.53) (0.64) (0.83)
Distributions from net realized gain on
investments 0.00 0.00 (0.18) 0.00 0.00
- ------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.60) (0.60) (0.71) (0.64) (0.83)
- ------------------------------------------------------------------------------------------------------
Net asset value - end of period $10.10 $10.27 $10.02 $10.70 $10.14
- ------------------------------------------------------------------------------------------------------
Total return (2) 4.26% 8.93% 0.10% 12.16% 12.42%
- ------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $83,039 $97,619 $88,965 $99,469 $87,712
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 0.81% 0.77% 0.68% 0.65% 0.61%
- ------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.78% 5.86% 5.03% 6.37% 7.73%
- ------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 0.92% 0.80% 0.70% 0.67% 0.65%
- ------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 5.67% 5.83% 5.00% 6.35% 7.69%
- ------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 71.97% 60.86% 65.04% 87.17% 53.92%
- ------------------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Retail Shares
------------------------------------------------
For the
Period Ended
May 31,
--------------------------
1996** 1995 1994*
------ ------- -------
<S> <C> <C> <C>
Net asset value - beginning of period: $10.27 $10.03 $10.97
- --------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.20 0.56 0.34
Net realized and unrealized gain (loss) on
investments 0.04 0.26 (0.77)
- --------------------------------------------------------------------------------
Total income (loss) from investment operations 0.24 0.82 (0.43)
- --------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.21) (0.58) (0.33)
Distributions from net realized gain on
investments 0.00 0.00 (0.18)
- --------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.21) (0.58) (0.51)
- --------------------------------------------------------------------------------
Net asset value - end of period $10.30 $10.27 $10.03
- --------------------------------------------------------------------------------
Total return (2) 2.34% 8.53% (6.33%)(3)
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $2,781 $2,571 $1,941
- --------------------------------------------------------------------------------
Ratio of expenses to average
net assets 0.95%(3) 0.99% 0.95%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 5.74%(3) 5.64% 4.65%(3)
- --------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 0.97%(3) 1.02% 0.97%(3)
- --------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 5.72%(3) 5.61% 4.63%(3)
- --------------------------------------------------------------------------------
Portfolio turnover rate (1) 71.97% 60.86% 65.04%
- --------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $61,945,342 and $78,767,790, respectively.
(2) Sales charges are not reflected in total return.
(3) Annualized.
* For the period October 11, 1993 (inception of offering) to May 31, 1994.
** For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
- ----------------------------------------------------------------------------
FS-27
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated:
<TABLE>
<CAPTION>
Long-Term Bond Fund
----------------------------------------------------------------------------------
For the Year
Ended May 31,
----------------------------------------------------------------------------------
1996 1995 1994 1993 1992 1991
---------- ----------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value - beginning of period $9.87 $9.22 $11.25 $10.60 $10.01 $10.11
- -----------------------------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.61 0.59 0.62 0.77 0.80 1.08
Net realized and unrealized gain (loss) on
investments (0.27) 0.66 (0.51) 0.99 0.56 0.04
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.34 1.25 0.11 1.76 1.36 1.12
- -----------------------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.62) (0.60) (0.62) (0.78) (0.77) (1.11)
Distributions from net realized gain on
investments 0.00 0.00 (1.52) (0.33) 0.00 (0.11)
- -----------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.62) (0.60) (2.14) (1.11) (0.77) (1.22)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value - end of period $9.59 $9.87 $9.22 $11.25 $10.60 $10.01
- -----------------------------------------------------------------------------------------------------------------------------------
Total return 3.41% 14.37% (.25%) 17.40% 14.04% 11.87%
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $25,070 $33,440 $26,962 $26,281 $30,800 $27,448
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 0.90% 0.94% 0.89% 0.77% 0.70% 0.65%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 6.07% 6.54% 5.74% 6.63% 7.59% 8.29%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.07% 0.99% 0.92% 0.80% 0.74% 0.73%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 5.90% 6.49% 5.71% 6.60% 7.55% 8.21%
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 33.10% 25.09% 52.82% 79.16% 51.79% 81.13%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the year ended
May 31, 1996 were $9,489,738 and $17,274,608, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
FS-28
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest
outstanding throughout the periods indicated: Colorado Tax-Exempt Fund
----------------------------------------------
For the Year
Ended May 31,
----------------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value - beginning of period $10.70 $10.52 $10.71 $10.25 $10.00
- --------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.52 0.52 0.53 0.57 0.58
Net realized and unrealized gain (loss) on
investments (0.10) 0.20 (0.19) 0.46 0.23
- --------------------------------------------------------------------------------------------------------------
Total income from investment operations 0.42 0.72 0.34 1.03 0.81
- --------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.51) (0.54) (0.53) (0.57) (0.56)
Distributions from net realized gain on
investments 0.00 0.00 0.00 0.00 0.00
- --------------------------------------------------------------------------------------------------------------
Total dividends and distributions to
shareholders (0.51) (0.54) (0.53) (0.57) (0.56)
- --------------------------------------------------------------------------------------------------------------
Net asset value - end of period $10.61 $10.70 $10.52 $10.71 $10.25
- --------------------------------------------------------------------------------------------------------------
Total return 3.97% 7.16% 3.22% 10.27% 8.36%
- --------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $13,922 $10,792 $10,553 $7,326 $4,511
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to average
net assets 0.44% 0.42% 0.27% 0.22% 0.11%
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average
net assets 4.87% 5.03% 4.98% 5.45% 5.84%
- --------------------------------------------------------------------------------------------------------------
Ratio of expenses to average net assets
without fee waivers 1.43% 1.62% 1.59% 1.88% 1.65%
- --------------------------------------------------------------------------------------------------------------
Ratio of net investment income to average net assets
without fee waivers 3.88% 3.83% 3.65% 3.79% 4.30%
- --------------------------------------------------------------------------------------------------------------
Portfolio turnover rate (1) 10.23% 3.15% 9.76% 1.82% 12.95%
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) A portfolio turnover rate is, in general, the percentage computed by taking
the lesser of purchases or sales of portfolio securities (excluding
securities with a maturity date of one year or less at the time of
acquisition) for a period and dividing it by the monthly average of the
market value of such securities during the period. Purchases and sales of
investment securities (excluding short-term securities) for the period
ended May 31, 1996 were $5,353,679 and $1,127,047, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
FS-29
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Westcore Trust ("the Trust") is registered under the Investment Company Act
of 1940, as amended, as an open ended management investment company. Interests
in the MIDCO Growth, Blue Chip (formerly the Modern Value Equity), Small-Cap
Opportunity, Growth and Income (formerly the Equity Income), Intermediate -Term
Bond, Long-Term Bond and Colorado Tax-Exempt Funds ("the Funds") are represented
by separate classes of beneficial interest of the Trust, which is organized as a
Massachusetts business trust. The Funds, for book and tax purposes, have a
fiscal year of May 31, 1996. From October 11, 1993 to September 30, 1995, MIDCO
Growth, Small-Cap Opportunity, the Growth and Income and Intermediate-Term Bond
Funds offered Institutional and Retail classes of shares with a front-end load
and their own distribution/administrative service plan. On October 1, 1995 the
Retail class was merged into the Institutional class at the respective net asset
value per share. The distribution/administrative service plan on the Retail
class was discontinued. The front-end sales load on all the Funds was also
discontinued.
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures in the financial
statements. The actual results could differ from those estimates.
INVESTMENT VALUATION - Securities of the Funds are valued at 4:00 p.m.
(Eastern time) on each trading day. Listed and unlisted securities for which
such information is regularly reported are valued at the last sales price of the
day or, in the absence of sales, at values based on the average closing bid and
asked price. Securities for which market quotations are not readily available
are valued under procedures established by the Board of Trustees to determine
fair value in good faith. Short term securities having a remaining maturity of
60 days or less are valued at amortized cost which approximates market value.
FEDERAL INCOME TAXES - It is the Funds' policy to continue to comply with
the provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all of their taxable income to shareholders.
Therefore, no federal income tax provision is required. At May 31, 1996 the
Intermediate-Term Bond and Colorado Tax-Exempt Funds had available for federal
income tax purposes unused capital loss carryovers of approximately $1,783,000
and $4,500, respectively, which will expire through 2003.
DISTRIBUTIONS - Distributions of net investment income are distributed
annually for the MIDCO Growth Fund, quarterly for the Blue Chip, Small-Cap
Opportunity and Growth and Income Funds and monthly for the Intermediate-Term
Bond, Long-Term Bond and Colorado Tax-Exempt Funds. Distributions of net
realized gains, if any, are declared at least once each year. Distributions to
shareholders are recorded on the ex-dividend date.
ORGANIZATION COSTS - Costs incurred in connection with the organization,
initial registration and public offering of shares have been paid by the Funds.
These costs are being amortized over the period of benefit, but not to exceed
sixty (60) months, from the Funds' commencement of operations.
ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES - From October 11,
1993 to September 30, 1995 the MIDCO Growth, Small-Cap Opportunity, Growth and
Income and Intermediate-Term Bond Funds allocated income, expenses (other than
the class specific expenses) and gains and losses daily to each class of shares
based upon their relative proportion of net assets represented by each class.
Operating expenses directly attributable to a specific class were charged
against the operations of that class.
OTHER - Investment transactions are accounted for on the date the
investments are purchased or sold (trade date). Dividend income is recorded on
the ex-dividend date. Interest income, which includes amortization of premiums
and accretion of discount, is accrued and recorded daily. Realized gains and
losses from investment transactions and unrealized appreciation and depreciation
of investments are reported on an identified cost basis which is the same basis
the Funds use for federal income tax purposes.
-----------------------------------------------------------------------------
FS-30
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST
On May 31, 1996, there was an unlimited number of no par value shares of
beneficial interest authorized for each fund. Transactions in shares of
beneficial interest were as follows:
<TABLE>
<CAPTION>
MIDCO Growth Fund
- --------------------------------------------------------------------------------------------------------------------------------
For the Year For the Year
Ended May 31, 1996 Ended May 31, 1995
---------------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Shares sold 7,169,895 $142,973,591 7,023,125 $114,412,350
Shares issued in reinvestment of dividends 949,284 18,492,060 698,545 10,911,274
Shares exchanged from retail class into institutional class 1,521,981 30,820,114 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Total 9,641,160 192,285,765 7,721,670 125,323,624
Shares redeemed (4,438,468) (91,040,333) (5,109,370) (84,310,312)
- -------------------------------------------------------------------------------------------------------------------------------
Net increase 5,202,692 $101,245,432 2,612,300 $41,013,312
- -------------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS:
Shares sold 101,559 $1,926,763 807,820 $13,203,520
Shares issued in reinvestment of dividends 0 0 43,618 681,314
- -------------------------------------------------------------------------------------------------------------------------------
Total 101,559 1,926,763 851,438 13,884,834
Shares redeemed (78,351) (1,493,666) (362,309) (5,959,534)
Shares exchanged from retail class into institutional class (1,524,993) (30,820,114) 0 0
- -------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase (1,501,785) $(30,387,017) 489,129 $7,925,300
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Blue Chip Fund
- ---------------------------------------------------------------------------------------------------------------------------
For the Year For the year
Ended May 31, Ended May 31,
--------------------------------------------------
1996 1995
---------------------- ------------------------
<S> <C> <C>
Shares sold 1,073,492 1,616,124
Shares issued in reinvestment of dividends 333,778 78,963
- ---------------------------------------------------------------------------------------------------------------------------
Total 1,407,270 1,695,087
Shares redeemed (1,059,656) (1,007,962)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in shares 347,614 687,125
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
- -----------------------------------------------------------------------------
FS-31
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
Small-Cap
Opportunity Fund
- --------------------------------------------------------------------------------------------------------------------------------
For the Year For the Year
Ended May 31, 1996 Ended May 31, 1995
---------------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Shares sold 497,964 $9,077,026 486,557 $7,428,629
Shares issued in reinvestment of dividends 24,014 444,359 6,861 99,590
Shares exchanged from retail class into institutional class 58,947 1,071,652 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total 580,925 10,593,037 493,418 7,528,219
Shares redeemed (67,659) (1,258,285) (29,115) (438,431)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase 513,266 $9,334,752 464,303 $7,089,788
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS:
Shares sold 2,359 $40,334 40,377 $610,631
Shares issued in reinvestment of dividends 49 886 641 9,286
- --------------------------------------------------------------------------------------------------------------------------------
Total 2,408 41,220 41,018 619,917
Shares redeemed (2,064) (35,334) (15,699) (230,732)
Shares exchanged from retail class into institutional class (58,914) (1,071,652) 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase (58,570) $(1,065,766) 25,319 $389,185
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Growth and Income Fund
- --------------------------------------------------------------------------------------------------------------------------------
For the Year For the Year
Ended May 31, 1996 Ended May 31, 1995
---------------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Shares sold 497,475 $5,580,398 947,656 $9,727,032
Shares issued in reinvestment of dividends 150,670 1,624,668 160,970 1,558,375
Shares exchanged from retail into institutional class 349,815 3,921,431 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total 997,960 11,126,497 1,108,626 11,285,407
Shares redeemed (1,511,113) (17,018,539) (2,549,105) (25,540,598)
- --------------------------------------------------------------------------------------------------------------------------------
Net decrease (513,153) $(5,892,042) (1,440,479) $(14,255,191)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS:
Shares sold 13,368 $145,165 137,072 $1,414,084
Shares issued in reinvestment of dividends 1,911 21,221 16,645 161,116
- --------------------------------------------------------------------------------------------------------------------------------
Total 15,279 166,386 153,717 1,575,200
Shares redeemed (34,087) (373,642) (164,093) (1,693,598)
Shares exchanged from retail into institutional class (349,504) (3,921,431) 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Net decrease (368,312) $(4,128,687) (10,376) $(118,398)
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------------------------------------------------------------
FS-32
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
<TABLE>
<CAPTION>
Intermediate-Term Bond Fund
- --------------------------------------------------------------------------------------------------------------------------------
For the Year For the Year
Ended May 31, 1996 Ended May 31, 1995
---------------------------------------------------------------
Shares Amount Shares Amount
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSTITUTIONAL CLASS:
Shares sold 1,832,976 $18,925,545 2,870,047 $28,408,983
Shares issued in reinvestment of dividends 401,174 4,126,393 429,337 4,247,744
Shares exchanged from retail class into institutional class 270,324 2,781,631 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Total 2,504,474 25,833,569 3,299,384 32,656,727
Shares redeemed (3,786,468) (39,148,063) (2,669,887) (26,532,507)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) (1,281,994) $(13,314,494) 629,497 $6,124,220
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RETAIL CLASS:
Shares sold 39,293 $404,991 133,381 $1,326,611
Shares issued in reinvestment of dividends 4,402 45,023 12,418 122,850
- --------------------------------------------------------------------------------------------------------------------------------
Total 43,695 450,014 145,799 1,449,461
Shares redeemed (23,810) (245,474) (89,216) (887,379)
Shares exchanged from retail class into institutional class (270,061) (2,781,631) 0 0
- --------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase (250,176) $(2,577,091) 56,583 $562,082
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Long-Term Bond Fund
- ---------------------------------------------------------------------------------------------------------------------------
For the Year For the year
Ended May 31, Ended May 31,
--------------------------------------------------
1996 1995
---------------------- ------------------------
<S> <C> <C>
Shares sold 628,595 1,114,253
Shares issued in reinvestment of dividends 168,046 183,017
- ---------------------------------------------------------------------------------------------------------------------------
Total 796,641 1,297,270
Shares redeemed (1,570,539) (833,904)
- ---------------------------------------------------------------------------------------------------------------------------
Net decrease in shares (773,898) (463,366)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Colorado Tax-Exempt Fund
- ---------------------------------------------------------------------------------------------------------------------------
For the Year For the year
Ended May 31, Ended May 31,
--------------------------------------------------
1996 1995
---------------------- ------------------------
<S> <C> <C>
Shares sold 334,258 120,163
Shares issued in reinvestment of dividends 32,305 31,410
- ---------------------------------------------------------------------------------------------------------------------------
Total 366,563 151,573
Shares redeemed (63,463) (146,459)
- ---------------------------------------------------------------------------------------------------------------------------
Net increase in shares 303,100 5,114
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
FS-33
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
<TABLE>
<CAPTION>
MIDCO Blue Small-Cap Growth and
Growth Chip Opportunity Income
Fund Fund Fund Fund
---- ---- ---- ----
<S> <C> <C> <C> <C>
As of May 31, 1996
Gross appreciation (excess of
value over cost) 234,951,327 16,899,760 5,559,895 5,225,579
Gross depreciation (excess of
cost over value) (10,710,977) (3,649) (412,451) (88,296)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation 224,240,350 16,896,111 5,147,444 5,137,283
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Intermediate- Long-Term Colorado
Term Bond Bond Tax-Exempt
Fund Fund Fund
---- ---- ----
<S> <C> <C> <C>
As of May 31, 1996
Gross appreciation (excess of
value over cost) 605,558 821,806 269,789
Gross depreciation (excess of
cost over value) (1,536,386) (694,350) (114,103)
- -----------------------------------------------------------------------------------------------------------------------
Net unrealized appreciation (930,828) 127,456 155,686
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
4. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER RELATED
PARTY TRANSACTIONS
The Trust has entered into an advisory agreement with Denver Investment
Advisors LLC, ("DIA") for all Funds. DIA succeeded First Interstate Capital
Management, Inc. ("FICM") as investment advisor to the Long-Term Bond and the
Colorado Tax-Exempt Fund on October 1, 1995. The advisory agreements have been
approved by the Trust's Board of Trustees and shareholders and contain terms and
conditions similar to those which were in these Funds' former advisory
agreement.
Pursuant to its advisory agreement with the Trust, DIA is entitled to an
investment advisory fee, computed daily and payable monthly of 0.65%, 0.65%,
1.00%, 0.65%, 0.45%, 0.45% and 0.50% of the average net assets for MIDCO Growth,
Blue Chip, Small-Cap Opportunity, Growth and Income, Intermediate-Term Bond,
Long-Term Bond and Colorado Tax-Exempt Funds, respectively.
First Interstate Bank of Denver, N.A. ("Denver") is the custodian of the
Funds. All custodial fees were waived by Denver for the year ended May 31,
1996. In addition, DIA waived all of its advisory fees and voluntarily
reimbursed some of the expenses of the Colorado Tax-Exempt Fund. DIA also
waived a portion of its advisory fees on the Blue Chip, Small-Cap Opportunity,
Growth and Income, Intermediate-Term Bond and Long-Term Bond Funds.
Certain officers of the Funds are also officers of DIA and ALPS Mutual Funds
Services, Inc., ("ALPS"). All affiliated and access persons, as defined in the
1940 Act, follow strict guidelines and policies on personal trading as outlined
in the Trust's Code of Ethics.
-----------------------------------------------------------------------------
FS-34
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER
RELATED PARTY TRANSACTIONS (CONTINUED)
Effective October 1, 1995, ALPS and DIA entered into a co-administration
agreement to serve as the Funds co-administrators. ALPS and DIA are entitled to
receive a fee from each Fund for its administrative services computed daily and
payable monthly, at the annual rate of 0.30% of the Funds' average net assets.
For the period ended May 31, 1996, ALPS and DIA voluntarily waived a portion of
their co-administration fee payable by certain Funds.
Expenses for the Funds include legal fees paid to Drinker, Biddle & Reath.
A partner of that firm is secretary of the Trust.
Each of the MIDCO Growth, Small-Cap Opportunity, Growth and Income and
Intermediate-Term Bond Funds had an approved plan of distribution/administrative
services ("the Plan") for the Retail class of each Fund until the exchange from
Retail class shares to Institutional class shares occurred on September 29,
1995. The plan allowed for up to 0.35%, 0.35%, 0.35% and 0.30%, respectively,
of net assets annually to reimburse for costs incurred in distributing Retail
shares of the Funds including amounts paid to brokers, dealers, banks and other
institutions. During the period ended September 29, 1995, the Funds accrued to
participants under the plan 0.25% on an annual basis of the average net asset
value of the Retail shares.
Shareholders holding more than 5% of the Funds constituted 45.62% of MIDCO
Growth, 87.04% of Blue Chip, 74.97% of Small-Cap Opportunity, 62.15% of Growth
and Income, 83.10% of Intermediate-Term Bond, 86.50% of Long-Term Bond and
62.49% of Colorado Tax-Exempt Funds' average net assets.
6. RESTRICTED SECURITIES
The Intermediate-Term Bond and Long-Term Bond Funds own restricted securities
purchased pursuant to Rule 144A of the Securities Act of 1933 (the Act).
Rule 144A securities amount to 3.25% and 4.40% of the Intermediate-Term Bond and
Long-Term Bond Funds Net Assets, respectively, at May 31, 1996 and are listed
below.
<TABLE>
<CAPTION>
Acquisition Cost Valuation per Unit as Fair Value as
Security Date per Unit of May 31, 1996 of May 31, 1996
-------- ---- -------- --------------- ---------------
Intermediate-Term Bond Fund
- ---------------------------
<S> <C> <C> <C> <C>
Bayer Corp, 6.50%, 10/01/02 09/26/95 $99.38 $96.97 $1,648,490
Jet Equipment Trust Ser. 95-B,
7.83%, 02/15/15 07/01/95 $100.00 $98.90 1,049,071
-----------
Total $2,697,561
-----------
-----------
Long-Term Bond Fund
- -------------------
Bayer Corp, 6.50%, 10/01/02 09/26/95 $99.38 $96.97 $533,335
Jet Equipment Trust Ser. 95-B,
7.83%, 02/15/15 07/01/95 $100.00 $98.90 339,977
Principal Mutual Life Insurance, 7.875%, 03/01/24 03/03/94 $99.32 $91.58 228,958
-----------
Total $1,102,270
-----------
-----------
</TABLE>
- -----------------------------------------------------------------------------
FS-35
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. ALLOCATION OF CLASS EXPENSES
<TABLE>
<CAPTION>
Institutional Retail
MIDCO GROWTH FUND EXPENSES Shares(1) Shares(2) Total
--------- --------- -----
<S> <C> <C> <C>
Investment advisory fee $3,496,172 $62,154 $3,558,326
Administrative fee 1,225,892 4,781 1,230,673
Fund accounting 174,730 3,057 177,787
Legal 162,818 1,786 164,604
Audit 13,538 283 13,821
Custodian 129,734 1,665 131,399
Transfer agency 329,185 6,560 335,745
Printing 112,273 5,200 117,473
Distribution/administration assistance
- retail shares 0 21,061 21,061
Insurance 23,266 336 23,602
Registration 47,205 358 47,563
Trustee fee 25,127 390 25,517
Reorganization 146,023 4,428 150,451
Other 64,148 459 64,607
- ------------------------------------------------------------------------------------------------------------------------------------
Total 5,950,111 112,518 6,062,629
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses waived by
Custodian (129,734) (1,665) (131,399)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Expenses $5,820,377 $110,853 $5,931,230
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Institutional Retail
SMALL-CAP OPPORTUNITY FUND EXPENSES Shares(1) Shares(2) Total
--------- --------- -----
<S> <C> <C> <C>
Investment advisory fee $170,199 $3,332 $173,531
Administrative fee 40,695 167 40,862
Fund accounting 31,606 781 32,387
Legal 8,265 97 8,362
Audit 7,655 158 7,813
Custodian 18,707 86 18,793
Amortization of organization costs 17,316 443 17,759
Transfer agency 37,262 1,203 38,465
Printing 9,450 783 10,233
Distribution/administration assistance
- retail shares 0 704 704
Insurance 512 5 517
Registration 19,796 478 20,274
Trustee fee 1,027 22 1,049
Reorganization 4,911 203 5,114
Other 7,638 19 7,657
- ------------------------------------------------------------------------------------------------------------------------------------
Total 375,039 8,481 383,520
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses waived by
Investment advisor (133,369) (3,422) (136,791)
Custodian (18,707) (86) (18,793)
Administrator (1,806) 0 (1,806)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Expenses $221,157 $4,973 $226,130
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the year ended May 31, 1996.
(2) For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
-----------------------------------------------------------------------------
FS-36
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. ALLOCATION OF CLASS EXPENSES (CONTINUED)
<TABLE>
<CAPTION>
Institutional Retail
GROWTH AND INCOME FUND EXPENSES Shares(1) Shares(2) Total
--------- --------- -----
<S> <C> <C> <C>
Investment advisory fee $170,717 $8,478 $179,195
Administrative fee 56,395 652 57,047
Fund accounting 30,473 1,239 31,712
Legal 9,559 269 9,828
Audit 8,487 326 8,813
Custodian 22,600 366 22,966
Transfer agency 58,943 2,921 61,864
Printing 5,150 1,949 7,099
Distribution/administration assistance
- retail shares 0 2,601 2,601
Insurance 1,375 71 1,446
Registration 14,269 754 15,023
Trustee fee 1,432 74 1,506
Reorganization 11,543 1,182 12,725
Other 6,651 75 6,726
- ------------------------------------------------------------------------------------------------------------------------------------
Total 397,594 20,957 418,551
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses waived by:
Investment advisor (49,319) 0 (49,319)
Custodian (22,600) (366) (22,966)
Administrator (4,873) 0 (4,873)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Expenses $320,802 $20,591 $341,393
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Institutional Retail
INTERMEDIATE-TERM BOND FUND EXPENSES Shares(1) Shares(2) Total
--------- --------- -----
<S> <C> <C> <C>
Investment advisory fee $405,357 $3,840 $409,197
Administrative fee 188,478 427 188,905
Fund accounting 42,383 384 42,767
Legal 37,284 238 37,522
Audit 12,218 95 12,313
Custodian 30,638 206 30,844
Transfer agency 41,822 524 42,346
Printing 13,862 234 14,096
Distribution/administration assistance
- retail shares 0 1,677 1,677
Insurance 3,915 23 3,938
Registration 25,619 270 25,889
Trustee fee 4,877 36 4,913
Reorganization 17,582 282 17,864
Other 5,641 40 5,681
- ------------------------------------------------------------------------------------------------------------------------------------
Total 829,676 8,276 837,952
- ------------------------------------------------------------------------------------------------------------------------------------
Expenses waived by:
Investment advisor (58,864) 0 (58,864)
Custodian (30,635) (209) (30,844)
Administrator (10,539) 0 (10,539)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Expenses $729,638 $8,067 $737,705
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the year ended May 31, 1996.
(2) For the period June 1, 1995 to September 29, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
FS-37
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
8. REORGANIZATION
A special meeting of the Westcore Board of Trustees was held on June 14,
1995, at which an Agreement ("Agreement") and Plan of Reorganization
("Reorganization") with Pacifica Funds Trust ("Pacifica") was approved subject
to shareholder approval. On August 21, 1995, Westcore Trust and Pacifica
entered into the Agreement, which contemplated the transfer to Pacifica of
assets and liabilities of fifteen of the twenty-two funds constituting the
Westcore Trust. The Growth Fund, Short-Term Government Bond Fund, Bonds Plus
Fund, GNMA Fund, Arizona Intermediate Tax-Free Fund, Oregon Tax-Exempt Fund,
Quality Tax-Exempt Income Fund, California Intermediate Tax-Free Fund, Basic
Value Fund, Balanced Investment Fund, Cash Reserve Fund, Treasury Money Market
Fund, Money Market Fund, Government Money Market Fund and Prime Money Market
Fund were included in the Reorganization. A special meeting of the shareholders
was held on September 28, 1995, at which shareholder approval of the
Reorganization was obtained on the Growth Fund, Short-Term Government Bond Fund,
Bonds Plus Fund, Arizona Intermediate Tax-Free Fund, Quality Tax-Exempt Income
Fund, Basic Value Fund, Balanced Investment Fund, Cash Reserve Fund, Treasury
Money Market Fund, Money Market Fund, Government Money Market Fund and Prime
Money Market Fund. On September 30, 1995, shareholder approval was obtained
from shareholders of the California Intermediate Tax-Free Fund. On October 11,
1995, shareholder approval was obtained from shareholders of the the Oregon
Tax-Exempt Fund. On November 15, 1995, shareholder approval was obtained from
shareholders of the the GNMA Fund. The Reorganization resulted in the
conveyance of the assets and liabilities of the fifteen funds to corresponding
portfolios of Pacifica.
The MIDCO Growth, Blue Chip, Small-Cap Opportunity, Growth and Income,
Intermediate-Term Bond, Long-Term Bond and Colorado Tax-Exempt Funds remain with
the Trust and are advised by DIA.
SHAREHOLDER TAX INFORMATION (UNAUDITED)
Certain tax information regarding the Westcore Funds Trust is required to be
provided to shareholders based upon each Fund's income and distribution for the
taxable year ended May 31, 1996. The information and distributions reported
herein may differ from information and distributions taxable to the shareholders
for the calendar year ended December 31, 1995.
During the fiscal year ended May 31, 1996, 100% of the dividends paid by the
Colorado Tax-Exempt Fund from net investment income should be treated as
tax-exempt dividends and 100% of the dividends paid by the Blue Chip, Small-Cap
Opportunity and Growth and Income Funds from net investment income qualify for
the corporate dividends received deduction.
During the fiscal year ended May 31, 1996, the Westcore Funds paid the following
distributions:
<TABLE>
<CAPTION>
Ordinary Capital Total
Income Dividends Gains Distributions Distributions
<S> <C> <C> <C>
MIDCO Growth Fund
Institutional Class $0.00 $0.72 $0.72
Retail Class 0.00 0.00 0.00
Blue Chip Fund Institutional Class 0.49 1.08 1.57
Small-Cap Opportunity Fund
Institutional Class 0.23 0.27 0.50
Fund Retail Class 0.02 0.00 0.02
Growth and Income Fund
Institutional Class 0.24 0.66 0.90
Retail Class 0.06 0.00 0.06
</TABLE>
-----------------------------------------------------------------------------
FS-38
<PAGE>
- --------------------------------------------------------------------------------
WESTCORE ANNUAL REPORT
- --------------------------------------------------------------------------------
[LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS,
WESTCORE TRUST:
We have audited the accompanying statements of assets and liabilities,
including the statements of investments, of the MIDCO Growth Fund, Blue Chip
Fund, Small-Cap Opportunity Fund, Growth and Income Fund, Intermediate-Term Bond
Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund as of May 31, 1996, the
related statements of operations for the year then ended and the statements of
changes in net assets and financial highlights for each of the periods
indicated. These financial statements and financial highlights are the
responsibility of the Trust's Management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
at May 31, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the MIDCO Growth
Fund, Blue Chip Fund, Small-Cap Opportunity Fund, Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund of
the Westcore Funds Trust as of May 31 1996, and the results of their operations,
the changes in their net assets and financial highlights for each of the periods
indicated in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- ---------------------
DELOITTE & TOUCHE LLP
DENVER, COLORADO
JUNE 28, 1996
- ---------------------
FS-39
<PAGE>
PART C - OTHER INFORMATION
Item 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements:
(1) Financial Highlights for the Colorado Tax-Exempt Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund, Blue Chip
Fund, Growth and Income Fund, MIDCO Growth Fund and Small-Cap
Opportunity Fund are included in Part A.
(2) Registrant's audited Annual Reports to Shareholders for the fiscal
year ended May 31, 1996 for the Colorado Tax-Exempt Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund, Blue Chip
Fund, Growth and Income Fund, MIDCO Growth Fund and Small-Cap
Opportunity Fund are included in Part B.
(b) Exhibits
(1) (a) Amended and Restated Declaration of Trust of the Registrant
dated November 19, 1987 is incorporated herein by
reference to Exhibit (1) to Post-Effective Amendment No.
21 to Registrant's Registration Statement.
(b) Amendment to Amended and Restated Declaration of Trust of the
Registrant dated July 16, 1990 is incorporated herein by
reference to Exhibit (1)(b) to Post-Effective Amendment
No. 23 to Registrant's Registration Statement
("Post-Effective Amendment No. 23").
(2) (a) Registrant's Code of Regulations is incorporated herein by
reference to Exhibit No. 2 to Post-Effective Amendment No.
7 to Registrant's Registration Statement ("Post-Effective
Amendment No. 7").
(b) Amendment No. 1 to Registrant's Code of Regulations dated
August 11, 1987 is incorporated herein by reference to
Exhibit No. 2(b) to Post-Effective Amendment No. 11 to
Registrant's Registration Statement.
C-1
<PAGE>
(c) Amendment No. 2 to Registrant's Code of Regulations dated
August 17, 1995 is incorporated herein by reference to
Exhibit 2(c) to Post-Effective Amendment No. 44.
(d) Registrant's Amended and Restated Code of Regulations is
filed herein.
(3) None.
(4) See Sections 5.1, 5.2 and 5.4 of Article 5, Sections 8.1, 8.2,
8.3, 8.4 and 8.5 of Article 8 and Sections 9.5 and 9.6 of
Article 9 of the Amended and Restated Declaration of Trust
which is incorporated by reference to Exhibit 1(a) herein,
and Sections 2.1, 2.2, 2.3 and 2.4 of Article 2 of the Amended
and Restated Code of Regulations which is incorporated by
reference to Exhibit 2 herein.
(5) (a) Amended and Restated Advisory Agreement dated October 1, 1995
between Registrant and Denver Investment Advisors LLC
relating to Registrant's Cash Reserve Fund (which has not
yet commenced operations, Colorado Tax-Exempt Fund, Growth
and Income Fund (formerly the Equity Income Fund),
Intermediate-Term Bond Fund, Long-Term Bond Fund, MIDCO
Growth Fund, Blue Chip Fund (formerly the Modern Value
Equity Fund) and Small-Cap Opportunity Fund is
incorporated by reference to Exhibit 5(b) to
Post-Effective Amendment No. 44.
(6) (a) Distribution Agreement dated November 30, 1987 between
Registrant and ALPS Securities, Inc. relating to
Registrant's MIDCO Growth Fund, Blue Chip Fund (formerly
the Modern Value Equity Fund), Growth and Income Fund
(formerly the Equity Income Fund), Intermediate-Term Bond
Fund, and Long-Term Bond Fund is incorporated herein by
reference to Exhibit No. 6(b) to Post-Effective Amendment
No. 14.
(i) Amendment No. 1 dated March 30, 1989 relating to
Registrant's Short-Intermediate Tax-Exempt Fund is
incorporated herein by reference to Exhibit No. 6(b)(i)
to Post-Effective Amendment No. 16 to Registrant's
C-2
<PAGE>
Registration Statement ("Post-Effective Amendment
No. 16").
(ii) Amendment No. 2 dated as of September 28, 1990 relating
to Registrant's Balanced Investment Fund is
incorporated herein by reference to Exhibit 6(b)(ii)
to Post-Effective Amendment No. 23.
(iii) Amendment No. 3 dated as of June 1, 1991 relating to
Registrant's Colorado Tax-Exempt Fund is incorporated
herein by reference to Exhibit 6(b)(iii) to
Post-Effective Amendment No. 26 to Registrant's
Registration Statement ("Post-Effective Amendment No.
26").
(iv) Amendment No. 4 dated as of March 1, 1992 relating to
Registrant's Arizona Intermediate Tax-Free Fund is
incorporated herein by reference to Exhibit 6(b)(iv)
to Post-Effective Amendment No. 32.
(v) Amendment No. 5 dated as of August 1, 1993 relating to
Registrant's Growth Fund is incorporated herein by
reference to Exhibit 6(b)(v) to Post-Effective
Amendment No. 36.
(vi) Amendment No. 6 dated as of January 7, 1993 relating to
Registrant's Quality Tax-Exempt Income Fund is
incorporated herein by reference to Exhibit 6(b)(vi)
to Post-Effective Amendment No. 36.
(vii) Amendment No. 7 dated as of January 4, 1993 relating to
Registrant's California Intermediate Tax-Free Fund is
incorporated herein by reference to Exhibit 6(b)(vii)
to Post-Effective Amendment No. 36.
(viii) Amendment No. 8 dated as of December 28, 1993 relating
to Registrant's Small-Cap Opportunity Fund is
incorporated herein by reference to Exhibit
6(b)(viii) to Post-Effective Amendment No. 40 to
Registrant's Registration statement ("Post-Effective
Amendment No. 40").
C-3
<PAGE>
(b) Form of Broker/Dealer Selling Agreement is incorporated
herein by reference to Exhibit No. 6(c) to Post-Effective
Amendment No. 14.
(c) Form of Bank Agreement is incorporated herein by reference
to Exhibit No. 6(d) to Post-Effective Amendment No. 14.
(7) None.
(8) (a) Custody Agreement dated November 30, 1987 between Registrant
and First Interstate Bank of Denver, N.A. relating to
Registrant's MIDCO Growth Fund, Blue Chip Fund (formerly
the Modern Value Equity Fund), Growth and Income Fund
(formerly the Equity Income Fund), Intermediate-Term Bond
Fund and Long-Term Bond Fund is incorporated herein by
reference to Exhibit No. 8(c) to Post-Effective Amendment
No. 14.
(i) Amendment No. 1 dated as of June 1, 1991 relating to
Registrant's Colorado Tax-Exempt Fund is incorporated
herein by reference to Exhibit 8(c)(i) to Post-Effective
Amendment No. 26.
(ii) Amendment No. 2 dated as of December 28, 1993 relating
to Registrant's Small-Cap Opportunity Fund is
incorporated herein by reference to Exhibit 8(b)(ii)
to Post-Effective Amendment No. 40.
(9) (a) Administration Agreement dated as of October 1, 1995 between
Registrant, Denver Investment Advisors LLC, and ALPS
Mutual Funds Services, Inc. relating to Registrant's Cash
Reserve Fund, Colorado Tax-Exempt Fund, Growth and Income
Fund (formerly the Equity Income Fund), Intermediate-Term
Bond Fund, Long-Term Bond Fund, MIDCO Growth Fund, Blue
Chip Fund (formerly the Modern Value Equity Fund) and
Small-Cap Opportunity Fund is filed herewith as Exhibit
9(b).
(b) Amended and Restated Transfer Agency and Service Agreement
dated January 4, 1993 as amended from the Transfer Agency
and Service Agreement dated June 1, 1992 between
Registrant and State Street Bank and Trust Company
relating to Registrant's Blue Chip
C-4
<PAGE>
Fund (formerly the Modern Value Equity Fund), Growth and
Income Fund (formerly the Equity Income Fund), MIDCO
Growth Fund, Intermediate-Term Bond Fund, Long-Term Bond
Fund and Colorado Tax-Exempt Fund is incorporated herein
by reference to Exhibit 9(f) to Post-Effective Amendment
No. 36.
(i) Amendment No. 1 dated as of December 28, 1993 relating
to Registrant's Small-Cap Opportunity Fund is
incorporated herein by reference to Exhibit 9(c)(i) to
Post-Effective Amendment No. 38.
(ii) Amendment No. 2 dated as of November 1, 1994 is
incorporated herein by reference to Exhibit 9(c) (ii)
to Post-Effective Amendment No. 44.
(c) Amended and Restated Bookkeeping and Pricing Agreement dated
January 7, 1993 as amended from the Bookkeeping and
Pricing Agreement dated June 1, 1992 between Registrant
and ALPS Securities, Inc. relating to Registrant's
Colorado Tax-Exempt Fund, Intermediate-Term Bond Fund,
Long-Term Bond Fund, Blue Chip Fund (formerly the Modern
Value Equity Fund), Growth and Income Fund (formerly the
Equity Income Fund), MIDCO Growth Fund and Small-Cap
Opportunity Fund is incorporated herein by reference to
Exhibit 9(g) to Post-Effective Amendment No. 36.
(d) Indemnification Agreement dated July 17, 1995 between
Registrant and First Interstate Bancorp is incorporated
herein by reference to Exhibit 9(h) to Post-Effective
Amendment No. 44.
(e) Retirement Plan Order Processing Amendment to the
Operating Agreements dated as of February 15, 1996;
Institutional Services Agreements dated as of November 27,
1995; Operating Agreements dated as of November 27, 1995;
Retail Services Agreement dated as of March 26, 1996; and
Confidentiality Agreement dated as of March 26, 1996 among
Westcore Trust, Denver Investment Advisors LLC and Charles
Schwab & Co., Inc. relating to the Cash Reserve Fund,
Colorado Tax-Exempt Fund, Growth and Income Fund (formerly
the Equity Income Fund), Intermediate-Term Bond Fund, Long-
Term Bond Fund, MIDCO Growth Fund, Blue Chip Fund (formerly
the Modern Value Equity Fund) and Small-Cap Opportunity Fund
is filed herewith as Exhibit 9(h).
C-5
<PAGE>
(10) (a) Opinion and consent of counsel with respect to
Registrant's 24f-2 Notice was filed with the Securities
and Exchange Commission on July 29, 1996.
(b) Opinion and consent of counsel with respect to Registrant's
registration of shares pursuant to Rule 24e-2 is filed
herein.
(11) (a) Consent of Drinker Biddle & Reath.
(b) Consent of Deloitte & Touche LLP.
(12) None.
(13) None.
(14) (a) Prototype Westcore IRA Application, Custodial Account
Statement and Disclosure Statement is incorporated herein
by reference to Exhibit 14(a) to Post-Effective Amendment
No. 36.
(b) Prototype Trust Consultants Inc. 401k Plan and Engagement
Letter is incorporated herein by reference to Exhibit 14(b)
to Post-Effective Amendment No. 36.
(15) None.
(16) Schedule for Computation of Performance Quotations for
Small-Cap Opportunity Fund is incorporated herein by
reference to Exhibit 16 to Post-Effective Amendment No.
40. Schedule for Computation of Performance Quotations
for Colorado Tax-Exempt Fund is incorporated herein by
reference to Exhibit (16) to Post-Effective Amendment No.
29. Schedule for Computation of Performance Quotations
for remaining portfolios incorporated herein by reference
to Exhibit (16) to Post-Effective Amendment No. 23.
(17) Financial Data Schedules as of May 31, 1996
(18) None.
Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Registrant is controlled by its Board of Trustees. Certain of
Registrant's trustees serve on the board of directors/trustees of certain
other registered investment
C-6
<PAGE>
companies. (See "Management of the Fund - Directors and Officers" in Part B
hereof).
Item 26. NUMBER OF HOLDERS OF SECURITIES
As of June 30, 1996:
Number of
Title of Class Record Holders
-------------- --------------
Class B Shares
(MIDCO Growth Fund) 8,619
Class G Shares
(Long-Term Bond Fund) 266
Class H Shares
(Intermediate-Term Bond Fund) 616
Class I Shares
(Blue Chip Fund) 947
Class J Shares
(Growth and Income Fund) 1,127
Class S Shares
(Colorado Tax-Exempt Fund) 122
Class X
(Small-Cap Opportunity Fund) 472
Item 27. INDEMNIFICATION
The trustees are indemnified by First Interstate Bancorp ("FIB"),
generally against damages arising out of (i) claims by any person that
implementation of the Agreement and Plan of Reorganization between Pacifica
Funds Trust ("Pacifica") and Westcore Trust (the "Plan") constitutes breach
or violation of certain agreements with ALPS Mutual Funds Services, Inc.; and
(ii) certain untrue or alleged untrue statements of material facts or
omissions or alleged omissions of material facts in information furnished by
or on behalf of FIB, intended for use in certain proxy materials or
amendments or supplements to the Registrant's registration statement relating
to the Plan.
Under the Plan, Pacifica has agreed to assume certain liabilities of the
Registrant, including certain obligations of the Registrant to indemnify the
Registrant's Trustees acting in their capacity as such with respect to any
claim alleging any breach of fiduciary duty with respect to transactions
contemplated by the Plan or otherwise to the fullest extent
C-7
<PAGE>
permitted by law and the Registrant's Declaration of Trust as in effect on
the date of such Plan.
Indemnification of Registrant's principal underwriter against certain
losses is provided for in Section 1.9 of the Distribution Agreement
incorporated herein by reference as Exhibits 6(a). Indemnification of First
Interstate Bank of Denver, N.A. as Custodian to the MIDCO Growth Fund, Blue
Chip Fund (formerly the Modern Value Equity Fund), Growth and Income Fund
(formerly the Equity Income Fund), Intermediate-Term Bond Fund, Long-Term
Bond Fund, Colorado Tax-Exempt Fund and Small-Cap Opportunity Fund against
certain losses is provided in Section 23 of the Custody Agreement
incorporated herein by reference as Exhibits 8(a). Indemnification of
Registrant's Bookkeeping and Pricing Agent against certain losses is provided
for in Section 6 of the Amended and Restated Bookkeeping and Pricing
Agreement incorporated herein by reference as Exhibit 9(c). Registrant has
obtained from a major insurance carrier a trustees' and officers' liability
policy covering certain types of errors and omissions. Registrant will not
pay an insurance premium for insurance coverage which indemnifies for any act
for which Registrant itself cannot indemnify. In addition, Section 9.3 of
the Registrant's Amended and Restated Declaration of Trust dated November 19,
1987, incorporated herein by reference as Exhibit 1, provides as follows:
9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES. The
Trust shall indemnify each of its Trustees against all liabilities and
expenses (including amounts paid in satisfaction of judgments, in compromise,
as fines and penalties, and as counsel fees) reasonably incurred by him in
connection with the defense or disposition of any action, suit or other
proceeding, whether civil or criminal, in which he may be involved or with
which he may be threatened, while as a Trustee or thereafter, by reason of
his being or having been such a Trustee EXCEPT with respect to any matter as
to which he shall have been adjudicated to have acted in bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties, PROVIDED
that as to any matter disposed of by a compromise payment by such person,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless the Trust shall
have received a written opinion from independent legal counsel approved by
the Trustees to the effect that if either the matter of willful misfeasance,
gross negligence or reckless disregard of duty, or the matter of bad faith
had been adjudicated, it would in the opinion of such counsel have been
adjudicated in favor of such person. The rights accruing to any person under
these provisions shall not exclude any other right to which he may be
lawfully entitled, PROVIDED that no person may satisfy any right of indemnity
or reimbursement hereunder except out of the
C-8
<PAGE>
property of the Trust. The Trustees may make advance payments in connection
with the indemnification under this Section 9.3, PROVIDED that the
indemnified person shall have given a written undertaking to reimburse the
Trust in the event it is subsequently determined that he is not entitled to
such indemnification.
The Trustees shall indemnify representatives and employees of the
Trust to the same extent that Trustees are entitled to indemnification
pursuant to this Section 9.2.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to trustees, officers and controlling
persons of Registrant pursuant to the foregoing provisions, or otherwise,
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
Section 9.6 of the Registrant's Amended and Restated Declaration of
Trust dated November 19, 1987, incorporated herein by reference as Exhibit 1,
also provides for the indemnification of shareholders of the Registrant.
Section 9.6 states as follows:
9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason of
his being or having been an [sic] Shareholder and not because of his acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his heirs, executors, administrators or other legal representatives or, in
the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets belonging to the classes of
Shares owned by such Shareholder to be held harmless from and indemnified
against all loss and expense arising from such liability. The Trust shall,
upon request by the Shareholder, assume the defense of any claim made against
any Shareholder for any act or obligations of the Trust and satisfy any
judgment thereon from such assets.
C-9
<PAGE>
Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
To Registrant's knowledge, none of the directors or senior
executive officers of Denver Investment Advisors LLC, except those set forth
below, is, or has been at any time during Registrant's past two fiscal years,
engaged in any other business, profession, vocation or employment of a
substantial nature. Set forth below are the names and principal businesses
of the directors and certain of the senior executive officers of Denver
Investment Advisors LLC who are or have been engaged in any other business,
profession, vocation or employment of a substantial nature during the past
two years.
C-10
<PAGE>
DENVER INVESTMENT ADVISORS LLC
<TABLE>
Position
with Other
Denver Investment Business Type of
Name Advisors LLC Connections Business
- ---- ----------------- ----------- --------
<S> <C> <C> <C>
Jeff Adams Manager/Vice None N/A
President
Todger Anderson Executive President of Blue Investment
Manager/President Chip Value Fund, Company
Inc.
Terri Baldwin Vice President None N/A
Leo Beserra Vice President None N/A
Glen Cahill Vice President None N/A
Will Chester Vice President None N/A
John Cormey Vice President Vice President of Investment
Blue Chip Value Company
Fund, Inc.
Mary Ellen Cox Vice President None N/A
Kathleen Duggan Vice President None N/A
Janet Gardiner Vice President None N/A
Les Garrison Vice President None N/A
Caleb F. Gates, Jr. Vice President None N/A
Dean Graves Vice President None N/A
Grafton Jhung Vice President None N/A
Doug Kidd Vice President None N/A
Dennis Larkin Manager/Vice None N/A
President
Alex Lock Vice President None N/A
Larry Luchini Vice President None N/A
JoAnn Nearents Vice President None N/A
Kenneth V. Penland Executive Chairman of the Investment
Manager/Chairman Board of Blue Chip Company
Value Fund, Inc.
Charlotte Petersen Vice President None N/A
Gerald Peterson Vice President None N/A
</TABLE>
C-11
<PAGE>
<TABLE>
Position
with Other
Denver Investment Business Type of
Name Advisors LLC Connections Business
- ---- ----------------- ----------- --------
<S> <C> <C> <C>
Varilyn Schock Vice President Vice President of Investment
Blue Chip Value Company
Fund, Inc.
Mil Schulhof Vice President None N/A
Tom Stevens Vice President None N/A
Dave Stueber Vice President/ None N/A
Manager
</TABLE>
Item 29. PRINCIPAL UNDERWRITER
(a) ALPS Mutual Funds Services, Inc. acts as the distributor for the
Registrant and the following investment companies: Duff & Phelps Trust, FGIC
Public Trust, First Funds, Sefton Funds and The Country Baskets Index Fund,
Inc.
(b) To the best of Registrant's knowledge, the directors and executive
officers of ALPS Mutual Funds Services, Inc., are as follows:
Positions and Positions and
Name and Principal Offices with Offices with
Business Address ALPS Registrant
- ------------------ ------------- --------------
W. Robert Alexander Chairman None
and Director
Arthur J. L. Lucey Secretary, None
President and Director
Mark Pougnet Chief Financial Officer Treasurer
Ned Burke Senior Vice President None
John W. Hannon, Jr. Director None
Asa W. Smith Director None
Rick Pederson Director None
Gordon Hobgood Director None
Steven Bettcher Director None
Mary Anstine Director None
C-12
<PAGE>
The principal business address for each of the above directors and
executive officers is 370 Seventeenth Street, Suite 2700, Denver, Colorado
80202.
(c) None.
Item 30. LOCATION OF ACCOUNTS AND RECORDS
(1) Denver Investment Advisors LLC, 1225 17th Street, 26th Floor, Denver,
Colorado 80202 (records relating to its function as investment
adviser for Registrant's Colorado Tax-Exempt Fund, MIDCO Growth Fund,
Blue Chip Fund (formerly the Modern Value Equity Fund), Long-Term
Bond Fund, Small-Cap Opportunity Fund, Growth and Income Fund
(formerly the Equity Income Fund) and Intermediate-Term Bond Fund).
(2) ALPS Mutual Funds Services, Inc., 370 Seventeenth Street, Suite 2700,
Denver, Colorado 80202 (records relating to its functions as
distributor, administrator and bookkeeping and pricing agent for each
of Registrant's investment portfolios).
(3) State Street Bank and Trust Company, 225 Franklin Street, Boston, MA
02110 (records relating to its functions as transfer agent for each of
the Registrant's investment portfolios).
(4) Drinker Biddle & Reath, Philadelphia National Bank Building, 1345
Chestnut Street, Philadelphia, Pennsylvania 19107-3496 (Registrant's
Declaration of Trust, Code of Regulations and Minute Books).
Item 31. MANAGEMENT SERVICES
None.
Item 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a
prospectus is delivered, a copy of the Registrant's latest annual report to
shareholders upon request and without charge.
C-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, 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 Post-Effective Amendment to the Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Denver, and State of Colorado, on the 30th day of
September, 1996.
WESTCORE TRUST
Registrant
By: /s/ Kenneth V. Penland
-------------------------------
Kenneth V. Penland
President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment to Registrant's Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
Signature Title Date
- --------- ----- ----
/s/ Jack D. Henderson
- -------------------------- Chairman September 27, 1996
Jack D. Henderson
/s/ McNeil S. Fiske
- -------------------------- Trustee September 27, 1996
McNeil S. Fiske
/s/ James B. O'Boyle
- -------------------------- Trustee September 27, 1996
James B. O'Boyle
/s/ Robert L. Stamp
- -------------------------- Trustee September 27, 1996
Robert L. Stamp
/s/ Lyman Seely
- -------------------------- Trustee September 27, 1996
Lyman Seely
/S/ Mark Pougnet
- -------------------------- Treasurer September 27, 1996
Mark Pougnet
C-14
<PAGE>
EXHIBIT INDEX
Exhibit Number Item
-------------- ----
Ex.99 (1)(a) Amended and Restated Declaration of Trust of the Registrant
dated November 19, 1987.
Ex.99 (1)(b) Amendment to Amended and Restated Declaration of Trust of
the Registrant dated July 16, 1990.
Ex.99 (2)(a) Registrant's Amended and Restated Code of Regulations dated
November 19, 1987.
Ex.99 (5)(a) Amended and Restated Advisory Agreement dated October 1,
1995.
Ex.99 (6)(a) Distribution Agreement dated November 30, 1987.
Ex.99 (6)(a)(i) Amendment No. 1 to Registrant's Distribution Agreement dated
March 30, 1989.
Ex.99 (6)(a)(ii) Amendment No. 2 to Registrant's Distribution Agreement dated
September 28, 1990.
Ex.99 (6)(a)(iii) Amendment No. 3 to Registrant's Distribution Agreement dated
June 1, 1991.
Ex.99 (6)(a)(iv) Amendment No. 4 to Registrant's Distribution Agreement dated
March 1, 1992.
Ex.99 (6)(a)(v) Amendment No. 5 to Registrant's Distribution Agreement dated
August 1, 1993.
Ex.99 (6)(a)(vi) Amendment No. 6 to Registrant's Distribution Agreement dated
January 7, 1993.
Ex.99 (6)(a)(vii) Amendment No. 7 to Registrant's Distribution Agreement dated
January 4, 1993.
Ex.99 (6)(a)(viii) Amendment No. 8 to Registrant's Distribution Agreement dated
December 28, 1993.
Ex.99 (6)(b) Form of Broker/Dealer Selling Agreement.
Ex.99 (6)(c) Form of Bank Agreement.
Ex.99 (8)(a) Custody Agreement dated November 30, 1987.
Ex.99 (8)(a)(i) Amendment No. 1 to Registrant's Custody Agreement dated
June 1, 1991.
C-15
<PAGE>
EXHIBIT INDEX
Exhibit Number Item
-------------- ----
Ex.99 (8)(a)(ii) Amendment No. 2 to Registrant's Custody Agreement dated
December 28, 1993.
Ex.99 (9)(a) Administration Agreement dated October 1, 1995.
Ex.99 (9)(b) Amended and Restated Transfer Agency and Service Agreement
dated January 4, 1993 as amended from the Transfer Agency
and Service Agreement dated June 1, 1992.
Ex.99 (9)(b)(i) Amendment No. 1 to Registrant's Transfer Agency Agreement
dated December 28, 1993.
Ex.99 (9)(b)(ii) Amendment No. 2 to Registrant's Transfer Agency Agreement
dated November 1, 1994.
Ex.99 (9)(c) Amended and Restated Bookkeeping and Pricing Agreement dated
January 7, 1993 as amended from the Bookkeeping and Pricing
Agreement dated June 1, 1992.
Ex.99 (9)(d) Indemnification Agreement dated July 17, 1995.
Ex.99 (9)(e) Service Agreement dated April 14, 1996 among Registrant,
Denver Investment Advisors LLC and Charles Schwab & Co.,
Inc.
Ex.99 (10)(b) Opinion and consent of counsel.
Ex.99 (11)(a) Consent of Drinker Biddle & Reath.
Ex.99 (11)(b) Consent of Deloitte & Touche LLP.
Ex.99 (14)(a) Prototype Westcore IRA Application, Custodial Account
Statement and Disclosure Statement.
Ex.99 (14)(b) Prototype Trust Consultants Inc. 401k Plan and Engagement
Letter.
Ex.99 (16) Schedule for Computation of Performance Quotations for
Small-Cap Opportunity Fund. Schedule for Computation of
Performance Quotations for Colorado Tax-Exempt Fund.
Schedule for Computation of Performance Quotations for
remaining portfolios.
(27)(a) Financial Data Schedules with respect to the Blue Chip
Fund for the fiscal year ended May 31, 1996.
(27)(b) Financial Data Schedules with respect to the Growth and
Income Fund for the fiscal year ended May 31, 1996.
(27)(c) Financial Data Schedules with respect to the Long-Term Bond
Fund for the fiscal year ended May 31, 1996.
(27)(d) Financial Data Schedules with respect to the Colorado
Tax-Exempt Fund for the fiscal year ended May 31, 1996.
(27)(e) Financial Data Schedules with respect to the Small-Cap
Opportunity Fund for the fiscal year ended May 31, 1996.
(27)(f) Financial Data Schedules with respect to the MIDCO Growth
Fund for the fiscal year ended May 31, 1996.
(27)(g) Financial Data Schedules with respect to the Intermediate-
Term Bond Fund for the fiscal year ended May 31, 1996.
(27)(h) Financial Data Schedules with respect to the Growth and
Income Fund (Retail Shares) for the four month period ended
September 30, 1995.
(27)(i) Financial Data Schedules with respect to the MIDCO Growth
Fund (Retail Shares) for the four month period ended
September 30, 1995.
(27)(j) Financial Data Schedules with respect to the Small-Cap
Opportunity Fund (Retail Shares) for the four month period
ended September 30, 1995.
(27)(k) Financial Data Schedules with respect to the Intermediate-
Term Bond Fund (Retail Shares) for the four month period
ended September 30, 1995.
C-16
<PAGE>
AMENDED AND RESTATED
DECLARATION OF TRUST
WESTCORE TRUST
November 19, 1987
AMENDED AND RESTATED DECLARATION OF TRUST, made as of November 19,
1987 by Jack D. Henderson, McNeil S. Fiske, James B. O'Boyle, Robert L. Stamp
and Lyman E. Seely (the "Trustees"):
WHEREAS, the Trustees have established trust funds for the investment
and reinvestment of funds contributed thereto under a Declaration of Trust dated
December 10, 1985; and
WHEREAS, the Trustees desire to amend and restate said Declaration of
Trust in its entirety; and
WHEREAS, all requisite authority by the Trustees and Shareholders
pertaining to said amendment and restatement has been obtained;
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust funds under said Declaration of Trust and hereunder
shall be held and managed under this Amended and Restated Declaration of Trust
as herein set forth below.
I.
NAME
This trust shall be known as WESTCORE TRUST (hereinafter called the
"Trust"), and the Trustees shall conduct the business of the Trust under that
name or any other name as they shall from time to time determine.
II.
DEFINITIONS
2.1 DEFINITION OF CERTAIN TERMS. As used in this Declaration of
Trust, the terms set forth below shall have the following meanings:
A. The "Act" refers to the Investment Company Act of 1940, as
now or hereafter amended, to the rules and
<PAGE>
regulations adopted from time to time thereunder and to any order or orders
thereunder which may from time to time be applicable to the Trust.
B. The terms "affiliated person," "assignment" and "interested
person" shall have the respective meanings set forth in the Act. The term "vote
of a majority of outstanding Shares" shall mean the "vote of a majority of the
outstanding voting securities" as defined in the Section 2(a)(42) of the Act.
C. The "Regulations" shall refer to the Code of Regulations of
the Trust as adopted and amended from time to time.
D. The "Declaration of Trust" shall mean this Declaration of
Trust as amended or restated from time to time.
E. "Person" shall mean a natural person, a corporation, a
partnership, an association, a joint-stock company, a trust, a fund or any
organized group of persons whether incorporated or not.
F. "Shares" means the equal proportionate transferable units of
interest of each class into which the beneficial interest in the Trust may be
classified or reclassified from time to time by the Trustees acting under this
Declaration of Trust, or in the absence of such action, means the equal
proportionate transferable units of interest into which the entire beneficial
interest in the Trust shall be divided from time to time, and includes fractions
of Shares as well as whole Shares.
G. "Shareholder" means a record owner of Shares in the Trust.
H. The "Trustees" refers to the individual trustees of the
Trust named herein or elected in accordance with Article VI hereof in their
capacity as trustees hereunder and not as individuals and to their successor or
successors while serving in office as a trustee of the Trust, and includes a
single trustee.
I. "Trust Property" means any and all assets and property, real
or personal, tangible or intangible, which is owned or held by or for the
account of the Trust or the Trustees.
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<PAGE>
III.
PURPOSE OF TRUST; AGENT FOR SERVICE
The Trust is a Massachusetts business trust of the type described in
Chapter 182 section l of the General Laws of the Commonwealth of Massachusetts
formed for the purpose of acting as a management investment company under the
Act; PROVIDED, HOWEVER, that the Trust may exercise all powers which are
ordinarily exercised by or permissible for Massachusetts business trusts.
The Agent of the Trust for Service of Process within the Commonwealth
of Massachusetts shall be: CT Corporation System, Two Oliver Street, Boston,
Massachusetts 02109.
IV.
OWNERSHIP OF ASSETS OF THE TRUST
The assets of the Trust shall be held separate and apart from any
assets now or hereafter held in any capacity, other than as Trustees
hereunder, by the Trustees, including without limitation any successor
Trustees. Legal title to all the assets of the Trust shall be vested in the
Trustees as joint tenants except that the Trustees shall have power to cause
legal title to any assets of the Trust to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any
other person as nominee, on such terms as the Trustees may reasonably
determine. The right, title and interest of the Trustees in the assets of
the Trust shall vest automatically in each person who may hereafter become a
Trustee. Upon the resignation, removal or death of a Trustee, such Trustee
shall automatically cease to have any right, title or interest in any of the
assets of the Trust, and the right, title and interest of such Trustee in the
assets of the Trust shall vest automatically in the remaining Trustees. Such
vesting and cessation of title shall be effective regardless of whether
conveyancing documents (pursuant to Section 6.6 hereof or otherwise) have
been executed and delivered. Except to the extent otherwise required by
Article V hereof, no Shareholder shall be deemed to have severable ownership
in any individual asset of the Trust or any right of partition or possession
thereof, or shall be called upon to assume any loss of the Trust nor can he
be called upon to assume any loss of the Trust or suffer an assessment of any
kind by virtue of his ownership of Shares, but each Shareholder shall have a
proportionate undivided beneficial interest in the assets belonging to a
particular class or classes of Shares to the extent provided in Article V.
The ownership of the Trust Property of every description and the right to
conduct any business hereinbefore described shall be vested exclusively in
the Trustees, and the Shareholders shall have no interest therein other than
the beneficial interest
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<PAGE>
conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be called upon to assume any losses of the Trust or suffer an
assessment of any kind by virtue of their ownership of Shares. The Shares shall
be personal property giving only the rights specifically set forth in this
Declaration of Trust. Shares shall not entitle any holder thereof to
preference, preemptive, appraisal, conversion or exchange rights, except as the
Trustees may determine pursuant to Article V hereof.
V.
SHAREHOLDERS; BENEFICIAL INTEREST IN THE TRUST;
PURCHASE AND REDEMPTION OF SHARES
5.1 SHARES IN THE TRUST.
A. The beneficial interest in the Trust shall at all times be
divided into an unlimited number of full and fractional transferable Shares
without par value. All Shares shall be of one class, PROVIDED that subject to
this Declaration of Trust and the requirements of applicable law, the Trustees
shall have the power to classify or reclassify any unissued Shares into any
number of additional classes of Shares by setting or changing in any one or more
respects, from time to time before the issuance thereof, their designations,
preferences, conversion or other rights, voting powers, restrictions,
limitations, qualifications or terms or conditions of redemption, PROVIDED
FURTHER that the investment objectives, policies and restrictions governing the
management and operations of the Trust, including the management of assets
belonging to any class of Shares, may from time to time be changed or
supplemented by the Trustees, subject to the requirements of the Act. The power
of the Trustees to classify or reclassify Shares shall include, without
limitation, the power to classify or reclassify any class of Shares into one or
more series of such class. All references to Shares in this Declaration of
Trust which are not accompanied by a reference to any particular class of Shares
shall be deemed to apply to all outstanding Shares of any and all classes. All
references in this Declaration of Trust to any class of Shares shall include and
refer to the Shares of any series thereof.
Upon the issuance of the first Share of a second class of Shares
classified or reclassified by the Trustees pursuant to this Section 5:1, all
Shares theretofore issued and outstanding shall automatically represent Shares
of a separate class having the preferences, conversion and other rights, voting
powers, restrictions, limitations, qualifications and terms and conditions of
redemption provided for in this Declaration of
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<PAGE>
Trust with respect to any class of Shares. The Trustees may from time to time
divide or combine the outstanding Shares of the Trust, or of any class or
classes with the same alphabetical designation, into a greater or lesser number
without thereby changing the proportionate beneficial interest of the Shares in
the Trust as so divided or combined or in the assets belonging to such class or
classes, as the case may be.
At any time that there are no Shares outstanding of any particular
class previously established and designated, the Trustees may abolish that class
and the establishment and designation thereof.
B. Subject always to the power of the Trustees to classify and
reclassify any unissued Shares pursuant to subsection A of this Section 5.1,
Shares of the Trust shall have the following designations, preferences,
conversion and other rights, voting powers, restrictions, limitations,
qualifications and terms and conditions of redemption:
(1) DESIGNATIONS. The Board of Trustees shall give each
class of Shares an alphabetical designation ("A," "B," "C," etc.), and may give
any class of Shares such supplementary designations as the Board may deem
appropriate. More than one class of Shares may have the same alphabetical
designation.
(2) ASSETS BELONGING TO CLASSES WITH SAME ALPHABETICAL
DESIGNATION. All consideration received by the Trust for the issue and sale of
Shares of any class shall be commingled, invested and reinvested together with
the consideration received by the Trust for the issue and sale of Shares of such
other class or classes, if any, that have the same alphabetical designation,
along with all income, earnings, profits and proceeds derived from the
investment thereof, including any proceeds derived from the sale, exchange or
liquidation of such investments, any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, and any general
assets of the Trust not belonging to a particular class which the Trustees may,
in their sole discretion, allocate to such classes having the same alphabetical
designation, and shall irrevocably belong to the classes with respect to which
such assets, payments or funds were received or allocated for all purposes,
subject only to the rights of creditors, and shall be so handled upon the books
of account of the Trust. For purposes of this Declaration of Trust, such assets
and the income, earnings, profits and proceeds thereof, including any proceeds
derived from the sale, exchange or liquidation thereof, and any assets derived
from any reinvestment of such proceeds in whatever form, are referred to as
"assets belonging to" such classes. Each Share of the classes having the same
alphabetical designation shall share equally with each other
-5-
<PAGE>
Share of such classes in the assets belonging to such classes. Shareholders of
any class of Shares shall have no right, title or interest in or to the assets
belonging to any class of Shares with a different alphabetical designation.
(3) LIABILITIES BELONGING TO CLASSES WITH SAME ALPHABETICAL
DESIGNATION. The assets belonging to classes of Shares with the same
alphabetical designation shall be charged with the direct liabilities in respect
of such classes and shall also be charged with such classes' proportionate share
of the general liabilities of the Trust as determined by comparing the assets
belonging to such classes with the aggregate assets of the Trust. The
liabilities so charged to such classes are herein referred to as "liabilities
belonging to" such classes, and each Share of such classes shall be charged
equally with each other Share of a class having the same alphabetical
designation with the liabilities belonging to such classes, except that:
(a) Shares of a class shall bear the expenses and
liabilities of payments to institutions under any agreements entered into by or
on behalf of the Trust which provide for services by the institutions to their
customers who beneficially own Shares of that class but do not provide for
services to any beneficial owners of Shares with that alphabetical designation
other than Shares of that class, as well as any other expenses that are directly
attributable to Shares of that class which the Board of Trustees determines
should be borne solely by such Shares; and
(b) Shares of a class shall not bear the expenses and
liabilities of payments to institutions under any agreements entered into by or
on behalf of the Trust which provide for services by the institutions to their
customers which beneficially own Shares other than Shares of that class but do
not provide for services to any beneficial owners of Shares of that class, or
any other expenses that are directly attributable to another class of Shares
which the Board of Trustees determines should be borne solely by such other
class of Shares.
(4) DIVIDENDS AND DISTRIBUTIONS. Shares of classes having
the same alphabetical designation shall be entitled to such dividends and
distributions, in Shares or in cash or both, as may be declared from time to
time by the Trustees, acting in their sole discretion, with respect to such
classes, PROVIDED that such dividends and distributions shall be paid only out
of the lawfully available "assets belonging to" such classes as such term is
defined in subsection B(2) of this Section 5.1.
(5) LIQUIDATING DISTRIBUTIONS. In the event of the
termination of the Trust and the winding up of its affairs, the Shareholders of
classes having the same alphabetical
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<PAGE>
designation shall be entitled to receive out of the assets of the Trust
available for distribution to Shareholders, but other than general assets not
belonging to any particular class of Shares, the assets belonging to such
classes and the assets so distributable to the Shareholders of such classes
shall, subject to the allocation of certain liabilities to a particular class as
set forth in sub-section B(3) of this Section 5.1, be distributed among such
shareholders in proportion to the number of Shares of such classes held by them
and recorded in their name on the books of the Trust. In the event that there
are any general assets not belonging to any particular class of Shares and
available for distribution, the Shareholders of classes having the same
alphabetical designation shall be entitled to receive a portion of such general
assets determined by comparing the assets belonging to such classes with the
aggregate assets of the Trust; and the assets so distributable to the
Shareholders of such classes shall, subject to the allocation of certain
liabilities to a particular class as set forth in sub-section B(3) of this
Section 5.1, be distributed among such Shareholders in proportion to the number
of Shares of such classes held by them and recorded in their name on the books
of the Trust.
(6) VOTING. The holder of each Share shall be entitled to one
vote for each full Share, and a proportionate fractional vote for each
fractional Share, irrespective of the class, then recorded in his name on the
books of the Trust, to the extent provided in Article VIII hereof.
(7) PRE-EMPTIVE RIGHTS. Shareholders shall have no pre-
emptive or other rights to subscribe to any additional Shares or other
securities issued by the Trust.
(8) CONVERSION RIGHTS. The Trustees shall have the
authority to provide from time to time that the holders of Shares of any class
shall have the right to convert or exchange said Shares for or into Shares of
one or more other classes in accordance with such requirements and procedures as
may be established from time to time by the Trustees.
(9) REDEMPTION OF SHARES. To the extent of the assets of
the Trust equally available for such redemptions, a Shareholder of the Trust
shall have the right to require the Trust to redeem his full and fractional
Shares of any class out of assets belonging to the classes with the same
alphabetical designation as such class at a redemption price equal to the net
asset value per Share next determined after receipt of a request to redeem in
proper form as determined by the Trustees, subject to the right of the Trustees
to suspend the right of redemption of Shares or postpone the date of payment of
such redemption price in accordance with the provisions of applicable law. The
Trustees shall establish such rules and procedures as they deem appropriate for
the redemption of Shares, provided that all
-7-
<PAGE>
redemptions shall be in accordance with the Act. Without limiting the
generality of the foregoing, the Trust shall, to the extent permitted by
applicable law, have the right at any time to redeem the Shares owned by any
holder thereof: (a) in connection with the termination of any class of Shares as
provided hereunder; (b) if the value of such Shares in the account or accounts
maintained by the Trust or its transfer agent for any class or classes of Shares
is less than the value determined from time to time by the Trustees as the
minimum required for an account or accounts of such class or classes, PROVIDED
that the Trust shall provide a Shareholder with written notice at least fifteen
(15) days prior to effecting a redemption of Shares as a result of not
satisfying such requirement; (c) to reimburse the Trust for any loss it has
sustained by reason of the failure of such Shareholder to make full payment for
Shares purchased by such Shareholder; (d) to collect any charge relating to a
transaction effected for the benefit of such Shareholder which is applicable to
Shares as provided in the prospectus relating to such Shares; or (e) if the net
income with respect to any particular class of Shares should be negative or it
should otherwise be appropriate to carry out the Trust's responsibilities under
the Act, in each case subject to such further terms and conditions as the
Trustees may from time to time establish. The redemption price of Shares in the
Trust shall, except as otherwise provided in this sub-section, be the net asset
value thereof as determined by the Trustees from time to time in accordance with
the provisions of applicable law, less such redemption fee or other charge, if
any, as may be fixed by the Trustees. When the net income of any class with
respect to which the Trustees have, in their discretion, established a policy of
maintaining a constant net asset value per Share is negative or whenever deemed
appropriate by the Trustees in order to carry out the Trust's responsibilities
under the Act, the Trust may, without payment of compensation but in
consideration of the interests of the Trust and the holders of Shares of such
class in maintaining a constant net asset value per Share of such class, redeem
pro rata from each holder of record on such day, such number of full and
fractional Shares of such class as may be necessary to reduce the aggregate
number of outstanding Shares in order to permit the net asset value thereof to
remain constant. Payment of the redemption price, if any, shall be made in cash
by the Trust at such time and in such manner as may be determined from time to
time by the Trustees unless, in the opinion of the Trustees, which shall be
conclusive, conditions exist which make payment wholly in cash unwise or
undesirable; in such event the Trust may make payment in the assets belonging or
allocable to the classes of Shares having the same alphabetical designation as
the class of the Shares redemption of which is being sought, the value of which
shall be determined as provided herein.
-8-
<PAGE>
(10) TERMINATION OF CLASSES. Without the vote of the Shares
of any class then outstanding (unless otherwise required by applicable law), the
Trustees may:
(a) Sell and convey the assets belonging to any class
or classes of Shares having the same alphabetical designation to another trust
or corporation that is a management investment company (as defined in the Act)
and is organized under the laws of any state of the United States for
consideration which may include the assumption of all outstanding obligations,
taxes and other liabilities, accrued or contingent, belonging to such class(es)
and which may include securities issued by such trust or corporation. Following
such sale and conveyance, and after making provision for the payment of any
liabilities belonging to such class(es) that are not assumed by the purchaser of
the assets belonging to such class(es), the Trust may, at the Trustees' option,
redeem all outstanding Shares of such class(es) at net asset value as determined
by the Trustees in accordance with the provisions of applicable law, less such
redemption fee or other charge, if any, as may be fixed by the Trustees.
Notwithstanding any other provision of this Declaration of Trust to the
contrary, the redemption price may be paid in cash or by distribution of the
securities or other consideration received by the Trust for the assets belonging
to such class(es) upon such conditions as the Trustees deem, in their sole
discretion, to be appropriate consistent with applicable law and this
Declaration of Trust;
(b) Sell and convert the assets belonging to any class
or classes of Shares having the same alphabetical designation into money and,
after making provision for the payment of all obligations, taxes and other
liabilities, accrued or contingent, belonging to such class(es), the Trust may,
at the: Trustees' option, (i) redeem all outstanding Shares of such class(es) at
net asset value as determined by the Trustees in accordance with the provisions
of applicable law, less such redemption fee or other charge, if any, as may be
fixed by the Trustees upon such conditions as the Trustees deem, in their sole
discretion, to be appropriate consistent with applicable law and this
Declaration of Trust; or (ii) combine the assets belonging to such class(es)
following such sale and conversion with the assets belonging to any one or more
other class(es) of Shares having a different alphabetical designation pursuant
to and in accordance with sub-section (c) of this Section 5.10;
(c) Combine the assets belonging to any class or
classes of Shares having the same alphabetical designation with the assets
belonging to any one or more other classes of Shares having a different
alphabetical designation if the Trustees reasonably determine that such
combination will not have a material adverse effect on the Shareholders of any
class
-9-
<PAGE>
participating in such combination. In connection with any such combination of
assets the Shares of any class then outstanding may, if so determined by the
Trustees, be converted into Shares of any other class or classes of Shares
participating in such combination, or may be redeemed, at the option of the
Trustees, at net asset value as determined by the Trustees in accordance with
the provisions of applicable law, less such redemption fee or other charge, or
conversion cost, if any, as may be fixed by the Trustees upon such conditions as
the Trustees deem, in their sole discretion, to be appropriate consistent with
applicable law and this Declaration of Trust. Notwithstanding any other
provision of this Declaration of Trust to the contrary, any redemption price, or
part thereof, paid pursuant to this sub-section may be paid in Shares of any
other class or classes participating in such combination; or
(d) Otherwise terminate and wind up the affairs of any
class or classes of Shares having the same alphabetical designation in
accordance with this Declaration of Trust and applicable law. In connection
with such termination of a class or classes of Shares having the same
alphabetical designation and the winding up of the affairs of such class(es),
all of the powers of the Trustees under this Declaration of Trust shall continue
until the affairs of such class(es) shall have been wound up, including the
power to fulfill or discharge the contracts of the Trust relating to such
class(es), to collect assets belonging to such class(es), to sell, convey,
assign, exchange, transfer or otherwise dispose of all or any part of the
remaining assets belonging to such class(es) to one or more persons at public or
private sale for consideration that may consist in whole or in part of cash,
securities or other property of any kind, to discharge or pay the liabilities
belonging to such class(es), and to do all other acts appropriate to liquidate
the business of such class(es), provided that the holders of Shares of any class
shall not be entitled in any liquidation to receive any distribution upon the
assets belonging to any other class that has a different alphabetical
designation.
If no Shares of a class then remain outstanding, or after the excess
of the assets belonging to any class(es) of Shares over the liabilities
belonging to such class(es) has been distributed among the Shareholders of such
class(es) as provided in this Declaration of Trust, the Trustees may authorize
the termination of such class(es) of Shares.
5.2 PURCHASE OF SHARES. The Trustees may accept investments in the
Trust from such persons for such consideration, including cash or property, and
on such other terms as they may from time to time authorize and the Trustees may
in such manner acquire other assets (including the acquisition of assets subject
to, and in connection with, the
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<PAGE>
assumption of liabilities) and businesses. The Trustees may in their discretion
reject any order for the purchase of Shares.
5.3 NET ASSET VALUE PER SHARE. The net asset value per Share of any
class of Shares shall be computed at such time or times as the Trustees may
specify pursuant to the Act. Assets shall be valued and net asset value per
Share shall be determined by such person or persons as the Trustees may appoint
under the supervision of the Trustees in such manner as the Trustees may
determine not inconsistent with the Act.
5.4 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded on
the record books of the Trust. The Trustees may make such rules and regulations
as they consider appropriate for the issuance of Share certificates, the
transfer of Shares and similar matters. Certificates certifying the ownership
of Shares may be issued as the Trustees may determine from time to time,
PROVIDED that the Trustees shall have the power to call outstanding Share
certificates and to replace them with book entries. The record books of the
Trust shall be conclusive as to the identity of holders of Shares and as to the
number of Shares held by each Shareholder.
VI.
THE TRUSTEES
6.1 MANAGEMENT OF THE TRUST. The affairs of the Trust shall be
managed by the Trustees and they shall have all powers necessary or desirable to
carry out such responsibility, including without limitation the appointment of
and delegation of responsibility to such officers, employees, agents, and
contractors as they may select.
6.2 NUMBER AND TERM OF OFFICE. The number of Trustees shall be
determined from time to time by the Trustees themselves, but shall not be more
than ten. Subject to the provisions of this section relating to resignation or
removal, the Trustees shall have the power to set and alter the terms of office
of the Trustees, and they may at any time lengthen or shorten their own terms or
make their terms of unlimited duration, PROVIDED that the term of office of any
incumbent Trustees shall continue until terminated as provided in Section 6.5
hereof, or, if not so terminated until the election of such Trustee's successor
in office has become effective in accordance with this section. A Trustee shall
qualify by accepting in writing his election or appointment and agreeing to be
bound by the provisions of this Declaration of Trust. Except as otherwise
provided herein in the case of vacancies, Trustees (other than the Initial
Trustee provided in Section 6.3 hereof) shall be elected by the shareholders at
such time or times as the Trustees shall
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<PAGE>
determine that such election is required under Section 16(a) of the Act or is
otherwise advisable. Notwithstanding the foregoing, (a) any Trustee may resign
as a Trustee by written instrument signed by him and delivered to the other
Trustees at the principal business office of the Trust (without need for prior
or subsequent accounting), which shall take effect upon such delivery or upon
such later date as is specified therein; (b) any Trustee may be removed at any
time with or without cause by written instrument, signed by at least two-thirds
of the number of Trustees prior to such removal, specifying the date when such
removal shall become effective; (c) any Trustee who has become incapacitated by
illness or injury may be retired by written instrument signed by a majority of
the other Trustees; and (d) the term of a Trustee shall terminate at his death,
resignation, removal or adjudicated incompetency.
6.3 INITIAL TRUSTEE. The initial Trustee shall be Patricia L.
Bickimer, who, by her execution hereof, has agreed to be bound by the provisions
of this Declaration of Trust. The initial trustee shall have the power to
appoint additional trustees prior to any public meeting.
6.4 QUORUM. At all meetings of the Trustees, a majority of the
Trustees shall constitute a quorum for the transaction of business and the
action of a majority of the Trustees present at any meeting at which a quorum is
present shall be the action of the Trustees unless the concurrence of a greater
proportion is required for such action by law, the Regulations or this
Declaration of Trust. If a quorum shall not be present at any meeting of
Trustees, the Trustees present thereat may by a majority vote adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present. Meetings may be held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons participating may hear each other. The Trustees may also act
without a meeting, unless provided otherwise in this Declaration of Trust or
required by law, by written consents of a majority of the Trustees. As used
herein, a "majority of the Trustees" shall mean a majority of the Trustees in
office at the time in question or if there shall be only one (l) Trustee in
office then such term shall mean such Trustee.
The Trustees may appoint committees of Trustees and delegate powers to
them as provided in the Regulations. Any committee of the Trustees, including
an executive committee, if any, may act with or without a meeting. A quorum for
all meetings of any such committee shall be a majority of the members thereof.
Unless provided otherwise in this Declaration of Trust, any action of any such
committee may be taken at a meeting by vote of a majority of the members present
(a quorum being
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<PAGE>
present) or without a meeting by unanimous written consent of the members.
6.5 VACANCIES. In case a vacancy shall exist by reason of an
increase in number, or for any other reason, the remaining Trustees may fill
such vacancy by appointing such other person as they in their discretion shall
select. An appointment of a Trustee may be made in anticipation of a vacancy to
occur at a later date by reason of retirement or resignation of the Trustee or
an increase in the number of Trustees; provided, that such appointment will not
become effective prior to such retirement or resignation or such increase in the
number of the Trustees. Whenever a vacancy in number of Trustees shall occur,
until such vacancy is filled as provided in this section, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed on the Trustees by the
Declaration of Trust. A written instrument certifying existence of such vacancy
signed by a majority of the Trustees shall be conclusive evidence of the
existence of such vacancy. Such appointment shall be evidenced by a written
instrument signed by a majority of the then Trustees but the appointment shall
not take effect until the individual so named shall have qualified by accepting
in writing the appointment and agreeing to be bound by the terms of this
Declaration of Trust. A vacancy may also be filled by the Shareholders in an
election held at an annual or special meeting. As soon as any Trustee so
appointed or elected shall have qualified, the Trust estate shall vest in the
new Trustee or Trustees, together with the continuing Trustees, without any
further act or conveyance.
6.6 EFFECT OF DEATH, RESIGNATION, ETC. OF TRUSTEE. The death,
resignation, removal, or incapacity of the Trustees, or any one of them, shall
not operate to annul the Trust or to revoke any existing agency created pursuant
to the terms of this Declaration of Trust. Upon the resignation or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust property held in the
name of the resigning or removed Trustee. Upon the incapacity or death of any
Trustee, his legal representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided in the preceding
sentence. The failure to request or deliver such documents shall not affect the
operation of the provisions of Article IV hereof.
6.7 POWERS. The Trustees in all instances shall act as principals
and are and shall be free from the control of the shareholders. The Trustees
shall have full power and authority to do any and all acts and to make and
execute any and all contracts and instruments that they may consider necessary
or
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desirable in connection with the management of the Trust. The Trustees shall
not be bound or limited by present or future laws or customs in regard to Trust
investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem proper to
accomplish the purpose of this Trust. Without limiting the foregoing, and
subject to any applicable limitation in this Declaration of Trust or the
Regulations, the Trustees shall have power and authority:
A. To conduct, operate and carry on, either directly or
through one or more wholly-owned subsidiaries, the business of an investment
company or any other lawful business activity which the Trustees, in their
sole and absolute discretion, consider to be (l) incidental to the business
of the Trust or any class of Shares as an investment company, (2) conducive
to or expedient for the benefit or protection of the Trust or the
shareholders of any class of Shares, or (3) calculated in any other manner to
promote the interests of the Trust or the Shareholders of any class of Shares.
B. To adopt Regulations not inconsistent with this Declaration
of Trust providing for the conduct of the affairs of the Trust and to amend and
repeal them to the extent that they do not reserve that right solely to the
shareholders.
C. To issue, sell, repurchase, redeem, retire, cancel, acquire,
hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares of the
Trust; and to apply to any such repurchase, redemption, retirement, cancellation
or acquisition of Shares, any funds or other assets of the Trust, whether
constituting capital or surplus or otherwise, to the full extent now or
hereafter permitted by applicable law; and to divide or combine Shares without
thereby changing the proportionate beneficial interest in the Trust.
D. To issue, acquire, hold, resell, convey, write options on,
and otherwise deal in securities, debt instruments and other instruments and
rights of a financial character and to apply to any acquisition of securities
any property of the Trust whether from capital or surplus or otherwise.
E. To invest and reinvest cash, and to hold cash uninvested.
F. To borrow money, issue guarantees of indebtedness or
contractual obligations of others, to sell, exchange, lend, pledge, mortgage,
hypothecate, write options on and lease any or all of the Trust Property.
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G. To act as a distributor of Shares and as underwriter of, or
broker or dealer in, securities or other property.
H. To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
deliver proxies or powers of attorney to such Person or Persons as the Trustees
shall deem proper, granting to such Person or Persons such power and discretion
with relation to securities or property as the Trustees shall deem proper.
I. To exercise powers and rights of subscription or otherwise
which in any manner arise out of ownership of securities.
J. To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in the
name of the Trustees or of the Trust or in the name of a custodian, subcustodian
or other depositary or a nominee or nominees or otherwise.
K. To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer; any
security of which is or was held in the Trust; and consent to any contract,
lease, mortgage purchase or sale of property by such corporation or issuer; and
to pay calls or subscriptions with respect to any security held in the Trust.
L. To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with, or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper.
M. To enter into joint ventures, general or limited
partnerships and any other combinations or associations.
N. To enter into contracts of any kind and description.
O. To collect all property due to the Trust, to pay all claims,
including taxes, against the assets belonging to the Trust, to prosecute,
defend, compromise, arbitrate, or otherwise adjust claims in favor of or against
the Trust or any matter in controversy including, but not limited to, claims for
taxes, to foreclose any security interest securing any
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obligations by virtue of which any property is owed to the Trust, and to enter
into releases, agreements and other instruments.
P. To retain and employ any Person or Persons to serve on
behalf of the Trust as investment adviser, administrator, transfer agent,
custodian, underwriter, distributor or in such other capacities as they consider
desirable and to delegate such power and authority as they consider desirable to
any such Person or Persons.
Q. To indemnify any person with whom the Trust has dealings.
R. To purchase and pay for entirely out of Trust Property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including without limitation, insurance policies insuring the Trust
Property and payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust individually against all
claims and liabilities of every nature arising by reason of holding, being or
having held any such office or position, or by reason of any action alleged to
have been taken or omitted by any such person as Shareholder, Trustee, officer,
employee, agent, investment adviser or manager, principal underwriter, or
independent contractor, including any action taken or omitted that may be
determined to constitute negligence, whether or not the Trust would have the
power to indemnify such Person against such liability.
S. To engage in and to prosecute, defend, compromise, abandon,
or adjust, by arbitration or otherwise, any actions, suits, proceedings,
disputes, claims, and demands relating to the Trust or the Trust Property, and,
out of the Trust Property, to pay or to satisfy any debts, claims or expenses
incurred in connection therewith, including those of litigation, and such power
shall include without limitation the power of the Trustees or any appropriate
committee thereof, in the exercise of their or its good faith business judgment,
consenting to dismiss any action, suit, proceeding, dispute, claims, or demand,
derivative or otherwise, brought by any person, including a Shareholder in such
Shareholder's own name or in the name of the Trust, whether or not the Trust or
any of the Trustees may be named individually therein or the subject matter
arises by reason of business for or on behalf of the Trust.
T. To establish pension, profit sharing, Share purchase, and
other retirement, incentive and benefit plans for any Trustees, officers,
employees and agents of the Trust.
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U. To determine and change the fiscal year of the Trust and the
method by which its accounts shall be kept.
V. To establish in their absolute discretion in accordance with
the provisions of applicable law the basis or method for determining the value
of the assets belonging to any class or classes of Shares, the value of the
liabilities belonging to any class or classes of Shares, the allocation of any
assets or liabilities to any class or classes of Shares, the net asset value of
any class of Shares, the times at which Shares of any class shall be deemed to
be outstanding or no longer outstanding and the net asset value of each Share of
any class for purposes of sales, redemptions, repurchases of Shares or
otherwise.
W. To determine in accordance with generally accepted
accounting principles and practices what constitutes net profits or net
earnings, and to determine what accounting periods shall be used by the Trust
for any purpose, whether annual or any other period, including daily; to set
apart out of the assets belonging to any class or classes of Shares such
reserves of funds for such purposes as it shall determine and to abolish the
same; to declare and pay any dividends and distributions to any class of Shares
in cash, securities or other property from any assets legally available
therefor, at such intervals (which may be as frequently as daily) or on such
other periodic basis, as it shall determine; to declare such dividends or
distributions by means of a formula or other method of determination, at
meetings held less frequently than the frequency of the effectiveness of such
declaration; to establish payment dates for dividends or any other distributions
on any basis, including dates occurring less frequently than the effectiveness
of declarations thereof; and to provide for the payment of declared dividends on
a date earlier or later than the specified payment date in the case of
Shareholders redeeming their entire ownership of Shares of any class.
X. To engage in any other lawful act or activity in which a
Massachusetts business trust or a corporation organized under the Massachusetts
Business Corporation Law may engage.
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to the
application of any payments made or property transferred to the Trustees or upon
their order.
6.8 TRUSTEES AND REPRESENTATIVES AS SHAREHOLDERS. Any Trustee,
representative or other agent of the Trust may acquire, own and dispose of
Shares of the Trust to the same extent as if he were not a Trustee,
representative or agent; and the Trust may issue and sell or cause to be issued
and sold Shares of the Trust
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to, and may buy such Shares from, any person with which such Trustee,
representative or agent is affiliated subject only to the general limitations
herein contained as to the sale and purchase of such Shares; all subject to any
restrictions which may be contained in the Regulations.
6.9 EXPENSES; TRUSTEE REIMBURSEMENT. The Trustees shall have the
power to incur and to pay (or shall be reimbursed) from the Trust Property all
expenses and disbursements of the Trust, including, without limitation, interest
expense, compensation payable to Trustees and representatives of the Trust,
taxes, fees and commissions of every kind incurred in connection with the
affairs of the Trust, expenses of issue, repurchase and redemption or Shares,
expenses of registering and qualifying the Trust and its Shares under Federal
and State securities laws and regulations, charges of custodians, transfer
agents, investment advisers, administrators and registrars, expenses of
preparing and printing and distributing prospectuses, auditing and legal
expenses, expenses of reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expense, association
membership dues and such non-recurring items as may arise, including costs and
expenses of litigation to which the Trust is a party, and for all losses and
liabilities by them incurred in administering the Trust, PROVIDED that expenses,
disbursements, losses and liabilities incurred in connection with classes of
Shares having the same alphabetical designation or in connection with the
management of the assets belonging to such classes shall be payable solely out
of the assets belonging to such classes, PROVIDED FURTHER that the Trustees
shall have a lien on the Trust Property prior to any rights or interests of the
Shareholders thereto for the payment of any expenses, disbursements, losses and
liabilities of the Trust.
6.10 POWER TO CARRY OUT TRUST'S PURPOSES; PRESUMPTIONS. The Trustees
shall have power to carry out any and all acts consistent with the Trust's
purposes through branches and offices both within and without the Commonwealth
of Massachusetts, in any and all states of the United States of America, in the
District of Columbia, and in any and all commonwealths, territories,
dependencies, possessions, agencies or instrumentalities of the United States of
America and of foreign governments, and to do all such other things and execute
all such instruments as they deem necessary, proper or desirable in order to
promote the interests of the Trust although such things are not herein
specifically mentioned. Any determination as to what is in the interests of the
Trust made by the Trustees in good faith shall be conclusive. In construing the
provisions of this Declaration, the presumption shall be in favor of a grant of
power to the Trustees. The enumeration of any specific power herein shall not
be construed as limiting the aforesaid power. The Trustees shall
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not be required to obtain any court order to deal with the Trust Property.
6.11 DETERMINATIONS BY TRUSTEES. Any determination made in good
faith and, so far as accounting matters are involved in accordance with
generally accepted accounting principles, by or pursuant to the direction of the
Trustees as to the amount and value of assets, obligations or liabilities of the
Trust or any class of Shares, as to the amount of net income of the Trust or any
class of Shares from dividends and interest for any period or amounts at any
time legally available for the payment of dividends, as to the amount of any
reserves or charges set up and the propriety thereof, as to the time of or
purpose for creating reserves or as to the use, alteration or cancellation of
any reserves or charges (whether or not any obligation or liability for which
such reserves or charges shall have been created shall have been paid or
discharged or shall be then or thereafter required to be paid or discharged), as
to the value of any security owned by the Trust or any class of Shares, as to
the allocation of any assets or liabilities to a class or classes of Shares, as
to the times at which Shares of any class shall be deemed to be outstanding or
no longer outstanding, or as to any other matters relating to the issuance,
sale, redemption or other acquisition or disposition of securities or Shares,
and any reasonable determination made in good faith by the Trustees as to
whether any transaction constitutes a purchase of securities on "margin," a sale
of securities "short," or any underwriting of the sale of, or a Participation in
any underwriting or selling group in connection with the public distribution of,
any securities, shall be final and conclusive, and shall be binding upon the
Trust and all shareholders, past, present and future, and Shares are issued and
sold on the condition and understanding, evidenced by the purchase of Shares or
acceptance of Share certificates, that any and all such determinations shall be
binding as aforesaid.
6.12 SERVICE IN OTHER CAPACITIES. Any Trustee, representative,
employee or agent of the Trust, including any investment adviser, transfer
agent, administrator, distributor, custodian or underwriter for the Trust, may
serve in any other capacity on his or its own behalf or on behalf of others, and
may engage in other business activities in addition to his or its services on
behalf of the Trust, PROVIDED that such other activities do not materially
interfere with the performance of his or its duties for or on behalf of the
Trust.
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VII.
AGREEMENTS WITH INVESTMENT ADVISER,
PRINCIPAL UNDERWRITER, ADMINISTRATOR,
TRANSFER AGENT, CUSTODIAN AND OTHERS
7.1 INVESTMENT ADVISER. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into a written
investment advisory agreement or agreements with any Person or Persons providing
for portfolio management, investment advisory, statistical and research
facilities and other services pertaining to the assets belonging to one or more
classes of Shares. Notwithstanding any other provision hereof, the Trustees may
authorize such an investment adviser (subject to such general or specific
instructions as the Trustees may adopt) to effect purchases; sales or exchanges
of portfolio securities of such class(es) on behalf of the Trustees and to
determine the net asset value and net income of such class(es) or may authorize
any representative or Trustee to effect such purchases, sales or exchanges
pursuant to the recommendations of such investment adviser (all without further
action by the Trustees). Any such purchases, sales and exchanges so effected
shall be deemed to have been authorized by all of the Trustees.
7.2 ADMINISTRATOR. The Trustees may, on such terms and conditions as
they may in their discretion determine, enter into one or more agreements with
any Person or Persons providing for administrative services to one or more
classes of Shares, including assistance in supervising the affairs of such
class(es) and performance of administrative, clerical and other services
considered desirable by the Trustees.
7.3 PRINCIPAL UNDERWRITER. The Trustees may, on such terms and
conditions as they may in their discretion determine, enter into one or more
distribution agreements with any Person or Persons providing for the sale of
Shares of one or more classes at a price at least equal to the net asset value
per Share of such class(es) and providing for sale of the Shares of such
class(es) pursuant to arrangements by which the Trust may either agree to sell
the Shares of such class(es) to the other party to the agreement or appoint such
other party its sales agent for such Shares. Such agreement(s) may also provide
for the repurchase of Shares of such class(es) by such other party as principal
or as agent of the Trust, and may authorize the other party to enter into
agreements with others for the purpose of the distribution or repurchase of
Shares of such class(es).
7.4 TRANSFER AGENT. The Trustees may, on such terms and conditions
as they may in their discretion determine, enter into one or more agreements
with any Person or Persons providing for transfer agency and other services to
Shareholders of any class.
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7.5 CUSTODIAN. The Trustees may, on such terms and conditions as
they may in their discretion determine, enter into one or more agreements with
any Person or Persons providing for the custody and safekeeping of the property
of the Trust or any class of Shares.
7.6 SERVICE AND DISTRIBUTION PLANS. The Trustees may, on such terms
and conditions as they may in their discretion determine, adopt one or more
plans pursuant to which Persons may be compensated directly or indirectly by the
Trust for shareholder servicing, administration or distribution with respect to
one or more classes of Shares, including without limitation plans subject to
Rule 12b-1 under the Act, and the Trustees may enter into agreements pursuant to
such Plans.
7.7 PARTIES TO AGREEMENTS. The same Person may be employed in
multiple capacities under Sections 7.1 through 7.6 of this Article VII and may
receive compensation in as many capacities as such Person serves. The Trustees
may enter into any agreement of the character described in this Article VII, or
any other agreement necessary or appropriate to the conduct of the business of
the Trust or any class of Shares, with any Person, including any Person in which
any Trustee, representative, employee or shareholder of the Trust may be
interested, and no such agreement shall be invalidated or rendered voidable by
reason of the existence of any such relationship, nor shall any Person holding
such relationship be liable by reason of such relationship for any loss or
expense to the Trust under or by reason of said agreement or accountable for any
profit realized directly or indirectly therefrom.
VIII.
SHAREHOLDERS' VOTING POWERS AND MEETINGS
8.1 VOTING POWERS. The shareholders shall have power to vote (a) for
the election of Trustees as provided in section 6.2 hereof, (b) to the same
extent as the shareholders of a Massachusetts business corporation when
considering whether a court action, proceeding or claim should or should not be
brought or maintained derivatively or as a class action on behalf of the Trust
or the Shareholders, (c) with respect to any of the matters and to the extent
provided in Article X hereof, (d) with respect to such additional matters
relating to the Trust as may be required by law, by this Declaration of Trust,
by the Regulations of the Trust, by any requirement applicable to or agreement
of the Trust, and as the Trustees may consider desirable. Every shareholder of
record shall have the right to one vote for every whole Share (other than Shares
held in the treasury of the Trust) standing in his name on the books of the
Trust, and to have a proportional fractional vote for any fractional Share, as
to any
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matter on which the Shareholder is entitled to vote. There shall be no
cumulative voting. Shares may be voted in person or by proxy. Until Shares are
issued, the Trustees may exercise all rights of Shareholders and may take any
action required or permitted to be taken by shareholders by law, this
Declaration of Trust or the Regulations.
8.2 MEETINGS. Meetings of Shareholders may be called by the Trustees
as provided in the Regulations and shall be called by the Trustees upon the
written request of Shareholders owning at least ten percent (10%) of the
outstanding Shares entitled to vote.
8.3 QUORUM AND REQUIRED VOTE. The presence, in person or by proxy,
of Shareholders entitled to cast at least a majority of the votes which all
Shareholders are entitled to cast on the particular matter shall constitute a
quorum for the purpose of considering such matter. Action may be taken on all
matters for which a quorum exists, irrespective of the absence of a quorum on
other matters. If a meeting cannot be organized with respect to a particular
matter because a quorum for that matter has not attended, those present and
entitled to vote on such matter may adjourn the meeting to such reasonable time
and place as they may determine.
On any matter submitted to a vote of Shareholders, Shares with
different alphabetical class designations that are then issued and outstanding
and entitled to vote shall be voted in the aggregate and not by class except:
(1) as otherwise required by applicable law or permitted by the Board of
Trustees of the Trust, or (2) when the matter, as conclusively determined by the
Trustees, affects only the interests of the Shareholders of a class or classes
with a particular alphabetical designation (in which case only Shareholders of
the affected class or classes shall be entitled to vote thereon).
Each share of classes having the same alphabetical designation shall
vote together in the aggregate and not by class on all matters submitted to a
vote of the Shareholders of such classes, except that:
(1) on any matter that pertains to the agreements or
expenses and liabilities described in subsection B(3)(a) of section 5.1 hereof
(or to any plan or other document adopted by the Trust relating to said
agreements, expenses or liabilities) and is submitted to a vote of Shareholders
of the Trust, only shares of the particular class specified therein shall be
entitled to vote, except that: (i) if said matter affects Shares in the Trust
other than shares of such class, such other affected shares in the Trust shall
also be entitled to vote, and in such case Shares of the particular class so
specified shall be voted in the aggregate together with such
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other affected Shares and not by class except where otherwise required by law or
permitted by the Board of Trustees of the Trust; and (ii) if said matter does
not affect shares of the particular class specified therein, said Shares shall
not be entitled to vote (except where required by law or permitted by the Board
of Trustees) even though the matter is submitted to a vote of the holders of
shares in the Trust other than Shares of such class; and
(2) on any matter that pertains to the agreements or
expenses and liabilities described in subsection B(3)(b) of section 5.1 hereof
(or any plan or other document adopted by the Trust relating to said agreements,
expenses or liabilities) and is submitted to a vote of Shareholders of the
Trust, Shares of the particular class specified therein shall not be entitled to
vote, except where otherwise required by law or permitted by the Board of
Trustees of the Trust, and except that if said matter affects Shares of such
class, such Shares shall be entitled to vote, and in such case shall be voted in
the aggregate together with all other shares in the Trust voting on the matter
and not by class except where otherwise required by law or permitted by the
Board of Trustees.
Subject to any applicable requirements of law or of this
Declaration of Trust or the Regulations: (a) the acts, at any duly organized
meeting, of the Shareholders present, in person or by proxy, entitled to cast at
least a majority of the votes which all shareholders present are entitled to
cast on the particular matter shall be the acts of the shareholders with respect
to that matter; and (b) in the election of Trustees, a plurality of the Shares
voting shall elect a Trustee.
8.4 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which may be
taken by Shareholders may be taken without a meeting if not less than a majority
of the Shareholders entitled to vote on the matter consent to the action in
writing and the written consents are filed with the records of the meetings of
shareholders. Such consent shall be treated for all purposes as a vote taken at
a meeting of shareholders.
8.5 CODE OF REGULATIONS. The Regulations may include further
provisions not inconsistent with this Declaration of Trust for meetings of
Shareholders, votes, record dates, notices of meetings and related matters.
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IX.
LIMITATIONS OF LIABILITY AND INDEMNIFICATION
9.1 LIABILITIES OF CLASSES. Liabilities belonging to classes of
Shares with the same alphabetical designation, including, without limitation,
expenses, fees, charges, taxes, and liabilities incurred or arising in
connection with such classes, or in connection with the management thereof,
shall be paid only from the assets belonging to such classes.
9.2 LIMITATION OF TRUSTEE LIABILITY. Every act or thing done or
omitted, and every power exercised or obligation incurred by the Trustee or any
of them in the administration of this Trust or in connection with any affairs,
property or concerns of the Trust, whether ostensibly in their own names or in
their Trust capacity, shall be done, omitted, exercised or incurred by them as
Trustees and not as individuals. Every person contracting or dealing with the
Trustees or having any debt, claim or judgment against them or any of them shall
look only to the funds and property of the Trust for payment or satisfaction.
No Trustee or Trustees of the Trust shall ever be personally liable for or on
account of any contract, debt, tort, claim, damage, judgment or decree arising
out of or connected with the administration or preservation of the Trust
Property or the conduct of any of the affairs of the Trust. Every note, bond,
contract, order or other undertaking issued by the Trust or the Trustees
relating to the Trust, and stationery used by the Trust shall include the notice
set forth in Section 9.5 of this Article IX (but the omission thereof shall not
be construed as a waiver of the foregoing provision, and shall not render the
Trustees personally liable).
It is the intention of this Section 9.2 that no Trustee shall be
subject to any personal liability whatsoever to any person for any action or
failure to act (including without limitation the failure to compel in any way
any former or acting Trustee to redress any breach of trust) except that nothing
in this Declaration of Trust shall protect any Trustee from any liability to the
Trust or its Shareholders to which he would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of his
duties, or by reason of reckless disregard of his obligations and duties as
Trustee; and that all persons shall look solely to the Trust Property belonging
to a class of Shares for satisfaction of claims of any nature arising in
connection with the affairs of such class of the Trust.
9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES
AND EMPLOYEES. The Trust shall indemnify of its Trustees against all
liabilities and expenses (including amounts paid in satisfaction of judgments,
in compromise, as fines and penalties,
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and as counsel fees) reasonably incurred by him in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, in which he may be involved or with which he may be threatened, while
as a Trustee or thereafter, by reason of his being or having been such a Trustee
EXCEPT with respect to any matter as to which he shall have been adjudicated to
have acted in bad faith, willful misfeasance, gross negligence or reckless
disregard of his duties, PROVIDED that as to any matter disposed of by a
compromise payment by such person, pursuant to a consent decree or otherwise, no
indemnification either for said payment or for any other expenses shall be
provided unless the Trust shall have received a written opinion from independent
legal counsel approved by the Trustees to the effect that if either the matter
of willful misfeasance, gross negligence or reckless disregard of duty, or the
matter of bad faith had been adjudicated, it would in the opinion of such
counsel have been adjudicated in favor of such person. The rights accruing to
any person under these provisions shall not exclude any other right to which he
may be lawfully entitled, PROVIDED that no person may satisfy any right of
indemnity or reimbursement hereunder except out of the property of the Trust.
The Trustees may make advance payments in connection with the indemnification
under this Section 9.3, PROVIDED that the indemnified person shall have given a
written undertaking to reimburse the Trust in the event it is subsequently
determined that he is not entitled to such indemnification.
The Trustees shall indemnify representatives and employees of the
Trust to the same extent that Trustees are entitled to indemnification pursuant
to this Section 9.2.
9.4 RELIANCE ON EXPERTS, ETC. Each Trustee and representative of the
Trust shall, in the performance of his duties, be fully and completely justified
and protected with regard to any act or any failure to act resulting from
reliance in good faith upon the books of account or other records of the Trust,
upon an opinion of counsel satisfactory to the Trust, or upon reports made to
the Trust by any of its representatives or employees or by the investment
adviser, the principal underwriter, selected dealers, accountants, appraisers or
other experts or consultants selected with reasonable care by the Trustees or
representatives of the Trust, regardless of whether such counsel or expert may
also be a Trustee.
9.5 LIMITATION OF SHAREHOLDER LIABILITY. Shareholders shall not be
subject to any personal liability in connection with the assets of the Trust for
the acts or obligations of the Trust. The Trustees shall have no power to bind
any Shareholder personally or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay by way of
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subscription to any Shares or otherwise. Every obligation, contract,
instrument, certificate, Share, other security of any class of Shares or
undertaking, and every other act whatsoever executed in connection with the
Trust or any class of Shares shall be conclusively presumed to have been
executed or done by the executors thereof only in their capacities as Trustees
under the Declaration of Trust or in their capacity as officers, employees or
agents of the Trust and not individually. Every note, bond, contract, order or
other undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust or any class of Shares, and the stationery used by the Trust, shall
include a recitation limiting the obligation represented thereby to the Trust
and its assets (but the omission of such a recitation shall not operate to bind
any shareholder), as follows:
"The names 'Westcore Trust' and 'Trustees of Westcore Trust'
refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to
time under an Amended and Restated Declaration of Trust dated
November 19, 1987 which is hereby referred to and a copy of which
is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the
Trust. The obligations of 'Westcore Trust' entered into in the
name or on behalf thereof by any of the Trustees, representatives
or agents are made not individually, but in such capacities, and
are not binding upon any of the Trustees, Shareholders or
representatives of the Trust personally, but bind only the Trust
Property, and all persons dealing with any class of shares of the
Trust must look solely to the Trust property belonging to such
class for the enforcement of any claims against the Trust."
The rights accruing to a Shareholder under this Section 9.5 shall not
exclude any other right to which such Shareholder may be lawfully entitled, nor
shall anything herein contained restrict the right of the Trust to indemnify or
reimburse a Shareholder in any appropriate situation even though not
specifically provided for herein, PROVIDED that a shareholder of any class of
Shares shall be indemnified only from assets belonging to the classes of shares
with the same alphabetical designation.
9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any shareholder or
former shareholder shall be held to be personally liable solely by reason of his
being or having been a shareholder and not because of his acts or omissions or
for some other reason, the Shareholder or former Shareholder (or his heirs,
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<PAGE>
executors, administrators or other legal representatives or, in the case of a
corporation or other entity, its corporate or other general successor) shall be
entitled out of the assets belonging to the classes of shares with the same
alphabetical designation as that of the shares owned by such shareholder to be
held harmless from and indemnified against all loss and expense arising from
such liability. The Trust shall, upon request by the Shareholder, assume the
defense of any claim made against any Shareholder for any act or obligations of
the Trust and satisfy any judgment thereon from such assets.
X.
MISCELLANEOUS
10.1 TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a
Massachusetts business trust and not a partnership, joint venture, corporation,
joint stock company or any form of legal relationship other than a trust is
created hereby. Nothing herein shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners or members of a joint stock
association. No Trustee hereunder shall have any power to bind personally
either a representative of the Trust or any Shareholder. All persons extending
credit to, contracting with or having any claim against the Trust or the
Trustees shall look only to the assets of the Trust for payment under such
credit, contract or claim; and neither the Shareholders nor the Trustees,
whether past, present or future, shall be personally liable therefor.
10.2 NO BOND OR SURETY. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.
10.3 DURATION OF TRUST. This Trust shall continue without limitation
of time, PROVIDED that the Trust or any class of Shares may be terminated at any
time in accordance with the provisions of this Declaration of Trust and
applicable law.
10.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge
into or consolidate with any other corporation, association, trust or other
organization or may sell, lease or exchange all or substantially all of the
Trust Property, including its good will, upon such terms and conditions and for
such consideration when and as authorized by vote or written consent of the
Trustees and approved by the affirmative vote of the holders of not less than
two-thirds of the Shares outstanding and entitled to vote, voting in the
aggregate and not by class except to the extent that applicable law may require
voting by class, or by an instrument or instruments in writing without a meeting
consented to by the holders of not less than two-thirds
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<PAGE>
of such Shares, voting in the aggregate and not by class except to the extent
that applicable law may require voting by class, PROVIDED that if such merger,
consolidation, sale, lease or exchange is recommended by the Trustees, such may
be approved by a vote of the majority of the outstanding Shares, voting in the
aggregate and not by class except to the extent that applicable law may require
voting by class or by an instrument or instruments in writing without a meeting
consented to by the holders of not less than a majority of such Shares, voting
in the aggregate and not by class except to the extent that applicable law may
require voting by class.
10.5 INCORPORATION. With the approval of the holders of a majority
of the outstanding shares, voting in the aggregate and not by class except to
the extent that applicable law may require voting by class, the Trustees may
cause to be organized, or assist in organizing, a corporation or corporations
under the laws of any jurisdiction, to carry on any affairs in which the Trust
shall directly or indirectly have any interest, and to transfer the Trust
Property to any such Person in exchange for any shares or securities thereof or
otherwise, and to lend money to, subscribe for the shares or securities of, and
enter into any contracts with any such Person in which the Trust holds or is
about to acquire securities or any other interest. The Trustees may also cause
a merger or consolidation between the Trust or any successor thereto and any
such Person if and to the extent permitted by law. Nothing contained herein
shall be construed as requiring approval of Shareholders for the Trustees to
organize or assist in organizing one or more corporations, trusts, partnerships,
associations or other organizations and selling, conveying or transferring a
portion of the Trust Property to such Person(s).
10.6 FILING OF COPIES, REFERENCES, HEADINGS. The original instrument
of this Declaration of Trust and of each amendment hereto shall be filed with
the State Secretary of the Commonwealth of Massachusetts as provided by law and
copies thereof shall be kept at the office of the Trust where they may be
inspected by any Shareholder. Each amendment so filed shall be accompanied by a
certificate signed and acknowledged by a Trustee or by the Secretary or any
Assistant Secretary of the Trust stating that such action was duly taken in the
manner provided herein, and unless such amendment or such certificate sets forth
some later time for the effectiveness of such amendment, such amendment shall be
effective upon its filing. A restated Declaration of Trust, integrating into a
single instrument all of the provisions of the Declaration of Trust that are
then in effect and operative, may be executed from time to time by a majority of
the Trustees and shall, upon filing with the State Secretary of the Commonwealth
of Massachusetts, be conclusive evidence of all amendments contained therein and
may thereafter be referred to in lieu of the initial Declaration of
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<PAGE>
Trust and the various amendments thereto. Anyone dealing with the Trust may
rely on a certificate by a representative of the Trust as to whether or not any
such amendment hereto may have been made and as to any matters in connection
with the Trust hereunder, with the same effect as if it were the original, and
may rely on a copy certified by a representative of the Trust to be a copy of
this instrument or of any amendment thereto. Headings are placed herein for
convenience of reference only and in the case of any conflict, the text of this
instrument, rather than the headings, shall control. This instrument may be
executed in any number of counterparts each of which shall be deemed an
original. All signatures to this instrument need not appear on the same page.
10.7 APPLICABLE LAW. The Trust set forth in this instrument is a
trust made in the Commonwealth of Massachusetts and is to be governed by and
construed and administered according to the laws of said Commonwealth.
10.8 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
A. No provision of this Declaration of Trust shall be effective
to:
(1) Require a waiver of compliance with any provision of
the Securities Act of 1933, as amended, or the Act, or of any valid rule,
regulation or order of the Securities and Exchange Commission thereunder; or
(2) Protect or purport to protect any Trustee or officer of
the Trust against any liability to the Trust or its Shareholders to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
B. The provisions of this Declaration of Trust are severable,
and if the Trustees shall determine with the advice of counsel that any of such
provisions is in conflict with the Act, the regulated investment company
provisions of the Internal Revenue Code, Chapter 182 of the General Laws of the
Commonwealth of Massachusetts or with any other applicable law or regulation,
then in such event the conflicting provision shall be deemed never to have
constituted a part of this Declaration of Trust, PROVIDED that such
determination shall not affect any of the remaining provisions of this
Declaration of Trust or render invalid or improper any action taken or omitted
prior to such determination.
C. If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such
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<PAGE>
provision in such jurisdiction and shall not in any manner affect such provision
in any other jurisdiction or any other provision of this Declaration of Trust in
any jurisdiction.
10.9 AMENDMENT OF DECLARATION OF TRUST.
A. This Declaration of Trust may be amended upon a resolution
to that effect being adopted by the Trustees and approved by the affirmative
vote of the holders of not less than a majority of the outstanding Shares,
voting in the aggregate and not by class except to the extent that applicable
law may require voting by class.
B. Notwithstanding any other provision hereof, until such time
as a Registration Statement under the Securities Act of 1933, as amended,
covering the first public offering of securities of the Trust shall have become
effective, this Declaration of Trust may be terminated or amended in any respect
by the affirmative vote of a majority of the Trustees.
C. The Trustees may amend this Declaration of Trust without a
vote of Shareholders to change the name of the Trust or to cure any error or
ambiguity or if they deem it necessary to conform this Declaration of Trust to
the requirements of applicable state or federal laws or regulations, including
without limitation the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do.
D. Notwithstanding any other provision hereof, this Declaration
of Trust may not be amended in any manner whatsoever that would impair the
exemption from personal liability of the Trustees and Shareholders of the Trust
or that would permit an assessment upon any Shareholder.
IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated
Declaration of Trust as Trustees and not individually, as of the 19th day of
November, 1987.
/s/Jack D. Henderson
--------------------------
Jack D. Henderson
--------------------------
McNeil S. Fiske
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<PAGE>
--------------------------
James B. O'Boyle
--------------------------
Robert L. Stamp
--------------------------
Lyman E. Seely
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<PAGE>
--------------------------
Jack D. Henderson
/s/McNeil S. Fiske
--------------------------
McNeil S. Fiske
--------------------------
James B. O'Boyle
--------------------------
Robert L. Stamp
--------------------------
Lyman E. Seely
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<PAGE>
--------------------------
Jack D. Henderson
--------------------------
McNeil S. Fiske
/s/James B. O'Boyle
--------------------------
James B. O'Boyle
--------------------------
Robert L. Stamp
--------------------------
Lyman E. Seely
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<PAGE>
--------------------------
Jack D. Henderson
--------------------------
McNeil S. Fiske
--------------------------
James B. O'Boyle
/s/Robert L. Stamp
--------------------------
Robert L. Stamp
--------------------------
Lyman E. Seely
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<PAGE>
--------------------------
Jack D. Henderson
--------------------------
McNeil S. Fiske
--------------------------
James B. O'Boyle
--------------------------
Robert L. Stamp
/s/Lyman E. Seely
--------------------------
Lyman E. Seely
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<PAGE>
STATE OF Colorado :
:
: SS.
CITY OF Jefferson :
On this 22nd day of September, 1987, James B. O'Boyle, known to me and
known to be the individual described in and who executed the foregoing
instrument, personally appeared before me and acknowledged the foregoing
instrument to be his free act and deed.
/s/L. Denise Cumming
-------------------------
Notary Public
My commission expires: 10/2/89
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<PAGE>
STATE OF :
:
: SS.
CITY OF :
On this 23rd day of September, 1987, McNeil S. Fiske, known to me and known
to be the individual described in and who executed the foregoing instrument,
personally appeared before me and acknowledged the foregoing instrument to be
his free act and deed.
/s/Margaret Morrissey
-------------------------
Notary Public
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<PAGE>
STATE OF :
: SS.
CITY OF :
On this 21st day of September, 1987, Jack D. Henderson, Esquire, known to
me and known to be the individual described in and who executed the foregoing
instrument, personally appeared before me and acknowledged the foregoing
instrument to be his free act and deed.
/s/Roberta J. Stone
-------------------------
Notary Public
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<PAGE>
STATE OF :
: SS.
CITY OF :
On this 28th day of September, 1987, Robert L. Stamp, known to me and known
to be the individual described in and who executed the foregoing instrument,
personally appeared before me and acknowledged the foregoing instrument to be
his free act and deed.
/s/ L. Patricia Sumney
-------------------------
Notary Public
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<PAGE>
STATE OF OREGON :
:
CITY OF LINCOLN CITY : SS.
On this 25th day of September, 1987, Lyman E. Seely, known to me and known
to be the individual described in and who executed the foregoing
instrument, personally appeared before me and acknowledged the foregoing
instrument to be his free act and deed.
/s/Mary Ann Cook
-------------------------
Notary Public
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<PAGE>
WESTCORE TRUST
SECRETARY'S CERTIFICATE
The undersigned, Secretary of Westcore Trust (the "Trust"), does
hereby certify that pursuant to Section 6.4 of the Amended and Restated
Declaration of Trust executed November 19, 1987, the following Resolutions were
consented to and adopted as and for the action of the Board of Trustees:
RESOLVED, that Section 5.1(B) (3) of the Trust's Amended and Restated
Declaration of Trust be amended and restated as follows:
(3) LIABILITIES BELONGING TO CLASSES WITH SAME ALPHABETICAL
DESIGNATION. The assets belonging to classes of Shares with the same
alphabetical designation shall be charged with the direct liabilities in
respect of such classes and shall also be charged with such classes'
proportionate share of the general liabilities of the Trust as determined
by comparing the assets belonging to such classes with the aggregate assets
of the Trust or as may otherwise be determined by the Board of Trustees in
its discretion. The liabilities so charged to such classes are herein
referred to as "liabilities belonging to" such classes, and each Share of
such classes shall be charged equally with each other Share of a class
having the same alphabetical designation with the liabilities belonging to
such classes, except that:
(a) Shares of a class shall bear the expenses and liabilities of
payments to institutions under any agreements entered into by or on behalf
of the Trust which provide for services by the institutions to their
customers who beneficially own Shares of that class but do not provide for
services to any beneficial owners of Shares with that alphabetical
designation other than Shares of that class, as well as any other expenses
that are directly attributable to Shares of that class which the Board of
Trustees determines should be borne solely by such Shares; and
(b) Shares of a class shall not bear the expenses and liabilities of
payments to institutions under any agreements entered into by or on behalf
of the Trust which provide for services by the institutions to their
customers which
<PAGE>
beneficially own Shares other than Shares of that class but do not provide
for services to any beneficial owners of Shares of that class, or any other
expenses that are directly attributable to another class of Shares which
the Board of Trustees determines should be borne solely by such other class
of Shares.
IN WITNESS WHEREOF, the undersigned has hereto set his hand this 16th
day of July, 1990.
/s/ W. Bruce McConnel, III
---------------------------------
W. Bruce McConnel, III
<PAGE>
AMENDED AND RESTATED
CODE OF REGULATIONS
of
WESTCORE TRUST
ARTICLE I
TRUSTEES
1.1 NUMBER AND TERM OF OFFICE. The number of Trustees shall be such
number, not more than ten (10), as may be fixed from time to time by the
Trustee(s). Each Trustee shall hold office until the next meeting of the
Shareholders following his election or appointment as a Trustee at which
trustees are elected and until his successor shall have been elected and
qualified.
1.2 PLACE OF MEETING; TELEPHONE MEETING. Meetings of the Trustees,
regular or special, shall be held at the principal office of the Trust or at
such other place as the Trustees may from time to time determine. The Trustees
or any committee thereof may participate in a meeting of the Trustees or of such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the conference may hear each
other at the same time and participation by such means shall constitute presence
in person at the meeting.
1.3 REGULAR MEETINGS. Regular meetings of the Trustees may be held
without notice at such time and at the
<PAGE>
principal office of the Trust or at such other place as the Trustees may from
time to time determine.
1.4 SPECIAL MEETINGS. Special meetings of the Trustees may be called
by the President on one day's notice to each Trustee; special meetings of the
Trustees shall be called by the President or Secretary in like manner and on
like notice on the written request of three Trustees.
1.5 COMMITTEES. The Trustees may by resolution passed by a majority
of the Trustees appoint from among its members an executive committee and other
committees composed of two or more Trustees, and may delegate to such
committees, in the intervals between meetings of the Trustees, any or all of the
powers of the Trustees in the management of the business and affairs of the
Trust, except the power to issue Shares in the Trust or to recommend to
Shareholders any action requiring Shareholders' approval.
1.6 CHAIRMAN OF THE BOARD. The Trustees may at any time appoint one
of their number as Chairman of the Board, who shall serve at the pleasure of the
Trustees and shall perform and execute such duties as the Trustees may from time
to time provide but who shall not by reason of performing or executing these
duties be deemed an officer or employee of the Trust.
1.7 COMPENSATION. Any Trustee, whether or not a salaried officer,
employee, or agent of the Trust, may be compensated for his services as a
Trustee or as a member of a committee, or as Chairman of the Trustees or
Chairman of a
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<PAGE>
committee, by fixed periodic payments or by fees for attendance at meetings or
by both, and in addition may be reimbursed for transportation and other
expenses, all in such manner and amounts as the Trustees may from time to time
determine.
ARTICLE II
SHAREHOLDERS
2.1 MEETINGS. Meetings of the Shareholders of the Trust may be
called by the Trustees and shall be called by the Trustees whenever required by
law or upon the written request of the holders of at least ten percent (10%) of
the outstanding Shares entitled to vote.
2.2 NOTICE. Written notice, stating the place, day and hour of each
meeting of the Shareholders and the general nature of the business to be
transacted shall be given by, or at the direction of, the person calling the
meeting to each Shareholder of record entitled to vote at the meeting at least
ten days prior to the day named for the meeting, unless in a particular case a
longer period of notice is required by law.
2.3 SHAREHOLDERS' LIST. The officer or agent having charge of the
transfer books for Shares of the Trust shall make, at least five days before
each meeting of the Shareholders, a complete list of the Shareholders entitled
to vote at the meeting, arranged in alphabetical order with the address of and
the number of Shares held by each such Shareholder. The list shall be kept on
file at the office of the Trust and shall be
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<PAGE>
subject to inspection by any Shareholders at any time during usual business
hours and shall also be produced and kept open at the time and place of each
meeting of Shareholder and shall be subject to the inspection of any Shareholder
during each meeting of Shareholders.
2.4 RECORD DATE. The Trustees may fix a time (during which they may
close the Share transfer books of the Trust) not more than sixty (60) days prior
to the date of any meeting of the Shareholders, or the date fixed for the
payment of any dividend, or the date of the allotment of rights or the date when
any change or conversion or exchange of Shares shall go into effect, as a record
date for the determination of the Shareholders entitled to notice of, or to vote
at, any such meeting, or entitled to receive payment of any such dividend, or to
receive any such allotment of rights, or to exercise such rights, as the case
may be. In such case, only such Shareholders as shall be Shareholders of record
at the close of business on the date so fixed shall be entitled to notice of, or
to vote at, such meeting or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any Shares on the books of the Trust after any
record date fixed, as aforesaid.
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<PAGE>
ARTICLE III
NOTICES
3.1 FORM. Notices to the Trustees shall be oral or by telephone or
telegram or in writing delivered personally or mailed to the Trustees at their
addresses appearing on the books of the Trust. Notices to the Shareholders
shall be in writing and delivered personally or mailed to the Shareholders at
their addresses appearing on the books of the Trust. Oral notice shall be
deemed to be given when given directly to the person required to be notified and
notice by mail shall be deemed to be given when deposited in the United States
mail or with a telegraph office for transmission. Notice to the Trustees need
not state the purpose of a regular or special meeting of the Trustees or
committee.
3.2 WAIVER. Whenever any notice of the time, place or purpose of any
meeting of the Shareholders, the Trustees or a committee is required to be given
under the provisions of Massachusetts law or under the provisions of the
Declaration of Trust or these Regulations, a waiver thereof in writing, signed
by the person or persons entitled to such notice and filed with the records of
the meeting, whether before or after the holding thereof, or actual attendance
at the meeting of the Shareholders in person or by proxy, or at the meeting of
the Trustees or the committee in person, shall be deemed equivalent to the
giving of such notice to such persons.
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<PAGE>
ARTICLE IV
OFFICERS
4.1 NUMBER. The officers of the Trust shall be chosen by the
Trustees and shall include a President, a Secretary and a Treasurer. The Board
of Trustees may from time to time elect or appoint one or more Vice Presidents,
Assistant Secretaries and Assistant Treasurers.
4.2 OTHER OFFICERS. The Trustees from time to time may appoint such
other officers and agents as they shall deem advisable, who shall hold their
offices for such terms and shall exercise such powers and perform such duties as
the Trustees may from time to time prescribe. The Trustees may delegate to one
or more officers or agents the power to appoint any such subordinate officers or
agents and to prescribe the respective rights, terms of office, authorities and
duties.
4.3 ELECTION AND TENURE. The officers of the Trust shall be chosen
by the Trustees. Two or more offices may be held by the same person but no
officer shall execute, acknowledge or verify any instrument in more than one
capacity if such instrument is required by law, the Declaration of Trust or
these Regulations to be executed, acknowledged or verified by two or more
officers. Any officer or agent may be removed by the Trustees. An officer of
the Trust may resign by filing a written resignation with the President or with
the Trustees or with the Secretary. Any vacancy occurring in any office of the
Trust by
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<PAGE>
death, resignation, removal or otherwise may be filled by the Trustees.
4.4 COMPENSATION. The salaries or other compensation of all officers
and agents of the Trust shall be fixed by the Trustees, except that the Trustees
may delegate to any committee the power to fix the salary or other compensation
of any officer of the Trust.
4.5 PRESIDENT. The President shall be the chief executive officer of
the Trust; he shall preside at all meetings of the Trustees and of the
Shareholders unless a Chairman has been designated; he shall be, EX OFFICIO, a
member of all standing committees; and he shall see that all orders and
resolutions of the Trustees are carried into effect. He, or such person as he
may designate, shall sign, execute and acknowledge, in the name of the Trust,
deeds, mortgages, bonds, contracts and other instruments authorized by the
Trustees, except in the case where the signing and execution thereof shall be
delegated by the Trustees to some other officer or agent of the Trust. The
President shall also be the chief administrative officer of the Trust and shall
perform such other duties and shall have such other powers as the Trustees may
from time to time prescribe.
4.6 VICE PRESIDENTS. The Vice Presidents, in the order of their
seniority, shall, in the absence or disability of the President, perform the
duties and exercise the powers of the President, and shall perform such other
duties as the Trustees may from time to time prescribe.
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<PAGE>
4.7 SECRETARY. The Secretary shall attend all meetings of the
Trustees and of the Shareholders and shall record all the proceedings thereof
and shall perform like duties for any committee when required. He shall give,
or cause to be given, notice of meetings of the Trustees and of the
Shareholders, and shall perform such other duties as may be prescribed by the
Trustees or the President, under whose supervision he shall be. He shall keep
in safe custody the seal of the Trust and, when authorized by the Trustees,
affix and attest the same to any instrument requiring it, provided that, in lieu
of affixing the seal of the Trust to any document, it shall be sufficient to
meet the requirements of any law, rule or regulation relating to a seal to affix
the word "(SEAL)" adjacent to the signature of the authorized officer of the
Trust. The Trustees may give general authority to any other officer to affix
the seal of the Trust and to attest the affixing by his signature.
4.8 ASSISTANT SECRETARIES. The Assistant Secretaries, in order of
their seniority, shall, in the absence or disability of the Secretary, perform
the duties and exercise the powers of the Secretary and shall perform such other
duties as the Trustees may from time to time prescribe.
4.9 TREASURER. The Treasurer shall be the chief financial officer of
the Trust. He shall be responsible for the maintenance of its accounting
records and shall render to the Trustees when the Trustees so require an account
of all the
-8-
<PAGE>
Trust's financial transactions and a report of the financial condition of the
Trust.
4.10 ASSISTANT TREASURERS. The Assistant Treasurers, in the order of
their seniority, shall, in the absence or disability of the Treasurer, perform
the duties and exercise the powers of the Treasurer and shall perform such other
duties as the Trustees may from time to time prescribe.
ARTICLE V
INVESTMENT RESTRICTIONS
The Trustees may from time to time adopt such restrictions upon the
investment of the assets of the Trust, or amendments thereto, as they may
consider necessary or desirable, PROVIDED that any such restriction or amendment
shall be approved by a majority of the outstanding Shares of the Trust entitled
to vote thereon if required by the Investment Company Act of 1940, as amended.
ARTICLE VI
GENERAL PROVISIONS
6.1 INSPECTION OF BOOKS. The Trustees may from time to time
determine whether and to what extent, and at what time and places, and under
what conditions and regulations the accounts and books of the Trust or any of
them shall be open to the inspections of the Shareholders; and no Shareholder
shall have any right of inspecting any account or book or document of
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<PAGE>
the Trust except as conferred by law or authorized by the Trustees or by
resolution of the Shareholders.
6.2 REPORTS. The Trust shall transmit to the Shareholders and/or
file with federal and state regulatory agencies such reports of its operations
as the Trustees shall consider necessary or desirable or as may be required by
law.
6.3 BONDING OF OFFICERS AND EMPLOYEES. All officers and employees of
the Trust shall be bonded to such extent, and in such manner, as may be required
by law.
6.4 TRANSFER OF SHARES. Transfer of Shares shall be made on the
books of the Trust at the direction of the person named on the Trust's books or
named in the certificates for such Shares (if issued), or by his attorney
lawfully constituted in writing, and upon surrender of the certificate or
certificates for such Shares (if issued) properly endorsed, together with a
proper request for redemption, to the Trust's transfer agent, with such evidence
of the authenticity of such transfer, authorization and other matters as the
Trust or its agents may reasonably require, and subject to such other reasonable
conditions and requirements as may be required by the Trust or its agents; or if
the Trustees shall by resolution so provide, transfer of Shares may be made in
any other manner provided by law.
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<PAGE>
ARTICLE VII
AMENDMENTS
This Code of Regulations may be altered or repealed by the Trustees at
any regular or special meeting of the Trustees.
Amended and Restated October 24, 1995
-11-
<PAGE>
DENVER INVESTMENT ADVISORS LLC
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of October 1, 1995 between WESTCORE TRUST, a
Massachusetts business trust (the "Trust"), and DENVER INVESTMENT ADVISORS LLC
(the "Investment Adviser"), a Colorado limited liability company.
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Investment Adviser to furnish
investment advisory and other services to the Trust for its Cash Reserve Fund,
Colorado Tax-Exempt Fund, Equity Income Fund, Intermediate-Term Bond Fund,
Small-Cap Opportunity Fund, MIDCO Growth Fund, Long-Term Bond Fund and Blue Chip
Fund (the "Funds"), and the Investment Adviser is willing to so furnish such
services;
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT.
(a) The Trust hereby appoints the Investment Adviser to act as
investment adviser to each Fund for the period and on the terms set
forth in this Agreement. The Investment Adviser accepts such
appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
(b) In the event that the Trust establishes one or more series
or portfolios other than the Funds with respect to which it desires to
retain the Investment Adviser to act as investment adviser hereunder,
it shall notify the Investment Adviser in writing. If the Investment
Adviser is willing to render such services under this Agreement, it
shall notify the Trust in writing whereupon such series or portfolio
shall become a Fund hereunder and shall be subject to the provisions
of this Agreement to the same extent as each Fund except to the extent
that said provisions (including those relating to the compensation
payable by the Trust to the Investment Adviser) are modified with
respect to such Fund in writing by the Trust and the Investment
Adviser at the time. The term "Fund" herein shall
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refer to each such Fund as referred to in the foregoing sentence
together with each existing Fund.
2. DELIVERY OF DOCUMENTS.
The Trust has furnished the Investment Adviser with copies properly
certified or authenticated of each of the following:
(a) The Trust's Amended and Restated Declaration of Trust, as
filed with the State Secretary of the Commonwealth of Massachusetts on
November 19, 1987, and all amendments thereto (such Declaration of
Trust, as presently in effect and as it shall from time to be amended,
is herein called the "Declaration of Trust");
(b) The Trust's Code of Regulations and amendments thereto;
(c) Post-Effective Amendment No. 42 to the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933 as amended
("1933 Act") (File No. 2-75677) and under the 1940 Act;
(d) The most recent prospectus of each Fund (such prospectus
together with the related statement of additional information, as
presently in effect and all amendments and supplements thereto, are
herein called "Prospectus").
The Trust will furnish the Investment Adviser from time to time with copies of
all amendments of or supplements to the foregoing, if any.
3. MANAGEMENT.
Subject to the supervision of the Trust's Board of Trustees, the
Investment Adviser will provide a continuous investment program for each Fund,
including investment research and management with respect to all securities,
investments, cash and cash equivalents in each Fund. The Investment Adviser
will determine from time to time what securities and other investments will be
purchased, retained or sold by each Fund. The Investment Adviser will provide
the services rendered by it under this Agreement in accordance with each Fund's
investment objective, policies and restrictions as stated in the Prospectus for
each Fund and resolutions of the Trust's Board of Trustees. Without limiting
the generality of the foregoing, the Investment Adviser shall:
(a) Furnish to the Board of Trustees statistical and economic
information as may be requested, and
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(b) Recommend potential changes in investment policy.
The Investment Adviser further agrees that it shall:
(c) Update each Fund's cash availability throughout the day as
required;
(d) Maintain historical tax lots for each portfolio security
held by each Fund;
(e) Transmit trades to the Trust's custodian for proper
settlement;
(f) Maintain all books and records with respect to each Fund's
securities transactions;
(g) Supply the Trust and its Board of Trustees with reports and
statistical data as requested; and
(h) Prepare a quarterly broker security transaction summary and
monthly security transaction listing for each Fund.
4. OTHER COVENANTS.
The Investment Adviser agrees that it:
(a) Will comply with all applicable Rules and Regulations of the
Securities and Exchange Commission and will conduct its activities
under this Agreement in accordance with other applicable law;
(b) Will use the same skill and care in providing such services
as it uses in providing services to fiduciary accounts for which it
has investment responsibilities; and
(c) Will place orders pursuant to its investment determinations
for each Fund either directly with the issuer or with any broker or
dealer. In executing portfolio transactions and selecting brokers or
dealers, the Investment Adviser will use its best efforts to seek on
behalf of each Fund the best overall terms available. In assessing
the best overall terms available for any transaction, the Investment
Adviser shall consider all factors that it deems relevant, including
the breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, both for the
specific transaction and on a continuing basis. In
3
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evaluating the best overall terms available, and in selecting the
broker-dealer to execute a particular transaction, the Investment
Adviser may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities Exchange
Act of 1934) provided to each Fund and/or other accounts over which
the Investment Adviser or an affiliate of the Investment Adviser
exercises investment discretion. The Investment Adviser is
authorized, subject to the prior approval of the Trust's Board of
Trustees, to pay to a broker or dealer who provides such brokerage and
research services a commission for executing a portfolio transaction
for each Fund which is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if,
but only if, the Investment Adviser determines in good faith that such
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer -- viewed in
terms of that particular transaction or in terms of the overall
responsibilities of the Investment Adviser to the Fund. In addition,
the Investment Adviser is authorized in allocating purchase and sales
orders for portfolio securities to brokers or dealers (including
brokers and dealers that are affiliated with the Investment Adviser or
the Trust's principal underwriter) to take into account the sale of
shares of the Trust by the broker or dealer if the Investment Adviser
believes that the quality of the transaction and the commission are
comparable to what they would be with other qualified firms. In no
instance, however, will portfolio securities be purchased from or sold
to the Investment Adviser, the Trust's principal underwriter or any
affiliated person of either the Trust, the Investment Adviser or the
principal underwriter, acting as principal in the transaction, except
to the extent permitted by the Securities and Exchange Commission.
5. SERVICES NOT EXCLUSIVE.
The services furnished by the Investment Adviser hereunder are deemed
not to be exclusive, and the Investment Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby. To the extent that the purchase or sale of securities or other
investments of the same issuer may be deemed by the Investment Adviser to be
suitable for two or more accounts managed by the Investment Adviser, the
available securities or investments may be allocated in a manner believed by the
Investment Adviser to be equitable to each account. It is recognized that in
some cases this procedure may adversely affect
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<PAGE>
the price paid or received by a Fund or the size of the position obtainable for
or disposed of by a Fund.
6. BOOKS AND RECORDS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Investment Adviser hereby agrees that all records which it maintains for the
Funds are the property of the Trust and further agrees to surrender promptly to
the Trust any of such records upon the Trust's request. The Investment Adviser
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act.
7. EXPENSES.
During the term of this Agreement, the Investment Adviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction costs, if any) purchased or sold for
a Fund. If the expenses borne by a Fund in any fiscal year exceed the
applicable expense limitations imposed by the securities regulations of any
state in which its shares are registered or qualified for sale to the public,
the Investment Adviser shall reimburse the Fund for any such excess to the
extent that said securities regulations so require. Such expense reimbursement,
if any, will be estimated, reconciled and paid on a monthly basis.
8. COMPENSATION.
For the services provided and the expenses assumed pursuant to this
Agreement, the Trust will pay the Investment Adviser and the Investment Adviser
will accept as full compensation therefor a fee, computed daily and payable
monthly, at the annual rate of .50% of the average daily net assets of the Cash
Reserve Fund, .50% of the average daily net assets of the Colorado Tax-Exempt
Fund, .65% of the average daily net assets of the Equity Income Fund, .45% of
the average daily net assets of the Intermediate-Term Bond Fund, 1.00% of the
average daily net assets of the Small-Cap Opportunity Fund, .65% of the average
daily net assets of the MIDCO Growth Fund, .45% of the average daily net assets
of the Long-Term Bond Fund, and .65% of the average daily net assets of the Blue
Chip Fund. As this Agreement covers multiple portfolios of the Trust, fees that
are attributable to each portfolio shall be a separate charge to such portfolio
and shall be the several (and not joint or joint and several) obligation of each
such portfolio.
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9. LIMITATION OF LIABILITY.
The Investment Adviser shall not be liable for any error of judgment
or mistake of law or for any loss suffered by the Trust in connection with the
performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or a
loss resulting from willful misfeasance, bad faith or gross negligence on the
part of the Investment Adviser in the performance of its duties or from reckless
disregard by it of its obligations and duties under this Agreement.
10. DURATION AND TERMINATION.
This Agreement shall become effective as of the date hereof and,
unless sooner terminated as provided herein, shall continue in effect until
September 30, 1996. Thereafter, if not terminated, this Agreement shall
automatically continue in effect as to a particular fund for successive annual
periods, PROVIDED such continuance is specifically approved at least annually
(a) by the vote of a majority of those members of the Trust's Board of Trustees
who are not interested persons of any party to this Agreement, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by the
Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of such fund. Notwithstanding the foregoing, this Agreement may be
terminated as to any fund at any time, without the payment of any penalty, by
the Trust (by vote of the Trust's Board of Trustees or by vote of a majority of
the outstanding voting securities of such Fund), or by the Investment Adviser on
sixty days written notice. This Agreement will immediately terminate in the
event of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as such terms have in the 1940 Act.)
11. 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 the party
against which enforcement of the change, waiver, discharge or termination is
sought. No amendment of this Agreement shall be effective as to a particular
fund until approved by vote of a majority of the outstanding voting securities
of such fund.
12. MISCELLANEOUS.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. If any provision of this
Agreement shall be held or
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<PAGE>
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
and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Colorado law.
13. NAMES.
The names "Westcore Trust" and "Trustees of Westcore Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their officers designated below as of the day and year first
above written.
WESTCORE TRUST
Attest: BY: /s/Kenneth V. Penland
------------------------------
/s/ Dennis E. Larlson TITLE: President
- ------------------------------ ---------------------------
[SEAL]
DENVER INVESTMENT ADVISORS LLC
Attest: BY: /s/Kenneth V. Penland
------------------------------
/s/ Dennis E. Larlson TITLE: Chairman
- ------------------------------ ---------------------------
[SEAL]
7
<PAGE>
DISTRIBUTION AGREEMENT
November 30, 1987
ALPS Securities, Inc.
600 Seventeenth Street
Suite 1605
Denver, CO 80202
Dear Sirs:
This is to confirm that in consideration of the agreements hereinafter
contained, the undersigned, Westcore Trust, a Massachusetts business trust (the
"Trust"), has agreed that you shall be, for the period of this Agreement, the
distributor of shares of beneficial interest (the "Shares") of the Trust's MIDCO
Growth Fund, Oregon Tax-Exempt Fund, GNMA Fund, Basic Value Fund, Bonds Plus
Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund,
Short-Term Bond Fund, Short-Term Government Bond Fund and Modern Value Equity
Fund (the "Funds").
1. SERVICES AS DISTRIBUTOR
1.1 You will act as agent for the distribution of Shares in
accordance with the instructions of the Trust's Board of Trustees and the
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended, and will transmit promptly any
orders received by you for the purchase or redemption of Shares either directly
to the Trust's transfer agent for the Fund involved or to any qualified
broker/dealer for transmittal to said agent.
1.2(a) You agree to use your best efforts to solicit orders for the
sale of Shares. You, at your own expense, shall finance appropriate activities
which you deem reasonable which are primarily intended to result in the sale of
Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. In addition, you will provide one or more persons, during
normal business hours, to respond to telephone questions with respect to the
Funds. It is contemplated that you will enter into selling agreements with
qualified broker/dealers and other persons with respect to the offering of
Shares to the public, and in so doing you will act only on your own behalf as
principal.
1.2(b) All Shares of the Funds offered for sale by you shall be
offered for sale to the public at a price per share (the
<PAGE>
"offering price") equal to (a) their net asset value (determined in the manner
set forth in the Trust's Declaration of Trust and then current prospectuses)
plus, except to those classes of persons set forth in the then current
prospectuses (b) a sales charge which shall be the percentage of the offering
price of such shares as set forth in the Trust's then current prospectuses. The
offering price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent. Concessions by you to broker/dealers and other persons shall be
set forth in either the selling agreements between you and such broker/dealers
and persons as from time to time amended, or if such concessions are described
in the Trust's then current prospectuses, shall be as so set forth. No
broker/dealer or other person who enters into a selling agreement with you shall
be authorized to act as agent for the Trust in connection with the offering or
sale of its Shares to the public or otherwise.
1.2(c) If any Shares sold by the Trust are redeemed or repurchased by
the Trust or by you as agent or are tendered for redemption within seven
business days after the date of confirmation of the original purchase of said
Shares, you shall forfeit the amount above the net asset value received by you
in respect of such Shares, provided that the portion, if any, of such amount re-
allowed by you to broker/dealers or other persons shall be repayable to the
Trust only to the extent recovered by you from the broker/dealer or other person
concerned. You shall include in the forms of agreement with such broker/dealers
and other persons a corresponding provision for the forfeiture by them of their
concession with respect to Shares sold by them or their principals and redeemed
or repurchased by the Trust or by you as agent (or tendered for redemption)
within seven business days after the date of confirmation of such initial
purchases.
1.3 You shall act as distributor of the Shares in compliance with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted pursuant to the Investment Company Act of 1940,
as amended, by the Securities and Exchange Commission or any securities
association registered under the Securities Exchange Act of 1934, as amended.
1.4 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any Shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise you promptly of such determination.
1.5 The Trust agrees to pay all costs and expenses in connection with
the registration of Shares under the Securities Act of 1933, as amended, and all
expenses in connection with
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<PAGE>
maintaining facilities for the issue and transfer of Shares and for supplying
information, prices and other data to be furnished by the Trust hereunder.
1.6 The Trust agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of Shares for sale in such states as you may designate to
the Trust and the Trust may approve, and the Trust agrees to pay all expenses
which may be incurred in connection with such qualification. You shall pay all
expenses connected with your own qualification as a broker under State or
Federal laws and, except as otherwise specifically provided in this agreement,
all other expenses incurred by you in connection with the sale of Shares as
contemplated in this agreement.
1.7 The Trust shall furnish you from time to time, for use in
connection with the sale of Shares, such information with respect to the Trust
and the Shares as you may reasonably request, and the Trust warrants that the
statements contained in any such information, when so signed by the Trust's
officers, shall be true and correct. The Trust also shall furnish you upon
request with: (a) annual audited reports of the Trust's books and accounts with
respect to each Funds, made by independent public accountants regularly retained
by the Trust, (b) semi-annual reports with respect to each of the Funds prepared
by the Trust, and (c) from time to time such additional information regarding
the Trust's financial condition as you may reasonably request.
1.8 The Trust represents to you that all registration statements and
prospectuses filed by the Trust with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, with respect to the Shares have
been prepared in conformity with the requirements of said Act and rules and
regulations of the Securities and Exchange Commission thereunder. As used in
this agreement the terms "registration statement" and "prospectus" shall mean
any registration statement and prospectus (together with the related statement
of additional information) filed with the Securities and Exchange Commission
with respect to any of the Shares and any amendments and supplements thereto
which at any time shall have been filed with said Commission. The Trust
represents and warrants to you that any registration statement and prospectus,
when such registration statement becomes effective, will contain all statements
required to be stated therein in conformity with said Act and the rules and
regulations of said Commission; that all statements of fact contained in any
such registration statement and prospectus will be materially true and correct
when such registration statement becomes effective; and that neither any
registration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or
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<PAGE>
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading. The Trust may but shall not be obligated
to propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Trust's counsel, be necessary
or advisable. If the Trust shall not propose such amendment or amendments
and/or supplement or supplements within fifteen days after receipt by the Trust
of a written request from you to do so, you may, at your option, terminate this
agreement. The Trust shall not file any amendment to any registration statement
or supplement to any prospectus without giving you reasonable notice thereof in
advance; provided, however, that nothing contained in this agreement shall in
any way limit the Trust's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus, of whatever
character, as the Trust may deem advisable, such right being in all respects
absolute and unconditional.
1.9 The Trust authorizes you to use any prospectus in the form
furnished to you from time to time, in connection with the sale of Shares. The
Trust agrees to indemnify, defend and hold you, your several officers and
directors, and any person who controls you within the meaning of Section 15 of
the Securities Act of 1933, as amended, free and harmless from and against any
and all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which you, your officers and directors,
or any such controlling person, may incur under the Securities Act of 1933, as
amended, or under common law or otherwise, arising out of or based upon any
untrue statement, or alleged untrue statement, of a material fact contained in
any registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Trust's
agreement to indemnify you, your officers or directors, and any such controlling
person shall not be deemed to cover any claims, demands, liabilities or expenses
arising out of any untrue statement or alleged untrue statement or omission or
alleged omission made in any registration statement or prospectus in reliance
upon and in conformity with information furnished to the Trust or its counsel by
you and used in the preparation thereof; and provided further that the Trust's
agreement to indemnify you and the Trust's representations and warranties herein
set forth shall not be deemed to cover any liability to the Trust or its
shareholders to which you would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of your duties, or
by reason of your reckless
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<PAGE>
disregard of your obligations and duties under this agreement. The Trust's
agreement to indemnify you, your officers and directors, and any such
controlling person, as aforesaid, is expressly conditioned upon the Trust's
being notified of any action brought against you, your officers or directors, or
any such controlling person, such notification to be given by letter or by
telegram addressed to the Trust at its principal office within ten days after
the summons or other first legal process shall have been served. The failure so
to notify the Trust of any such action shall not relieve the Trust from any
liability which the Trust may have to the person against whom such action is
brought by reason of any such untrue, or alleged untrue, statement or omission,
or alleged omission, otherwise than on account of the Trust's indemnity
agreement contained in this paragraph 1.9. The Trust will be entitled to assume
the defense of any suit brought to enforce any such claim, demand or liability,
but, in such case, such defense shall be conducted by counsel of good standing
chosen by the Trust and approved by you. In the event the Trust elects to
assume the defense of any such suit and retain counsel of good standing approved
by you which approval shall not be unreasonably withheld, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by any of them; but in case the Trust does not elect to assume
the defense of any such suit, or in case you do not reasonably approve of
counsel chosen by the Trust, the Trust will reimburse you, your officers and
directors, or the controlling person or persons named as defendant or defendants
in such suit, for the fees and expenses of any counsel retained by you or them.
The Trust's indemnification agreement contained in this paragraph 1.9 and the
Trust's representations and warranties in this agreement shall remain operative
and in full force and effect regardless of any investigation made by or on
behalf of you, your officers and directors, or any controlling person, and shall
survive the delivery of any Shares. This agreement of indemnity will inure
exclusively to your benefit, to the benefit of your several officers and
directors, and their respective estates, and to the benefit of any controlling
persons and their successors. The Trust agrees promptly to notify you of the
commencement of any litigation or proceedings against the Trust or any of its
officers or trustees in connection with the issue and sale of any of the Shares.
1.10 You agree to indemnify, defend and hold the Trust, its several
officers and trustees, and any person who controls the Trust within the meaning
of Section 15 of the Securities Act of 1933, as amended, free and harmless from
and against any and all claims, demands, liabilities and expenses (including the
cost of investigating or defending such claims, demands or liabilities and any
counsel fees incurred in connection therewith) which the Trust, its officers or
trustees, or any such controlling person, may incur under the Securities Act of
1933, as amended, or under common law or otherwise, but
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<PAGE>
only to the extent that such liability or expense incurred by the Trust, its
officers or trustees, or such controlling person resulting from such claims or
demands, shall arise out of or be based upon any untrue, or alleged untrue,
statement of a material fact contained in information furnished by you to the
Trust or its counsel and used in the Trust's registration statement or in the
corresponding statements made in the prospectus, or shall arise out of or be
based upon any omission, or alleged omission, to state a material fact in
connection with such information furnished by you to the Trust or its counsel
and required to be stated in such answers or necessary to make such information
not misleading. Your agreement to indemnify the Trust, its officers and
trustees, and any such controlling person, as aforesaid, is expressly
conditioned upon your being notified of any action brought against the Trust,
its officers or trustees, or any such controlling person, such notification to
be given by letter or telegram addressed to you at your principal office within
ten days after the summons or other first legal process shall have been served.
You shall have the right to control the defense of such action, with counsel of
your own choosing, satisfactory to the Trust, if such action is based solely
upon such alleged misstatement or omission on your part, and in any other event
the Trust, its officers or trustees or such controlling person shall each have
the right to participate in the defense or preparation of the defense of any
such action. The failure so to notify you of any such action shall not relieve
you from any liability which you may have to the Trust, its officers or
trustees, or to such controlling person by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
your indemnity agreement contained in this paragraph 1.10.
1.11 No Shares shall be offered by either you or the Trust under any
of the provisions of this agreement and no orders for the purchase or sale of
such Shares hereunder shall be accepted by the Trust if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities Act of 1933, as amended, or if and so long as current prospectuses as
required by Section 10 of said Act, as amended, are not on file with the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Trust's obligation to repurchase Shares from any shareholder in
accordance with the provisions of the prospectuses or Declaration of Trust.
1.12 The Trust agrees to advise you promptly in writing:
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<PAGE>
(a) of any request by the Securities and Exchange Commission for
amendments to the registration statement or prospectuses then in
effect;
(b) in the event of the issuance by the Securities and Exchange
Commission of any stop order suspending the effectiveness of the
registration statement or prospectuses then in effect or the
initiation of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the registration statement or
prospectuses then in effect or which requires the making of a change
in such registration statement or prospectuses in order to make the
statements therein not misleading; and
(d) of all actions of the Securities and Exchange Commission
with respect to any amendments to any registration statement or
prospectus which may from time to time be filed with the Securities
and Exchange Commission.
2. TERM
2.1 This agreement shall become effective as of the date hereof and,
unless sooner terminated, shall continue until September 30 1988, and thereafter
shall continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by (i) the Trust's Board
of Trustees or (ii) the vote of a majority (as defined in the Investment Company
Act of 1940) of the Funds' outstanding Shares, provided that in either event its
continuance also is approved by a majority of the Trust's trustees who are not
"interested persons" (as defined in said Act) of any party to this agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. This agreement is terminable without penalty, on not less than 60
days' notice, by the Trust's Board of Trustees, by vote of the holders of a
majority (as defined in said Act) of the Funds' outstanding Shares, or by you.
This agreement will also terminate automatically in the event of its assignment
(as defined in said Act).
3. MISCELLANEOUS
3.1 The Trust recognizes that from time to time your directors,
officers and employees may serve as directors, officers and employees of other
corporations or business trusts (including other investment companies) and that
such other corporations and trusts may include the name ALPS as part of their
name, and that you or your affiliates may enter into
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<PAGE>
investment advisory or other agreements with such other corporations and trusts.
3.2 The names "Westcore Trust" and "Trustees of Westcore Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of its trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust property belonging to such class for the enforcement of any claims
against the Trust.
3.3 No provision of this agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
3.4 This agreement shall be governed by Colorado law.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place below indicated,
whereupon it shall become a binding agreement between us.
Very truly yours,
WESTCORE TRUST
By: /s/Jack D. Henderson
--------------------
Accepted:
ALPS SECURITIES, INC.
By: /s/ W.R. Alexander
--------------------
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AMENDMENT NO. 1
TO DISTRIBUTION AGREEMENT
Amendment dated as of March 30, 1989 to the Distribution Agreement (the
"Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., a
Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for the investment portfolios of the Trust
pursuant to the Agreement, and also serves as Administrator of said investment
portfolios under an Administration Agreement, also dated as of November 30,
1987.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Short-Intermediate Tax-Exempt Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds, Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 2
TO DISTRIBUTION AGREEMENT
Amendment dated as of September 28, 1990 to the Distribution Agreement (the
"Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts
business trust (the "Trust"), and ALPS Securities, Inc., a Colorado corporation
("ALPS").
BACKGROUND
1. ALPS serves as distributor for the Trust's MIDCO Growth Fund, Bonds
Plus Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund,
Short-Term Bond Fund, Short-Term Government Bond Fund, Modern Value Equity Fund,
GNMA Fund, Basic Value Fund, Oregon Tax-Exempt Fund and Short-Intermediate Tax-
Exempt Fund pursuant to the Agreement, and also serves as administrator of said
investment portfolios under an Administration Agreement, also dated as of
November 30, 1987.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Balanced Investment Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds, Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 3
TO DISTRIBUTION AGREEMENT
Amendment dated as of June 1, 1991 to the Distribution Agreement (the
"Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts
business trust (the "Trust"), and ALPS Securities, Inc., a Colorado corporation
("ALPS").
BACKGROUND
1. ALPS serves as distributor for the Trust's MIDCO Growth Fund, Bonds
Plus Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund,
SHort-Term BOnd Fund, Short-Term Government BOnd Fund, Modern Value Equity Fund,
GNMA Fund, Basic Value Fund, Oregon Tax-Exempt Fund, Short-Intermediate Tax-
Exempt FUnd and Balanced Investment Fund pursuant to the Agreement, and also
serves as administrator of said investment portfolios under an Administration
Agreement, also dated as of November 30, 1987.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Colorado Tax-Exempt Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds, Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 4
TO DISTRIBUTION AGREEMENT
Amendment dated as of March 1, 1992 to the Distribution Agreement (the
"Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a
ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for certain of the investment portfolios of
the Trust pursuant to the Agreement, and also serves as Administrator of said
investment portfolios under an Administration Agreement, also dated as of
November 30, 1987.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Arizona Intermediate Tax-Free Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds, Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 5
TO DISTRIBUTION AGREEMENT
Amendment dated as of August 1, 1993 to the Distribution Agreement (the
"Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a
ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for the investment portfolios of the Trust
pursuant to the Agreement, and also serves as Administrator of said investment
portfolios under an Administration Agreement, also dated as of November 30,
1987.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Growth Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds Services, Inc.
By: /s/W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 6
TO DISTRIBUTION AGREEMENT
Amendment dated as of January 7, 1993 to the Distribution Agreement (the
"Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a
ALPS Mutual Funds Service, Inc., a Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for the investment portfolios of the Trust
pursuant to the Agreement, and also serves as Administrator of said investment
portfolios under Administration Agreements, dated as of October 1, 1990 and June
1, 1991.
2. The Trust is this day appointing ALPS as administrator for the Trust's
Quality Tax-Exempt Income Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares of
the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for
the Fund for the period and on the terms set forth in the Agreement. ALPS
accepts such appointment for said period and on said terms, and agrees to
provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in
full force and effect as modified hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their duly authorized officers designated below on the day and year
first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds, Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
AMENDMENT NO. 7
TO DISTRIBUTION AGREEMENT
Amendment dated as of January 4, 1993 to the Distribution Agreement
(the "Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a
ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for the investment portfolios of the
Trust pursuant to the Agreement, and also serves as administrator of said
investment portfolios under an Administration Agreement, also dated as of
November 30, 1987.
2. The Trust is this day appointing ALPS as administrator for the
Trust's California Intermediate Tax-Free Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares
of the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as
distributor for the Fund for the period and on the terms set forth in the
Agreement. ALPS accepts such appointment for said period and on said terms, and
agrees to provide the services set forth in the Agreement.
2. AMENDMENTS. Sections 1.2(a) and 2 of the Agreement are hereby
amended and restated as follows:
1.2(a) You agree to use your best efforts to solicit orders for
the sale of Shares. You, at your own expense, (but subject to reimbursement in
accordance with the Distribution and Administrative Service Plan as may be in
effect for the California Intermediate Tax-Free Fund) shall finance appropriate
activities which you deem reasonable which are primarily intended to result in
the sale of Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. In addition, you will provide one or more persons, during
normal business hours, to respond to telephone questions
<PAGE>
with respect to the Funds. It is contemplated that you will enter into selling
agreements with qualified broker/dealers and other persons with respect to the
offering of Shares to the public, and in so doing you will act only on your own
behalf as principal.
2. TERM AND COMPENSATION.
2.1 This agreement shall become effective as of the date hereof
and, unless sooner terminated, shall continue until September 30, 1993, and
thereafter shall continue automatically with respect to each Fund for successive
annual periods, provided such continuance is specifically approved at least
annually by (i) the Trust's Board of Trustees or (ii) the vote of a majority (as
defined in the Investment Company Act of 1940) of the Fund's outstanding Shares,
provided that in either event its continuance also is approved by a majority of
the Trust's trustees who are not "interested persons" (as defined in said Act)
of any party to this agreement and have no direct or indirect financial interest
in the operation of any Distribution Plan under Rule 12b-1 for such Fund (if
any) or in any agreements related to any such plan, by vote cast in person at a
meeting called for the purpose of voting on such approval. This agreement is
terminable with respect to a Fund without penalty, on not less than 60 days'
notice, by a vote of a majority of the Trust's Board of Trustees who, in the
case of a Fund which has a Distribution Plan under Rule 12b-1, are not
interested persons of the Trust and have no direct or indirect financial
interest in the operation of such Distribution Plan for such Fund or in any
agreements related to any such Distribution Plan, by vote of the holders of a
majority (as defined in said Act) of the Fund's outstanding Shares, or by you.
This agreement will also terminate automatically in the event of its assignment
(as defined in said Act).
2.2 Subject to the terms of, and upon effectiveness of the
Distribution and Administrative Service Plan described below, the Trust shall
reimburse you for the expenses described below with respect to the Retail Shares
of the Trust's California Intermediate Tax-Free Fund (the "Distribution Plan
Shares") at the annual rate of (a) up to .05% of the average daily net asset
value of such Shares (such reimbursement to be for the purposes of and in the
amount of your out-of-pocket expenses incurred in connection with distributing
the Distribution Plan Shares) and (b) up to .15% of the average daily net asset
value of such shares (such reimbursement to be for the purposes of and in the
amount of payments by you to one or more securities dealers, financial
institutions and other industry professionals who are dealers or shareholders of
record or which otherwise have a servicing relationship with the beneficial
owners of the Distribution Plan Shares for distribution assistance and/or
support services provided with respect to the
-2-
<PAGE>
Shares pursuant to the Distribution and Administrative Service Plan with respect
to the Distribution Plan Shares). The amount of such compensation shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Board of Trustees and you may mutually agree.
3. CONTINUING VALIDITY. The provisions of the Agreement shall remain
in full force and effect as modified hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers designated below on day and year
first above written.
WESTCORE TRUST
By:/s/Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds Services, Inc.
By:/s/W. Robert Alexander
--------------------------------
W. Robert Alexander, President
-3-
<PAGE>
AMENDMENT NO. 8
TO THE DISTRIBUTION AGREEMENT
Amendment dated as of December 28, 1993 to the Distribution Agreement
(the "Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and ALPS Securities, Inc. d/b/a ALPS
Mutual Funds Services, Inc., a Colorado corporation ("ALPS").
BACKGROUND
1. ALPS serves as distributor for certain of the investment
portfolios of the Trust pursuant to the Agreement, and also serves as
administrator of said investment portfolios under an Administration Agreement,
dated as of October 1, 1993.
2. The Trust is this day appointing ALPS as administrator for the
Trust's Small-Cap Opportunity Fund (the "Fund").
3. The Trust desires to employ ALPS as its distributor of the shares
of the Fund, and ALPS is willing to provide such services.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints ALPS to act as
distributor for the Fund for the period and on the terms set forth in the
Agreement. ALPS accepts such appointment for said period and on said terms, and
agrees to provide the services set forth in the Agreement.
2. CONTINUING VALIDITY. The provisions of the Agreement shall
remain in full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers designated below on the day and
year first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-------------------------------
Jack D. Henderson, President
ALPS Mutual Funds Services, Inc.
By: /s/ W. Robert Alexander
-------------------------------
W. Robert Alexander, President
<PAGE>
BROKER-DEALER AGREEMENT
(FULLY DISCLOSED BASIS)
ALPS Securities, Inc.
Suite 1605 South
600 Seventeenth Street
Denver, Colorado 80202
Gentlemen:
We desire to enter into an Agreement with you for the sale of shares of
beneficial interest in investment portfolios (collectively "Funds") of Westcore
Trust (the "Trust") that are now or hereafter available for sale to our
customers. You are the principal underwriter (as such term is defined in the
Investment Company Act of 1940, as amended) of the offering of shares of the
Funds and the exclusive agent for the continuous distribution of such shares
pursuant to the terms of a Distribution Agreement between you and the Trust. As
used herein the term "Prospectus" means the prospectus and, unless the context
otherwise requires, related statement of additional information (the "Statement
of Additional Information") incorporated therein by reference, as the same are
amended and supplemented from time to time, of each of the respective Funds.
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. You acknowledge that customers of ours who purchase Fund shares are
our customers. We shall be responsible for opening, approving and
monitoring customer accounts and for the review and supervision of
these accounts, all in accordance with the rules of the Securities and
Exchange Commission ("SEC") and National Association of securities
Dealers, Inc. (the "NASD"). In no transaction involving Fund shares
shall we have any authority to act as agent for the Trust or for you.
2. All orders for the purchase of any Fund shares shall be executed at
the then current public offering price per share (I.E., the net asset
value per share plus the applicable sales load, if any) and all orders
for the redemption of any Fund shares shall be executed at the net
asset value per share, in each case as described in the Prospectus of
such Fund. The minimum initial purchase order and minimum subsequent
purchase order by any person shall be as set forth in the Prospectus
of such Fund. All orders are subject to acceptance or
<PAGE>
rejection by the Trust at its sole discretion. Unless otherwise
mutually agreed in writing, each transaction shall be promptly
confirmed in writing to the customer on a fully disclosed basis and a
copy of each confirmation shall be sent simultaneously to us. We
agree that upon receipt of duplicate confirmations we will examine the
same and promptly notify the Trust of any errors or discrepancies
which we discover and shall promptly bring to the attention of the
Trust any errors in such confirmations claimed by our customers. The
Trust reserves the right, at its discretion and without notice, to
suspend the sale of shares or withdraw entirely the sale of shares of
any or all of the Funds.
3. In ordering shares of any Fund, we shall rely solely and conclusively
on the representations contained in the Prospectus of such Fund. We
agree that we shall not offer or sell shares of any Fund except in
compliance with all applicable federal and state securities laws and
the rules and regulations of applicable regulatory agencies or
authorities. In connection with offers to sell and sales of shares of
each Fund, we agree to deliver or cause to be delivered to each person
to whom any such offer or sale is made, at or prior to the time of
such offer or sale, a copy of the Prospectus and, upon request, the
Statement of Additional Information of the Fund involved. We further
agree to obtain from each customer to whom we sell Fund shares any
taxpayer identification number certification required under Section
3406 of the Internal Revenue Code of 1986, as amended (the "Code"),
and the regulations promulgated thereunder, and to provide you or your
designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding in accordance with
Section 3406 of the Code and the regulations thereunder. Unless
otherwise mutually agreed in writing, you shall deliver or cause to be
delivered to each of the customers who purchases shares of any Fund
through us copies of all annual and interim reports, proxy
solicitation materials and any other information and materials
relating to such Fund and prepared by or on behalf of you, the Trust
or its investment adviser, custodian, transfer agent or dividend
disbursing agent for distribution to such customer. You agree to
supply us with copies of the Prospectus, Statement of Additional
Information, annual reports, interim reports, proxy solicitation
materials and any such other information and materials relating to
each Fund in reasonable quantities upon request. We acknowledge that
any material or information that you
-2-
<PAGE>
furnish to us, other than Prospectuses, annual and interim reports to
shareholders and proxy solicitation materials prepared by the Trust,
are your sole responsibility and not the responsibility of the Trust.
4. We shall not make any representations concerning any Fund shares other
than those contained in the Prospectus of the Fund involved or in any
promotional materials or sales literature furnished to us by you or
the Trust. We shall not furnish or cause to be furnished to any
person or display or publish any information or materials relating to
any Fund (including, without limitation, promotional materials and
sales literature, advertisements, press releases, announcements,
statements, posters, signs or other similar material), except such
information and materials as may be furnished to us by you or the
Trust, and such other information and materials as may be approved in
writing by you.
5. In determining the amount of any sales commission pay-able to us
hereunder, you reserve the right to exclude any sales which you
reasonably determine are not made in accordance with the terms of the
applicable Fund Prospectus and the provisions of this Agreement.
Unless at the time of transmitting an order we advise you or to the
transfer agent for the Fund involved (the "Transfer Agent") to the
contrary, the shares ordered will be deemed to be the total holdings
of the specified investor.
6. (a) In the case of any Fund shares sold with a sales load, customers
may be entitled to a reduction of the sales load on purchases made
under a letter of intent ("Letter of Intent") in accordance with the
Prospectus of the Fund involved. In such case our sales commission
will be paid based upon the reduced sales load, but adjustment will be
made in accordance with the Prospectus of the applicable Fund to
reflect actual purchases of the customer if he should fail to fulfill
his Letter of Intent. The sales load and/or our sales commission may
be changed at any time in the Trust's sole discretion.
(b) In accordance with the terms of the Prospectus of the Fund
involved, a reduced sales load may also be applicable with respect to
customer accounts through a right of accumulation under which
customers are permitted to purchase shares of a Fund sold with a sales
load at the then current public offering price per share applicable to
the total of (i) the dollar amount of shares then being purchased plus
(ii) an
-3-
<PAGE>
amount equal to the then current net asset value of shares of such
Fund (and any other Fund as may be permitted by the applicable
Prospectus) that are already beneficially owned at the time of
purchase by the customer on which a sales load has been paid. In each
case where a reduced sales load is applicable, we agree to furnish to
the Transfer Agent sufficient information to permit confirmation of
qualification for a reduced sales load, and acceptance of the purchase
order is subject to such confirmation.
(c) For the purpose of applying the Letter of Intent and right of
accumulation privileges offered by the Trust, reduced sales loads may
apply to the combined purchases made by a customer and certain other
persons (for example, a customer's spouse and minor children) as set
forth from time to time in the applicable Fund Prospectus. The Letter
of Intent and right of accumulation privileges may be modified in any
respect or terminated by the Trust at any time in its sole discretion.
(d) We acknowledge that certain classes of investors may be entitled
to purchase shares of a Fund at net asset value without a sales load
as from time to time provided in the applicable Fund Prospectus.
(e) We agree to advise you promptly at your request as to amount of
any and all sales by us qualifying for reduced sales load or no sales
load.
(f) Exchanges (I.E., the investment of the proceeds from the
liquidation of shares of one Fund in the shares of another Fund)
shall, where available, be made in accordance with the terms of each
Fund Prospectus.
7. The procedures relating to orders and the handling thereof will be
subject to the terms of the Prospectus of the Fund involved and
instructions received by us from you or the Transfer Agent from time
to time. No conditional orders will be accepted. We agree that
purchase orders placed by us will be made only for the purpose of
covering purchase orders already received from our customers and that
we will not make purchases for any other securities dealer or broker.
Further, we shall place purchase orders from customers with the Trust
immediately and shall not withhold the placement of such orders so as
to profit ourselves; provided, however, that the foregoing shall not
prevent the purchase of shares of any Fund by us for our own bona fide
investment. We agree that: (a) we shall not effect any transactions
(including, without limitation,
-4-
<PAGE>
any purchases and redemptions) in any Fund shares registered in the
name of, or beneficially owned by, any customer unless such customer
has granted us full right, power and authority to effect such
transactions on his behalf, and (b) you, the Trust, each Transfer
Agent and your and their respective officers, directors or trustees,
agents, employees and affiliates shall not be liable for, and shall be
fully indemnified and held harmless by us from and against, any and
all claims, demands, liabilities and expenses (including, without
limitation, reasonable attorneys' fees) which may be incurred by you
or any of the foregoing persons entitled to indemnification from us
hereunder arising out of or in connection with the execution of any
transactions in Fund shares registered in the name of, or beneficially
owned by, any customer in reliance upon any oral or written
instructions believed to be genuine and to have been given by or on
behalf of us. The indemnification agreement contained in this
Paragraph 7 shall survive the termination of this Agreement.
8. (a) We agree that payment for orders from us for the purchase of Fund
shares will be made in accordance with the terms of the Prospectus of
the applicable Fund. On or before the settlement date of each
purchase order for shares of any Fund, we shall either (i) remit to an
account designated by you with the Transfer Agent an amount equal to
the then current public offering price of the shares of such Fund
being purchased less our sales commission, if any, with respect to
such purchase order as determined by you in accordance with the terms
of the applicable Fund Prospectus, or (ii) remit to an account
designated by you with the Transfer Agent an amount equal to the then
current public offering price of the shares of such Fund being
purchased without deduction for our sales commission, if any, with
respect to such purchase order as determined by you in accordance with
the terms of the applicable Fund Prospectus, in which case our sales
commission, if any, shall be payable to us on at least a monthly
basis. If payment for any purchase order is not received in
accordance with the terms of the applicable Fund Prospectus, you
reserve the right, without notice, to cancel the sale and to hold us
responsible for any loss sustained as a result thereof.
(b) If any shares sold under the terms of this Agreement are sold with
a sales load and are redeemed for the account of a Fund or are
tendered for redemption within seven (7) business days after
confirmation of our purchase order for such shares: (i) we shall
forthwith refund to you the full sales
-5-
<PAGE>
commission received by us on the sale; and (ii) you shall forthwith
pay to the Fund your portion of the sales load on the sale which had
been retained by you, if any, and shall also pay to the Trust the
amount refunded by us.
9. Certificates for shares sold hereunder shall only be issued in
accordance with the terms of each Fund Prospectus upon our customer's
specific request and, upon such request, shall be promptly delivered
to us by the Transfer Agent unless other arrangements are made by you
and us. However, in making delivery of such share certificates, the
Transfer Agent shall have adequate time to clear any checks drawn for
the payment of Fund shares. We acknowledge that the terms of a Fund's
Prospectus may provide that certificates for shares will not be issued
under any circumstances.
10. We hereby represent and warrant that: (a) we are a corporation,
partnership or other entity duly organized and validly existing in
good standing under the laws of the jurisdiction in which we were
organized; (b) the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby have been duly
authorized by all necessary action and all other authorizations and
approvals (if any) required for our lawful execution and delivery of
this Agreement and our performance hereunder have been obtained; and
(c) upon execution and delivery by us, and assuming due and valid
execution and delivery by you, this Agreement will constitute a valid
and binding agreement, enforceable against us in accordance with its
terms.
11. We further represent and warrant that we are a member of the NASD and,
with respect to any sales in the United States, we agree to abide by
all of the rules and regulations of the NASD, including, without
limitation, its Rules of Fair Practice. We agree to comply with all
applicable federal and state laws, rules and regulations. You agree
to inform us, upon our request, as to the states in which you believe
the shares of the respective Funds have been qualified for sale under,
or are exempt from the requirements of, the respective securities laws
of such states, but you shall have no obligation or responsibility to
make shares of any Funds available for sale to our customers in any
jurisdiction. We agree to notify you immediately in the event of our
expulsion or suspension from the NASD. Our expulsion from the NASD
will automatically terminate this Agreement immediately without
notice. Our suspension from the NASD will
-6-
<PAGE>
terminate this Agreement effective immediately upon your written
notice of termination to us.
12. The names and addresses and other information concerning our customers
are and shall remain our sole property, and neither you nor your
affiliates shall use such names, addresses or other information for
any purpose except in connection with the performance of your duties
and responsibilities hereunder and except for servicing and
informational mailings relating to the Funds. Notwithstanding the
foregoing, this Paragraph 12 shall not prohibit you or any of your
affiliates from utilizing for any purpose the names, addresses or
other information concerning any of our customers if such names,
addresses or other information are obtained in any manner other than
from us pursuant to this Agreement. The provisions of this Paragraph
12 shall survive the termination of this Agreement.
13. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an
exclusive arrangement, or to create a partnership, association or
joint venture between you and us. Neither party hereto shall be, act
as, or represent itself as, the agent or representative of the other,
nor shall either party have the right or authority to assume, create
or incur any liability or any obligation of any kind, express or
implied, against or in the name of, or on behalf of, the other party.
This Agreement is not intended to, and shall not, create any rights
against either party hereto by any third party solely on account of
this Agreement. Neither party hereto shall use the name of the other
party in any manner without the other party's prior written consent,
except as required by any applicable federal or state law, rule or
regulation, and except pursuant to any promotional programs mutually
agreed upon in writing by the parties hereto.
14. Except as otherwise specifically provided herein, all notices required
or permitted to be given pursuant to this Agreement shall be given in
writing and delivered by personal delivery or by postage prepaid,
registered or certified United States first class mail, return receipt
requested, or by telex, telegram or similar means of same day delivery
(with confirming copy by mail as provided herein), unless otherwise
notified in writing, all notices to you shall be given or sent to you
at your offices, located at Suite 1605 South, 600 Seventeenth Street,
Denver, Colorado 80202, and all notices to us shall be given or sent
to us at our address shown below.
-7-
<PAGE>
15. This Agreement shall become effective only when accepted and signed by
you, and may be terminated at any time by either party hereto upon
fifteen (15) days' prior written notice to the other party. This
Agreement may be amended only by a written instrument signed by both
of the parties hereto and may not be assigned by either party without
the prior written consent of the other party. This Agreement
constitutes the entire agreement and understanding between the parties
hereto relating to the subject matter hereof and supersedes any and
all prior agreements between the parties relating to said subject
matter.
16. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of Colorado, without giving effect to
principles of conflicts of laws.
Very truly yours,
---------------------------------------------
Name of Broker-Dealer (Please Print or Type)
---------------------------------------------
---------------------------------------------
Address
Date: By:
--------------- -----------------------------------------
Authorized Officer
NOTE: Please sign and return both copies of this Agreement to ALPS
Securities, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
ALPS SECURITIES, INC.
Date: By:
--------------- -----------------------------------------
Authorized Officer
-8-
<PAGE>
BANK AGREEMENT
ALPS Mutual Funds Services, Inc.
Suite 1605 South
600 Seventeenth Street
Denver, Colorado 80202
Gentlemen:
We are either (i) a "bank" (as such term is defined in Section 3(a)(6) of the
Securities Exchange Act of 1934, as amended) or (ii) a broker-dealer that is
registered with the Securities and Exchange Commission ("SEC") under said Act
and is affiliated with a "bank" as so defined. We desire to make available to
our customers shares of beneficial interest in investment portfolios
(collectively "Funds") of Westcore Trust (the "Trust") that are now or hereafter
available for sale to our customers. You are the principal underwriter (as such
term is defined in the Investment Company Act of 1940, as amended) of the
offering of shares of the Funds and the exclusive agent for the continuous
distribution of such shares pursuant to the terms of a Distribution Agreement
between you and the Trust. As used herein the term "Prospectus" shall mean the
prospectus and, unless the context otherwise requires, related statement of
additional information (the "Statement of Additional Information") incorporated
therein by reference, as the same are amended and supplemented from time to
time, of each of the respective Funds.
In consideration for the mutual covenants contained herein, it is hereby agreed
that our respective rights and obligations shall be as follows:
1. With respect to any and all transactions in the shares of any Fund pursuant
to this Agreement, it is understood and agreed in each case that: (a) we
shall be acting solely as agent for the account of our customer; (b) each
transaction shall be initiated solely upon the order of our customer; (c)
each transaction shall be executed by the Trust only upon receipt of
instructions from us acting as agent for our customer; (d) as between us
and our customer, our customer will have full beneficial ownership of all
Fund shares; and (e) each transaction shall be for the account of our
customer and not for our account. Each transaction shall be without
recourse to us provided that we act in accordance with the terms of this
Agreement. We represent and warrant that we will have full right, power and
authority to effect transactions (including, without limitation, any
purchases and redemptions) in Fund shares on behalf of all customer
accounts provided by us to you or to any transfer agent as such term is
defined in the Prospectus of each Fund (the "Transfer Agent"). Customers of
ours who purchase Fund
<PAGE>
shares are for all purposes our customers and not customers of the Trust.
We shall be responsible for opening, approving and monitoring customer
accounts and for the review and supervision of these accounts, all in
accordance with applicable law, including the rules of the SEC and National
Association of Securities Dealers, Inc. (the "NASD") if applicable and/or
the regulations of applicable federal and state bank regulatory agencies or
authorities. In no transaction involving Fund shares shall we have any
authority to act as agent for the Trust or for you.
2. All orders for the purchase of any Fund shares shall be executed at the
then current public offering price per share (I.E., the net asset value per
share plus the applicable sale load, if any) and all orders for the
redemption of any Fund shares shall be executed at the net asset value per
share, in each case as described in the Prospectus. The minimum initial
purchase order and minimum subsequent purchase order by any person shall be
as set forth in the Prospectus of such fund. All orders are subject to
acceptance or rejection by the Trust at its sole discretion. Unless
otherwise mutually agreed in writing, each transaction shall be promptly
confirmed in writing to the customer on a fully disclosed basis and a copy
of each confirmation shall be sent simultaneously to us. We agree that
upon receipt of duplicate confirmations we will examine the same and
promptly notify the Trust of any errors or discrepancies which we discover
and shall promptly bring to the attention of the Trust any errors in such
confirmations claimed by our customers. The Trust reserves the right, at
its discretion and without notice, to suspend the sale of shares or
withdraw entirely the sale of shares of any or all of the Funds.
3. We agree that we shall not make shares of any Fund available to our
customers except in compliance with all applicable federal and state laws
and the rules and regulations of applicable regulatory agencies or
authorities. We agree that we shall not purchase any Fund shares, as agent
for any customer, unless we deliver or cause to be delivered to such
customer, at or prior to the time of delivery of the sale confirmation, a
copy of the appropriate Prospectus of the Fund involved, or unless such
customer has acknowledged receipt of Prospectus of such fund. We further
agree that such sale confirmation, accompanied by the appropriate
Prospectus, shall be delivered by the Transfer Agent, upon receipt of an
order to purchase units from us. We further agree to obtain from each
customer for whom we act as agent for the purchase of Fund shares any
taxpayer identification number certification required under Section 3406 of
the Internal Revenue Code of 1986, as amended (the "Code"), and the
regulations promulgated thereunder, and to provide you
-2-
<PAGE>
or your designee with timely written notice of any failure to obtain such
taxpayer identification number certification in order to enable the
implementation of any required backup withholding in accordance with
Section 3406 of the Code and the regulations thereunder. Unless otherwise
mutually agreed in writing, you shall deliver or cause to be delivered to
each of the customers who purchases shares of any Fund through us copies of
all annual and interim reports, proxy solicitation materials and any other
information and materials relating to such Fund and prepared by or on
behalf of you, the Trust or its investment adviser, custodian, transfer
agent or dividend disbursing agent for distribution to such customer. You
agree to supply us with copies of the Prospectus, Statement of Additional
Information, annual and interim reports, proxy solicitation materials and
any such other information and materials relating to each Fund in
reasonable quantities upon request. We acknowledge that any material or
information that you furnish to us, other than Prospectuses, annual and
interim reports to shareholders and proxy solicitation materials prepared
by the Trust, are your sole responsibility and not the responsibility of
the Trust.
4. We shall not make any representations concerning any Fund shares other than
those contained in the Prospectus of the Fund involved or in any
promotional materials or sales literature furnished to us by you or the
Trust. We shall not furnish or cause to be furnished to any person or
display or publish any information or materials relating to any Fund
(including, without limitation, promotional materials and sales literature,
advertisements, press releases, announcements, statements, posters, signs
or other similar material), except such information and materials as may be
furnished to us by you or the Trust, and such other information and
materials as may be approved in writing by you.
5. In the case of purchases of Fund shares hereunder that are sold with a
sales load, an agency commission shall be payable to us as hereinafter
provided. In determining the amount of any agency commission payable to us
hereunder, you reserve the right to exclude any accounts which you
reasonably determine are not initiated, and any subsequent purchases for
any accounts which you reasonably determine are not made, in accordance
with the terms of the applicable Fund Prospectus and the provisions of this
Agreement. Unless at the time of transmitting an order we advise you or the
Transfer Agent to the contrary, the shares ordered will be deemed to be the
total holdings of the specified customer.
6. (a) In the case of any Fund shares sold with a sales load, customers may be
entitled to a reduction of the sales load on purchases made under a letter
of intent ("Letter of
-3-
<PAGE>
Intent") in accordance with the Prospectus of the Fund involved. In such
case, our agency commission will be paid based upon the reduced sales load,
but an adjustment will be made in accordance with the Prospectus of the
applicable Fund to reflect actual purchases of the customer if he should
fall to fulfill his Letter of Intent. The sales load and/or agency
commission may be changed at any time in the Trust's sole discretion.
(b) In accordance with the terms of the Prospectus of the Fund involved, a
reduced sales load may also be applicable with respect to customer accounts
through a right of accumulation under which customers are permitted to
purchase shares of a Fund sold with a sales load at the then current public
offering per share applicable to the total of (i) the dollar amount of
shares then being purchased plus (ii) an amount equal to the then current
net asset value of shares of such Fund (and any other Fund as may be
permitted by the applicable Prospectus) that are already beneficially owned
at the time of purchase by the customer on which a sales load has been
paid. In each case where a reduced sales load is applicable, we agree to
furnish to the Transfer Agent sufficient information to permit confirmation
of qualification for a reduced sales load, and acceptance of the purchase
order is subject to such confirmation.
(c) For the purpose of applying the Letter of Intent and right of
accumulation privileges offered by the Trust, reduced sales loads may apply
to the combined purchases made by a customer and certain other persons (for
example, a customer's spouse and minor children) as set forth from time to
time in the applicable Fund Prospectus. The Letter of Intent and right of
accumulation privileges may be modified in any respect or eliminated by the
Trust at any time in its sole discretion.
(d) We acknowledge that certain classes of investors may be entitled to
purchase shares of a Fund at net asset value without a sales load as from
time to time provided in the applicable Fund Prospectus.
(e) We agree to advise you promptly at your request as to amounts of any
and all purchases of Fund shares made by us, as agent for our customers,
qualifying for a reduced sales load or no sales load.
(f) Exchanges (I.E., the investment of the proceeds from the liquidation of
shares of one Fund in the shares of another Fund) shall, where available,
be made in accordance with the terms of each Fund Prospectus.
-4-
<PAGE>
7. The procedures relating to orders and the handling thereof will be subject
to the terms of the Prospectus of the Fund involved and instructions
received by us from you or the Transfer Agent from time to time. No
conditional orders will be accepted. We agree that purchase orders placed
by us will be made only for the purpose of covering purchase orders already
received from our customers and that we will not make purchases for any
securities dealer or broker. Further, we shall not withhold the placement
of such orders so as to profit ourselves; provided, however, that the
foregoing shall not prevent the purchase of shares of any Fund by us for
our own bona fide investment.
8. (a) We agree to pay for purchase orders of any Fund shares from us as agent
for our customers in accordance with the terms of the Prospectus of the
applicable Fund. On or before the settlement date of each purchase order
for shares of any Fund, we shall either (i) remit to an account designated
by you with the Transfer Agent an amount equal to the then current public
offering price of the shares of such Fund being purchased less our agency
commission, if any, with respect to such purchase order as determined by
you in accordance with the terms of the applicable Fund Prospectus, or (ii)
remit to an account designated by you with the Transfer Agent an amount
equal to the then current public offering price of the shares of such Fund
being purchased without deduction for our agency commission, if any, with
respect to such purchase order as determined by you in accordance with the
terms of the applicable Fund Prospectus, in which case our agency
commission, if any, shall be payable to us by you on at least a monthly
basis. If payment for any purchase order is not received in accordance
with the terms of the applicable Fund Prospectus, you reserve the right,
without notice, to cancel the sale and to hold us responsible for any loss
sustained as a result thereof.
(b) If any shares sold to us as agent for our customers under the terms of
this Agreement are sold with a sales load and are redeemed for the account
of a Fund or are tendered for redemption within seven (7) business days
after confirmation of our purchase order for such shares: (i) we shall
forthwith refund to you the full agency commission received by us on the
sale; and (ii) you shall forthwith pay to the Fund your portion of the
sales load on the sale which had been retained by you, if any, and shall
also pay to the Trust the amount refunded by us.
9. Certificates for shares sold hereunder shall only be issued in accordance
with the terms of each Fund Prospectus upon our customers' specific request
and, upon such request, shall be promptly delivered to us, acting as agent
for our
-5-
<PAGE>
customers, by the Transfer Agent unless other arrangements are made by you
and us. However, in making delivery of such share certificates, the
Transfer Agent shall have adequate time to clear any checks drawn for the
payment of Fund shares. We acknowledge that the terms of a Fund's
Prospectus may provide that certificates for shares will not be issued
under any circumstances.
10. We hereby represent and warrant that: (a) we are a corporation,
partnership, national association or other entity duly organized and
validly existing in good standing under the laws of the jurisdiction in
which we are organized; (b) the execution and delivery of this Agreement
and the performance of the transactions contemplated hereby have been duly
authorized by all necessary action and all other authorizations and
approvals (if any) required for our lawful execution and delivery of this
Agreement and our performance hereunder have been obtained; and (c) upon
execution and delivery by us, and assuming due and valid execution and
delivery by you, this Agreement will constitute a valid and binding
agreement, enforceable against us in accordance with its terms.
11. If we are a bank as defined in the first paragraph of this Agreement, then
we agree to give written notice to you immediately in the event that we
cease to be a "bank" as so defined. In such event, this Agreement shall
automatically terminate upon such written notice.
12. You agree to inform us, upon our request, as to the states in which you
believe the shares of the respective Funds have been qualified for sale
under, or are exempt from the requirements of, the respective securities
laws of such states, but you shall have no obligation or responsibility to
make shares of any Funds available for sale to our customers in any
jurisdiction.
13. The names and addresses and other information concerning our customers are
and shall remain our sole property, and neither you nor your affiliates
shall use such names, addresses or other information for any purpose except
in connection with the performance of your duties and responsibilities
hereunder and except for servicing and informational mailings relating to
the Funds. Notwithstanding the foregoing, this Paragraph 13 shall not
prohibit you or any of your affiliates from utilizing for any purpose the
names, addresses or other information concerning any of our customers if
such names, addresses or other information are obtained in any manner other
than from us pursuant to this Agreement. The provisions of this Paragraph
13 shall survive the termination of this Agreement.
-6-
<PAGE>
14. (a) We will indemnify and hold you, the Trust, each transfer agent and
their respective officers, directors or trustees, agents, employees,
affiliates and controlling persons harmless against any and all losses,
claims, damages, liabilities, actions, costs or expenses (including any
legal expenses) insofar as such losses, claims, damages, liabilities,
actions, costs or expenses arise out of or are based upon (i) the execution
of any transactions in Fund shares registered in the name of, or
beneficially owned by, any customer in reliance upon any oral or written
instructions believed to be genuine and to have been given by or on behalf
of us or (ii) the negligent, reckless or intentional conduct of us or our
employees.
(b) You will indemnify and hold harmless us and our directors, officers,
employees, agents, controlling persons and affiliates against any and all
losses, claims, damages, liabilities, actions, costs or expenses insofar as
such losses, claims, damages, liabilities, actions, costs or expenses arise
out of or are based upon your or your employees negligent, reckless or
intentional conduct.
(c) A party seeking indemnification (an "Indemnified Party") hereunder will
(i) give prompt written notice to other party hereto (the "Indemnifying
Party") of any claim with respect to which it seeks indemnification, and
(ii) permit such Indemnifying Party to assume the defense of such claim
with counsel reasonably satisfactory to the Indemnified Party, PROVIDED,
HOWEVER, that the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense of such claim, but the fees and
expenses of such counsel shall be at the expense of the Indemnified Party
unless (w) the Indemnifying Party has agreed in writing to pay such fees or
expenses, or (x) the Indemnifying Party shall have failed to assume the
defense of such claim or employ counsel reasonably satisfactory to the
Indemnified Party, or (y) the defendants in any such action include both
the Indemnifying Party and the Indemnified Party, and the Indemnified Party
has reasonably concluded that there may be legal defenses available to it
which are different from or additional to those available to the
Indemnifying Party, or (z) there exists or will exist a conflict of
interest between the Indemnified Party and Indemnifying Party which would
make it inappropriate in the reasonable judgement of the Indemnified Party
for the same counsel to represent both the Indemnified Party and the
Indemnifying Party (in which case, if the Indemnified Party notifies the
Indemnifying Party in writing that the Indemnified Party elects to employ
separate counsel at the expense of the Indemnifying Party, the Indemnified
Party shall cooperate with the Indemnifying Party in the contest or defense
thereof. The Indemnifying Party, in defense of any action assumed by it,
shall not,
-7-
<PAGE>
without the consent of the Indemnified Party, consent to entry of any
judgment or enter into any settlement of such action which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
the Indemnified Party of a release from all liability in respect to such
action. If such defense is not assumed by the Indemnifying Party, the
Indemnifying Party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably
withheld), and the Indemnifying Party will not be required to consent to
entry of any judgment or entry into any settlement which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to
the Indemnified Party of a release from all liability in respect to such
action. If the Indemnifying Party is not entitled to, or elect not to,
assume the defense of a claim, the Indemnifying Party will not be obligated
to pay the fees and expenses of more than one counsel for all parties
indemnified by the Indemnifying Party with respect to such claim, unless in
the reasonable judgment of the Indemnified Party a conflict of interest may
exist between any of the Indemnified parties with respect to such claim, in
which event the Indemnifying Party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.
(d) The indemnification agreement contained in this paragraph shall survive
the termination of this Agreement.
15. Neither this Agreement nor the performance of the services of the
respective parties hereunder shall be considered to constitute an exclusive
arrangement, or to create a partnership, association or joint venture
between you and us. Neither party hereto shall be, act as, or represent
itself as, the agent or representative of the other, nor shall either party
have the right or authority to assume, create or incur any liability or any
obligation of any kind, express or implied, against or in the name of, or
on behalf of, the other party. This Agreement is not intended to, and
shall not, create any rights against either party hereto by any third party
solely on account of this Agreement. Neither party hereto shall use the
name of the other party in any manner without the other party's prior
written consent, except as required by any applicable federal or state law,
rule or regulation, and except pursuant to any promotional programs
mutually agreed upon in writing by the parties hereto.
16. Except as otherwise specifically provided herein, all notices required or
permitted to be given pursuant to this Agreement shall be given in writing
and delivered by personal delivery or by postage prepaid, registered or
certified United States first class mail, return receipt
-8-
<PAGE>
requested, or by telex, telegram or similar means of same day delivery
(with a confirming copy by mail as provided herein). Unless otherwise
notified in writing, all notices to you shall be given or sent to you at
your offices located at Suite 1605 South, 600 Seventeenth Street, Denver,
Colorado 80202, and all notices to us shall be given or sent to us at our
address shown below.
17. This Agreement shall become effective only when accepted and signed by you,
and may be terminated at any time by either party hereto upon fifteen (15)
days' prior written notice to the other party. This Agreement may be
amended only by a written instrument signed by both of the parties hereto
and may not be assigned by either party without the prior written consent
of the other party. This Agreement constitutes the entire agreement and
understanding between the parties hereto relating to the subject matter
hereof and supersedes any and all prior agreements between the parties
relating to said subject matter.
18. This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Colorado, without giving effect to principles
of conflicts of laws.
Very truly yours,
-------------------------------------------------------
Name of Bank or Bank-Affiliated
Broker-Dealer
(Please Print or Type)
-------------------------------------------------------
-------------------------------------------------------
Address
Date: By:
--------------- ----------------------------------------------------
Authorized Officer
NOTE: Please sign and return both copies of this Agreement to ALPS Mutual
Funds Services, Inc. Upon acceptance one countersigned copy will be
returned to you for your files.
Accepted:
ALPS MUTUAL FUNDS SERVICES, INC.
Date: By:
--------------- ----------------------------------------------------
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<PAGE>
Authorized Officer
-10-
<PAGE>
CUSTODY AGREEMENT
THIS AGREEMENT is made this 30th day of November, 1987, by and between
WESTCORE TRUST, a Massachusetts business trust (the "Trust"), and FIRST
INTERSTATE BANK OF DENVER, N.A., a national banking association ("First
Interstate").
W I T N E S S E T H :
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended ("the 1940 Act");
and
WHEREAS, the Trust desires to retain First Interstate to serve as the
custodian for the Trust's MIDCO Growth Fund, Modern Value Equity Fund, Equity
Income Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and
Short/Intermediate-Term Bond Fund (the "Funds") and First Interstate is willing
to furnish such services:
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints First Interstate to act
as custodian of the portfolio securities, cash, and other property belonging to
each of the Funds for the period and on the terms set forth in this Agreement.
First Interstate accepts such appointment and agrees to furnish the services
<PAGE>
herein set forth in return for the compensation as provided n Paragraph 22 this
Agreement. First Interstate agrees to comply with all relevant provisions of
the 1940 Act and applicable rules and regulations thereunder.
2. DELIVERY OF DOCUMENTS. The Trust has furnished First Interstate
with copies properly certified or authenticated of each of the following:
(a) Resolutions of the Trust's Board of Trustees authorizing the
appointment of First Interstate as custodian of the portfolio securities, cash
and other property of each Fund and approving this Agreement;
(b) Incumbency and signature certificates identifying and
containing the signatures of the Trust's officers and/or other persons
authorized to sign Written Instructions, as hereinafter defined, on behalf of
the Trust;
(c) The Trust's Amended and Restated Declaration of Trust dated
as of November 19, 1987 and all amendments thereto (such Declaration of Trust,
as presently in effect and as it shall from time to time be amended or
supplemented, is herein called the "Declaration of Trust");
(d) The Trust's Code of Regulations and all amendments thereto
(such Code of Regulations, as presently in effect and as it shall from time to
time be amended, is herein called the "Code of Regulations");
(e) Resolutions of the Trust's Board of Trustees appointing
First Interstate as the investment adviser, and Denver
-2-
<PAGE>
Investment Advisors, Inc. as the sub-investment adviser, of the Funds, and
resolutions of the Trust's Board of Trustees and holders of shares of beneficial
interest ("Shareholders") of the Funds approving proposed Investment Advisory
and Sub-Advisory Agreements pertaining to the Funds;
(f) Resolutions of the Trust's Board of Trustees appointing ALPS
Securities, Inc; ("ALPS") as the Funds' distributor and administrator and
resolutions of the Trust's Board of Trustees approving a proposed Distribution
Agreement and a proposed Administration Agreement pertaining to the Funds;
(g) Resolutions of the Trust's Board of Trustees appointing
Fund/Plan Services, Inc. as the transfer agent, dividend disbursing agent and
accounting services agent of the Funds, and resolutions of the Trust's Board of
Trustees approving a proposed General Services Agreement and a proposed
Accounting Services Agreement pertaining to the Funds;
(h) Copies of each of the aforesaid proposed agreements;
(i) Post-Effective Amendment No. 13 to the Trust's Registration
Statement on Form N-1A under the Securities Act of 1933, as amended ("the 1933
Act"), and under the 1940 Act as filed with the Securities and Exchange
Commission ("SEC"); and
(j) The Trust's most recent Prospectus pertaining to the Funds
(such prospectus, together with the related statement of additional information,
as presently in effect and
-3-
<PAGE>
all amendments and supplements thereto, are herein called the "Prospectus").
The Trust will furnish First Interstate from time to time with copies
of all amendments of or supplements to the foregoing, if any.
3. DEFINITIONS.
(a) "AUTHORIZED PERSON". As used in this Agreement, the term
"Authorized Person" means the Trust's President, Treasurer, and any other
person, whether or not any such person is an officer or employee of the Trust,
duly authorized by the Board of Trustees of the Trust to give Oral and Written
Instructions on behalf of the Trust and listed on the Certificate annexed hereto
as Appendix A or such other Certificate listing persons duly authorized to give
Oral and Written Instructions on behalf of the Trust as may be received by First
Interstate from time to time.
(b) "BOOK-ENTRY SYSTEM". As used in this Agreement, the term
"Book-Entry System" means the Federal Reserve/Treasury book-entry system for
United States and federal agency securities, its successor or successors and its
nominee or nominees.
(c) "DEPOSITORY". As used in this Agreement. the term
"Depository" means a clearing agency registered with the SEC under Section 17A
of the Securities Exchange Act of 1934, as amended ("1934 Act") which acts as a
depository.
-4-
<PAGE>
(d) "ORAL INSTRUCTIONS". As used in this Agreement, the term
"Oral Instructions" means verbal instructions actually received by First
Interstate from an Authorized Person or from a person reasonably believed by
First Interstate to be an Authorized Person. The Trust agrees to deliver to
First Interstate, at the time and in the manner specified in Paragraph 8(b) of
this Agreement, Written Instructions confirming Oral Instructions.
(e) "PROPERTY". The term "Property", as used in this Agreement,
means:
(i) any and all securities and other property which
the Trust may from time to time deposit, or cause to be deposited,
with First Interstate with respect to any Fund or which First
Interstate may from time to time hold for the Trust with respect to a
Fund;
(ii) all income in respect of any of such securities or
other property;
(iii) all proceeds of the sale of any of such securities
or other property; and
(iv) all proceeds of the sale of securities issued by
the Trust with respect to any Fund, which are received by First
Interstate from time to time from or on behalf of the Trust.
(f) "WRITTEN INSTRUCTIONS". As used in this Agreement, the term
"Written Instructions" means written instructions delivered by mail, tested
telegram, cable, telex or
-5-
<PAGE>
facsimile sending device, and received by First Interstate, signed by two
Authorized Persons.
4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Trust will
deliver or cause to be delivered to First Interstate all securities, other
investments and moneys with respect to the Funds owned by them, including cash
received for the issuance of shares of beneficial interest representing
interests in the Funds ("Shares"), at any time during the period of this
Agreement. First Interstate will not be responsible for such securities,
investments and moneys until actually received by it. All securities and other
investments delivered to First Interstate (other than in bearer form) shall be
registered in the name of the Trust or in the name of a nominee of the Trust or
in the name of First Interstate or any nominee of First Interstate which nominee
name shall be assigned exclusively to the Trust (with or without indication of
fiduciary status) or in the name of any subcustodian or any nominee of any such
subcustodian appointed pursuant to Paragraph 6 hereof or shall be properly
endorsed and in form for transfer satisfactory to First Interstate.
5. RECEIPT AND DISBURSEMENT OF MONEY.
(a) First Interstate shall open and maintain a separate
custodial account or accounts for each Fund in the name of the Trust, subject
only to draft or order by First Interstate acting pursuant to the terms of
this Agreement, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
particular
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Fund involved. First Interstate shall make payments of cash to, or for the
account of, a Fund from such cash only (i) for the purchase of securities and
other investments as provided in Paragraph 12 hereof; (ii) for the redemption of
Shares of the Fund as provided in subparagraph (b) of Paragraph 9 hereof; (iii)
for the payment of interest, dividends and other shareholder distributions,
taxes, management fees or expenses which are to be borne by the Trust on behalf
of the Fund under the terms of this or any other agreement or arrangement, which
payment shall be upon receipt of Written Instructions except as otherwise
provided in Paragraph 9(d); (iv) upon receipt of Written Instructions, for
payments in connection with the conversion, exchange or surrender of securities
or other investments owned or subscribed to by the Trust for the Fund involved
and held by or to be delivered to First Interstate; (v) to a subcustodian
pursuant to Paragraph 6 hereof; or (vi) upon receipt of Written Instructions,
for other proper Trust purposes. No payment pursuant to (i) above shall be made
unless First Interstate has received a copy of the broker's or dealer's
confirmation, the payee's invoice or comparable confirmation in connection with
options or other investments, as appropriate.
(b) First Interstate is hereby authorized to endorse and collect
all checks, drafts or other orders for the payment of money received as
custodian for the account of the Funds.
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<PAGE>
6. RECEIPT OF SECURITIES AND OTHER NON-CASH PROPERTY. (a) Except as
provided by Paragraph 7 hereof, First Interstate shall hold and physically
segregate in a separate account, identifiable at all times from those of any
other persons, firms, or corporations, all securities and non-cash property
received by it for the account of a Fund. (Options issued by the Options
Clearing Corporation and traded on a national securities exchange and securities
issued by investment companies registered under the 1940 Act shall be deemed to
be held by First Interstate if it has received appropriate confirmation from the
clearing member or investment company involved that the securities have been
purchased and are registered as provided in this Agreement and, in addition,
First Interstate's records clearly identify such investments as belonging to the
particular Fund involved.) All such securities and non-cash property are to be
held or disposed of by First Interstate for such Fund pursuant to the terms of
this Agreement. In the absence of Written Instructions accompanied by a
certified resolution of the Trust's Board of Trustees authorizing the specific
transaction. First Interstate shall have no power or authority to withdraw,
deliver, assign, hypothecate, pledge or otherwise dispose of any such securities
and investments, except in accordance with the express terms provided for in
this Agreement. In no case may any trustee, officer, employee or agent of the
Trust withdraw any securities or other non-cash property. In connection with
its duties under this Paragraph 6, First Interstate may, at its own expense,
enter
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<PAGE>
into subcustodian agreements with other banks or trust companies for the receipt
of certain securities, other investments and cash to be held by First Interstate
for the account of the Funds pursuant to this Agreement; provided that each such
bank or trust company has an aggregate capital, surplus and undivided profits,
as shown by its last published report, of not less than twenty million dollars
($20,000,000) and that such bank or trust company agrees with First Interstate
to comply with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. First Interstate shall remain responsible for the
performance of all of its duties under this Agreement and shall hold the Trust
harmless from the acts and omissions of any bank or trust company that it might
choose pursuant to this Paragraph 6 except that First Interstate shall not be
liable for any loss resulting from, or caused by, the direction of the Trust to
maintain custody of any Property in a foreign country including but not limited
to, losses resulting from nationalization, expropriation, currency restrictions
or acts of war or terrorism.
(b) Promptly after the close of business on each day First
Interstate shall furnish the Trust with confirmations, where available, and a
summary of all transfers to or from the account of each Fund during said day.
Where securities are transferred to an account of a Fund established pursuant to
Paragraph 7 hereof, First Interstate shall also by book entry or otherwise,
identify as belonging to that Fund the quantity of securities in a fungible bulk
of securities registered in the
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name of First Interstate (or its nominee) or shown in First Interstate's account
on the books of the Book-Entry System or Depository involved. At least monthly
and from time to time, First Interstate shall furnish the Trust with a detailed
statement of the Property held for each Fund under this Agreement.
7. USE OF BOOK-ENTRY SYSTEM AND DEPOSITORIES. Prior to using the
Book-Entry System or a Depository with respect to a Fund, the Trust shall
deliver to First Interstate certified resolutions of the Board of Trustees of
the Trust approving, authorizing and instructing First Interstate on a
continuous and on-going basis until instructed to the contrary by Oral or
Written Instructions actually received by First Interstate (a) to deposit in the
Book-Entry System and any Depository all securities of the Fund eligible for
deposit therein and (b) to utilize the Book-Entry System and any Depository to
the extent possible in connection with settlements of purchases and sales of
securities by the Trust on behalf of such Fund, and deliveries and reurns of
securities loaned, subject to repurchase or reverse repurchase agreements or
used as collateral in connection with borrowings. Without limiting the
generality of such use, it is agreed that the following provisions shall apply
thereto:
(a) Securities and any cash of a Fund deposited in the Book-
Entry System or with a Depository will at all times be segregated from any
assets and cash controlled by First Interstate in other than a fiduciary or
custodian capacity but
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may be commingled with other assets held in such capacities. First Interstate
will pay out money only upon receipt of securities and will deliver securities
only upon the receipt of money.
(b) All books and records maintained by First Interstate which
relate to a Fund's participation in the Book-Entry System or use of a
Depository will at all times during First Interstate's regular business hours be
open to the inspection of the Trust's duly authorized employees or agents, and
the Trust will be furnished with all information in respect of such services
rendered to such Fund as it may require.
(c) First Interstate will provide the Trust with copies of any
report obtained by First Interstate on the system of internal accounting control
of the Book-Entry System or a Depository within ten days after receipt of such a
report by First Interstate. First Interstate will also provide the Trust with
such reports on its own system of internal control as the Trust may reasonably
request from time to time.
8. INSTRUCTIONS CONSISTENT WITH CHARTER, ETC.
(a) Unless otherwise provided in this Agreement, First
Interstate shall act only upon Oral and Written Instructions. Although First
Interstate may take cognizance of the provisions of the Declaration of Trust and
Code of Regulations of the Trust, First Interstate may assume that any Oral or
Written Instructions received hereunder are not in any way inconsistent with any
provisions of such Declaration of Trust
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or Code of Regulations or any vote, resolution or proceeding of the
Shareholders, or of the Board of Trustees, or of any committee thereof.
(b) First Interstate shall be entitled to rely upon any Oral
Instructions and any Written Instructions actually received by First Interstate
pursuant to this Agreement. The Trust agrees to forward to First Interstate
Written Instructions confirming Oral Instructions in such manner that the
Written Instructions are received by First Interstate, whether by hand delivery,
telex, facsimile sending device or otherwise, by the close of business of the
same day that such Oral Instructions are given to First Interstate. The Trust
agrees that the fact that such confirming Written Instructions are not received
by First Interstate shall in no way affect the validity of the transactions or
enforceability of the transactions authorized by the Trust by giving Oral
Instructions. The Trust agrees that First Interstate shall incur no liability
to the Trust in acting upon Oral Instructions given to First Interstate
hereunder concerning such transactions provided such instructions reasonably
appear to have been received from an Authorized Person.
9. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. First Interstate is
authorized to take the following action without Oral or Written Instructions:
(a) DEPOSITS OF PROCEEDS OF ISSUANCE OF SHARES. First Interstate
shall collect and receive for the account of
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each Fund all payments received in payment for Shares issued by that Fund.
(b) REDEMPTIONS. Upon receipt of notice by the Trust's transfer
agent stating that such transfer agent is required to redeem Shares and
specifying the number and class of Shares which such transfer agent is required
to redeem and the date and time the request or requests for redemption were
received, First Interstate shall either (i) pay to such transfer agent, for
distribution to the redeeming shareholder, the amount payable to such
shareholder upon the redemption of such Shares as determined in the manner
described in the then current Prospectus, or (ii) arrange for the direct payment
of such redemption proceeds by First Interstate to the redeeming shareholder in
accordance with such procedures and controls as are mutually agreed upon from
time to time by and among First Interstate, the Trust and the Trust's transfer
agent.
(c) COLLECTION OF INCOME AND OTHER PAYMENTS. First Interstate
shall:
(i) collect and receive for the account of each Fund, all
income and other payments and distributions, including (without limitation)
stock dividends, rights, warrants and similar items, included or to be
included in the Property of that Fund, and promptly advise the Trust of
such receipt and shall credit such income, as collected, to the Trust's
custodian account for the particular Fund involved;
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(ii) endorse and deposit for collection, in the name of the
Trust, checks, drafts, or other orders for the payment of money on the same
day as received;
(iii) receive and hold for the account of each Fund all
securities received as a distribution on the portfolio securities of that
Fund as a result of a stock dividend, share split-up or reorganization,
recapitalization, readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any portfolio
securities belonging to the Fund held by First Interstate hereunder;
(iv) present for payment and collect the amount payable upon
all securities and other investments which may mature or be called,
redeemed, or retired, or otherwise become payable on the date such
securities become payable; and
(v) take any action which may be necessary and proper in
connection with the collection and receipt of such income, payments and
other Property and the endorsement for collection of checks, drafts, and
other negotiable instruments.
(d) CERTAIN CASH DISBURSEMENTS. First Interstate may make cash
disbursements for the payment of advisory and administration fees, as well as
fees payable to Service Organizations (as defined in the Prospectus), in
accordance with
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<PAGE>
the provisions of the Trust's agreements under which said fees are payable.
(e) MISCELLANEOUS TRANSACTIONS. First Interstate is authorized
to deliver or cause to be delivered Property against payment or other
consideration or written receipt therefor in the following cases:
(i) for examination by a broker selling for the account of
a Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary
securities for definitive securities; and
(iii) for transfer of securities or other investments into
the name of the Trust or First Interstate or nominee of either, or for
exchange of securities or other investments for a different number of
bonds, certificates, or other evidence, representing the same aggregate
face amount or number of units bearing the same interest rate, maturity
date and call provisions, if any; provided that in any such case, the new
securities or investments are to be delivered to First Interstate.
10. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral or
written Instructions and not otherwise, First Interstate, directly or through
the use of the Book-Entry System or a Depository, shall:
(a) execute and deliver to such persons as may be designated in
such Oral or Written Instructions, proxies,
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<PAGE>
consents, authorizations, and any other instruments whereby the authority of the
Trust as owner of any securities may be exercised;
(b) deliver any securities held for a Fund against receipt of
other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, merger, consolidation or recapitalization of any
corporation, or the exercise of any conversion privilege;
(c) deliver, any securities held for a Fund to any protective
committee, reorganization Committee or other person in connection with the
liquidation, reorganization, refinancing, merger, consolidation,
recapitalization or sale of assets of any corporation, and receive and hold
under the terms of this Agreement such certificates of deposit, interim receipts
or other instruments or documents as may be issued to it to evidence such
delivery;
(d) make such transfers or exchanges of the assets of a Fund and
take such other steps as shall be stated in said Oral or Written Instructions to
be for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation. recapitalization or sale of assets of a
Fund or the Trust;
(e) release securities belonging to a Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by that Fund; provided, however, that securities shall be released only upon
payment to First
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<PAGE>
Interstate of the monies borrowed, except that in cases where additional
collateral is required to secure a borrowing already made, subject to proper
prior authorization, further securities may be released for that purpose; and
pay such loan upon redelivery to it of the securities pledged or hypothecated
therefor and upon surrender of the note or notes evidencing the loan; and
(f) release securities loaned by a Fund to any broker, dealer or
other financial institution, provided that the Custodian receives the collateral
specified in the Oral and Written Instructions authorizing said loan in
accordance with the custom prevailing among dealers in securities; and return
said collateral upon redelivery to it of the loaned securities.
11. SEGREGATED ACCOUNTS. First Interstate shall upon receipt of
Written or Oral Instructions establish and maintain a segregated account or
accounts on its records for the Trust on behalf of a Fund, into which account or
accounts may be transferred cash and/or securities, including securities in the
Book-Entry System or with a Depository (i) for the purposes of compliance by the
Trust with the procedures required by Investment Company Act Release No. 10666,
or any subsequent release or releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies and (ii) for other proper
corporate purposes, but only, in the case of clause (ii), upon receipt of
Written Instructions.
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<PAGE>
12. PURCHASES OF SECURITIES AND OTHER INVESTMENTS. Promptly after
each decision to purchase securities or other investments for a Fund, the Trust,
through Denver Investment Advisors, Inc., shall deliver to First Interstate Oral
Instructions specifying with respect to each such purchase: (a) the name of the
issuer and the title of the securities or other investment, (b) the number of
shares or the principal amount purchased and accrued interest, if any, (c) the
date of purchase and settlement, (d) the purchase price per unit, (e) the total
amount payable upon such purchase, (f) the name of the person from whom or the
broker through whom the purchase was made and (g) the Fund for which the
purchase was made. First Interstate shall, upon receipt of the securities or
other investment purchased by or for a Fund (or upon receipt of a copy of the
broker's or dealer's confirmation, the payee's invoice or comparable
confirmation with respect to such securities or investment), pay out of the
moneys held for the account of that Fund the total amount payable to the person
from whom or the broker or dealer through whom the purchase was made, provided
that the same conforms to the total amount payable as specified in such Oral
Instructions.
13. SALES OF SECURITIES AND OTHER INVESTMENTS. (a) Promptly after
each decision to sell securities or other investment for a Fund, the Trust,
through Denver Investment Advisors, Inc., shall deliver to First Interstate Oral
Instructions, specifying with respect to each such sale: (a) the
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name of the issuer and the title of the security or other investment, (b) the
number of shares or principal amount sold, and accrued interest, if any, (c) the
date of sale, (d) the sale price per unit, (e) the total amount payable to the
Fund upon such sale, (f) the name of the broker through whom or the person to
whom the sale was made and (g) the Fund for which the sale was made. First
Interstate shall deliver the securities or other investment upon receipt of the
total amount payable to the particular Fund involved upon such sale, provided
that the same conforms to the total amount payable as specified in such Oral
Instructions. Subject to the foregoing, First Interstate may accept payment in
such form as shall be satisfactory to it, and may deliver securities and other
investments and arrange for payment in accordance with the customs prevailing
among dealers in securities and the investments involved.
(b) Whenever the Trust on behalf of a Fund writes a covered call or
secured put option, the Trust, through Denver Investment Advisors, Inc., shall
deliver to First Interstate Oral Instructions specifying with respect to such
option such matters as First Interstate shall reasonably require. First
Interstate shall deliver, in exchange for receipt of the premium payable with
respect to such option, such receipts as are required in accordance with the
customs prevailing among brokers in covered call and secured put options, and
shall impose upon the securities subject to the options such restrictions as may
be required by such receipts.
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14. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish First
Interstate with appropriate evidence of action by the Trust's Board of Trustees
declaring and authorizing the payment of any dividends and distributions to the
shareholders of a Fund. Upon receipt by First Interstate of Written
Instructions (which may be standing instructions) with respect to dividends and
distributions declared by the Trust's Board of Trustees and payable to the
shareholders of a Fund, and in conformance with procedures mutually agreed upon
by First Interstate, the Trust and the Fund's transfer agent, First Interstate
shall pay to the Fund's transfer agent, as agent for the shareholders of the
Fund involved, an amount equal to the amount indicated in said Written
Instructions as payable by the Trust to the shareholders for distribution in
cash by the transfer agent to said shareholders who have elected in proper
manner to receive cash distributions. In lieu of paying the Trust's transfer
agent cash dividends and distributions, First Interstate may arrange for the
direct payment of cash dividends and distributions to shareholders by First
Interstate in accordance with such procedures and controls as are mutually
agreed upon from time to time by and among the Trust, First Interstate and the
Trust's transfer agent.
15. CORRESPONDENCE. First Interstate will answer correspondence from
securities brokers and others relating to its duties hereunder and such other
correspondence as may from time to time be mutually agreed upon between First
Interstate and the Trust.
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<PAGE>
16. RECORDS. First Interstate shall keep and maintain appropriate
books and records for each Fund with respect to its duties hereunder. The books
and records pertaining to the Funds which are in the possession of First
Interstate shall be property of the Trust. Such books and records shall be
prepared and maintained as required by the 1940 Act and other applicable
securities laws and rules and regulations. The Trust, or the Trust's authorized
representatives, shall have access to such books and records at all times during
First Interstate's normal business hours. Upon the reasonable request of the
Trust, copies of any such books and records shall be provided by First
Interstate to the Trust or the Trust's authorized representatives at the Trust's
expense.
17. REPORTS. First Interstate shall furnish the Trust the following
reports:
(a) such periodic and special reports as the Trust may
reasonably request;
(b) a monthly statement summarizing all transactions and entries
for the account of each Fund;
(c) a monthly report of portfolio investments belonging to each
Fund showing the adjusted average cost of each investment and the market value
at the end of such month;
(d) a monthly report of the cash account of each Fund showing
disbursements;
(e) the reports required to be furnished to the Trust pursuant
to Rule 17f-4; and
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(f) such other information as may be agreed upon from time to
time between the Trust and First Interstate.
18. COOPERATION WITH ACCOUNTANTS. First Interstate shall cooperate
with the Trust's independent public accountants and shall take all reasonable
action in the performance of its obligations under this Agreement to assure that
the necessary information is made availabLe to such accountants for the
expression of their unqualified opinion, as such may be required by the Trust
from time to time.
19. EQUIPMENT FAILURES. In the event of equipment failures beyond
First Interstate's control, First Interstate shall, at no additional expense to
the Trust, take reasonable steps to minimize service interruptions but shall
have no liability with respect thereto. First Interstate shall enter into and
maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing equipment
to the extent appropriate equipment is available.
20. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE TRUST. If First Interstate shall be in doubt
as to any action to be taken or omitted by it, it may request, and shall
receive, from the Trust directions or advice, including Oral or Written
Instructions where appropriate.
(b) ADVICE OF COUNSEL. If First Interstate shall be in doubt as
to any question of law involved in any action to be taken or omitted by First
Interstate, it may request advice at
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its own cost from counsel of its own choosing (who may be counsel for Denver
Investment Advisors. Inc., ALPS, the Trust or First Interstate, at the option of
First Interstate).
(c) CONFLICTING ADVICE. In case of conflicting directions,
advice or Oral or Written Instructions received by First Interstate pursuant to
subparagraph (a) of this paragraph and advice received by First Interstate
pursuant to subparagraph (b) of this paragraph, First Interstate shall be
entitled to rely on and follow the advice received pursuant to the latter
provision alone.
(d) PROTECTION OF FIRST INTERSTATE. First Interstate shall be
protected in any action or inaction which it takes in reliance on any
directions, advice or Oral or Written Instructions received pursuant to
subparagraphs (a) or (b) of this paragraph which First Interstate, after receipt
of any such directions, advice or Oral or Written Instructions, in good faith
believes to be consistent with such directions, advice or Oral or Written
Instructions, as the case may be. However, nothing in this paragraph shall be
construed as imposing upon First Interstate the obligation (i) to seek such
directions, advice or Oral or Written Instructions, or (ii) to act in accordance
with such directions, advice or Oral or Written Instructions when received,
unless, under the terms of another provision of this Agreement, the same is a
condition to First Interstate's properly taking or omitting to take such action.
Nothing in this subsection shall excuse First Interstate when an action or
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<PAGE>
omission on the part of First Interstate constitutes willful misfeasance, bad
faith, gross negligence or reckless disregard by First Interstate of any duties,
obligations or responsibilities not expressly provided for in this Agreement or
First Interstate's negligent failure to perform its duties expressly provided
for in this Agreement.
21. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The Trust
assumes full responsibility for insuring that the contents of the Prospectus for
any Fund comply with all applicable requirements of the 1933 Act, the 1940 Act,
and any laws, rules and regulations of governmental authorities having
jurisdiction.
22. COMPENSATION. First Interstate shall be entitled to reasonable
compensation for its services and expenses as Custodian under this Agreement as
agreed upon in writing from time to time by the Trust and First Interstate.
23. INDEMNIFICATION. The Trust, on behalf of the Funds and as sole
owner of the Property, agrees to indemnify and hold harmless First Interstate
and its nominees from all taxes, charges, expenses, assessments, claims and
liabilities (including, without limitation, liabilities arising under the 1933
Act, the Securities Exchange Act of 1934, the 1940 Act, and any state and
foreign securities and blue sky laws, all as or to be amended from time to time)
and expenses, including (without limitation) attorneys' fees and disbursements,
arising directly or indirectly (a) from the fact that securities or other
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investments included in the Property are registered in the name of any nominee
or (b) without limiting the generality of the foregoing clause (a) from any
action or thing which First Interstate takes or does or omits to take or do (i)
at the request or on the direction of or in reliance on the advice of the Trust
or (ii) upon Oral or Written Instructions, PROVIDED, that neither First
Interstate nor any of its nominees shall be indemnified against any liability to
the Trust or to its shareholders (or any expenses incident to such Liability)
arising out of (x) First Interstate's or such nominee's own willful misfeasance,
bad faith, gross negligence or reckless disregard of any duties, obligations or
responsibilities not expressly provided for in this Agreement or (y) First
Interstate's own negligent failure to perform its duties expressly provided for
in this Agreement: and PROVIDED FURTHER, that First Interstate shall only be
indemnified hereunder from assets of the Trust belonging to the Fund with
respect to which such taxes, charges, expenses, assessments, claims and
liabilities were incurred. In the event of any advance of cash for any purpose
made by First Interstate resulting from orders or Oral or Written Instructions
of the Trust, or in the event that First Interstate or its nominee shall incur
or be assessed any taxes, charges, expenses, assessments, claims, or liabilities
in connection with the performance of this Agreement, except such as may arise
from its or its nominee's own negligent action, negligent failure to act,
willful misconduct, or reckless disregard, any Property at any
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time held for the account of the Fund with respect to which the same was
incurred shall be security therefor.
24. RESPONSIBILITY OF FIRST INTERSTATE. First Interstate shall be
under no duty to take any action on behalf of the Trust except as specifically
set forth herein or as may be specifically agreed to by First Interstate in
writing. In the performance of its duties hereunder, First Interstate shall be
obligated to exercise care and diligence and to act in good faith and to use its
best efforts within reasonable limits to ensure the accuracy of all services
performed under this Agreement, First Interstate shall be responsible for its
own negligent failure to perform its duties under this Agreement, but to the
extent that duties, obligations and responsibilities are not expressly set forth
in this Agreement, First Interstate shall not be liable for any act or omission
which does not constitute willful misfeasance, bad faith or gross negligence on
the part of First Interstate or reckless disregard of such duties, obligations
and responsibilities. Without limiting the generality of the foregoing or of
any other provision of this Agreement, First Interstate in connection with its
duties under this Agreement shall not be under any duty or obligation to inquire
into and shall not be liable for or in respect of (a) the validity or invalidity
or authority or lack thereof of any Oral or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this Agreement, if
any, and which First Interstate reasonably believes to be genuine: (b)
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<PAGE>
the validity or invalidity of the issuance of any securities or other
investments included or to be included in the Property, the legality or
illegality of the purchase of such securities or other investments, or the
propriety or impropriety of the amount paid therefor; (c) the legality or
illegality of the sale (or exchange) of any Property or the propriety or
impropriety of the amount for which such Property is sold (or exchanged); or (d)
delays or errors or loss of data occurring by reason of circumstances beyond
First Interstate's control, including acts of civil or military authority,
national emergencies, labor difficulties, fire, mechanical breakdown (except as
provided in Paragraph 19), flood or catastrophe, acts of God, insurrection, war,
riots or, failure of the mails, transportation, communication or power supply,
nor shall First Interstate be under any duty or obligation hereunder to
ascertain whether any Property at any time delivered to or held by First
Interstate may properly be held by or for the Fund involved.
25. COLLECTIONS. All collections of monies or other property in
respect, or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by First Interstate) shall be at the sole risk of the
Trust. In any case in which First Interstate does not receive any payment due a
Fund within a reasonable time after First Interstate has made proper demands for
the same, it shall so notify the Trust in writing, including copies of all
demand letters, any written responses thereto, and memoranda of all oral
responses thereto and to
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<PAGE>
telephonic demands, and await instructions from the Trust. First Interstate
shall not be obliged to take legal action for collection unless and until
reasonably indemnified to its satisfaction. First Interstate shaLl also notify
the Trust as soon as reasonably practicable whenever income due on securities or
other investments is not collected in due course.
26. DURATION AND TERMINATION. This Agreement shall continue until
termination by the Trust or by First Interstate on sixty (60) days' written
notice. Upon any termination of this Agreement, pending appointment of a
successor to First Interstate or a vote of the shareholders of the Trust to
dissolve or to function without a custodian of its cash, securities or other
property, First Interstate shall not deliver cash, securities or other property
of any Fund to the Trust, but may deliver them to a bank or trust company of its
own selection, having an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than twenty million dollars
($20,000,000) as a custodian for the Funds to be held under terms similar to
those of this Agreement, PROVIDED, HOWEVER, that First Interstate shall not be
required to make any such delivery of payment with respect to a Fund until full
payment shall have been made by the Trust of all liabilities constituting a
charge on or against the properties of said Fund then held by First Interstate,
or on or against First Interstate with respect to said Fund, and until full
payment shall have been made to First Interstate of all of its fees,
compensation, costs and expenses
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with respect to said Fund, subject to the provisions of Paragraph 22 of this
Agreement.
27. NOTICES. All notices and other communications, including Written
Instructions (collectively referred to as "Notice" or "Notices" in this
paragraph), hereunder shall be in writing or by confirming telegram, cable,
telex or facsimile sending device. Notices shall be addressed (a) if to First
Interstate at First Interstate's address, P.O. Box 5825 Denver, Colorado 80217,
marked for the attention of the Trust Operations (or its successor); (b) if to
the Trust, at the address of the Trust; or (c) if to neither of the foregoing,
at such other address as the sender of any such Notice or other communication
shall have been notified. If the location of the sender of a Notice and the
address of the addressee thereof are, at the time of sending, more than 100
miles apart, the Notice may be sent by first-class mail, in which case it shall
be deemed to have been given three days after it is sent, or if sent by
confirming telegram, cable, telex or facsimile sending device, it shall be
deemed to have been given immediately, and, if the location of the sender of a
Notice and the address of the addressee thereof are, at the time of sending, not
more than 100 miles apart, the Notice may be sent by first-class mail, in which
case it shall be deemed to have been given two days after it is sent, or if sent
by messenger, it shall be deemed to have been given on the day it is delivered,
or if sent by confirming telegram, cable, telex or facsimile sending device, it
shall be deemed to have been given
-29-
<PAGE>
immediately. All postage, cable, telegram, telex and facsimile sending device
charges arising from the sending of a Notice hereunder shall be paid by the
sender.
28. FURTHER ACTIONS. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the purposes
hereof.
29. AMENDMENTS. This Agreement or any part hereof may be changed or
waived only by an instrument in writing signed by the party against which
enforcement of such change or waiver is sought.
30. DELEGATION. On thirty (30) days' prior written notice to the
Trust, First Interstate may assign its rights and delegate its duties hereunder,
provided, however, that First Interstate may delegate its duties only to a bank
having the qualifications provided in Section 17(f) of the 1940 Act, and further
provided that First Interstate and its delegate shall promptly provide such
information as the Trust may request relative to the delegation, including
(without limitation) the capabilities of the delegate. First Interstate shall
remain liable to the Trust for performance of its duties notwithstanding any
delegation.
31. NAMES. The names "Westcore Trust" and "Trustees of Westcore
Trust" refer respectively to the Trust created and the Trustees, as trustees but
not individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 which is hereby
-30-
<PAGE>
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
32. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided that the
parties hereto may embody in one or more separate documents their agreement, if
any, with respect to delegated and/or Oral and Written Instructions. The
captions in this Agreement are included for convenience of reference only and in
no way define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement shall be deemed to be a contract made in
Colorado and governed by Colorado law. 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 and
-31-
<PAGE>
shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers designated below on the day and
year first above written.
[SEAL] WESTCORE TRUST
Attest: By: /s/Jack D. Henderson
-----------------------------
Jack D. Henderson, President
[SEAL] FIRST INTERSTATE BANK OF DENVER, N.A.
Attest: By: /s/Roberta L. Butterly
-----------------------------
Roberta L. Butterly
Senior Vice President &
Trust Officer
-32-
<PAGE>
APPENDIX B
TO CUSTODY AGREEMENT BETWEEN
WESTCORE TRUST AND FIRST INTERSTATE
BANK OF DENVER, N.A.
CUSTODIAL FEES
Modern Value Equity Fund; Equity Income Fund; MIDCO Growth Fund; Short-Term Bond
Fund; Intermediate Term Bond Fund; Long-Term Bond Fund; Colorado Tax-Exempt Fund
ANNUAL FEE:
Based on Aggregate Daily Market Values of the Funds' Total Gross Assets
$.20 per $1,000 on 1st $50,000,000 or 2.0 Basis Points
$.18 per $1,000 on Next $50,000,000 or 1.8 Basis Points
$.13 per $1,000 on Next $100,000,000 or 1.3 Basis Points
$.10 per $1,000 on Next $300,000,000 or 1.0 Basis Points
$.05 per $1,000 on Remainder or .5 Basis Points
MINIMUM ANNUAL FEE:
$500.00 per year.
ACTIVITY CHARGES:
$20.00 per transaction
(Includes purchases and sales, calls, maturities, tenders and exchanges and
dated commercial paper.)
$25.00 per foreign transaction
$45.00 per option
(Includes issuance of escrow receipt.)
OUT-OF-POCKET EXPENSES:
All such expenses will be charged to the account, including, but not limited to:
postage, insurance, telephone and telegraph, correspondent bank charges.
Accepted By: Date: April 15, 1991
Westcore Trust
By /s/ Jack D. Henderson
-------------------------
Title:
*All fees, charges and expenses are payable on a monthly basis.
<PAGE>
WESTCORE TRUST
CERTIFICATE
The following resolutions, adopted by the Board of Trustees of
Westcore Trust (the "Trust") on April 15, 1991, identify the persons authorized
to give Proper Instructions under the Custody Agreement with First Interstate
Bank of Denver, N.A. with respect to the Trust's MIDCO Growth Fund, Equity
Income Fund, Modern Value Equity Fund, Short-Term Bond Fund, Intermediate-Term
Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund:
RESOLVED, that, in addition to each of the Trust's President and the
Trust's Treasurer, any one of the following individuals be, and each of
them hereby is, authorized to give "Oral Instructions" on behalf of the
Trust to the Custodian under the Custody Agreement between the Trust and
First Interstate Bank of Denver with respect to MIDCO Growth Fund, Equity
Income Fund, Modern Value Equity Fund, Short-Term Bond Fund, Intermediate-
Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund (for
purposes of these resolutions, the "Denver Group of Funds"), provided that
no person shall be authorized or permitted to withdraw investments or
assets belonging to the portfolios upon his or her mere receipt:
All Denver Funds: W. Robert Alexander
Thomas A. Hejl
MIDCO Growth Fund
Equity Income Fund
Modern Value Equity Fund: Todger Anderson
Kenneth Penland
Larry Luchini
JoAnn Nearents
Mary Ellen Cox
Short-Term Bond Fund
Intermediate-Term Bond
Long-Term Bond Fund: O. James Barr
Glen Cahill
Thomas Stevens
Grafton Jhung
Colorado Tax-Exempt Fund: Robert O. Lindig
William F. Scott
Milford H. Schulhof
FURTHER RESOLVED, that, in addition to each of the Trust's president
and the Trust's Treasurer, any two of the
<PAGE>
individuals named above be, and hereby are, authorized to give "Written
Instructions" to the Custodian under such Custody Agreement; provided,
however, that Written Instructions given in connection with the issuance of
checks and other drafts in payment of the operating expenses of the Denver
Group of Funds as provided therein must include the signature of either the
Trust's Treasurer or Robert Alexander; and provided further that no one or
more persons shall be authorized or permitted to withdraw investments or
assets belonging to the Denver Group of Funds upon his, her or their mere
receipt;
FURTHER RESOLVED, that notwithstanding anything to the contrary in the
foregoing resolutions, only any one of the following individuals be, and
hereby is, authorized to give "Oral Instructions," and only any two of the
following individuals be, and hereby are, authorized to give "Written
instructions," to the Custodian under such Custody Agreement in connection
with the purchase or sale of portfolio investments with respect to the
portfolios, provided that no one or more persons shall be authorized or
permitted to withdraw portfolio investments or assets upon his, her or
their mere receipt:
MIDCO Growth Fund
Equity Income Fund
Modern Value Equity Fund Todger Anderson
Kenneth Penland
Larry Luchini
JoAnn Nearents
Mary Ellen Cox
Short-Term Bond Fund
Intermediate-Term Bond
Long-Term Bond Fund: O. James Barr
Glen Cahill
Thomas Stevens
Grafton Jhung
Colorado Tax-Exempt Fund: Robert O. Lindig
William F. Scott
Milford H. Schulhof
FURTHER RESOLVED, that the President, Treasurer and Secretary of the
Trust, and each of them, hereby is designated as a person authorized to
execute and deliver an
-2-
<PAGE>
officer's certificate setting forth persons authorized to give instructions
under the Custody Agreement.
WESTCORE TRUST
Dated: April 16, 1991 By: /s/ W. Bruce McConnel, III
--------------------------
W. Bruce McConnel, III
Secretary
-3-
<PAGE>
SPECIMEN SIGNATURES*
- ------------------------------ ------------------------------
W. Robert Alexander Jack D. Henderson
- ------------------------------ ------------------------------
Mark Pougnet Thomas A. Hejl
/s/Kenneth Penland /s/Todger Anderson
- ------------------------------ ------------------------------
Kenneth Penland Todger Anderson
/s/JoAnn Nearents /s/Larry Luchini
- ------------------------------ ------------------------------
JoAnn Nearents Larry Luchini
/s/O. James Barr /s/Mary Ellen Cox
- ------------------------------ ------------------------------
O. James Barr Mary Ellen Cox
/s/Thomas Stevens /s/Glen Cahill
- ------------------------------ ------------------------------
Thomas Stevens Glen Cahill
/s/Robert O. Lindig /s/Grafton Jhung
- ------------------------------ ------------------------------
Robert O. Lindig Grafton Jhung
/s/Milford H. Schulhof /s/William F. Scott
- ------------------------------ ------------------------------
Milford H. Schulhof William F. Scott
-4-
<PAGE>
SPECIMEN SIGNATURES*
/s/W. Robert Alexander /s/Jack D. Henderson
- ------------------------------ ------------------------------
W. Robert Alexander Jack D. Henderson
/s/Mark Pougnet /s/Thomas A. Hejl
- ------------------------------ ------------------------------
Mark Pougnet Thomas A. Hejl
- ------------------------------ ------------------------------
Kenneth Penland Todger Anderson
- ------------------------------ ------------------------------
JoAnn Nearents Larry Luchini
- ------------------------------ ------------------------------
O. James Barr Mary Ellen Cox
- ------------------------------ ------------------------------
Thomas Stevens Glen Cahill
- ------------------------------ ------------------------------
Robert O. Lindig Graton Jhung
- ------------------------------ ------------------------------
Milford H. Schulhof William F. Scott
-5-
<PAGE>
APPENDIX A
TO CUSTODY AGREEMENT
BETWEEN WESTCORE TRUST
AND FIRST INTERSTATE OF DENVER, N.A.
CERTIFICATE
The following resolutions, adopted by the Board of Trustees of Westcore
Trust (the "Trust") on February 18, 1994, identify the person authorized to give
Oral and Written Instructions after such date on behalf of the Trust under the
Custody Agreement with First Interstate Bank of Denver, N.A. with respect to the
Trust's Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund, Colorado Tax-Exempt Fund and
Small-Cap Opportunity Fund:
RESOLVED, that, in addition to each of the Trust's President and the
Trust's Treasurer, any one of the following individuals be, and each of
them hereby is, authorized to give "Oral Instructions" on behalf of the
Trust to the Custodian under the Custody Agreement between the Trust and
First Interstate Bank of Denver with respect to MIDCO Growth Fund, Equity
Income Fund, Modern Value Equity Fund, Intermediate-Term Bond Fund, Long-
Term Bond Fund, Small-Cap Opportunity Fund and Colorado Tax-Exempt Fund
(for purposes of these resolutions, the "Denver Group of Funds"), provided
that no person shall be authorized or permitted to withdraw investments or
assets belonging to the portfolios upon his or her mere receipt:
All Denver Funds: W. Robert Alexander
Edward Claunch
Nancy Timm
MIDCO Growth Fund
Equity Income Fund
Modern Value Equity Fund: Todger Anderson
Kenneth Penland
Larry Luchini
JoAnn Nearents
Mary Ellen Cox
Grafton Jhung
Varilyn Schock
Intermediate-Term Bond
Long-Term Bond Fund: Glen Cahill
John Cormey
Thomas Stevens
Grafton Jhung
Alex Lock
-6-
<PAGE>
Colorado Tax-Exempt Fund: Robert O. Lindig
Edward Claunch
Milford H. Schulhof
Small-Cap Opportunity Fund: Todger Anderson
Mary Ellen Cox
Grafton Jhung
Larry Luchini
JoAnn Nearents
Kenneth Penland
Varilyn Schock
FURTHER RESOLVED, that, in addition to each of the Trust's President
and the Trust's Treasurer, any two of the individuals named above be, and
hereby are, authorized to give "Written Instructions" to the Custodian
under such Custody Agreement; provided, however, that Written Instructions
given in connection with the issuance of checks and other drafts in payment
of the operating expenses of the Denver Group of Funds as provided therein
must include the signature of either the Trust's Treasurer or W. Robert
Alexander; and provided further that no one or more persons shall be
authorized or permitted to withdraw investments or assets belonging to the
Denver Group of Funds upon his, her or their mere receipt;
FURTHER RESOLVED, that notwithstanding anything to the contrary in the
foregoing resolutions, only any one of the following individuals be, and
hereby is, authorized to give "Oral Instructions," and only any two of the
following individuals be, and hereby are, authorized to give "Written
Instructions," to the Custodian under such Custody Agreement in connection
with the purchase or sale of portfolio investments with respect to the
portfolios, provided that no one or more persons shall be authorized or
permitted to withdraw portfolio investments or assets upon his, her or
their mere receipt:
MIDCO Growth Fund
Equity Income Fund
Modern Value Equity Fund: Todger Anderson
Kenneth Penland
Larry Luchini
JoAnn Nearents
Mary Ellen Cox
Grafton Jhung
-7-
<PAGE>
Intermediate-Term Bond
Long-Term Bond Fund: Glen Cahill
John Cormey
Thomas Stevens
Grafton Jhung
Alex Lock
Colorado Tax-Exempt Fund: Robert O. Lindig
Edward Claunch
Milford H. Schulhof
Small-Cap Opportunity Fund: Todger Anderson
Mary Ellen Cox
Grafton Jhung
Larry Luchini
JoAnn Nearents
Kenneth Penland
Varilyn Schock
FURTHER RESOLVED, that the President, Treasurer and Secretary of the
Trust, and each of them, hereby is designated as a person authorized to
execute and deliver an officer's certificate setting forth persons
authorized to give instructions under the Custody Agreement.
WESTCORE TRUST
[SEAL] BY:
------------------------------
W. BRUCE McCONNEL
Secretary
Dated: March , 1994
--
-8-
<PAGE>
SPECIMEN SIGNATURES
- ------------------------------ ------------------------------
Nancy Timm Varilyn Schock
- ------------------------------ ------------------------------
John Cormey Edward Claunch
- ------------------------------
Alex Lock
-9-
<PAGE>
AMENDMENT NO. 1
TO CUSTODY AGREEMENT
Amendment dated as of June 1, 1991, to the Custody Agreement (the
"Agreement") dated as of November 30, 1987 between Westcore Trust, a
Massachusetts business trust (the "Trust"), and First Interstate Bank of Denver,
N.A., a national banking association ("First Interstate").
W I T N E S S E T H :
WHEREAS, First Interstate serves as custodian of the Trust's MIDCO
Growth Fund, Modern Value Equity Fund, Equity Income Fund, Intermediate-Term
Bond Fund, Long-Term Bond Fund and Short-Term Bond Fund pursuant to the terms
and conditions of the Agreement; and
WHEREAS, the Trust desires to retain First Interstate to serve as the
custodian for the Trust's Colorado Tax-Exempt Fund (the "Fund") and First
Interstate is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints First Interstate to act
as custodian of the portfolio securities, cash, and other property belonging to
the Fund for the period and on the terms set forth in the Agreement. First
Interstate accepts such appointment for said period and on said terms, and
agrees to furnish the services set forth in the Agreement in return for the
compensation as provided herein. First Interstate agrees to comply with all
relevant provisions of the Investment Company Act of 1940 and the applicable
rules and regulations thereunder.
2. COMPENSATION. First Interstate shall be entitled to reasonable
compensation for its services and expenses as Custodian under this Amendment as
agreed upon in writing from time to time by the Trust and First Interstate.
3. CONTINUING VALIDITY. The provisions of the Agreement shall
remain in full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers designated below on the day and
year first above written.
[SEAL] WESTCORE TRUST
Attest: /s/ W. Bruce McConnel, III By /s/ Jack D. Henderson
----------------------------- ----------------------------
Jack D. Henderson, President
[SEAL] FIRST INTERSTATE BANK OF
DENVER, N.A.
Attest:/s/ W. Bruce McConnel, III By /s/ EA Claunch
----------------------------- ----------------------------
Authorized Officer
<PAGE>
AMENDMENT NO. 2
TO THE CUSTODY AGREEMENT
Amendment dated as of December 28, 1993 to the Custody Agreement (the
"Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts
business trust (the "Trust"), and First Interstate Bank of Denver, N.A., a
national banking association ("First Interstate").
W I T N E S S E T H :
WHEREAS, First Interstate serves as custodian of the portfolio
securities, cash and other property belonging to the Trust's Modern Value Equity
Fund, Equity Income Fund, MIDCO Growth Fund, Intermediate-Term Bond Fund, Long-
Term Bond Fund and Colorado Tax-Exempt Fund, pursuant to the terms and
conditions of the Agreement; and
WHEREAS, the Trust desires to retain First Interstate to serve as the
custodian for the Trust's Small-Cap Opportunity Fund (the "Fund") and First
Interstate is willing to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints First Interstate to act
as custodian of the portfolio securities, cash, and other property belonging to
the Fund for the period and on the terms set forth in the Agreement. First
Interstate accepts such appointment for said period and on said terms, and
agrees to furnish the services set forth in the Agreement in return for the
compensation as provided herein. First Interstate agrees to comply with all
relevant provisions of the Investment Company Act of 1940 and the applicable
rules and regulations thereunder.
2. COMPENSATION. First Interstate shall be entitled to reasonable
compensation for its services and expenses as Custodian under this Amendment as
agreed upon in writing from time to time by the Trust and First Interstate.
3. CONTINUING VALIDITY. The provisions of the Agreement shall
remain in full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers designated below on the day and
year first above written.
[SEAL] WESTCORE TRUST
Attest: By: /s/ Jack D. Henderson
----------------------- -------------------------------
Jack D. Henderson, President
[SEAL] FIRST INTERSTATE BANK OF DENVER, N.A.
Attest: By: /s/ W. Robert Alexander
----------------------- -------------------------------
W. Robert Alexander, President
-2-
<PAGE>
APPENDIX A
TO AMENDMENT NO. 2 OF THE CUSTODY
AGREEMENT BETWEEN WESTCORE TRUST
AND FIRST INTERSTATE BANK OF DENVER
CERTIFICATE
The following resolutions, adopted by the Board of Trustees of
Westcore Trust (the "Trust") on December 9, 1993 identify the persons authorized
to give Oral and Written Instruction after such date on behalf of the Trust
under the Custody Agreement with First Interstate Bank of Denver, N.A. with
respect to the Trust's Small-Cap Opportunity Fund:
RESOLVED, that, in addition to each of the Trust's President and
the Trust's Treasurer, any one of the following individuals be, and
each of them hereby is, authorized to give "Oral Instructions" on
behalf of the Trust to the Custodian under the Custody Agreement
between the Trust and First Interstate Bank of Denver, N.A. with
respect to the Trust's Small-Cap Opportunity Fund, provided that no
person shall be authorized or permitted to withdraw investments or
assets belonging to the portfolio upon his or here mere receipt:
Nancy Timm Varilyn Schock
Ken Penland Edward Claunch
Robert Alexander
FURTHER RESOLVED, that, in addition to each of the Trust's
President and Trust's Treasurer, any two of the individuals named
above be, and hereby are, authorized to give "Written Instructions" to
the Custodian under such Custody Agreement; provided, however, that
Written Instructions given in connection with the issuance of checks
and other drafts in payment of the operating expenses of the Small-Cap
Opportunity Fund as provided therein must include the signature of
either the Trust's Treasurer, Robert Alexander, Edward Claunch or
Nancy Timm and must not be given except upon prior written
authorization of the Trust's Treasurer; and provided further that no
one or more persons shall be authorized or permitted to withdraw
investments or assets belonging to the portfolio upon his, or her or
their mere receipt;
FURTHER RESOLVED, that notwithstanding anything to the contrary
in the foregoing resolutions, only one of the following individuals
be, and hereby is, authorized to give "Oral Instructions," and only
any two of the
A-1
<PAGE>
following individuals be, and hereby are, authorized to give "Written
Instructions" to the Custodian under such Custody Agreement in
connection with the purchase or sale of Small-Cap Opportunity Fund
investments with respect to the portfolio, provided that no one or
more persons shall be authorized or permitted to withdraw portfolio
investments or assets upon his, her or their mere receipt:
Ken Penland
Varilyn Schock
FURTHER RESOLVED, that the President, Treasurer and Secretary of
the Trust, and each of them, hereby is designated as a person
authorized to execute and deliver an officer's certificate setting
forth persons authorized to give instructions under the Custody
Agreement.
WESTCORE TRUST
[SEAL] By: /s/ W. Bruce McConnel, III
-----------------------------
W. Bruce McConnel, III
Secretary
Dated: , 19
---------------- --
A-2
<PAGE>
APPENDIX B
TO AMENDMENT NO. 2 OF THE CUSTODY AGREEMENT BETWEEN
WESTCORE TRUST AND FIRST INTERSTATE
BANK OF DENVER, N.A.
CUSTODIAL FEES*
SMALL-CAP OPPORTUNITY FUND
ANNUAL FEE
Based on Aggregate Daily Market Values of the Funds' Total Gross Assets
$.20 per $1,000 on 1st $ 50,000,000 or 2.0 Basis Points
$.18 per $1,000 on Next $ 50,000,000 or 1.8 Basis Points
$.13 per $1,000 on Next $100,000,000 or 1.3 Basis Points
$.10 per $1,000 on Next $300,000,000 or 1.0 Basis Points
$.05 per $1,000 on Remainder or .5 Basis Points
MINIMUM ANNUAL FEE
$500.00 per year.
ACTIVITY CHARGES:
$20.00 per transaction
(Includes purchases and sales, calls, maturities, tenders and exchanges and
dated commercial paper).
$25.00 per foreign transaction
$45.00 per option
(Includes issuance of escrow receipt.)
OUT-OF-POCKET EXPENSES
All such expenses will be charged to the account, including, but not limited to:
postage, insurance, telephone and telegraph, and correspondent bank charges.
B-1
<PAGE>
*All fees, charges and expenses are payable on a monthly basis.
Date:
--------------------------
Accepted By:
Westcore Trust
By: /s/ Jack D. Henderson
-----------------------------
Jack D. Henderson, President
B-2
<PAGE>
ADMINISTRATION AGREEMENT
THE AGREEMENT made as of October 1, 1995 by and between WESTCORE
TRUST, a Massachusetts business trust (the "Trust") and Denver Investment
Advisors LLC ("DIA"), a Colorado limited liability company having its principle
office at 1225 Seventeenth Street, 26th Floor, Denver, Colorado 80202, and ALPS
Mutual Funds Services, Inc. ("ALPS), a Colorado corporation having its principal
office at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202 (DIA and
ALPS being referred to herein collectively, as the "Administrators).
W I T N E S S E T H:
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust wishes to retain the Administrators to provide, as
co-administrators, certain administration services with respect to the Trust's
Colorado Tax-Exempt, Intermediate-Term Bond, Long-Term Bond, Equity Income,
MIDCO Growth, Blue Chip (formerly the Modern Value Equity), Small-Cap
Opportunity and Cash Reserve Funds (individually, a "Fund," collectively, the
"Funds") and the Administrators are willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed among the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Administrators
jointly and severally to provide administration services to the Funds for the
period and on the terms set forth in this Agreement. The Administrators accept
such appointment and agree to furnish the services herein set forth in return
for the compensation as provided in Paragraph 4 of this Agreement. In the event
that the Trust establishes one or more portfolios other than the Funds with
respect to which it decides to retain the Administrators to act as co-
administrators hereunder, the Trust shall notify the Administrators in writing.
If the Administrators are willing to render such services to a new portfolio,
they shall so notify the Trust in writing whereupon such portfolio shall become
a Fund hereunder and shall be subject to the provisions of this Agreement to the
same extent as the Funds, except to the extent that said provisions (including
those relating to the compensation payable by the Trust) may be modified with
respect to such portfolio in writing by the Trust and the Administrators at the
time of the addition of such new portfolio.
<PAGE>
2. SERVICES
(a) Subject to the direction and control of the Board of
Trustees of the Trust, the Administrators jointly, and generally agree to assist
in supervising various aspects of each Fund's administrative operations
including the performance of the following specific services for each Fund: (i)
assist in maintaining office facilities (which may be in the offices of either
of the Administrators or a corporate affiliate but shall be in such location as
the Trust shall reasonably determine); (ii) furnish clerical services and
stationery and office supplies; (iii) compile data for and prepare with respect
to the Funds timely Notices to the Securities and Exchange Commission required
pursuant to Rule 24f-2 under the 1940 Act and SemiAnnual Reports on Form N-SAR;
(iv) coordinate execution and filing by the Trust of all federal and state tax
returns and required tax filings other than those required to be made by the
Trust's custodians and transfer agent; (v) prepare compliance filings pursuant
to state securities laws with the advice of the Trust's counsel; (vi) assist to
the extent requested by the Trust with the Trust's preparation of Annual and
Semi-Annual Reports to Fund shareholders and Registration Statements for the
Funds (on Form N-IA or any replacement therefor); (vii) monitor each Fund's
expense accruals and pay all expenses on proper authorization from each Fund;
(viii) monitor each Fund's status as a regulated ,investment company under
Subchapter M of the Internal Revenue Code of 1986, as amended from time to time;
(ix) maintain each Fund's fidelity bond as required by the 1940 Act; (x) monitor
compliance with the policies and limitations of each Fund as set forth in the
Trust's most recent Prospectus(es) and Statement(s) of Additional Information
and all amendments and supplements thereto (collectively, the "Prospectus"),
Code of Regulations and Declaration of Trust; and (xi) generally assist in the
Funds' operations.
(b) The Administrators jointly and generally agree to monitor
fund expenses, including but not limited to, fund accounting, and to use good
faith efforts in maintaining such expenses at competitive levels.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
the Administrators hereby agree that all records which they or either of them
maintains for the Funds are the property of the Trust and further agree to
surrender promptly to the Trust any of such records upon the Trust's request.
The Administrators agree to maintain a back-up set of accounts and records of
the Trust (which back-up shall be updated on at least a weekly basis) at a
location other than that where the original accounts and records are stored.
The Administrators shall assist the Trust, the Trust's independent auditors, or,
upon approval of the Trust, any regulatory body, in any requested review of the
Trust's accounts and records, and reports by the Administrators
-2-
<PAGE>
or their independent accountants concerning their accounting system and internal
auditing controls will be open to such entities for audit or inspection upon
reasonable request. There shall be no additional fee for these services. The
Administrators further agree to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
In performing their duties as co-administrators of the Trust, the
Administrators (a) will act in accordance with the Trust's Declaration of Trust,
Code of Regulations, Prospectus and the instructions and directions of the
Trust's Board of Trustees and will conform to, and comply with, the requirements
of the 1940 Act and all other applicable Federal or state laws and regulations,
and (b) will consult with outside legal counsel to the Trust, as necessary or
appropriate.
3. FEES; EXPENSES:
(a) In consideration of services rendered pursuant to this
Agreement, the Trust will pay the Administrators jointly a fee, computed daily
and payable monthly, at the annual rate of 0.30% of the average daily net assets
of each Fund. Net asset value shall be computed in accordance with the Funds'
Prospectus and resolutions of the Trust's Board of Trustees. The fee for the
period from the day of the month this Agreement is entered into until the end of
that month shall be pro-rated according to the proportion which such period
bears to the full monthly period. Upon any termination of this Agreement before
the end of any month, the fee for such part of a month shall be pro-rated
according to the proportion which such period bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. Such fee
as is attributable to each Fund shall be a separate charge to such Fund and
shall be the several (and not joint or joint and several) obligation of each
such Fund.
The Administrators will bear all expenses in connection with the
performance of their services under this Agreement except as otherwise provided
herein. Other expenses to be incurred in the operation of the Funds, including
taxes, interest, brokerage fees and commissions, if any, salaries and fees of
officers and trustees, who are not officers, directors, shareholders, partners
or employees of the Administrators, or the Trust's investment advisor or
distributor for the Funds, Securities and Exchange Commission fees and state
Blue Sky qualification fees, advisory, fund accounting and administration fees,
charges of custodians and transfer agents, certain insurance-premiums, outside
auditing and legal expenses, costs of maintenance of corporate existence,
typesetting and printing of prospectuses for regulatory purposes and for
distribution to current shareholders, costs of shareholder reports and meetings
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<PAGE>
and any extraordinary expenses, will be borne by the Trust; provided, however,
that the Funds will not bear, directly or indirectly, the cost of any activity
which is primarily intended to result in the distribution of shares of the
Funds.
If in any fiscal year any Fund's aggregate expenses (as defined under
the securities regulations of any state having jurisdiction over the Fund)
exceed the expense limitations of any such state, the Administrators jointly and
severally agree to reimburse such Fund for a portion of any such excess expense
in an amount equal to the proportion that the fees otherwise payable to the
Administrators bear to the total amount of investment advisory and
administration fees otherwise payable by the Fund. The expense reimbursement
obligation of the Administrators is limited to the amount of their fees
hereunder for such fiscal year, PROVIDED, HOWEVER, that notwithstanding the
foregoing, the Administrators shall reimburse such Fund for a portion of any
such excess expenses in an amount equal to the proportion that the fees
otherwise payable to the Administrators bear to the total amount of investment
advisory and administration fees otherwise payable by the Fund regardless of the
amount of fees paid to the Administrators during such fiscal year to the extent
that the securities regulations of any state having jurisdiction over the Fund
so require. Such expense reimbursement, if any, will be estimated, reconciled
and paid on a monthly basis.
(b) The Trust agrees on behalf of each Fund to reimburse DIA,
up to the amount set forth in the next succeeding sentence, for DIA's costs
("Costs") of providing sub-accounting and recordkeeping services to persons who
beneficially own shares of the Fund as a result of investing through omnibus
arrangements with a Fund shareholder of record. The amount to be reimbursed
will be computed periodically based on the aggregate value of Fund shares so
beneficially owned ("Beneficial Aggregate Value") and will not exceed the lesser
of (i) Costs actually borne by DIA or (ii) that amount computed by determining
the actual cost of transfer agency services borne by the Fund without taking
into account the Beneficial Aggregate Value and applying that percentage to the
beneficial Aggregate Value.
4. SUBCONTRACTORS AND COMPENSATION TO SERVICE PROVIDERS.
The Administrators may from time to time employ or associate with
themselves such person or persons as the Administrators may believe to be
particularly fitted to assist them in the performance of this Agreement
("subcontractors"). Subcontractors may be officers and employees who are
employed by both the Administrators and the Trust. The compensation of such
sub-contractors shall be paid by the Administrators and no obligation shall be
incurred on behalf of the Trust in such respect. The Administrators shall
provide oversight over any
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<PAGE>
subcontractors) who shall in turn provide services pursuant to an agreement with
the Administrators. Any agreement entered into between the Administrators and a
subcontractor shall acknowledge that the agreement is for the benefit of the
Trust, that the subcontractor shall be directly liable and responsible to the
Trust for the performance of its obligations thereunder, and that the Trust may
therefore enforce its rights directly against the subcontractor.
Notwithstanding such delegation, the Administrators shall continue to be
directly liable to the Trust for the performance of any subcontractor's
obligations under such agreement. In addition to employing subcontractors, the
Administrators may compensate parties who provide shareholder services or other
services pursuant to contracts entered into directly between such parties and
the Trust.
5. PROPRIETARY AND CONFIDENTIAL INFORMATION
The Administrators agree on behalf of themselves and their employees
to treat confidentiality and as proprietary information of the Trust all records
and other information relative to the Funds and prior, present or potential
shareholders of the Funds (and clients of said shareholders), and not to use
such records and information for any purpose other than performance of their
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where the Administrators may be exposed to
civil or criminal contempt proceedings for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust.
6. LIMITATION OF LIABILITY
The Administrators shall not be liable for any error of judgment or
mistake of law or for any loss suffered by the Trust in connection with matters
to which this Agreement relates, except for a loss resulting from willful
misfeasance, bad faith or gross negligence on their part in the performance of
their duties or from reckless disregard by them of their obligations and duties
under this Agreement. Any person, even though also an officer, partner,
employee or agent of either of the Administrators, who may be or become an
officer, director, employee or agent of the Trust, shall be deemed when
rendering services to the Trust or acting on any business of the Trust (other
than services or business in connection with the Administrator, duties
hereunder) to be rendering such services to or acting solely for the Trust and
not as an officer, partner, employee or agent or one under the control or
direction of the Administrators even though paid by either of them. The
Administrators agree that their "ability under this Agreement, as set forth
herein, will be joint and several.
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7. REPORTS
Whenever, in the course of performing their duties under this
Agreement, the Administrators determine, on the basis of information supplied to
the Administrators by the Trust or its authorized agents, that a violation of
applicable law has occurred or that, to their knowledge, a possible violation of
applicable law may have occurred or, with the passage of time, would occur, the
Administrators shall promptly notify the Trust and its counsel.
8. ACTIVITIES OF THE ADMINISTRATORS.
The services of the Administrators under this Agreement are not to be
deemed exclusive, and the Administrators shall be free to render similar
services to others so long as their services hereunder are not impaired thereby.
9. TERM
This Agreement shall become effective as of the date hereof and unless
sooner terminated as provided herein, shall continue until October 1, 1997 (the
"Initial Term"). Thereafter, this Agreement shall continue automatically with
respect to a Fund for successive annual periods ending September 30 of each
year, PROVIDED such continuance is specifically approved at least annually (i)
by the Trust's Board of Trustees or (ii) by a vote of a majority of the
outstanding voting securities of the Fund (as defined in the 1940 Act), and
PROVIDED further that in either' event such continuance is also approved by a
majority of the Trust's Trustees who are not interested persons (as defined in
the 1940 Act) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. During the Initial
Term, the performance of the Administrators, obligations and duties as
Administrators and the fee payable hereunder shall be specifically reviewed at
least annually by the Trust's Board of Trustees, and the fee payable hereunder
for each succeeding year of the Initial Term shall be in such amount as may be
approved by the Trust's Board of Trustees, in light of the Administrators,
performance hereunder, the total expense ratios of the Funds as compared to
comparable fund expense ratios as determined by Lipper Analytical Services, Inc.
(or other data provider acceptable to the Trustees) and other information as the
Trustees may deem relevant in connection with such annual review. In addition,
during the Initial Term, this Agreement may be terminated with respect to a
Fund,, without penalty, solely (a) by agreement of the parties, (b) for cause
(as defined below) on not less than sixty days' notice by the Trust's Board of
Trustees, (c) or by vote of a majority of the outstanding voting securities of
such Fund (as defined by the 1940 Act), or (d) by the Trust's Board of Trustees,
in their sole discretion, in connection with any reorganization, combination,
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<PAGE>
change of control, sale, loan, exchange or transfer of all or substantially all
of the assets, consolidation or similar transaction involving such Fund. After
the Initial Term, this Agreement may be terminated without cause with respect to
a Fund and without penalty, by the Trust's Board of Trustees, by vote of a
majority (as defined in the 1940 Act) of the outstanding voting securities of
such Fund, or by either Administrator, on not less than sixty days, notice.
Termination for "cause" during the Initial Term shall mean:
(i) willful misfeasance, bad faith, gross negligence,
abandonment, or reckless disregard on the part of an Administrator with respect
to its obligations and duties hereunder;
(ii) regulatory, administrative, or judicial proceedings against
an Administrator which result in a determination that it has violated any rule,
regulation, order, or law;
(iii) financial difficulties on the part of an Administrator
which are evidenced by the authorization or commencement of, or involvement by
way of pleading, answer, consent, or acquiescence in, a voluntary or involuntary
case under title 11 of the United States Code, as from time to time in effect,
or any applicable law, other than said Title 11, of any jurisdiction relating to
the liquidation or reorganization of debtors or to the modification or
alteration of the rights of creditors;
(iv) sale or any other change in control of an Administrator;
(v) failure by an Administrator to maintain net capital of at
least $100,000 and to provide to the Chairman of the Trust at least annually an
audited financial statement documenting the existence of such net capital;
(vi) failure by either Administrator to keep in effect
professional liability insurance satisfactory to the Trust naming it as insured
and providing coverage with respect to its activities on behalf of the Trust in
the amount of at least $1,000,000 (provided that the Board of Trustees by
resolution may approve a lesser amount); or
(vii) any other circumstance which in the reasonable judgment of
the Trust's Board of Trustees, including a majority of the Trust's Trustees who
are not interested persons (as defined in the 1940 Act) of any party to this
Agreement,
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<PAGE>
substantially impairs the performance of an Administrator's obligations and
duties hereunder.
Upon termination of this Agreement, the Administrators shall deliver
to the Trust or as otherwise directed by the Trust (at the expense of the Trust,
unless such termination is for breach of this Agreement by the Administrators)
all records and other documents made or accumulated in the performance of their
duties or the duties of any subcontractor(s) for the Trust hereunder.
Upon effectiveness of this Agreement, the current Administration
Agreement between the Trust and the Trust's Administrator is deemed to be
terminated by consent of the parties thereto, with a waiver of any applicable
notice.
10. ASSIGNMENT. This Agreement shall extend to and shall be binding
upon the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Trust without the
prior written consent of the Administrators, or by the Administrators without
the prior written consent of the Trust; provided further, that no agreement with
any subcontractor(s) contemplated hereunder shall be entered into, terminated,
amended, assigned or permitted to be assigned without the prior written consent
of the Trust.
11. NOTICES. All notices and other communications hereunder shall be
in writing, shall be deemed to have been given when received or when sent by
telex or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Administrators:
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street, Suite 2700
Denver, Colorado 80202
Attn: Mark Pougnet
Denver Investment Advisors LLC
1225 Seventeenth Street, 26th Floor
Denver, Colorado 80202
Attn: Kenneth V. Penland
To the Fund:
Westcore Trust
c/o W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
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12. OTHER PROVISIONS
The Trust recognizes that from time to time directors, officers and
employees of either of the Administrators may serve as directors, officers and
employees of other corporations or. business trusts (including other investment
companies) and that such other corporations and trusts may include the name ALPS
or DIA as part of their name, and that the Administrators or either of their
affiliates may enter into investment advisory or other agreements with such
other corporations and trusts.
This Agreement shall be governed by the laws of the Commonwealth of
Massachusetts, and the 1940 Act and the rules thereunder. To the extent that
the laws of the Commonwealth of Massachusetts conflict with the 1940 Act or such
rules, the latter shall control.
No provision of this Agreement may be changed, discharged or
terminated orally, but only by an instrument in ,writing signed by the party
against which enforcement of the change, discharge or termination is sought. If
a change or discharge is sought against the Trust, the instrument must be signed
by both Administrators. This Agreement may be executed in one or more
counterparts and all such counterparts will constitute one and the same
instrument.
The names "Westcore Trust" and "Trustees of Westcore Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of its trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the trustees shareholders, or
representatives of the Trust Personally, but bind only the Trust property, and
all persons dealing with any class Of shares of the Trust must look solely to
the Trust property belonging to such class for the enforcement of any claims
against the Trust.
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<PAGE>
If the foregoing is in accordance with your and understanding, will
you kindly so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
WESTCORE TRUST
By /s/Jack D. Henderson
--------------------
Title: Chairman
Accepted:
ALPS MUTUAL FUNDS SERVICES, INC.
By: /s/W. Robert Alexander
----------------------
Title: Chairman
DENVER INVESTMENT ADVISORS LLC
By: /s/Kenneth V. Penland
---------------------
Title: Chairman
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<PAGE>
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 4th day of January, 1993, as amended from the
Transfer Agency and Service Agreement dated June 1, 1992 by and between WESTCORE
TRUST, a Massachusetts business trust, having its principal office and place of
business at 600 Seventeenth Street, Suite 1605 South, Denver, Colorado 80202
(the "Trust"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company having its principal office and place of business at 225 Franklin
Street, Boston, Massachusetts 02110 (the "Bank").
WHEREAS, the Trust desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
WHEREAS, the Trust is authorized to issue shares in separate series, with
each such series representing interests in a separate portfolio of securities
and other assets; and
WHEREAS, the Trust presently offers Shares in 22 series, Money Market Fund,
Cash Reserve Fund, Treasury Money Market Fund, Prime Money Market Fund,
Government Money Market Fund, Modern Value Equity Fund, Equity Income Fund,
MIDCO Growth Fund, Short-Term Bond Fund, Intermediate-Term Bond Fund, Long-Term
Bond Fund, Basic Value Fund, Bonds Plus Fund, GNMA Fund, Short-Term Government
Bond Fund, Short-Intermediate Tax-Exempt Fund, Balanced Investment Fund,
Colorado Tax-Exempt Fund, Oregon Tax-Exempt Fund, Arizona Intermediate Tax-Free
Fund, Growth Fund and
<PAGE>
Quality Tax-Exempt Income Fund and California Intermediate Tax-Free Fund (the
"Funds");
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1. TERMS OF APPOINTMENT; DUTIES OF THE BANK
1.01 Subject to the terms and conditions set forth in this Agreement,
the Trust hereby employs and appoints the Bank to act as, and the Bank agrees to
act as its transfer agent for the Trust's authorized and issued shares of
beneficial interest in the Funds ("Shares"), dividend disbursing agent and agent
in connection with any accumulation, open-account or similar plans provided to
the shareholders of the Trust ("Shareholders") and set out in the currently
effective prospectuses and statements of additional information ("prospectuses")
of the Trust, including without limitation any periodic investment plan or
periodic withdrawal program.
1.02 The Bank agrees that it will perform the following services in
accordance with the Trust's respective prospectuses:
(a) In accordance with procedures established from time to time
by agreement between the Trust and the Bank, the Bank shall:
(i) Receive for acceptance, orders for the purchase of Shares,
promptly deliver payment and appropriate documentation
thereof to the Custodians of the Trust authorized pursuant
to the Amended and Restated Declaration of Trust of the
Trust (each of which is referred
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<PAGE>
to herein as the "Custodian"), and make proper remittance of
any sales load received by it to the persons entitled to the
same as instructed by the Trust's Administrator;
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) In the event any check or other order for the transfer of
money is returned unpaid, take such steps as it may deem
appropriate or the Trust may instruct to protect the Trust
and the Bank from financial loss;
(iv) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof
to the appropriate Custodian;
(v) In respect to the transactions in items (i), (ii) and (iv)
above, the Bank shall execute transactions directly with
broker-dealers authorized by the Trust who shall thereby be
deemed to be acting on behalf of the Trust;
(vi) At the appropriate time as and when it receives monies paid
to it by the Custodian with respect to any redemption, pay
over or cause to be paid over in the appropriate manner such
monies as instructed by the redeeming Shareholders;
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<PAGE>
(vii) Effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(viii) Prepare and transmit payments (or where appropriate credit a
Shareholder account) for dividends and distributions
declared by a Fund;
(ix) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon receipt
by the Bank of indemnification satisfactory to the Bank and
protecting the Bank and the Trust, and the Bank at its
option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and
without such indemnity;
(x) Maintain records of account for and advise the Trust and its
Shareholders as to the foregoing; and
(xi) Record the issuance of Shares of the Trust and maintain
pursuant to SEC Rule 17Ad-10(e) a record of the total number
of Shares of the Trust which are authorized, based upon data
provided to it by the Trust, and issued and outstanding.
The Bank shall also provide the Trust on a regular basis
with the total number of Shares which are authorized and
issued and outstanding and shall have no
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<PAGE>
obligation, when recording the issuance of Shares, to
monitor the issuance of such Shares or to take cognizance of
any laws relating to the issue or sale of such Shares, which
functions shall be the sole responsibility of the Trust.
(b) In addition to and neither in lieu nor in contravention of
the services set forth in the above paragraph (a), the Bank shall: (i) perform
the customary services of a transfer agent, dividend disbursing agent and, as
relevant, agent in connection with accumulation, open-account or similar plans
(including without limitation any periodic investment plan or periodic
withdrawal program), including but not limited to: maintaining all Shareholder
accounts, preparing Shareholder meeting lists, mailing proxies, mailing
Shareholder reports and prospectuses to current Shareholders, withholding taxes
on U.S. resident and non-resident alien accounts and maintaining records with
respect to such withholding, preparing and filing U.S. Treasury Department Forms
1099 and other appropriate forms required with respect to dividends and
distributions by federal authorities for all Shareholders, preparing and mailing
confirmation forms and statements of account to Shareholders for all purchases
and redemptions of Shares and other confirmable transactions in Shareholder
accounts, responding to Shareholder telephone calls and Shareholder
correspondence, preparing and mailing activity statements for Shareholders, and
providing Shareholder account information and (ii) provide a system which
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will enable the Trust to monitor the total number of Shares sold in each State.
(c) In addition, the Trust's Administrator shall (i) identify to
the Bank in writing those transactions and assets to be treated as exempt from
blue sky reporting for each State and (ii) verify the establishment of
transactions for each State on the system prior to activation and thereafter
monitor the daily activity for each State. The responsibility of the Bank for a
Fund's blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by such Fund and
the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of these services
in Article 1 may be established from time to time by agreement between the Trust
and the Bank per the attached service responsibility schedule. The Bank may at
times perform only a portion of these services and the Trust or its agent may
perform these services on the Trust's behalf.
(e) The Bank shall provide additional services on behalf of the
Trust (i.e., escheatment services) which may be agreed upon in writing between
the Trust and the Bank.
Article 2. FEES AND EXPENSES
2.01 For the performance by the Bank pursuant to this Agreement, the
Trust agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto as Exhibit A.
Such fees and out-of-pocket expenses and advances identified under Section 2.02
below
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<PAGE>
may be changed from time to time subject to mutual written agreement between the
Trust and the Bank.
2.02 In addition to the fee paid under Section 2.01 above, the
Fund(s) agree(s) to reimburse the Bank for out-of-pocket expenses, including but
not limited to confirmation production, postage, forms, telephone, microfilm,
microfiche, tabulating proxies, records storage, or advances incurred by the
Bank for the items set out in the fee schedule attached hereto as Exhibit A. In
addition, any other expenses incurred by the Bank at the request or with the
consent of the Fund(s), will be reimbursed by the Fund(s).
2.03 The Fund(s) agree(s) to pay all fees and reimbursable expenses
within thirty days following the receipt of the respective billing notice.
Postage for mailing of dividends, proxies, Fund reports and other mailings to
all Shareholder accounts shall be advanced to the Bank by the Fund(s) at least
seven (7) days prior to the mailing date of such materials.
Article 3. REPRESENTATIONS AND WARRANTIES OF THE BANK
The Bank represents and warrants to the Trust that:
3.01 It is a trust company duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its Charter and By-
Laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement.
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<PAGE>
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4. REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to the Bank that:
4.01 It is a business trust duly organized and existing and in good
standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its Amended and
Restated Declaration of Trust and Code of Regulations to enter into and perform
this Agreement.
4.03 All trust proceedings required by said Amended and Restated
Declaration of Trust and Code of Regulations have been taken to authorize it to
enter into and perform this Agreement.
4.04 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of 1933, as
amended is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with respect
to all Shares of the Trust being offered for sale.
Article 5. DATA ACCESS AND PROPRIETARY INFORMATION
5.01 The Trust acknowledges that the data bases, computer programs,
screen formats, report formats, interactive design techniques, and documentation
manuals furnished to the Trust by the Bank as part of the Trust's ability to
access certain related data ("Customer Data") maintained by the Bank on
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<PAGE>
data bases under the control and ownership of the Bank ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to the Bank. It
is understood that Customer Data, which includes data provided to the Bank by or
on behalf of the Trust and records belonging to the Trust pursuant to Section 31
of the Investment Company Act of 1940 as amended (and the Rules thereunder),
will not be deemed to be Data Access Services or Proprietary Information. The
Trust agrees to treat all Proprietary Information as proprietary to the Bank and
further agrees that it shall not divulge any Proprietary Information to any
person or organization except as may be provided hereunder. Without limiting
the foregoing, the Trust agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may be
designated in writing by the Bank and solely in accordance with
the Bank's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose
of such information in accordance with the Bank's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted
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<PAGE>
to any other computer facility or other location, except with the
prior written consent of the Bank;
(e) that the Trust shall have access only to those authorized
transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by the Bank to
protect at the Bank's expense the rights of the Bank in
Proprietary Information at common law, under federal copyright
law and under other federal or state law.
Each party shall take reasonable efforts to advise its employees or
independent service contractors of the obligations pursuant to this Article 5.
The obligations of this Article shall survive any earlier termination of this
Agreement.
5.02 If the Trust notifies the Bank that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, the Bank shall endeavor in a timely manner
to correct such failure. Organizations from which the Bank may obtain certain
data included in the Data Access Services are solely responsible for the
contents of such data and the Trust agrees to make no claim against the Bank
arising out of the contents of such third-party data, including, but not limited
to, the accuracy thereof, provided that the Bank will comply with all reasonable
requests for assistance from the Trust in resolving any claim or other
discrepancy the Trust may have with such third party organizations. DATA ACCESS
SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN
CONNECTION THEREWITH ARE
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<PAGE>
PROVIDED ON AN AS IS, AS AVAILABLE BASIS (PROVIDED THAT THE BANK SHALL CONTINUE
TO BE RESPONSIBLE FOR ANY DELAY IN OR OTHER FAILURE OF PERFORMANCE THAT ARISES
AS A RESULT OF A MATTER REASONABLY WITHIN THE BANK'S CONTROL). THE BANK
EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN
INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Trust include the ability
to originate a customer originated electronic financial instruction to the Bank
in order to (i) effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such transactions
constituting a "COEFI"), then in such event the Bank shall be entitled to rely
on the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
reasonable security procedures established by the Bank from time to time.
Article 6. INDEMNIFICATION
6.01 The Bank shall not be responsible for, and the Trust shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions taken or omitted to be taken by the Bank or its
agent or subcontractors required to be taken pursuant to this Agreement,
provided that such actions are taken in good faith and without negligence or
willful misconduct.
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<PAGE>
(b) The Funds' lack of good faith, negligence or willful
misconduct which arise out of the breach of any representation or warranty of
the Fund(s) hereunder.
(c) The good faith reliance on or use by the Bank or its agents
or subcontractors of written information, records and documents or services
which (i) are received or relied upon by the Bank or its agents or
subcontractors and furnished to it or performed by or on behalf of the Fund(s),
and (ii) have been prepared, maintained and/or performed by the Fund(s) or any
other authorized person or firm on behalf of the Fund(s).
(d) The reliance on, or the carrying out by the Bank or its
agents or subcontractors of any instructions or requests of the Fund(s).
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time the Bank may apply to any officer of the Trust for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel (provided
such counsel is reasonably satisfactory to
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<PAGE>
the Trust). The Bank, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Fund(s), reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records or
documents provided the Bank or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Fund(s),
and shall not be held to have notice of any change of authority of any person,
until receipt of written notice thereof from the Fund(s). The Bank, its agents
and subcontractors shall also be protected and indemnified in recognizing stock
certificates which are reasonably believed to bear the proper manual or
facsimile signatures of the officer(s) of the Trust, and the proper
countersignature of any former transfer agent or former registrar, or of a co-
transfer agent or co-registrar.
6.03 In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
6.04 In order that the indemnification provisions contained in this
Article 6 shall apply, upon the assertion of a claim for which the Trust may be
required to indemnify the Bank, the Bank shall promptly notify the Trust of such
assertion, and shall keep the Trust advised with respect to all developments
-13-
<PAGE>
concerning such claim. The Trust shall have the option to participate with the
Bank in the defense of such claim or to defend against said claim in its own
name or in the name of the Bank. The Bank shall in no case confess any claim or
make any compromise in any case in which the Trust may be required to indemnify
the Bank except with the Trust's prior written consent.
Article 7. STANDARD OF CARE
7.01 The Bank shall at all times act in good faith and agrees to use
its best efforts within reasonable limits to insure the accuracy of all services
performed under this Agreement, but assumes no responsibility and shall not be
liable for loss or damage due to errors unless said errors are caused by its
negligence, bad faith, or willful misconduct or that of its employees.
Article 8. COVENANTS OF THE TRUST AND THE BANK
8.01 The Trust shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Trustees
of the Trust authorizing the appointment of the Bank and the execution and
delivery of this Agreement.
(b) A copy of the Amended and Restated Declaration of Trust and
Code of Regulations of the Trust and all amendments thereto.
(c) Copies of each vote of the Board of Trustees of the Trust
designating authorized persons to give instructions to the Bank.
8.02 The Bank hereby agrees to establish and maintain facilities and
procedures reasonably acceptable to the Trust for
-14-
<PAGE>
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
8.03 The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable, as
required by applicable laws, rules and regulations. To the extent required by
Section 31 of the Investment Company Act of 1940, as amended, and the Rules
thereunder, the Bank agrees that all such records prepared or maintained by the
Bank relating to the services to be performed by the Bank hereunder are the
property of the Trust and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered promptly to the
Trust on and in accordance with its request. Additionally, the Bank will make
reasonably available to the Trust and its authorized representatives records
maintained by the Bank pursuant to this Agreement for reasonable inspection, use
and audit, and will take all reasonable action to assist the Trust's independent
accountants in rendering their opinion.
8.04 The Bank and the Trust agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of the
Shareholder records of the Trust, the Bank will
-15-
<PAGE>
endeavor to notify the Trust and to secure instructions from an authorized
officer of the Trust as to such inspection. The Bank reserves the right,
however, to exhibit the Shareholder records to any person whenever it is advised
by its counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person.
Article 9. TERMINATION OF AGREEMENT
9.01 This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other, and may be terminated
immediately by the Trust should the Bank cease to be qualified to act as the
Trust's transfer agent pursuant to applicable law.
9.02 Should the Trust exercise its right to terminate, other than as
a result of a default under this Agreement by the Bank, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, the Bank reserves the right to charge for any other
reasonable expenses associated with such termination.
Article 10. ASSIGNMENT
10.01 Except as provided in Section 10.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
10.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
10.03 The Bank may, without further consent on the part of the Trust,
subcontract for the performance hereof with
-16-
<PAGE>
(i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS")
which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of
the Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a
BFDS subsidiary duly registered as a transfer agent pursuant to Section
17A(c)(1) or (iii) a BFDS affiliate duly registered as a transfer agent pursuant
to Section 17A(c)(1); provided, however, that the Bank shall be as fully
responsible to the Trust for the acts and omissions of any subcontractor as it
is for its own acts and omissions.
Article 11. AMENDMENT
11.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Trustees of the Trust.
Article 12. MASSACHUSETTS LAW TO APPLY
12.01 This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 13. MERGER OF AGREEMENT
13.01 This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
Article 14. COUNTERPARTS
14.01 This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
-17-
<PAGE>
Article 15. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
15.01 The names "Westcore Trust" and "Trustees of Westcore Trust"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 as amended July 16, 1990
and as may be further amended from time to time which is hereby referred to and
a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees,
shareholders, or representatives of the Trust personally, but bind only the
Trust Property, and all persons dealing with any class of shares of the Trust
must look solely to the Trust Property belonging to such class for the
enforcement of any claims against the Trust.
-18-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in their names and on their behalf by and through their duly
authorized officers, as of the day and year first above written.
WESTCORE TRUST
By: /s/ Jack D. Henderson
-----------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/Ronald E. Logue
-----------------------------
Sr. Vice President
ATTEST:
- ------------------------------
Assistant Secretary
-19-
<PAGE>
STATE STREET BANK & TRUST COMPANY
FUND SERVICE RESPONSIBILITIES
Service Performed Responsibility
- ----------------- --------------
Bank Trust
---- -----
1. Receives orders for the purchase
of Shares.
2. Issue Shares and hold Shares in
Shareholders' accounts.
3. Receive redemption requests.
4. Effect transactions 1-3 above
directly with broker-dealers.
5. Pay over monies to redeeming
Shareholders.
6. Effect transfers of Shares.
7. Prepare and transmit dividends
and distributions.
8. Issue replacement Certificates.
9. Reporting of abandoned property.
10. Maintain records of account.
11. Maintain and keep a current and
accurate control book for each
issue of securities.
12. Mail proxies.
13. Mail Shareholder reports.
14. Mail prospectuses to current
Shareholders.
15. Withhold taxes on U.S. resident
and non-resident alien accounts.
16. Prepare and file U.S. Treasury
Department forms.
17. Prepare and mail account and
confirmation statements for
Shareholders.
-1-
<PAGE>
Service Performed Responsibility
- ----------------- --------------
Bank Trust
---- -----
18. Provide Shareholder account
information.
19. Blue sky reporting.
* Such services are more fully described in Article 1.02(a), (b) and (c) of
the Agreement.
WESTCORE TRUST
By: /s/Jack D. Henderson
-----------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST COMPANY
By: /s/Ronald E. Logue
-----------------------------
Sr. Vice President
ATTEST:
- ------------------------------
Assistant Secretary
-2-
<PAGE>
AMENDMENT NO. 1
TO THE AMENDED AND RESTATED TRANSFER AGENT
AND SERVICE AGREEMENT
Amendment dated as of December 28, 1993 to the Amended and Restated
Transfer Agent and Service Agreement (the "Agreement") dated as of January 4,
1993 between Westcore Trust, a Massachusetts business trust (the "Trust"), and
State Street Bank and Trust Company, a Massachusetts trust company ("STATE
STREET").
BACKGROUND
1. STATE STREET serves as the transfer agent for certain of the
Trust's portfolios pursuant to the Agreement.
2. The Trust desires to employ STATE STREET as its transfer agent
for the Small-Cap Opportunity Fund (the "Fund"), on the terms and for the
compensation set forth in the Agreement and STATE STREET agrees to provide such
services.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and mutual covenants
herein contained, the parties hereto, intending to be legally bound, agree as
follows:
1. APPOINTMENT. The Trust hereby appoints STATE STREET to act as
transfer agent for the Fund for the period and on the terms set forth in the
Agreement and STATE STREET accepts such appointment for said period and on said
terms, and agrees to provide the services set forth in the Agreement and in
return for the compensation provided therein.
2. CONTINUING VALIDITY. The provisions of the Agreement shall
remain in full force and effect as modified hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers designated below on the day and
year first above written.
WESTCORE TRUST
By: /s/Jack D. Henderson
-------------------------------
Jack D. Henderson, President
STATE STREET BANK AND TRUST COMPANY
By: /s/Robert Dame
-------------------------------
Robert Dame, Vice President
-2-
<PAGE>
AMENDMENT NO. 2
TO AMENDED AND RESTATED TRANSFER AGENCY
AND SERVICE AGREEMENT
WHEREAS, WESTCORE TRUST, a Massachusetts business trust (the "Trust"), and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (the "Bank"),
are parties to an Amended and Restated Transfer Agency and Service Agreement
dated as of January 4, 1993 (the "Agreement") wherein the Trust has appointed
the Bank as its transfer agent, dividend disbursing agent and agent in
connection with the Trust's funds as described in the Agreement;
WHEREAS, the parties wish to amend the Agreement in certain respects;
NOW THEREFORE, the parties hereby agree, intending to be legally bound,
that effective immediately the Agreement is amended to read as follows:
Section 1.02(a)(v) of the Agreement is amended and
restated in its entirety as follows: "In respect to the transactions in items
(i), (ii) and (iv) above, the Bank shall execute transactions directly with
broker dealers, investment advisers and other institutions acting on behalf of
investors authorized by the Trust who shall thereby be deemed to be acting on
behalf of the Trust;"
Except as expressly amended and modified hereby, all other provisions of
the Agreement shall remain in full force and effect.
In WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of
the 1st day of November, 1994.
WESTCORE TRUST
By:
-----------------------------
ATTEST:
- ------------------------------
STATE STREET BANK AND TRUST
By: /s/Ronald E. Logue
-----------------------------
ATTEST:
- ------------------------------
<PAGE>
AMENDED AND RESTATED
BOOKKEEPING AND PRICING AGREEMENT
Between
WESTCORE TRUST
and
ALPS SECURITIES, INC.
<PAGE>
AMENDED AND RESTATED
BOOKKEEPING AND PRICING AGREEMENT
AGREEMENT made this 7th day of January, 1993, as amended from the
Bookkeeping and Pricing Agreement dated June 1, 1992, by and between Westcore
Trust, a business trust established under the laws of the Commonwealth of
Massachusetts (the "Fund") and ALPS SECURITIES, INC., a Colorado corporation
having its principal office at 600 Seventeenth Street, Suite 1605 South, Denver,
Colorado 80202 (the "Agent").
WHEREAS, the Fund is an open-end management investment company
registered under the Investment Company Act of 1940 presently consisting of the
following twenty-one investment portfolios: the Money Market Fund, Cash Reserve
Fund, Treasury Money Market Fund, Prime Money Market Fund, Government Money
Market Fund, Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund,
Short-Term Bond Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Basic
Value Fund, Bonds Plus Fund, GNMA Fund, Short-Term Government Bond Fund, Short-
Intermediate Tax-Exempt Fund, Oregon Tax-Exempt Fund, Balanced Investment Fund,
Colorado Tax-Exempt Fund, Arizona Intermediate Tax-Free Fund, the Growth Fund,
the Quality Tax-Exempt Income Fund and the California Intermediate Tax-Free
Fund; each of such investment portfolios and any additional investment
portfolios that may be established by the Fund is referred to herein
individually as a "Portfolio" and collectively as the "Portfolios;" and
WHEREAS, the Fund desires to appoint the Agent as agent to perform
certain bookkeeping and pricing services for the Portfolios on behalf of the
Fund, and the Agent has indicated its willingness to so act, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. AGENT APPOINTED BOOKKEEPING AND PRICING AGENT. The Fund hereby
appoints the Agent as bookkeeping and pricing agent for the Portfolios and the
Agent agrees to provide the services contemplated herein upon the terms and
conditions hereinafter set forth.
2. DEFINITIONS. In this Agreement the terms below have the
following meanings:
(a) AUTHORIZED PERSON. Authorized Person means any of the
persons duly authorized to give Proper Instructions or otherwise act on
behalf of the Fund by appropriate resolution of the Board of Trustees of
the Fund.
<PAGE>
The Fund will at all times maintain on file with the Agent certification,
in such form as may be acceptable to the Agent, of (i) the names and
signatures of the Authorized Person(s) and (ii) the names of the members of
the Board of Trustees of the Fund, it being understood that upon the
occurrence of any change in the information set forth in the most recent
certification on file (including without limitation any person named in the
most recent certification who is no longer an Authorized Person as
designated therein), the Fund will provide a new or amended certification
setting forth the change. The Agent will be entitled to rely upon any
Proper Instruction (defined below) which has been signed by person(s) named
in the most recent certification.
(b) PROPER INSTRUCTIONS. Proper Instructions means any request,
instruction or certification signed by one or more Authorized Persons.
Oral instructions will be considered Proper Instructions if the Agent
reasonably believes them to have been given by an Authorized Person and
they are confirmed in writing. Proper Instructions may include
communication effected directly between electro-mechanical or electronic
devices as agreed upon by the parties hereto.
3. DUTIES OF THE AGENT. The Agent agrees to provide or to arrange
to provide at its expense the following services for the Fund:
(a) Maintain separate accounts for each Portfolio, all as
directed from time to time by Proper Instructions;
(b) Timely calculate and transmit to NASDAQ each Portfolio's
daily net asset value and public offering price (such
determinations to be made in accordance with the provisions
of the Fund's Amended and Restated Declaration of Trust and
the appropriate prospectuses and statements of additional
information relating to the Portfolios, and any applicable
resolutions of the Board of Trustees of the Fund) and
promptly communicate such values and prices to the Fund and
the Fund's transfer agent;
(c) Maintain and keep current all books and records of the Fund
as required by Section 31 and the rules thereunder under the
1940 Act ("Section 31") in connection with the Agent's
duties hereunder. The Agent shall comply with all laws,
rules and regulations
-2-
<PAGE>
applicable to the performance of its obligations hereunder.
Without limiting the generality of the foregoing, the Agent
will prepare and maintain the following records upon receipt
of information in proper form from Authorized Persons of the
Fund:
(i) Cash receipts journal
(ii) Cash disbursements journal
(iii) Dividend records
(iv) Purchase and sales - portfolio
securities journals
(v) Subscription and redemption journals
(vi) Security ledgers
(vii) Broker ledger
(viii) General ledger
(ix) Daily expense accruals
(x) Daily income accruals
(xi) Securities and monies borrowed or loaned and
collateral therefore
(xii) Foreign currency journals
(xiii) Trial balances
(d) Provide the Fund and its investment adviser(s) with daily
portfolio values, net asset values and other statistical
data for each Portfolio as requested from time to time.
(e) Compute the net income, exempt interest income and capital
gains of each Portfolio for dividend purposes in accordance
with relevant prospectus policies and resolutions of the
Board of Trustees of the Fund.
(f) Provide the Fund and its investment adviser(s) with camera
ready copies of the semi-annual and annual financial
statements to be furnished to shareholders of each Portfolio
and all raw financial data necessary for the timely
preparation of tax returns, Form N-SAR, prospectus updates,
Rule 24f-2 filings and proxy statements.
(g) Provide facilities to accommodate annual audits and any
audits or examinations conducted by the Securities and
Exchange Commission or other governmental entities.
-3-
<PAGE>
(h) Provide audited financial statements regarding the Agent on
an annual basis, as requested. Such audits shall be
conducted by an independent accounting firm mutually agreed
upon by the Agent and the Fund.
(i) Furnish to the Fund at the end of every month, and at the
close of each quarter of the Fund's fiscal year, a list of
the portfolio securities and the aggregate amount of cash in
the Portfolios.
(j) Assist in the preparation of certain reports, audits of
accounts, and other matters of like nature, as reasonably
requested from time to time by the Fund.
The Agent shall for all purposes be deemed to be an independent
contractor and shall, unless otherwise expressly authorized, have no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
4. SUBCONTRACTORS. It is understood that the Agent may from time to
time at its expense delegate the performance of all or a portion of its
obligations under this Agreement to one or more persons (hereinafter
"subcontractor(s)") as the Agent may believe to be particularly fit to assist it
in the performance of this Agreement. The Agent shall provide oversight over
any subcontractor(s) who shall in turn provide services pursuant to an agreement
with the Agent approved by a resolution of the Board of Trustees of the Fund.
Any agreement entered into between the Agent and a subcontractor shall
acknowledge that the agreement is for the benefit of the Fund, that the
subcontractor shall be directly liable and responsible to the Fund for the
performance of its obligations thereunder, and that the Fund may therefore
enforce its rights directly against the subcontractor. Notwithstanding such
delegation, the Agent shall continue to be directly liable to the Fund for the
performance of any subcontractor's obligations under such agreement. In
accordance with the foregoing, it is understood that the Agent intends to
appoint American Data Services as subcontractor.
5. INSTRUCTIONS TO THE AGENT. The Agent shall promptly take all
appropriate steps necessary to carry out or comply with any Proper Instructions
received from the Fund.
6. AGENT COMPENSATION. In consideration for the services to be
performed by the Agent, the Agent shall be entitled to receive from the Fund
such compensation and reimbursement for all reasonable out-of-pocket expenses as
may be agreed upon from time to time between the Agent and the Fund in advance
and in writing. The Fund agrees to pay the Agent
-4-
<PAGE>
compensation as described in the schedule attached as Exhibit A.
7. LIABILITY OF THE AGENT.
(a) The Agent may rely upon the written advice of counsel for
the Fund and the Fund's independent accountants, and upon oral or written
statements of brokers and other persons reasonably believed by the Agent in good
faith to be expert in the matters upon which they are consulted and, for any
actions reasonably taken in good faith reliance upon such advice or statements
and without negligence, the Agent shall not be liable to anyone.
(b) Nothing herein contained shall be construed to protect the
Agent against any liability to the Fund or its security holders to which the
Agent would otherwise be subject by reason of willful misfeasance, bad faith or
negligence in the performance of its duties.
(c) Except as may otherwise be provided by applicable law,
neither the Agent nor its shareholders, officers, directors, employees or agents
shall be subject to, and the Fund shall indemnify and hold such persons harmless
from and against, any liability for and any damages, expenses or losses incurred
by reason of the inaccuracy of factual information furnished to the Agent or any
subcontractor(s) by an Authorized Person of the Fund.
(d) The Agent shall ensure that it or any subcontractors have
and maintain Errors and Omissions Insurance for the services rendered under this
Agreement of at least $1 million (provided the Board of Trustees of the Fund may
by resolution approve some lesser amount). The Agent shall provide to the Fund
annually a certificate from the appropriate errors and omissions insurance
carrier(s) certifying that such Errors and Omissions Insurance is in full force
and effect.
8. REPORTS. Whenever, in the course of performing its duties under
this Agreement, the Agent determines, on the basis of information supplied to
the Agent by the Fund or its authorized agents, that a violation of applicable
law has occurred or that, to its knowledge, a possible violation of applicable
law may have occurred or, with the passage of time, would occur, the Agent shall
promptly notify the Fund and its counsel.
9. ACTIVITIES OF THE AGENT. The services of the Agent under this
Agreement are not to be deemed exclusive, and the Agent shall be free to render
similar services to others so long as its services hereunder are not impaired
thereby.
-5-
<PAGE>
10. ACCOUNTS AND RECORDS. The accounts and records maintained by the
Agent shall be the property of the Fund, and shall be surrendered to the Fund
promptly upon receipt of Proper Instructions from the Fund in the form in which
such accounts and records have been maintained or preserved. The Agent agrees
to maintain a back-up set of accounts and records of the Fund (which back-up set
shall be updated on at least a weekly basis) at a location other than that where
the original accounts and records are stored. The Agent shall assist the Fund,
the Fund's independent auditors, or, upon approval of the Fund, any regulatory
body, in any requested review of the Fund's accounts and records, and reports by
the Agent or its independent accountants concerning its accounting system and
internal auditing controls will be open to such entities for audit or inspection
upon reasonable request. There shall be no additional fee for these services.
The Agent shall preserve the accounts and records as they are required to be
maintained and preserved by Section 31.
11. CONFIDENTIALITY. The Agent agrees that it will, on behalf of
itself and its officers and employees, treat all transactions contemplated by
this Agreement, and all other information germane thereto, as confidential and
not to be disclosed to any person except as may be authorized by the Fund in
Proper Instructions.
12. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
become effective as of the date hereof. Either party may terminate this
Agreement, without penalty, upon sixty (60) days prior written notice to the
other.
Upon termination of this Agreement, the Agent shall deliver to the
Fund or as otherwise directed in Proper Instructions (at the expense of the
Fund, unless such termination is for breach of this Agreement by the Agent) all
records and other documents made or accumulated in the performance of its duties
or the duties of any subcontractor(s) for the Fund hereunder.
13. ASSIGNMENT. This Agreement shall extend to and shall be binding
upon the parties hereto and their respective successors and assigns; provided,
however, that this Agreement shall not be assignable by the Fund without the
prior written consent of the Agent, or by the Agent without the prior written
consent of the Fund; provided further, that no agreement with any
subcontractor(s) contemplated hereunder shall be entered into, terminated,
amended, assigned or permitted to be assigned without the prior written consent
of the Fund.
14. GOVERNING LAW. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the Commonwealth of
Massachusetts, and the 1940 Act and the rules
-6-
<PAGE>
thereunder. To the extent that the laws of the Commonwealth of Massachusetts
conflict with the 1940 Act or such rules, the latter shall control.
15. NAMES. The names "Westcore Trust" and "Trustees of Westcore
Trust" refer respectively to the Trust created and the Trustees as trustees but
not individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 as amended July 16, 1990
and as may be further amended from time to time which is hereby referred to and
a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
16. AMENDMENTS TO THIS AGREEMENT. This Agreement may only be amended
by the parties in writing.
17. NOTICES. All notices and other communications hereunder shall be
in writing, shall be deemed to have been given when received or when sent by
telex or facsimile, and shall be given to the following addresses (or such other
addresses as to which notice is given):
To the Agent:
ALPS Securities, Inc.
600 Seventeenth Street - Suite 1605 South
Denver, Colorado 80202
Attn: W. Robert Alexander
To the Fund:
Westcore Trust
c/o W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
Philadelphia National Bank Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
18. COUNTERPARTS. This Agreement may be executed by the parties
hereto on any number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WESTCORE TRUST
By /s/ Jack D. Henderson
---------------------------
ATTEST:
/s/ James L. Smith
- ------------------------------
ALPS SECURITIES, INC.
By /s/ W. Robert Alexander
---------------------------
ATTEST:
/s/ James L. Smith
- ------------------------------
-8-
<PAGE>
Exhibit A
ALPS Fee Schedule - Commencing as of January 7, 1993.
Fees to be calculated and paid on a monthly basis.
I. Fee Based on total assets 2.9 basis
points annually
II. Minimum $1700 per month per Portfolio
III. All out of pocket costs shall be
submitted to the Fund on a monthly basis
(such costs shall be pre-approved by the
Fund)
Out of pocket expenses include pricing (all pricing service fees shall be a
direct pass through to the Fund) and incremental costs associated with record
keeping for options, futures and foreign securities.
-9-
<PAGE>
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into as of July
17, 1995 between First Interstate Bancorp, a Delaware corporation ("FI"), and
Westcore Trust, a Massachusetts business trust (the "Trust").
R E C I T A L S
WHEREAS, FI desires the Board of Trustees of the Trust to consider and vote
on the Plan of Consolidation (as hereinafter defined); and
WHEREAS, the Board of Trustees of the Trust desires that, prior to voting
on the Plan of Consolidation, FI provide the Trust with written indemnification
of any claims made by ALPS Mutual Funds Services, Inc. ("ALPS") or other persons
related to or arising out of the Plan of Consolidation.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, the terms used in this
Agreement shall have the meanings assigned to such terms in this Section 1.
"ALPS AGREEMENTS" shall mean, collectively, that certain Amended and
Restated Administration Agreement (Money Market) between ALPS and the Trust
dated as of October 1, 1993, as amended through the date hereof, and that
certain Amended and Restated Administration Agreement (Non-Money Market) between
ALPS and the Trust dated as of October 1, 1993, as amended through the date
hereof, the current distribution agreements between ALPS, as distributor and
principal underwriter for the Trust, and the Trust and each of its separate
series of portfolios, and the Bookkeeping and Pricing Agreement between ALPS and
the Trust.
"CLAIMS" shall mean any and all actions, suits, claims, rights, causes of
action, demands, damages, losses, liabilities, expenses, costs, attorneys' fees
or charges of whatever kind or nature, whether contingent or fixed, whether
known or unknown, whether suspected or unsuspected, which ALPS or any other
person (i) now has or claims to have, (ii) at any time had or claimed to have,
or (iii) at any time hereafter may have or claim to have.
"DAMAGES" shall mean any and all losses, costs, liabilities, obligations,
losses, claims, expenses, damages or judgments of
<PAGE>
any kind, including reasonable attorneys' fees and the fees of accountants and
experts.
"INDEMNIFIED PARTIES" shall mean, collectively, (i) the Trust; (ii) each
current, former and future officer, trustee, beneficial interest holder,
employee, agent, attorney, predecessor, successor, representative or affiliate
of the Trust, but not ALPS or any of ALPS' current, former and future officers,
trustees, beneficial interest holders, employees, agents, attorneys,
predecessors, successors or representatives; (iii) any successor, assign, heir,
estate or legal representative of any of the parties described in clauses (i) or
(ii); and (iv) any series or portfolio of the Trust.
"PLAN OF CONSOLIDATION" shall mean the plan for the combination and
transfer of assets of the series or portfolios of the Trust, for which FI or its
affiliates have acted as investment adviser or sub-adviser (which does not
relate to the Colorado Tax-Exempt, Equity Income, Intermediate-Term Bond, MIDCO
Growth, Modern Value Equity, Small Cap-Opportunity and Long-Term Bond Funds),
with and into various series or portfolios of Pacifica Funds Trust, for which FI
or its affiliates now act as investment adviser, which Plan has been proposed by
FI to the Board of Trustees of the Trust.
"IMPLEMENTATION OF THE PLAN OF CONSOLIDATION" shall mean the consummation
of the Plan, following approval of it by the board and shareholders of the
subject Westcore Funds.
2. INDEMNIFICATION.
(a) FI shall defend, indemnify and hold harmless each Indemnified
Party from and against all Damages arising out of or resulting from any Claims
against such Indemnified Party related to or arising out of (i) any allegation
made by ALPS or any other person that the implementation of the Plan of
Consolidation constitutes a breach of the ALPS Agreements or is otherwise in
violation of the terms of the ALPS Agreements or (ii) any untrue or alleged
untrue statement of a material fact contained in information furnished by or on
behalf of FI intended for use in (x) the proxy materials to be prepared to seek
authorization of the Plan of Consolidation or (y) amendments or supplements to
the Trust's registration statement under the Securities Act of 1933, as amended,
the Investment Company Act of 1940, as amended, and applicable state securities
laws in connection with the Plan of Consolidation; or that shall arise out of or
be based upon any omission or alleged omission to state a material fact in
connection with such information, PROVIDED THAT, information provided "on
behalf" of FI, if furnished other than by FI or a direct or indirect subsidiary
of FI, includes only information furnished with the approval of FI or a direct
or indirect subsidiary.
-2-
<PAGE>
(b) If any Indemnified Party receives notice of the assertion of any
Claim with respect to which FI is or may be obligated to provide indemnification
(an "Indemnifiable Claim"), the Indemnified Party shall promptly notify FI in
writing (the "Claim Notice") of the Indemnifiable Claim; provided, however, that
the failure to provide such notice shall not relieve or otherwise affect the
obligation of FI to provide indemnification hereunder, except to the extent that
any Damages directly resulted or were caused by such failure.
(c) FI shall have thirty (30) days after receipt of the Claim Notice
to undertake, conduct and control, through counsel of its own choosing (subject
to the consent of the Indemnified Party, which consent shall not be unreasonably
withheld), and at its expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with FI in connection therewith; provided,
however, that (i) FI shall permit the Indemnified Party to participate in such
settlement or defense through separate counsel chosen by the Indemnified Party
(subject to the consent of FI, which consent shall not be unreasonably
withheld), provided that the fees and expenses of such counsel shall not be
borne by FI unless one of the following conditions shall exist: (x) FI shall
have failed to assume the defense of such claim or employ counsel reasonably
satisfactory to the Indemnified Party, or (y) the defendants in any such action
include both FI and the Indemnified Party and the Indemnified Party has
reasonably concluded that there may be legal defenses available to it which are
different from or additional to those available to FI, or (z) there exists or
will exist a conflict of interest between the Indemnified Party and FI which
would make it inappropriate in the reasonable judgment of the Indemnified Party
for the same counsel to represent both FI and the Indemnified Party and (ii) FI,
in defense of any action assumed by it, shall not, without the consent of the
Indemnified Party, consent to entry of any judgment or enter into any settlement
of such action which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to the Indemnified Party of a release from
all liability in respect to such action. So long as FI is vigorously contesting
an Indemnifiable Claim in good faith, the Indemnified Party shall not pay or
settle any Indemnifiable Claim without FI's consent.
(d) If FI does not notify the Indemnified Party within thirty (30)
days after receipt of the Claim Notice that it elects to undertake the defense
of the Indemnifiable Claim described therein, the Indemnified Party shall have
the right to contest, settle or compromise the Indemnifiable Claim in the
exercise of its reasonable discretion; provided, however, that the Indemnified
Party shall notify FI of any compromise or settlement of any such Indemnifiable
Claim.
-3-
<PAGE>
3. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
replaces all prior negotiations and agreements, written or oral.
4. AMENDMENT AND WAIVER. This Agreement may be amended, modified,
superseded, canceled, renewed or extended and the terms or covenants hereof may
be waived only by a written instrument executed by the parties hereto or, in the
case of a waiver, by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by any
party of the breach of any term or provision contained in this Agreement,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such breach, or a
waiver of the breach of any other term or covenant contained in this Agreement.
5. NOTICES. All notices and other communications provided for hereunder
shall be in writing and shall be given by personal delivery, overnight air
courier (with signed receipt of acknowledgement) or by telecopy (with
"answerback" confirmation of receipt), addressed to the parties at their
respective addresses set forth on the signature page hereto, or at such other
address as shall be designated by either party in a written notice to the other
party. All such notices and other communications shall be deemed to have been
delivered upon receipt.
6. MISCELLANEOUS.
(a) This Agreement shall be binding upon each of the undersigned and
its representatives and assigns and shall inure to the benefit of (and may be
enforced by) each Indemnified Party.
(b) In the event any Indemnified Party seeks to enforce his, her or
its rights hereunder, such Indemnified Party shall be entitled to recover all
reasonable fees and costs incurred in connection therewith, including reasonable
attorneys' fees.
(c) This Agreement shall in all respects be governed under the
internal laws (and not the laws of conflicts) of the State of California.
(d) If any provision of this Agreement is held to be illegal or
invalid by a court of competent jurisdiction, such provision shall be severed
and deleted, and neither such provision nor its severance and deletion shall
affect the validity of the remaining provisions hereof.
-4-
<PAGE>
(e) This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original, but all of which counterparts shall
together constitute a single agreement.
(f) The section headings of this Agreement are inserted for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
(g) This Agreement shall continue from the day first above written
until the expiration of all applicable statutes of limitations for any Claims.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
FIRST INTERSTATE BANCORP
BY: /s/ Illegible
--------------------------------------
Its:
--------------------------------------
Address for Notices:
First Interstate Bancorp
P.O. Box 54068
Mail Sort T72-10
Los Angeles, CA 90054
Attention: William J. Bogaard, Esq.
Telecopy: (213) 614-3741
WESTCORE TRUST
By:/s/Jack D. Henderson
----------------------------------------------
Its:Chairman and President
---------------------------------------------
Address for Notices:
Jack D. Henderson, Esq., Chairman
Clanahan, Tanner, Downing
& Knowlton, P.C.
1600 Broadway, Suite 2400
Denver, CO 80202
Telecopy: (303) 830-0299
cc: W. Bruce McConnel, III, Esq.
Drinker Biddle & Reath
Philadelphia National Bank
Building
1345 Chestnut Street
Philadelphia, PA 19107-3496
Telecopy: (215) 988-2757
-5-
<PAGE>
RETIREMENT PLAN ORDER PROCESSING AMENDMENT
TO THE OPERATING AGREEMENT
This Retirement Plan Order Processing Amendment is made as of February
15, 1996, by and between Charles Schwab & Co., Inc. ("Schwab"), a California
corporation; The Charles Schwab Trust Company ("CSTC"), a California banking
corporation; and Westcore Trust, a registered investment company ("Fund
Company") listed on Schedule I hereto, executing this Amendment on its own
behalf and on behalf of each of its series or classes of shares ("Fund(s)"),
which are parties to an Operating Agreement with Schwab, made as of November 27,
1995, as amended thereafter ("Operating Agreement"), except such Funds as are
listed on Schedule II hereto, which are excluded from this Amendment ("Excluded
Funds"). This Amendment amends the Operating Agreement. In the event that
there are no Funds, then the term "Fund(s)" shall mean "Fund Company."
WHEREAS, Schwab and Fund Company, on its own behalf and on behalf of
the Funds, have entered into the Operating Agreement pursuant to which shares of
the Funds are made available for purchase and redemption by Schwab's brokerage
customers through Schwab's Mutual Fund Marketplace-Registered Trademark-
("MFMP");
WHEREAS, Schwab has designated CSTC as its agent to perform certain
functions under the Operating Agreement, including communication of aggregate
purchase and redemption orders for Fund shares to each Fund, for which Schwab
remains fully responsible to Fund Company and the Funds;
WHEREAS, Schwab and Fund Company desire to amend the Operating
Agreement to facilitate the purchase and redemption of Fund shares on behalf of
certain retirement plans ("Plans") for which CSTC acts as trustee of the trust
funds under the Plans and for which an entity identified on Schedule III, as
amended by Schwab from time to time, acts as recordkeeper ("Recordkeeper"),
subject to the terms and conditions of this Amendment; and
WHEREAS, Fund Company wishes to appoint CSTC as a limited purpose co-
transfer agent to each Fund's named transfer agent to facilitate such
<PAGE>
purchases and redemptions on behalf of the Plans, and CSTC wishes to accept this
appointment.
NOW THEREFORE, in consideration of the foregoing, and the mutual
promises set forth below, the parties hereto agree as follows:
1. AGENCY APPOINTMENT AND ACCEPTANCE. Fund Company hereby appoints
CSTC to be a limited purpose co-transfer agent to each Fund's named transfer
agent for the purpose of receiving instructions in proper form from the persons
designated to direct investment of the Plan assets ("Instructions") from which
are derived orders for purchases and redemptions of Fund shares ("Orders").
CSTC hereby accepts the appointment as limited purpose co-transfer agent to each
Fund's named transfer agent.
2. AGENTS OF CSTC. CSTC, as a co-transfer agent, may engage such
subagents as it deems necessary, appropriate or desirable to carry out its
obligation as a limited purpose co-transfer agent to each Fund's named transfer
agent under Section 1 of this Amendment, pursuant to such terms as are
consistent with the agreements set forth in this Amendment and as CSTC deems
necessary, appropriate or desirable. CSTC shall, however, remain fully
responsible to Fund Company and the Funds for any obligations performed by
CSTC's agents under this Section 2. These agents of CSTC shall be the
Recordkeepers and shall each be a service company and a limited purpose sub-
transfer agent to CSTC as co-transfer agent to each Fund's named transfer agent.
3. CSTC'S RECEIPT AND TRANSMISSION OF ORDERS. CSTC agrees that (a)
Orders derived from Instructions received by Recordkeepers prior to the close of
the New York Stock Exchange (generally, 4:00 p.m. Eastern Time) ("Market Close")
on any Business Day ("Day 1") will be transmitted by CSTC to the Fund by 10:00
a.m. Eastern Time on the next Business Day ("Day 2") provided that such Orders
were funded by Day 1 Market Close (such Orders are referred to herein as "Day 1
Trades"); and (b) Orders derived from Instructions received by Recordkeepers
after Market Close on any Business Day ("Day 1") will be transmitted by CSTC to
the Fund by 10:00 a.m. Eastern Time
-2-
<PAGE>
on the second Business Day following Day 1 ("Day 3") provided that such Orders
were funded by Day 2 Market Close (such Orders are referred to herein as "Day 2
Trades").
4. FUND'S PRICING OF ORDERS. Fund Company agrees that Day 1
Trades will be effected at the net asset value of each Fund's shares ("Net
Asset Value") calculated as of Market Close on Day 1, provided such trades
are received by the Fund by 10:00 a.m. Eastern Time on Day 2; and Day 2
Trades will be effected at the Net Asset Value calculated as of Market Close
on Day 2, provided such trades are received by the Fund by 10:00 a.m. Eastern
Time on Day 3 Fund Company agrees that, consistent with the foregoing, Day 1
Trades will have been received by the Fund prior to Market Close on Day 1,
and Day 2 Trades will have been received by the Fund prior to Market Close on
Day 2 for all purposes, including, without limitation, effecting
distributions.
5. SETTLEMENT. In accordance with the Operating Agreement, Schwab
and Fund Company will settle Day 1 Trades on Day 2 and will settle Day 2 Trades
on Day 3.
6. PROVISION OF NET ASSET VALUE. In accordance with the Operating
Agreement, Fund Company will provide Schwab the Net Asset Value calculated as of
Market Close on each Business Day by 7:00 p.m. Eastern Time on such Business
Day.
7. REPRESENTATIONS AND WARRANTIES AS TO TRANSFER AGENCY. CSTC
represents and warrants that it is registered as a transfer agent under Section
17A of the Securities Exchange Act of 1934, as amended ("1934 Act"), and CSTC
will amend its TA-1 filing to disclose its appointment pursuant to this
Amendment as a limited purpose co-transfer agent to each Fund's named transfer
agent. CSTC further represents and warrants that each Recordkeeper appointed by
CSTC pursuant to Section 2 of this Amendment shall be registered as a transfer
agent under Section 17A of the 1934 Act, and that it shall cause each
Recordkeeper to amend its TA-1 to disclose its appointment as a service
-3-
<PAGE>
company and a limited purpose sub-transfer agent to CSTC as co-transfer agent to
each Fund's named transfer agent.
Fund Company represents and warrants that the Funds' named transfer
agent is set forth on Schedule IV hereto, as revised by Fund Company from time
to time.
8. BOOKS AND RECORDS. To the extent required under the Investment
Company Act of 1940, as amended ("1940 Act"), and the rules thereunder, CSTC
agrees that such records maintained by it or each Recordkeeper hereunder are the
property of the Funds and will be preserved, maintained, and made available in
accordance with the 1940 Act and the rules thereunder. Copies, or if required
originals, of such records shall be surrendered promptly to a Fund and its
agents (or independent accountants) upon request. This Section 8 shall survive
termination of this Amendment.
9. ROLE AND RELATIONSHIP OF CSTC. The parties acknowledge and agree
that, except as specifically provided in this Amendment, and for the sole and
limited purpose set forth herein, CSTC acts as an agent for Schwab under the
Operating Agreement in connection with the effectuation of Orders subject to
this Amendment. CSTC shall not be nor hold itself out as an agent of any Fund
other than as provided herein.
10. ROLE AND RELATIONSHIP OF RECORDKEEPERS. The parties acknowledge
and agree that, except as specifically provided in this Amendment and for the
sole and limited purpose set forth herein, the Recordkeepers act as agents of
the Plans in connection with the effectuation of Orders subject to this
Amendment. The parties agree that the Recordkeepers are not agents of the Funds
other than as provided herein, and CSTC shall ensure that the Recordkeepers do
not hold themselves out as an agent of any Fund other than as provided herein.
11. INSURANCE COVERAGE. CSTC shall maintain, and shall cause each
Recordkeeper to maintain, general liability insurance, at all times that this
Amendment is in effect, that is reasonable and customary in light of its
-4-
<PAGE>
duties hereunder. Such general liability insurance coverage shall be issued by
a qualified insurance carrier, with limits of not less than $5 million.
12. EFFECTIVENESS AND TERMINATION. This Amendment shall become
effective 10 days after written notice by Schwab to Fund Company.
Once effective, Fund Company will provide Schwab and CSTC 90 days'
prior written notice if purchase orders for a Fund's shares may no longer be
effected in accordance with this Amendment. Such termination shall not affect
the remaining provisions of this Amendment as to such Fund, and redemption
orders shall continue to be effected pursuant to this Amendment. Schwab and
CSTC may terminate this Amendment as to a Fund upon 90 days' prior written
notice to Fund Company.
Any termination of the Operating Agreement by Fund Company shall not
apply to transactions effected pursuant to this Amendment prior to 90 days after
the date the Fund Company provides written notice of such termination to Schwab
and CSTC.
13. INDEMNIFICATION. Schwab and CSTC, on the one hand, and Fund
Company, on the other, agree to indemnify and hold harmless Fund Company, on the
one hand, and Schwab and CSTC, on the other, together with each of its trustees,
directors, officers, employees and agents, from and against any and all losses,
liabilities, demands, claims, actions and expenses (including, without
limitation, reasonable attorney's fees) ("Losses") arising out of or in
connection with any breach by Schwab or CSTC, on the one hand, and Fund Company,
on the other, of its obligations under this Amendment, except to the extent such
breach was a direct consequence of an act or omission of an indemnified party
constituting negligence or willful misconduct. In no event will any party be
liable for consequential, incidental, special or indirect damages resulting to
an indemnified party subject to this Amendment. This Section 13 shall survive
termination of this Amendment.
14. PROPRIETARY INFORMATION. The parties agree that all books,
records, information, and data pertaining to the business of the other party
which are exchanged or received pursuant to the negotiation or carrying out of
-5-
<PAGE>
this Amendment, including but not limited to the information on Schedule III, as
amended by Schwab from time to time, and any reports regarding Fund
shareholdings of the Plans or the Recordkeepers that CSTC may provide to Fund
Company from time to time as part of its obligations as a limited purpose co-
transfer agent to each Fund's named transfer agent, shall be kept confidential
and shall not be otherwise used or voluntarily disclosed to any other person,
except as may be required by law or judicial process. Fund Company expressly
agrees not to use nor permit others to use any such books, records, information,
or data to solicit Plans, sponsors of Plans, or Recordkeepers. This Section 14
shall survive termination of this Amendment.
15. EFFECT OF AMENDMENT. This Amendment is intended to amend and
supplement the provisions of the Operating Agreement. In the event of a
conflict between the provisions of this Amendment and the provisions of the
Operating Agreement, the provisions of this Amendment shall control. All other
provisions of the Operating Agreement shall remain in full force and effect.
16. The names "Westcore Trust" and "Trustees of Westcore Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987 (the "Trust Instrument"),
which is hereby referred to and a copy of which is on file at the office of the
State Secretary of the Commonwealth of Massachusetts and at the principal office
of the Trust. The obligations of "Westcore Trust" entered into in the name or
on behalf thereof by any of the Trustees, representatives or agents are made no
individually, but in such capacities, and are not binding upon any of the
Trustees, shareholders, or representatives of the Trust personally, but bind
only the Trust Property (as defined in the Trust Instrument, and all persons
dealing with any class of shares of the
-6-
<PAGE>
Trust must look solely to the Trust Property belonging to such class for the
enforcement of any claims against the Trust.
CHARLES SCHWAB & CO., INC. WESTCORE TRUST, on its own behalf
and on behalf of each Fund, except
Excluded Funds listed on Schedule II
By: hereto
---------------------------
Colleen Hummer
Senior Vice President/
Mutual Funds
Operations Administration By:
--------------------------------
Date: 4/15/96 Name: Kenneth V. Penland
------------------------- ------------------------------
Title: President
THE CHARLES SCHWAB -----------------------------
TRUST COMPANY Date: 3/29/96
------------------------------
By:
---------------------------
Joann Ferguson
Vice President
Date: 4/25/96
-------------------------
-7-
<PAGE>
SCHEDULE I
TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT
TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996
FUND COMPANY
Westcore Trust
Date: February 15, 1996
-8-
<PAGE>
SCHEDULE II
TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT
TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996
EXCLUDED FUNDS
Westcore Colorado Tax-Exempt Fund
Date: February 15, 1996
-9-
<PAGE>
SCHEDULE III
TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT
TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996
RECORDKEEPERS
The Hampton Company
Date: February 15, 1996
-10-
<PAGE>
SCHEDULE IV
TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT
TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996
NAMED TRANSFER AGENT
State Street Bank and Trust Company
Date: February 15, 1996
-11-
<PAGE>
March 5, 1996
WESTCORE TRUST
c/o ALPS Mutual Funds Services, Inc.
370 Seventeenth Street, Suite 2700
Denver, CO 80202
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street, Suite 2700
Denver, CO 80202
Denver Investment Advisors LLC
1225 17th Street - 26th Floor
Denver, CO 80202
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Re: Operating Agreement dated as of November 27, 1995 between
Westcore Trust (the "Trust") and Charles Schwab & Co., Inc.
("Schwab") and Institutional Services Agreement dated as of
November 27, 1995 among the Trust, Schwab, Denver Investment
Advisors LLC and ALPS Mutual Funds Services, Inc. (the
"Agreements")
------------------------------------------------------------
Dear Sirs:
The Agreements referred to above require the Trust to adhere to
certain requirements and procedures which the Trust accomplishes through you, as
the Trust's service providers. By your signatures below, please signify that
you will adhere to the requirements and procedures set forth in the Agreements,
including, without limitation, as indicated on the attachment hereto.
Yours truly,
Westcore Trust
By:/s/Kenneth V. Penland
---------------------
Title: President
ALPS Mutual Funds Services, Inc., Administrator
Distributor and Bookkeeping and Pricing Agent
By:/s/Jim Hyatt
--------------------------------
Title: General Counsel
Denver Investment Advisers LLC, as Administrator and Adviser
By:/s/Illegible
--------------------------------
Title:
State Street Bank & Trust Company, as Transfer Agent
-12-
<PAGE>
By:/s/Illegible
--------------------------------
Title:
-13-
<PAGE>
Certain Westcore Duties under Schwab Agreements for which
Service Providers Acknowledge Responsibility
Administrators will comply with Services Agreement Section 6(b) (relating to
furnishing copies of prospectus/SAI changes to Schwab).
Administrators, Distributor and Transfer Agent will comply with Operating
Agreement Section 5(a) (including provision that Schwab's name will not be used
without Schwab's prior written consent).
Administrators, Distributor and Transfer Agent will comply with Operating
Agreement Section 6 (relating to confidentiality).
Transfer Agent will comply with Operating Procedures Section 1(d) (including
provision relating to keeping the Schwab account open even if it shrinks below
minimum size, and giving Schwab notice before closing an inactive account).
Transfer Agent and Administrators will comply with Section 3 of Operating
Procedures (relating to Settlement of Transaction procedures).
Transfer Agent and Administrators will comply with Operating Procedures Section
4(c) (relating to timely provision of statements to Schwab).
Administrators and Bookkeeping and Pricing Agent will comply with Operating
Procedures Section 5 (relating to providing pricing information to Schwab).
Administrators, Transfer Agent and Bookkeeping and Pricing Agent will comply
with Operating Procedures Section 6 (relating to distributions).
Bookkeeping and Pricing Agent, Administrators and Transfer Agent will comply
with Operating Procedures Section 7(a), (c) and (d) (relating to communicating
pricing errors to Schwab and making adjustments as indicated in the procedures).
Transfer Agent will comply with Operating Procedures Section 9 (relating to
account transfer procedures).
Administrators and Transfer Agent will comply with Operating Procedures Section
10(a) and 10(b) (relating to Schwab's procedures for mailing proxies, annual
reports, prospectuses, supplements etc.).
Administrators will comply with Operating Procedures Section 10(d) (relating to
maintaining Schwab's requested language in the prospectus).
Administrators will comply with Operating Procedures Section 11 (relating to
cooperation with Schwab regarding new processing systems for MFMP).
Administrators will be responsible for notifying Schwab of any changes in the
information in the Fund Information Questionnaire in Exhibit B or in the Fund
Contacts Sheet in Exhibit C.
The Administrators, Distributor, Transfer Agent and Adviser are responsible for
the matters set forth in Operating Agreement Sections 2(a) and (b), 3(a) and (b)
and 4(a) in accordance with their respective service agreements with the Trust.
(These sections relate, in general, to Blue Sky compliance; compliance with
laws, rules and regulations and rules and regulations of self-regulatory
organizations; gathering of 5% shareholder information.)
<PAGE>
The Distributor makes the representation set forth in Operating Agreement
Section 4(a) (relating to compliance by each Fund with NASD Rules of Fair
Practice Article III, Section 26, with enables a NASD member to offer or self-
fund the share).
- 2 -
<PAGE>
CHARLES SCHWAB
Mutual Fund Marketplace-Registered Trademark-
INSTITUTIONAL
SERVICES AGREEMENT
This Agreement is made as of November 27, 1995, between Charles Schwab
Co., Inc. ("Schwab"), a California corporation, each registered investment
company ("Fund Company") executing this Agreement, on its own behalf and on
behalf of each of the series or classes of shares, if any, listed on Schedule I,
as amended from time to time (such series or classes being referred to as the
"Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement.
Fund Company and Fund Affiliate are collectively referred to herein as "Fund
Parties." In the event that there are no series or classes of shares listed on
Schedule I, the term "Fund(s)" shall mean "Fund Company".
WHEREAS, Fund Affiliate is either (i) an investment adviser to or
administrator for the Funds or (ii) the principal underwriter or distributor for
the Funds.
WHEREAS, Fund Parties wish to have Schwab perform certain
recordkeeping, shareholder communication, and other services for each Fund; and
WHEREAS, Schwab is willing to perform such services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. SERVICES
a. During the term of this Agreement, Schwab shall perform the
services set forth on Exhibit A hereto, as such exhibit may be amended from time
to time by mutual consent of the parties (the "Services").
b. In processing purchase, redemption, transfer and exchange
orders placed by Schwab on behalf of its customers, and in order to facilitate
Schwab's performance of Services, the parties agree that the Operating
Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as
amended from time to time ("Operating Agreement"), is incorporated herein by
this reference. All terms and conditions of the Operating Agreement shall be
binding as between Schwab and Fund Parties, and the references to Fund Company
therein shall be deemed to mean Fund Parties for the purposes of this Agreement.
In the event of any inconsistency between the Operating Agreement and this
Agreement, this Agreement shall control.
2. FEES
For the Services, Schwab shall receive a fee (the "Fee") which
shall be calculated and paid in accordance with Exhibit B hereto. Schedule II
reflects the amount of the Fee that each Fund Party has agreed, as between them,
to pay. Should Exhibit A be amended to revise the Services, the parties shall
also amend Exhibit B and Schedule II, if necessary, in order to reflect any
changes in the Fee.
<PAGE>
3. TRANSACTION CHARGES
Schwab shall not, during the term of this Agreement, assess
against or collect from its customers any transaction fee upon the purchase or
redemption of any Fund's shares that are considered in calculating the Fee. The
parties acknowledge and agree that Schwab may collect such transaction fees from
certain customers (including "Active Traders," as Schwab may define that term)
for certain special trading services and from other customers upon such other
customers' redemption of certain shares. The value of shares as to which such
transaction fees are charged will not be included in the calculation of the Fee.
4. INDEMNIFICATION
a. Schwab shall indemnify and hold harmless Fund Parties and
their directors, officers, employees, and agents ("Indemnified Parties") from
and against any and all losses, claims, liabilities and expenses (including
reasonable attorney's fees) ("Losses") incurred by any of them arising out of
(i) Schwab's dissemination of information regarding Fund Parties or a Fund that
is materially incorrect and that was not provided to Schwab, or approved, by a
Fund Party, its affiliated persons ("Affiliates") as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"), or agents or (ii)
Schwab's willful misconduct or negligence in the performance of, or failure to
perform, its obligations under this Agreement, except to the extent such Losses
result from the negligence, willful misconduct or breach of this Agreement by an
Indemnified Party.
b. In any event, no party shall be liable for any special,
consequential or incidental damages.
5. ROLE AND RELATIONSHIP OF SCHWAB
The parties acknowledge and agree that the Services under this
Agreement are recordkeeping, shareholder communication and related services only
and are not the services of an underwriter or a principal underwriter of any
Fund within the meaning of the Securities Act of 1933, as amended, or the 1940
Act. This Agreement does not grant Schwab any right to purchase shares from any
Fund (although it does not preclude Schwab from purchasing any such shares), nor
does it constitute Schwab an agent of Fund Parties or any Fund for purposes of
selling shares of any Fund to any dealer or the public. To the extent Schwab is
involved in the purchase of shares of any Fund by Schwab's customers, such
involvement will be is agent of such customer only.
6. INFORMATION TO BE PROVIDED
Fund Parties shall provide to Schwab prior to the effectiveness
of this Agreement or as soon thereafter as practicable:
a. Certified resolutions of the board of directors of each Fund
Party authorizing the Fund Party to enter into this Agreement and indicating the
officers authorized to execute this Agreement on behalf of the Fund Party; and
b. Two (2) copies of the then-current prospectus and statement
of additional information of each Fund. Fund Party shall provide Schwab with
written copies of any amendments to or changes in the Fund's prospectus or
statement of additional information as soon at practicable after such amendments
or changes become available.
-2-
<PAGE>
7. NOTICES
All notices required by this Agreement (excluding the Operating
Agreement) shall be in writing and delivered personally or sent by first class
mail. Such notices will be deemed to have been received as of the earlier of
actual physical receipt or three (3) days after deposit, first class postage
prepaid, in the United States mail. All such notices shall be made:
if to Schwab, to: Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
Attention: John McGonigle
Senior Vice President/Mutual
Funds
with a copy to: General Counsel, at the same address;
if to Fund Party, to the address given below in the signature
block.
8. NONEXCLUSIVITY
Each Party acknowledges that the other may enter into agreements
similar to this Agreement with other parties for the performance of services
similar to those to be provided under this Agreement, unless otherwise agreed to
in writing by the parties.
9. ASSIGNABILITY
This Agreement is not assignable by any party without the other
parties' prior written consents and any attempted assignment in contravention
hereof shall be null and void; provided, however, that Schwab may, without the
consent of Fund Parties, assign its rights and obligations under this Agreement
to any Affiliate.
10. EXHIBITS AND SCHEDULES
All Exhibits and Schedules attached to this Agreement, as they
may be amended from time to time. are by this reference incorporated into and
made a part of this Agreement.
11. ENTIRE AGREEMENT: AMENDMENT
This Agreement (including the Exhibits and Schedules hereto),
together with the Operating Agreement, constitute the entire agreement between
the parties as to the subject matter hereof and supersede any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered by Schwab and Fund Parties. This Agreement and the Exhibits and
Schedules hereto may be amended only by a writing executed by each party hereto
that is to be bound by such amendment.
12. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws
of the State of California as applied to contracts entered into and to be
performed entirely within that state.
-3-
<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together shall constitute
one and the same instrument.
14. EFFECTIVENESS OF AGREEMENT; TERMINATION
a. This Agreement will become effective as to a Fund as of the
later of (i) the date set forth on Schedule I opposite the name of the Fund or
(ii) such later date as Schwab may, in its discretion, designate.
b. This Agreement may be terminated as to a Fund by any party
(i) upon ninety (90) days' written notice to the other parties or (ii) upon such
shorter notice as is required by law, order, or instruction by a court of
competent jurisdiction or a regulatory body or self-regulatory organization with
jurisdiction over the terminating party or (iii) automatically, effective on the
day following the termination of any plan of distribution ("Rule 12b Plan")
adopted and maintained pursuant to Rule 12b under the 1940 Act by any Fund
that has a Rule 12b Plan in effect as of the effective date of this Agreement,
provided that a portion of the Fee is paid pursuant to the Rule 12b Plan.
c. After the date of termination as to a Fund, Fund Parties
will not be obligated to pay the Fee with respect to any shares of the Fund that
are first held in Schwab customer accounts after the date of such termination.
However, notwithstanding any such termination, Fund Parties will remain
obligated to pay Schwab the Fee as to each share of the Fund that was considered
in the calculation of the Fee as of the date of termination (a "Pre-Termination
Share"), for so long as such Pre-Termination Share is held in any Schwab
brokerage account and Schwab continues to perform substantially all of the
Services as to such Pre-Termination Share. Further, for so long as Schwab
continues to perform the Services as to any Pre-Termination Shares, this
Agreement will otherwise remain in full force and effect as to such Pre-
Termination Shares. Fund Parties shall reimburse Schwab promptly for any
reasonable expenses Schwab incurs in affecting any termination of this
Agreement, including delivery to a Fund Party of any records, instruments, or
documents reasonably requested by the Fund Party.
15. The name "Westcore Trust" and references in this Agreement to
"Fund Company" refer to the Trust created under an Amended and Restated
Declaration of Trust dated November 19, 1987, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of Westcore Trust entered into the name or on behalf thereof by any
of its Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust, and all
persons dealing with the Trust must look solely to the Trust for the enforcement
of any claims against the Trust.
-4-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
CHARLES SCHWAB & CO., INC.
By:
---------------------------------
John McGonigle
Senior Vice President/Mutual Funds
Date:
-------------------------------
DENVER INVESTMENT ADVISORS LLC WESTCORE TRUST
[Name of Fund Affiliate] [Name of Fund Company]
By: By:
--------------------------- ---------------------------
Name: Kenneth V. Penland Name: Kenneth V. Penland
-------------------------- ---------------------------
Title: Chairman Title: Chairman
-------------------------- ---------------------------
Address: 1225 17th St., 26th Fl. Address: 370 17th St., Suite 2700
------------------------ -------------------------
Denver, CO 80202 Denver, CO 80202
- -------------------------------- ---------------------------------
Attn: Steve Wine Attn: Nancy Timm
--------------------------- ----------------------------
Date: 11/27/95 Date: 11/27/95
--------------------------- ----------------------------
-5-
<PAGE>
EXHIBIT A
SERVICES
1. RECORD MAINTENANCE
Schwab shall maintain the following records with respect to a
Fund for each customer who holds Fund shares in a Schwab brokerage account:
a. Number of shares;
b. Date, price and amount of purchases and redemptions
(including dividend reinvestments) and dates and amounts of dividends paid for
at least the current year to date;
c. Name and address of the customer, including zip codes and
social security numbers or taxpayer identification numbers;
d. Records of distributions and dividend payments;
e. Any transfers of shares; and
f. Overall control records.
2. SHAREHOLDER COMMUNICATIONS
Schwab shall:
a. Provide to a shareholder mailing agent employed by each Fund
for the purpose of mailing certain Fund-related materials the names and
addresses of all Schwab customers who hold shares of such Fund in their Schwab
brokerage accounts. Such shareholder mailing agent shall be a person or entity
engaged by such Fund in accordance with the Operating Agreement and the Fund-
related materials to be sent by such agent shall consist of updated prospectuses
and any supplements and amendments thereto, annual and other periodic reports,
proxy or information statements and other appropriate shareholder
communications;
b. Mail current Fund prospectuses and statements of additional
information and annual and other periodic reports upon customer request and, as
applicable, with confirmation statements;
c. Mail statements to customers on a monthly basis (or, as to
accounts in which there has been no activity in a particular month, no less
frequently than quarterly) showing, among other things, the number of shares of
each Fund owned by such customer and the net asset value of such Fund as of a
recent date;
d. Produce and mail to customers confirmation statements
reflecting purchases and redemptions of shares of each Fund in Schwab brokerage
accounts;
e. Respond to customer inquiries regarding, among other things,
share prices, account balances, dividend amounts and dividend payment dates; and
f. With respect to Fund shares purchased by customers after the
effective date of this Agreement, provide average cost basis reporting to the
customers to assist them in preparation of income tax returns.
3. TRANSACTIONAL SERVICES
Schwab shall communicate, as to shares of each Fund, purchase,
redemption and exchange orders reflecting the orders it receives from its
A-1
<PAGE>
customers. Schwab shall also communicate, as to shares of each Fund, mergers,
splits and other reorganization activities.
4. TAX INFORMATION RETURNS AND REPORTS
Schwab shall prepare and File with the appropriate governmental
agencies, such information, returns and reports as are required to be so filed
for reporting (i) dividends and other distributions made, (ii) amounts withheld
on dividends and other distributions and payments under applicable federal and
state laws, rules and regulations, and (iii) gross proceeds of sales
transactions as required.
5. FUND COMMUNICATIONS
Schwab shall, on a daily basis and for each Fund, report the number of
shares on which the Fee is to be paid pursuant to this Agreement and the number
of shares on which no such Fee is to be paid. Schwab shall also provide each
Fund with monthly summaries of reports. Such summaries shall be expressed in
both shares and dollar amounts.
A-2
<PAGE>
EXHIBIT B
CALCULATION OF FEE
1. The Fee shall be calculated by multiplying the Daily Value of
Qualifying Shares (defined below) times the appropriate Fee Rate (indicated
below). The Fee shall be computed daily and paid monthly in arrears.
2. The Daily Value of Qualifying Shares is the aggregate daily value
of all shares of the Fund held in Schwab brokerage accounts, subject to the
following exclusions ("Qualifying Shares"). There shall be excluded from the
shares (i) shares as to which a brokerage customer paid Schwab a transaction fee
upon the purchase of such shares, (ii) shares held in a Schwab brokerage account
prior to the effective date of this Agreement as to the Fund and (iii) shares
first held in a Schwab brokerage account after the termination of this Agreement
as to the Fund.
3. The Fee Rate is determined based on the aggregate value of the
Qualifying Shares of all Funds listed on all Schedule I's, as amended from time
to time, as of the prior review date. The review dates are December 31 and June
30. The Fee Rate is effective from the next business day following the review
date up to and including the next review date. The Fee Rates are as follows:
Aggregate Value of
Qualifying Shares Fee Rate
------------------ --------
Up to and including $500 million basis points per annum
Over $500 million basis points per annum
The rate scale is not intended to produce a "blended rate." Rather, once a
threshold is reached, the rate applicable to the total amount of assets will be
used for all assets. Thus, if the aggregate value of Qualifying Shams of all
such Funds is $501 million as of a review date, the Fee Rate will be basis
points (to be applied to the Daily Value of Qualifying Shares) until the next
review date.
4. For purposes of this Exhibit, the daily value of the shares of
each Fund will be the net asset value reported by such Fund to the National
Association of Securities Dealers, Inc. Automated Quotation System. No
adjustments will be made to the net asset values to correct errors in the net
asset values so reported for any day unless such error is corrected and the
corrected net asset value per share is reported to Schwab before 5 o'clock.
p.m., San Francisco time, on the first business day after the day to which the
error relates.
5. At the request of Fund Parties, Schwab shall provide, on each
business day, a statement detailing the calculation for each Fund, the aggregate
value of the Qualifying Shares of each Fund and the amount of the Fee for each
Fund. As soon as practicable after the end of the month, Schwab shall also
provide to Fund Parties an invoice for the amount of the Fee due for each Fund.
In the calculation of such Fee, Schwab's records shall govern unless an error
can be shown in the number of shares used in such calculation.
6. Fund Parties shall pay Schwab the Fee within thirty (30) days
after Fund Parties' receipt of such statement. Such payment shall be by wire
transfer, unless the amount thereof is less than $250. Such wire transfers
shall be separate from wire transfers of redemption proceeds or distributions
under the Operating Agreement. Amounts less than $250 may, at Fund Parties'
discretion, be paid by check.
B-1
<PAGE>
SCHEDULE I
TO THE SERVICES AGREEMENT
Fund Effective Date
---- --------------
Westcore Midco Growth Fund* November 27, 1995
Westcore Blue Chip Fund* November 27, 1995
Westcore Equity Income Fund* November 27, 1995
Westcore Small-Cap Opportunity Fund* November 27, 1995
Westcore Long-Term Bond Fund* November 27, 1995
Westcore Intermediate-Term Bond Fund* November 27, 1995
Westcore Colorado Tax-Exempt Fund* November 27, 1995
*Indicates that Fund is a "no load" or "no sales charge" Fund as defined in
Section 26 of the NASD's Rules of Fair Practice.
WESTCORE TRUST
[Name of Fund Company]
By:
---------------------------------
Name: Kenneth V. Penland
-------------------------------
Title: President
------------------------------
Date: 11/27/95
------------------------------
ACKNOWLEDGED BY
DENVER INVESTMENT ADVISORS LLC ACCEPTED BY CHARLES SCHWAB & CO., INC.
[Name of Fund Affiliate]
By: By:
--------------------------- -----------------------------------
Name: Kenneth V. Penland John McGonigle
------------------------- Senior Vice President/Mutual Funds
Title: Chairman Date:
------------------------ ---------------------------------
Date: 11/27/95
------------------------
<PAGE>
SCHEDULE II
TO THE SERVICES AGREEMENT
Aggregate Value of Qualifying Shares
------------------------------------
Up to
and including
$500 Million Over $500 Million
------------- -----------------
Fund Company:
- ------------
% %
---------- ----------
Fund Affiliate:
- --------------
Denver Investment Advisors LLC % %
---------- ----------
Fee Rate Percentage Per Annum
of Average Daily Value of
Fund Shares % %
<PAGE>
CHARLES SCHWAB
Mutual Fund Marketplace-Registered Trademark-
OPERATING AGREEMENT
This Agreement is made as of November 27, 1995, between Charles Schwab
& Co., Inc. ("Schwab"), a California corporation, and each registered investment
company executing this Agreement ("Fund Company"), on its own behalf and on
behalf of each of the series or classes of shares, if any, listed on Schedule I,
as amended from time to time (such series or classes being referred to as the
"Fund(s)"). In the event there are no series or classes of shares listed on
Schedule I, then the term "Fund(s)" shall mean "Fund Company".
WHEREAS, Fund Company wishes to have shares of the Fund(s) available
for purchase and redemption by Schwab's brokerage customers through Schwab's
Mutual Fund Marketplace-Registered Trademark- ("MFMP");
WHEREAS, certain policies, procedures and information are necessary to
enable the Fund(s) to participate in the MFMP; and
WHEREAS, Schwab is willing to permit the Fund(s) to participate in its
MFMP pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. OPERATING PROCEDURES
Schwab will open an omnibus account (the "Account") with each
Fund through which it will purchase and redeem shares, settle transactions,
reconcile transactions, obtain pricing, reinvest distributions and maintain
records in accordance with the Operating Procedures set forth in Exhibit A
hereto. In addition, the parties agree to transfer accounts, communicate with
Fund shareholders and perform other obligations in accordance with the Operating
Procedures.
2. REGISTRATION REQUIREMENTS
a. Schwab will only place purchase orders for shares of a Fund
on behalf of its customers whose addresses recorded on Schwab's books are in
states or other jurisdictions in which Fund Company has advised Schwab that such
Fund has registered or qualified its shares for sale under applicable law. Fund
Company shall advise Schwab immediately if any such registration or
qualification is terminated or if it wishes Schwab not to place purchase orders
for a Fund on behalf of its customers who reside in a particular state or
jurisdiction.
b. Schwab will, upon request, (i) furnish Fund Company with
monthly written statement the number of shares of each Fund purchased on behalf
of Schwab customers resident in one or more states or jurisdictions indicated by
Fund Company or (ii) on a daily basis, transmit to an electronic database
provider with whom Schwab has established effective systems interfaces
information regarding the number of shares of each Fund sold in each state for
retrieval by Fund Company. Fund Company shall be responsible for all reasonable
fees and other reasonable charges of such database provider in connection with
Schwab's transmission of such information to and Fund Company's retrieval of
such information from such database provider.
<PAGE>
c. Fund Company agrees that any recession offer that is made to
shareholders who own shares directly with a Fund will also be made to Schwab
customers who would be entitled to such remission offer if they owned shares
directly with the Fund. Fund Company will provide Schwab with a letter on Fund
Company letterhead containing the terms of any such recission offer, and Schwab
may send this writing, or any derivation thereof, to the affected Schwab
customers. To assist Fund Company in effecting any such recission offer, Schwab
agrees to provide Fund Company with relevant information regarding any affected
Schwab customer, including the account number, the number of shares purchased
and redeemed, if any, the dates of the purchase(s) and redemption(s), if any,
and the dollar amount of such transactions.
3. COMPLIANCE RESPONSIBILITIES
a. Fund Company is responsible for (i) the compliance of each
prospectus, registration statement, annual or other periodic report, proxy
statement and item of advertising or marketing material of or relating to each
Fund with all applicable laws, rules and regulations (except for advertising or
marketing material prepared by Schwab that was not published or provided to
Schwab by Fund Company or any Affiliate (defined below) or accurately derived
from information published or provided by them), (ii) the distribution and
tabulation of proxies in accordance with all applicable laws, regulations
(except for such proxy related services provided by Schwab's mailing agent),
(iii) the registration or qualification of the shares of each Fund under all
applicable laws, rules and regulations, and (iv) the compliance by Fund Company
and each "affiliated person" of Fund Company as that term is defined under the
Investment Company of 1940, as amended ("1940 Act"), herein referred to as
"Affiliate" with all applicable laws, rules and regulations (including the 1940
Act and the Investment Advisers Act of 1940, as amended), and the rules and
regulations of each self-regulatory organization with jurisdiction over Fund
Company or Affiliate, except to the extent that the failure to so comply by Fund
Company or any Affiliate is caused by Schwab's breach of this Agreement.
b. In the event that the Account holds more than five percent
(5%) of the outstanding Fund shares, Fund Company will be responsible for
requesting Schwab to confirm its status as shareholder of record and to confirm
whether any Schwab customer beneficially owns more than five percent (5%) of the
outstanding Fund shares through its Schwab brokerage account. For this purpose,
Fund Company shall indicate in its inquiry the number of Fund shares that equal
five percent (5%) of outstanding Fund shares. Schwab shall promptly reply to
any such inquiries.
c. Schwab is responsible for Schwab's compliance with all
applicable laws, rules and regulations governing Schwab's performance under this
Agreement, except to the extent that Schwab's failure to comply with any law,
rule or regulation is caused by Fund Company's breach of this Agreement.
d. Except as set forth in this Agreement or as otherwise agreed
upon in writing by the parties, any communication, instruction or notice made
pursuant to this Agreement shall be made orally, provided that such oral
communication is on a recorded telephone line or is promptly confirmed in
writing by facsimile transmission. Schwab is entitled to rely on any
communications, instructions or notices which it reasonably believes were
provided to it by Fund Company, any Affiliate or their agents authorized to
provide such communications, instructions or notices to Schwab, and on
communications, instructions or notices provided to it by its customers. Fund
Company is entitled to rely on any communications, instructions or notices it
reasonably believes were provided to it by Schwab, or its agents authorized to
provide such communications, instructions or notices to Fund Company.
-2-
<PAGE>
e. Except to the extent otherwise expressly provided in this
Agreement, neither party assumes any responsibility hereunder, or will be liable
to the other, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
f. Fund Company and each Fund shall indemnify and hold harmless
Schwab and each director, officer, employee and agent of Schwab from and against
any and all losses, claims, liabilities and expenses (including reasonable
attorney's fees) ("Losses") incurred by any of them arising out of (i) any
untrue statement of material fact or any omission of a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading in any prospectus, registration statement, annual
or other periodic report or proxy statement of the Fund or in any advertising or
promotional material generated by Fund Company or any Affiliate or accurately
derived from information published or provided by Fund Company or any Affiliate,
(ii) any violation or any law, rule or regulation relating to the registration
or qualification of shares of the Fund, (iii) any breach by Fund Company of any
representation, warranty or agreement contained in this Agreement, or (iv) any
willful misconduct or negligence by Fund Company or a Fund in the performance
of, or failure to perform, its obligations under this Agreement, except to the
extent such Losses are caused by Schwab's breach of this Agreement or its
willful misconduct or negligence in the performance, or failure to perform, its
obligations under this Agreement. This Section 3(f) shall survive termination
of this Agreement.
4. REPRESENTATIONS AND WARRANTIES
a. Fund Company represents and warrants to Schwab that each
Fund is in compliance with the conditions and qualifications set forth in the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.
("NASD"), Article III, Section 26, as amended from time to time ("Section 26"),
which enable an NASD member to offer or sell shares in the Fund. Fund Company
represents and warrants that each Fund marked with an asterisk on Schedule I is
a "no load" or "no sales charge" Fund as defined in Section 26. If a Fund, for
any reason, fails to satisfy the terms and conditions of Section 26, Fund
Company will notify Schwab immediately of the Fund's disqualification and the
reason therefor.
b. Schwab represents and warrants that Schwab is a member of
the NASD.
5. USE OF PARTIES' NAMES
a. Without Schwab's prior written consent, Fund Company will
not cause or permit the use, description, or reference to Schwab, or to the
relationship contemplated by this Agreement in any advertisement or promotional
materials or activities.
b. Fund Company authorizes Schwab to use the names or other
identifying marks of, and certain information about, Fund Company and Fund in
connection with the operation of the MFMP. Fund Company may withdraw this
authorization as to any particular use of any such name or identifying marks at
any time (i) upon Fund Company's reasonable determination that such use would
have a material adverse effect on the reputation or marketing efforts of Fund
Company or such Fund, or (ii) if any of the Funds cease to be available through
the MFMP; provided, however, that Schwab may, in its discretion, continue to use
materials prepared or printed prior to the withdrawal of such authorization or
in the process of being prepared or printed at the time of such withdrawal.
-3-
<PAGE>
6. PROPRIETARY INFORMATION
Each party hereto acknowledges that the identities of the other
party's customers, information maintained by such other party regarding those
customers, and all computer programs and procedures developed by such other
party or such other party's Affiliates or agents in connection with such other
party's performance of its duties hereunder constitute the valuable property of
such other party. Each party agrees that should it come into possession of any
list or compilation of the identities of or other information about the other
party's customers, or any other property of such party, pursuant to this
Agreement or any other agreement related to services under this Agreement, the
party who acquired such information or property shall use its best efforts to
hold such information or property in confidence and refrain from using,
disclosing, or distributing any of such information or other property, except
(i) with the other party's prior written consent, or (ii) as required by law or
judicial process. Each party acknowledges that any breach of the foregoing
agreements as to another party would result in immediate and irreparable harm to
such other party for which there would be no adequate remedy at law and agrees
that in the event of such a breach such other party will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
7. ASSIGNABILITY
This Agreement is not assignable by either party without the
other party's prior written consent, and any attempted assignment in
contravention hereof shall be null and void; provided, however, that Schwab may,
without the consent of Fund Company, assign its rights and obligations under
this Agreement to any Affiliate.
8. EXHIBITS AND SCHEDULES
All Exhibits and Schedules to this Agreement, as they may be
amended from time to time, are by this reference incorporated into and made a
part of this Agreement.
9. AMENDMENT
This Agreement may be amended only by a writing executed by each
party hereto that is to be bound by such amendment, except as provided in this
Section 9. Exhibit A may be amended by Schwab on forty (40) days' written
notice to Fund Company or such earlier time as shall be agreed to by the
parties. Exhibits B and C shall be amended by Fund Company in the event of any
change to the information contained therein.
10. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws
of the State of California, as applied to contracts entered into and to be
performed entirely within the state.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together shall constitute
one and the same instrument.
-4-
<PAGE>
12. EFFECTIVENESS AND TERMINATION
a. The effective date of this Agreement as to any Fund is the
later of the date set forth opposite the name of the Fund on Schedule I or the
date Schedule I is accepted by Schwab.
b. This Agreement may be terminated as to any Fund by Schwab
immediately upon written notice to Fund Company. This Agreement may be
terminated as to any Fund by Fund Company upon thirty (30) days' written notice
to Schwab.
c. Upon the termination date for any Fund, Schwab will no
longer make the Fund shares available for purchase by Schwab's customers through
the MFMP. Schwab reserves the right to transfer the Fund shares of its
customers out of the Account. If Schwab continues to hold the Fund shares on
behalf of its customers in the Account, the parties agree to be obligated under,
and act in accordance with, the terms and conditions of this Agreement with
respect to such shares.
13. The name "Westcore Trust" and references in this Agreement to
"Fund Company" refer to the Trust created under an Amended and Restated
Declaration of Trust dated November 19, 1987, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of Westcore Trust entered into the name or on behalf thereof by any
of its Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust, and all
persons dealing with the Trust must look solely to the Trust for the enforcement
of any claims against the Trust.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized representative of the parties hereto.
CHARLES SCHWAB & CO., INC. WESTCORE TRUST,
on its own behalf and on behalf of each of
its Funds listed on Schedule I hereto as
amended from time to time
By: By:
--------------------------- ------------------------------------
Colleen Hummer
Senior Vice President/ Name: Kenneth V. Penland
Mutual Funds ----------------------------------
Operations Administration Title: President
---------------------------------
Date: By: 11/27/95
------------------------- ------------------------------------
-5-
<PAGE>
SCHEDULE I
TO THE OPERATING AGREEMENT
Fund Effective Date
---- --------------
Westcore Midco Growth Fund* November 27, 1995
Westcore Blue Chip Fund* November 27, 1995
Westcore Equity Income Fund* November 27, 1995
Westcore Small-Cap Opportunity Fund* November 27, 1995
Westcore Long-Term Bond Fund* November 27, 1995
Westcore Intermediate-Term Bond Fund* November 27, 1995
Westcore Colorado Tax-Exempt Fund* November 27, 1995
*Indicates that Fund is a "no load" or "no sales charge" Fund as defined in
Section 26 of the NASD's Rules of Fair Practice.
WESTCORE TRUST
[Name of Fund Company]
By:
---------------------------------
Title: President
------------------------------
Date: 11/27/95
------------------------------
Accepted by Charles Schwab & Co., Inc.
By:
---------------------------------
Colleen Hummer
Senior Vice President/Mutual Funds
Operations Administration
Date:
-------------------------------
-6-
<PAGE>
EXHIBIT A
OPERATING PROCEDURES
1. THE ACCOUNT
a. Schwab will open an omnibus account with each Fund. The
Account shall be registered:
Charles Schwab & Co., Inc.
Special Custody Account for the Exclusive Benefits of
Customers
Attention: Mutual Funds
101 Montgomery Street
San Francisco, California 94104
The Account will be set up for the reinvestment of capital gains and dividend
distributions.
b. The Fund shall designate the Account with account numbers.
Account numbers will be the means of identification when the parties are
transacting in the Account.
c. The parties acknowledge that the Account is an omnibus
account in Schwab's name with shares held by any number of beneficial owners.
Schwab represents that the shares in the Account are customer securities and are
segregated from Schwab's own assets. Fund Company represents that the shares in
the Account are carried free of any charge, lien or payment of any kind in favor
of the Fund or any person claiming through the Fund.
d. The Account shall be kept open on the Fund's books
regardless of a lack of activity or small position size, except to the extent
that Schwab takes specific action to close the Account, or to the extent the
Fund's prospectus reserves the right to close accounts that are inactive. In
the latter case, Fund Company will give prior notice to Schwab before closing
any Account.
e. Schwab has the right to open additional accounts from time
to time to accommodate other investment options and features, and to consolidate
existing accounts if and when appropriate to meet the needs of the MFMP. In the
event that it is necessary for Schwab to open an account with a Fund for the
payment of distributions in cash, the term "Account" shall mean both the account
for the reinvestment of capital gains and dividend distributions and the account
for the payment of distributions in cash.
f. Schwab reserves the right to issue instructions to each fund
to move shares between the Account and any other account Schwab may open.
2. PURCHASE AND REDEMPTION ORDERS
For each day on which any Schwab customer places with Schwab a
purchase or redemption order for shares of a Fund, Schwab shall aggregate all
such purchase orders and aggregate all such redemption orders and communicate to
the Fund an aggregate purchase order and an aggregate redemption order. Schwab
will accept orders to purchase and redeem Fund shares from its customers no
later than 1:00 P.M. Pacific Time (market close). Schwab will communicate the
order to the Fund prior to a mutually agreed upon time.
<PAGE>
3. SETTLEMENT OF TRANSACTIONS
a. Schwab will transmit the purchase price of the aggregate
purchase order to the Fund by wire transfer on the next business day after the
trade date. For purposes of this Agreement, a "business day" is any day the New
York Stock Orange is open for trading.
b. For each business day on which Schwab places a redemption
order for a Fund within the time designated by the Fund, Fund Company will cause
the Fund(s) to send to Schwab the aggregate proceeds of all redemption orders
for the Fund(s) placed by Schwab on that day. Such redemption proceeds will be
sent by wire transfer on the next business day following the trade date for the
redemption orders; provided that Fund Company may, in its discretion, send such
proceeds by check if the aggregate amount is less than $250. Wire transfers of
redemption proceeds shall be separate from wire transfers for other purposes.
c. Each wire transfer of redemption proceeds shall indicate, on
the FedFund's wire system the amount thereof attributable to each Fund;
provided, however, that if the number of entries would be too great to be
transmitted through the FedFund's wire system, Fund Company shall, on the day
the wire is sent, notify Schwab of such entries. The cost of the wire transfer
is the responsibility of the party sending the wire. The interest cost
associated with any delayed wire is the responsibility of the party sending the
wire.
d. Should a Fund need to extend settlement on a trade, Fund
Company must contact Schwab on trade date to discuss the extension. For
purposes of determining the length of settlement, Fund Company agrees to treat
shareholders that hold Fund shares through the Account the same as it treats
shareholders that hold Fund shares directly with the Fund.
e. In the event that a Fund cannot verify redemption proceeds,
Fund Company will settle trades and forward redemption proceeds in accordance
with this Agreement based on the information provided by Schwab. Schwab will be
responsible for the accuracy of all trade information provided by it.
f. If a trade is settled in error, Fund Company shall notify
Schwab orally and confirm in writing the name of the Fund, the Account number
and the date and amount of the error. If the error results in an overpayment to
Schwab, it shall be corrected by debiting the Account. If the error results in
an underpayment to Schwab, it shall be corrected by crediting the Account.
g. Fund Company represents that each Fund that has reserved the
right to redeem in kind has filed Form N-18F-1 with the Securities and Exchange
Commission. For purposes of complying with the Fund's election on Form N-18F-1,
Fund Company agrees that it will treat as a "shareholder" each shareholder that
holds Fund shares through the Account, provided that Schwab provides to Fund
Company, upon request, the name or account number, number of Fund shares and
other relevant information for each such shareholder. Fund Company acknowledges
that treatment of Schwab as the sole shareholder of Fund shares held in the
Account for purposes of applying the limits in Rule 18f-1 under the 1940 Act
would be inconsistent with the intent of Rule 18f-1 and the Fund's election on
Form N-18F-1 and could unfairly prejudice shareholders that hold Fund shares
through the Account.
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<PAGE>
4. ACCOUNT RECONCILIATION REQUIREMENTS
a. Schwab shall verify, on a next-day basis, orders placed
for the Account with each Fund. All activity in the Account must be
reflected. Therefore, any "as of" activity must be shown with its
corresponding "as of" dates.
b. The parties agree to notify each other and correct any error
in the Account with any Fund upon discovery. Fund Company agrees to make best
efforts to avoid any errors, made by Fund Company, any Fund or agents of Fund
Company or the Fund and not corrected on a next day basis, from hindering any
routine daily requests such as transactions, transfer, dividends, etc. Fund
Company agrees to promptly notify Schwab of any adjustments to an Account with
any Fund initiated by Fund Company, any Fund or any agent of either.
c. Schwab must receive statements on or before the eighth
business day of each month, even if there has been no activity in the Account
during the period, unless Schwab can verify transactions by direct or indirect
systems access.
5. PRICING
Every business day on which there is a transaction in the Account
and for each month-end business day, Fund Company will provide to Schwab prior
to 7:00 p.m., Eastern Time, each Fund's closing net asset value and public
offering price (if applicable) for that day and/or notification of no price
for that day. Fund Company shall provide such information on a best efforts
basis taking into consideration any extraordinary circumstances arising at the
Fund (e.g., natural disasters, etc.).
6. DISTRIBUTIONS
a. Fund Company shall provide distribution information to
Schwab in a timely manner to enable Schwab to pay distributions to its customers
on or as close to payable date as practicable. As to each Fund, Fund Company or
such Fund shall provide Schwab with (i) the record date, ex-dividend date, and
payable date with respect to a Fund as soon as practicable after it is
announced, but no later than three (3) business days prior to record date, (ii)
the record date share balance in the Account and the distribution rate per share
on the first business day after record date, and (iii) the reinvest price per
share as soon as it is available. Other distribution information contained in,
and in the same format as, Schwab's Dividend Information Sheet (provided
separately) shall be provided on such dates as are agreed upon between Schwab
and Fund Company, but no later than payable date.
b. As to each Fund, Schwab shall hold the information as to the
amount of the pending distribution in strictest confidence, and shall use such
information only for the purpose of computing the amounts of cash distributions
to be paid to Schwab customers until Fund or Fund Company shall have made such
information generally available to the public. Schwab will maintain and enforce
rules and policies designed to protect against unauthorized access to, or use
of, the information during such period by anyone other than Schwab employees who
have a need to know the information for this purpose.
c. Prior to 10:00 a.m., Eastern Time on the next business day
following receipt of the reinvest price per share as provided in paragraph
6(a)(iii) above, Schwab shall notify Fund Company of the aggregate number of
Fund shares with respect to which the purchase is required to be rescinded in
order to pay the distribution in cash to Schwab customers who have elected to
A-3
<PAGE>
receive their capital gain distributions and/or dividends in cash. Fund Company
agrees that the purchase of such aggregate number of Fund shares may be
rescinded. Fund Company or such Fund shall wire the proceeds of such rescission
from the Fund to the Account on the same business day.
d. For each Fund that pays daily dividends, Fund Company shall
provide on a daily basis, the following record date information: daily rate,
account share balance, account accrual dividend amount (for that day), account
accrual dividend amount (for period to date), and account transfers and period-
to-date accrual amounts.
e. In the event that Schwab maintains an Account with a Fund
for the payment of distributions in cash, Fund Company shall wire, on payable
date, any cash distribution from the Fund to the Account.
f. Each Fund that declares dividends daily shall accrue
dividends, commencing on the settlement date for the purchase of Fund shares and
terminating on the trade date for the redemption of Fund shares.
g. For annual tax reporting purposes, Fund Company shall inform
Schwab of the portion of each Fund's distribution that include any of the
following: foreign source income, tax exempt income by state of origin or
return of capital.
h. Schwab shall prepare and file with the appropriate
governmental agencies, such information, returns and reports as are required to
be so filed for reporting (i) dividends and other distributions made, (ii)
amounts withheld on dividends and other distributions and payments under
applicable federal and state laws, rules and regulations and (iii) gross
proceeds of sales transactions as required.
i. Upon notice from Fund Company, Schwab shall effect mergers,
splits and other reorganization activities of a Fund for its customers.
7. PRICE AND DISTRIBUTION RATE ERRORS
a. In the event adjustments are required to correct any error
in the computation of the net asset value or public offering price of a Fund's
shares or in the distribution rate for a Fund's shares, Fund Company shall
notify Schwab as soon as possible after discovering the need for such
adjustments. Notification can be made orally, but must be confirmed in writing.
The letter shall be written on Fund Company letterhead and must state for each
day on which an error occurred the incorrect price or rate, the correct price or
rate, and the reason for the price or rate change. Fund Company agrees that
Schwab may send this writing, or derivation thereof, to Schwab's customers whose
accounts are affected by the price or rate change.
b. If Schwab's customers have received amounts in excess of the
amounts to which they are entitled, Schwab will, when requested by Fund Company,
and to the extent practicable and permitted by law, debit its customers'
brokerage accounts in the amount of such excess and repay it to the Fund. In no
event, however, shall Schwab be liable to Fund Company or the Fund for any such
amounts.
c. If adjustment is necessary to correct an error which has
caused Schwab's customers to receive amounts less than the amounts to which they
are entitled, the Fund shall make all necessary adjustments to the number of
shares owned in the Account and distribute to Schwab any and all amounts of the
underpayment. Schwab will credit the appropriate amount of such payment to each
Schwab customer.
A-4
<PAGE>
d. For purposes of making adjustments, including the
collection of overpayments, Fund Company agrees to treat shareholders that hold
Fund shares through the Account the same as it treats shareholders that hold
Fund shares directly with the Fund. When making adjustments for an error, a
Fund shall not net same day transactions in the Account. Schwab and Fund
Company shall agree promptly and in good faith to a resolution of the error, and
no adjustment for the error shall be taken in the account until such agreement
is reached.
8. RECORD MAINTENANCE
a. Schwab shall maintain records for each of its customers who
holds Fund shares through the Account, which records shall include:
i. Number of shares;
ii. Date, price and amount of purchases and redemptions
(including dividend reinvestments) and date and amounts of
dividends paid for at least the current year to date;
iii. Name and address of each of its customers, including zip
codes and social security numbers or taxpayer identification
numbers;
iv. Records of distributions and dividend payments;
v. Any transfers of shares; and
vi. Overall control records.
b. Schwab will be responsible for accurately posting
transactions in Fund shares to its customers' brokerage accounts.
9. TRANSFER OF ACCOUNTS
a. Fund Company agrees to transfer shares between accounts for
Schwab customers or other street name brokers held directly with a Fund and
the Account on the Fund's records. For the purpose of expediting direct
transfers from accounts for Schwab customers, Fund Company will accept by
facsimile transmission a summary sheet of information indicating the
customers' names, account numbers, the Fund affected and the number of shares to
be re-registered. For record keeping purposes, actual copies of transfer forms
will be forwarded to a Fund upon its request for such forms.
b. Schwab represents and warrants that for each transfer
indicated in the summary sheet of information, it holds each underlying
instruction for re-registration signed by its customer, and that its customer's
signature on such instruction is signature guaranteed by Schwab pursuant to the
New York Stock Exchange's Medallion Signature Program.
c. Schwab agrees to indemnify and hold harmless Fund Company,
the Fund and each director, officer, employee and agent of Fund Company
("indemnified person") from and against any and all Losses incurred by any of
them arising out of the impropriety of any transfer effected by the Fund in
reliance on the summary sheet of information, except to the extent such Losses
arise out of the failure of any indemnified person to comply with the
instructions on the summary sheet of information.
d. Fund Company shall process all transfer requests into the
appropriate Account. Schwab as custodian is qualified to accept in the Accounts
shares from Fund IRA, Keogh or 401(k) accounts. At no time shall any Fund
establish separate accounts registered to Schwab for the benefit of individual
shareholders. In the event any such account is mistakenly opened,
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<PAGE>
Schwab reserves the right to instruct such Fund to move Fund shares to the
Account.
e. Fund Company must confirm to Schwab the completion of each
transfer on the day it occurs. The confirming information shall include the
number of shares, date ("as of" date if unavoidable delay), transaction date,
account number of the customer and the Account, registration, accrued dividends
and account type (i.e., IRA, Keogh, 401(k), etc.).
f. Transfer processing after record date but prior to payable
date will include all accrued dividends. Each Fund is responsible for
monitoring all completed full transfers for "trailing" dividends. Should a
"trailing" dividend appear in an account, a Fund shall send such dividend to
Schwab within five (5) business days, along with a specific written notification
thereof. Notification shall include details of the dividend and customer,
including the customer's social security number or taxpayer identification
number, and/or the account number for the Account to which the transfer was
made.
g. If Schwab customers submit share certificates for transfer
into their Schwab brokerage accounts, Schwab will send such certificates,
properly endorsed to the applicable Fund, for transfer into Account with such
Fund. Upon Schwab's request, Fund Company agrees to provide the status of said
certificates and book share balances.
10. SHAREHOLDER COMMUNICATION
a. Fund Company shall arrange with a mailing agent
designated by Schwab for the distribution of the materials listed below to all
of Schwab's customers who hold Fund shares, which distribution shall be so
arranged by Fund Company as to occur immediately upon the effective date of the
materials:
i. All proxy or information statements prepared for circulation
to shareholders of record of such Fund;
ii. Annual reports;
iii. Semi-annual reports;
iv. Quarterly reports (if applicable); and
v. All updated prospectuses, supplements and amendments
thereto.
Fund Company shall be responsible for providing the materials and for the
mailing agent's fees in connection with this service as well as for timely
distribution. Fund Company agrees to have the mailing agent consolidate
mailings of material to shareholders of more than one Fund if the mailing is
identical for all Funds in the Fund Company family.
b. In addition to the materials listed above, Fund Company
agrees to provide directly to Schwab all prospectuses, statements of additional
information and supplements and amendments thereto, and annual and other
periodic reports for each Fund in amounts reasonably requested by Schwab for
distribution to its customers. Fund Company is obligated to supply these
materials to Schwab in a timely manner so as to allow Schwab, at its expense, to
send current prospectuses and statements of additional information and periodic
reports, immediately upon their effective dates, to customers and prospective
customers requesting them through Schwab. Schwab will also send a current Fund
prospectus with purchase trade confirmations for the initial purchase of a Fund.
Fund Company shall notify Schwab immediately of any change to a Fund's
prospectus.
c. Fund Company shall ensure that the foregoing materials shall
be in compliance with all applicable provisions of the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the
A-6
<PAGE>
Shareholder Communications Improvement Act of 1990, all applicable rules and
regulations under any of such statutes, and any and all laws, rules and
regulations that may be adopted and become applicable in the future.
d. Fund Company shall ensure that the prospectus of each of its
Funds discloses (i) that a broker may charge transaction fees on the purchase
and/or sale of Fund shares, (ii) that the performance of the Fund may be
compared in publications to the performance of various indices and investments
for which reliable performance data is available, (iii) that the performance of
the Fund may be compared in publications to averages, performance rankings, or
other information prepared by recognized mutual fund statistical services, and
(iv) that the annual report contains additional performance information and will
be made available to investors upon request and without charge.
e. Schwab shall mail statements to its customers on a monthly
basis (or as to accounts in which there has been no activity in a particular
month, no less frequently than quarterly) showing, among other things, the
number of shares of each Fund owned by such customer and the net asset value of
each such Fund as of a recent date.
f. Schwab shall respond to customer inquiries regarding, among
other things, share prices, account balances, dividend amounts and dividend
payment dates. With respect to Fund shares purchased by customers after the
effective date of this Agreement, Schwab shall provide average cost basis
reporting to assist customers in the preparation of income tax returns.
11. NEW PROCESSING SYSTEMS
Fund Company agrees to cooperate to the extent possible with
Schwab as Schwab develops and seeks to implement new processing systems for the
MFMP.
A-7
<PAGE>
CHARLES SCHWAB
May 15, 1996
Steve Wine
Denver Investment Advisors, LLC
1225 17th Street, 26th Floor
Denver, CO 80202
Dear Steve:
Enclosed for your files are fully executed copies of the Retail Services
Agreement and Confidentiality Agreement between Charles Schwab & Co., Inc. and
Westcore Trust.
If you have any questions, please give me a call.
Sincerely,
<PAGE>
Charles Schwab
Mutual Fund Marketplace-Registered Trademark-
RETAIL SERVICES AGREEMENT
This Agreement is made as of March 26, 1996, between Charles Schwab &
Co., Inc. ("Schwab"), a California corporation, each registered investment
company ("Fund Company") executing this Agreement, on its own behalf and on
behalf of each of the series or classes of shares, if any, listed on Schedule I,
as amended from time to time (such series or classes being referred to as the
"Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement.
Fund Company and Fund Affiliate are collectively referred to herein as "Fund
Parties." In the event that there are no series or classes of shares listed on
Schedule I, the term "Fund(s)" shall mean "Fund Company."
WHEREAS, Fund Affiliate is either (i) an investment adviser to or
administrator for the Funds or (ii) the principal underwriter or distributor for
the Funds.
WHEREAS, Fund Parties wish to have Schwab perform certain
recordkeeping, shareholder communication, and other services for each Fund; and
WHEREAS, Schwab is willing to perform such services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. SERVICES
a. During the term of this Agreement, Schwab shall perform the
services set forth on Exhibit A hereto, as such exhibit may be amended from time
to time by mutual consent of the parties (the "Services").
b. In processing purchase, redemption, transfer and exchange
orders placed by Schwab on behalf of its customers, and in order to facilitate
Schwab's performance of Services, the parties agree that the Operating
Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as
amended from time to time ("Operating Agreement"), is incorporated herein by
this reference. All terms and conditions of the Operating Agreement shall be
binding as between Schwab and Fund Parties, and the references to Fund Company
therein shall be deemed to mean Fund Parties for the purposes of this Agreement.
In the event of any inconsistency between the Operating Agreement and this
Agreement, this Agreement shall control.
2. FEES
For the Services, Schwab shall receive a fee (the "Fee") which
shall be calculated and paid in accordance with Exhibit B hereto. Schedule II
reflects the amount of the Fee that each Fund Party has agreed to pay. Should
Exhibit A be amended to revise the Services, the parties shall also amend
Exhibit B and Schedule II, if necessary, in order to reflect any changes in the
Fee.
3. TRANSACTION CHARGES
Schwab shall not, during the term of this Agreement, assess
against or collect from its customers any transaction fee upon the purchase or
<PAGE>
redemption of any Fund's shares that are considered in calculating the Fee. The
parties acknowledge and agree that Schwab may collect such transaction fees from
certain customers (including "Active Traders," as Schwab may define that term)
for certain special trading services and from other customers upon such other
customers' redemption of certain shares. The value of shares as to which such
transaction fees are charged will not be included in the calculation of the Fee.
4. INDEMNIFICATION
a. Schwab shall indemnify and hold harmless Fund Parties and
their directors, officers, employees, and agents ("Indemnified Parties") from
and against any and all losses, claims, liabilities and expenses (including
reasonable attorney's fees) ("Losses") incurred by any of them arising out of
(i) Schwab's dissemination of information regarding Fund Parties or a Fund that
contains an untrue statement of material fact or any omission of a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading and that was not published or
provided to Schwab by or on behalf of Fund Company or its affiliated persons
("Affiliates") as defined under the Investment Company Act of 1940, as amended
(the "1940 Act"), or accurately derived from information published or provided
by or on behalf of Fund Company or any Affiliate, (ii) any breach by Schwab of
any representation, warranty or agreement contained in this Agreement, or (iii)
any willful misconduct or negligence by Schwab in the performance of, or failure
to perform, its obligations under this Agreement, except to the extent such
Losses are caused by Fund Company or Fund's breach of this Agreement or Fund
Company or Fund's willful misconduct or negligence in the performance, or
failure to perform, its obligations under this Agreement. This Section 4(a)
shall survive termination of this Agreement.
b. In any event, no party shall be liable for any special,
consequential or incidental damages.
5. ROLE AND RELATIONSHIP OF SCHWAB
The parties acknowledge and agree that the Services under this
Agreement are recordkeeping, shareholder communication and related services only
and are not the services of an underwriter or a principal underwriter of any
Fund within the meaning of the Securities Act of 1933, as amended, or the 1940
Act. This Agreement does not grant Schwab any right to purchase shares from any
Fund (although it does not preclude Schwab from purchasing any such shares), nor
does it constitute Schwab an agent of Fund Parties or any Fund for purposes of
selling shares of any Fund to any dealer or the public. To the extent Schwab is
involved in the purchase of shares of any Fund by Schwab's customers, such
involvement will be as agent of such customer only.
6. INFORMATION TO BE PROVIDED
Fund Parties shall provide to Schwab prior to the effectiveness
of this Agreement or as soon thereafter as practicable:
a. Certified resolutions of the board of directors of each Fund
Party authorizing the Fund Party to enter into this Agreement and indicating the
officers authorized to execute this Agreement on behalf of the Fund Party; and
b. Two (2) copies of the then-current prospectus and statement
of additional information of each Fund. Fund Party shall provide Schwab with
written copies of any amendments to or changes in the Fund's
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<PAGE>
prospectus or statement of additional information immediately upon their
effective date.
7. NOTICES
All notices required by this Agreement (excluding the Operating
Agreement) shall be in writing and delivered personally or sent by first class
mail. Such notices will be deemed to have been received as of the earlier of
actual physical receipt or three (3) days after deposit, first class postage
prepaid, in the United States mail. All such notices shall be made:
if to Schwab, to: Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
Attention: John McGonigle
Senior Vice President/Mutual Funds
with a copy to: General Counsel, at the same address;
if to Fund Party, to the address given below in the signature
block.
8. NONEXCLUSIVITY
Each Party acknowledges that the other may enter into agreements
similar to this Agreement with other parties for the performance of services
similar to those to be provided under this Agreement, unless otherwise agreed to
in writing by the parties.
9. ASSIGNABILITY
This Agreement is not assignable by any party without the other
parties' prior written consents and any attempted assignment in contravention
hereof shall be null and void; provided, however, that Schwab may, without the
consent of Fund Parties, assign its rights and obligations under this Agreement
to any Affiliate.
10. EXHIBITS AND SCHEDULES; ENTIRE AGREEMENT
All Exhibits and Schedules to this Agreement, as they may be
amended from time to time, are by this reference incorporated into and made a
part of this Agreement. This Agreement (including the Exhibits and Schedules
hereto), together with the Operating Agreement, constitute the entire agreement
between the parties as to the subject matter hereof and supersede any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered by Schwab and Fund Parties.
11. AMENDMENT
This Agreement and the Exhibits and Schedules hereto may be
amended only by a writing executed by each party hereto that is to be bound by
such amendment.
12. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws
of the State of California as applied to contracts entered into and to be
performed entirely within that state.
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<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together shall constitute
one and the same instrument.
14. EFFECTIVENESS OF AGREEMENT; TERMINATION
a. Upon Schwab's acceptance of Schedule I, as amended from time
to time, the effective date of this Agreement as to any Fund shall be the later
of the date on which this Agreement is made or the date set forth opposite the
name of the Fund on Schedule I.
b. This Agreement may be terminated as to a Fund by any party
(i) upon ninety (90) days' written notice to the other parties or (ii) upon such
shorter notice as is required by law, order, or instruction by a court of
competent jurisdiction or a regulatory body or self-regulatory organization with
jurisdiction over the terminating party or (iii) automatically, effective on the
day following the termination of any plan of distribution ("Rule 12b Plan")
adopted and maintained pursuant to Rule 12b under the 1940 Act by any Fund
that has a Rule 12b Plan in effect as of the effective date of this Agreement,
provided that a portion of the Fee is paid pursuant to the Rule 12b Plan.
c. After the date of termination as to a Fund, Fund Parties
will not be obligated to pay the Fee with respect to any shares of the Fund that
are first held in Schwab customer accounts after the date of such termination.
However, notwithstanding any such termination, Fund Parties will remain
obligated to pay Schwab the Fee as to each share of the Fund that was considered
in the calculation of the Fee as of the date of termination (a "Pre-Termination
Share"), for so long as such Pre-Termination Share is held in any Schwab
brokerage account and Schwab continues to perform substantially all of the
Services as to such Pre-Termination Share. Further, for so long as Schwab
continues to perform the Services as to any Pre-Termination Shares, this
Agreement will otherwise remain in full force and effect as to such Pre-
Termination Shares. Fund Parties shall reimburse Schwab promptly for any
reasonable expenses Schwab incurs in effecting any termination of this
Agreement, including delivery to a Fund Party of any records, instruments, or
documents reasonably requested by the Fund Party.
15. NAMES
The names "Westcore Trust" and "Trustees of Westcore Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under an Amended and
Restated Declaration of Trust dated November 19, 1987, which is hereby referred
to and a copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of "Westcore Trust" entered into in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust Property, and
all persons dealing with any class of shares of the Trust must look solely to
the Trust Property belonging to such class for the enforcement of any claims
against the Trust.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
Charles Schwab & CO., Inc. Westcore Trust
------------------------------------
Name of Fund Company
By: By:
--------------------------- ---------------------------------
John McGonigle
Senior Vice President/ Name: Kenneth V. Penland
Mutual Funds -------------------------------
Title: President
------------------------------
Date: Date: 3/29/96
------------------------- -------------------------------
Address: 370 17th St., Suite 2700
----------------------------
Denver, CO 80202
------------------------------------
------------------------------------
Attn: Jasper Frontz
-------------------------------
Date: 3/29/96
-------------------------------
Denver Investment Advisors LLC
------------------------------------
Name of Fund Affiliate
By:
---------------------------------
Name: Kenneth V. Penland
-------------------------------
Title: Chairman
-----------------------------
Address: 1225 17th St., 26th Floor
----------------------------
Denver, CO 80202
------------------------------------
------------------------------------
Attn: Steve Wine
-------------------------------
Date: 3/29/96
-------------------------------
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<PAGE>
EXHIBIT A
SERVICES
1. RECORD MAINTENANCE
Schwab shall maintain the following records with respect to a
Fund for each customer who holds Fund shares in a Schwab brokerage account:
a. Number of shares;
b. Date, price and amount of purchases and redemptions
(including dividend reinvestments) and dates and amounts of dividends paid
for at least the current year to date;
c. Name and address of the customer, including zip codes and
social security numbers or taxpayer identification numbers;
d. Records of distributions and dividend payments;
e. Any transfers of shares; and
f. Overall control records.
2. SHAREHOLDER COMMUNICATIONS
Schwab shall:
a. Provide to a shareholder mailing agent for the purpose of
mailing certain Fund-related materials the names and addresses of all Schwab
customers who hold shares of such Fund in their Schwab brokerage accounts. The
shareholder mailing agent shall be a person or entity with whom the Fund has
arranged for the distribution of certain Fund-related material in accordance
with the Operating Agreement. The Fund-related materials shall consist of
updated prospectuses and any supplements and amendments thereto, annual and
other periodic reports, proxy or information statements and other appropriate
shareholder communications. In the alternative, in accordance with the
Operating Agreement, Schwab may distribute the Fund-related materials to its
customers.
b. Mail current Fund prospectuses and statements of additional
information and annual and other periodic reports upon customer request and, as
applicable, with confirmation statements;
c. Mail statements to customers on a monthly basis (or, as to
accounts in which there has been no activity in a particular month, no less
frequently than quarterly) showing, among other things, the number of shares of
each Fund owned by such customer and the net asset value of such Fund as of a
recent date;
d. Produce and mail to customers confirmation statements
reflecting purchases and redemptions of shares of each Fund in Schwab brokerage
accounts;
e. Respond to customer inquiries regarding, among other things,
share prices, account balances, dividend amounts and dividend payment dates; and
f. With respect to Fund shares purchased by customers after the
effective date of this Agreement, provide average cost basis reporting to the
customers to assist them in preparation of income tax returns.
3. TRANSACTIONAL SERVICES
Schwab shall communicate, as to shares of each Fund, purchase,
redemption and exchange orders reflecting the orders it receives
-6-
<PAGE>
from its customers. Schwab shall also communicate, as to shares of each Fund,
mergers, splits and other reorganization activities.
4. TAX INFORMATION RETURNS AND REPORTS
Schwab shall prepare and file with the appropriate governmental
agencies, such information, returns and reports as are required to be so filed
for reporting (i) dividends and other distributions made, (ii) amounts withheld
on dividends and other distributions and payments under applicable federal and
state laws, rules and regulations, and (iii) gross proceeds of sales
transactions as required.
5. FUND COMMUNICATIONS
Schwab shall, on a daily basis and for each Fund, report the
number of shares on which the Fee is to be paid pursuant to this Agreement and
the number of shares on which no such Fee is to be paid. Schwab shall also
provide each Fund with monthly summaries of reports. Such summaries shall be
expressed in both shares and dollar amounts.
-7-
<PAGE>
EXHIBIT B
CALCULATION OF FEE
1. The Fee shall be calculated by multiplying the Daily Value of
Qualifying Shares (defined below) times the appropriate Fee Rate (indicated
below). The Fee shall be computed daily and paid monthly in arrears.
2. The Daily Value of Qualifying Shares is the aggregate daily value
of all shares of the Fund held in Schwab brokerage accounts, subject to the
following exclusions ("Qualifying Shares"). There shall be excluded from the
shares (i) shares as to which a brokerage customer paid Schwab a transaction fee
upon the purchase of such shares, (ii) shares held in a Schwab brokerage account
prior to the effective date of this Agreement as to the Fund and (iii) shares
first held in a Schwab brokerage account after the termination of this Agreement
as to the Fund.
3. The Fee Rate is determined based on the aggregate value of the
Qualifying Shares of all Funds listed on all Schedule I's, as amended from time
to time, as of the prior review date. The review dates are December 31 and June
30. The Fee Rate is effective from the next business day following the review
date up to and including the next review date. The Fee Rates are as follows:
Aggregate Value of
Qualifying Shares Fee Rate
----------------- --------
Up to and including $500 million 35 basis points per annum
Over $500 million and up to and 30 basis points per annum
including $1.5 billion
Over $1.5 billion 25 basis points per annum
The rate scale is not intended to produce a "blended rate." Rather, once a
threshold is reached, the rate applicable to the total amount of assets will be
used for all assets. Thus, if the aggregate value of Qualifying Shares of all
such Funds is $501 million as of a review date, the Fee Rate will be 30 basis
points (to be applied to the Daily Value of Qualifying Shares) until the next
review date.
4. For purposes of this Exhibit, the daily value of the shares of
each Fund will be the net asset value reported by such Fund to the National
Association of Securities Dealers, Inc. Automated Quotation System. No
adjustments will be made to the net asset values to correct errors in the net
asset values so reported for any day unless such error is corrected and the
corrected net asset value per share is reported to Schwab before 5 o'clock,
p.m., San Francisco time, on the first business day after the day to which the
error relates.
5. At the request of Fund Parties, Schwab shall provide, on each
business day, a statement detailing the calculation for each Fund, the aggregate
value of the Qualifying Shares of each Fund and the amount of the Fee for each
Fund. As soon as practicable after the end of the month, Schwab shall also
provide to Fund Parties an invoice for the amount of the Fee due for each Fund.
In the calculation of such Fee, Schwab's records shall govern unless an error
can be shown in the number of shares used in such calculation as indicated on
Schedule II.
6. Fund Parties shall pay Schwab the Fee within thirty (30) days
after Fund Parties' receipt of such statement. Such payment shall be by
-8-
<PAGE>
wire transfer, unless the amount thereof is less than $250. Such wire transfers
shall be separate from wire transfers of redemption proceeds or distributions
under the Operating Agreements. Amounts less than $250 may, at Fund Parties'
discretion, be paid by check.
-9-
<PAGE>
SCHEDULE I
TO THE SERVICES AGREEMENT
Fund Effective Date
---- --------------
Westcore Blue Chip Fund* 3/26/96
Westcore Colorado Tax-Exempt Fund* 3/26/96
Westcore Growth & Income Fund* 3/26/96
Westcore Intermediate Term Bond Fund* 3/26/96
Westcore Long Term Bond Fund* 3/26/96
Westcore Midco Growth Institutional* 3/26/96
Westcore Small-Cap Opportunity Fund* 3/26/96
*Indicates that Fund is a "no load" or "no sales charge" Fund as defined in
Section 26 of the NASD's Rules of Fair Practice.
Westcore Trust
-----------------------------------------
Name of Fund Company
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
Acknowledged by Accepted by Charles Schwab & Co. Inc.
- ------------------------------
Name of Fund Affiliate
By: By:
--------------------------- --------------------------------------
John McGonigle
Name: Senior Vice President/Mutual Funds
-------------------------
Title:
------------------------
Date: Date:
------------------------- ------------------------------------
-10-
<PAGE>
SCHEDULE II
TO THE SERVICES AGREEMENT
Aggregate Value of Qualifying Shares
-------------------------------------
Up to and including Over $500M and up Above $1.5
$500 Million to $1.5 Billion Billion
-------------------- ----------------- ----------
Fund Company
- ------------
N/A 0% 0% 0%
- ----------------- ---- ---- ----
(Name)
Fund Affiliate
- --------------
Denver Investment
Advisors LLC .35% .30% .25%
- ----------------- ---- ---- ----
(Name)
Fee Rate 0.35% 0.30% 0.25%
Percentage Per Annum ---- ---- ----
of Average Daily
Value of Fund Shares
-11-
<PAGE>
CHARLES SCHWAB
Mutual Fund Marketplace-Registered Trademark-
CONFIDENTIALITY AGREEMENT
This Agreement is made as of the 26th day of March, 1996, between
Charles Schwab & Co., Inc. ("Schwab"), a California corporation, and DENVER
INVESTMENT ADVISORS LLC ("Fund Affiliate"), an affiliate of the registered
investment company(ies), Westcore Trust, which entered into an Operating
Agreement with Schwab dated November 27, 1995 ("Operating Agreement").
RECITALS
A. Fund Affiliate wishes Schwab to provide it with the names and
addresses of investment managers and retirement plan administrators, whose
clients hold positions in any of the funds (as defined in the Operating
Agreement), for purposes of Fund Affiliate's direct marketing and communication
with these investment managers and retirement plan administrators and for
purposes of tracking the demographics of sale of the Fund shares. Fund
Affiliate mailings using this confidential, proprietary information may occur
through a mailing agent for the Fund Affiliate.
B. Subject to the terms and conditions herein or as may be mutually
agreed upon in writing from time to time, Schwab is willing to provide to Fund
Affiliate such confidential, proprietary information.
AGREEMENT
THEREFORE, in consideration of the foregoing and the mutual promises
set forth below, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, each of the following
terms will have the meaning ascribed thereto:
a. "Schwab Institutional Customer" means a Schwab customer who
is an investment manager or retirement plan administrator whose client(s) hold
position(s) in any of the Funds.
b. "Mailing Agent" means the person or entity with whom Fund
Affiliate contracts to act as its agent in performing mailings to Schwab
Institutional Customers and to whom Fund Affiliate provides names and addresses
of Schwab Institutional Customers received from Schwab under this Agreement;
c. "Objecting Customer" means any Schwab Institutional Customer
who has made objection to the release of his or her name or address.
d. "Proprietary Information" means the lists of names and
addresses of Schwab Institutional Customers, other than Objecting Customers,
together with the opening and closing position in the Fund(s) by each master
account and any activity which has occurred in the master account subsequent to
any previous reporting, which will be provided to Fund Affiliate under this
Agreement.
2. ACCESS TO PROPRIETARY INFORMATION.
a. During the term of this Agreement, Schwab will provide to
Fund Affiliate on a monthly basis, the Proprietary Information for that month.
The Proprietary Information shall be provided together with the master accounts
of Objecting Customers - which shall be identified only by coded account number.
b. Fund Affiliate will hold the Proprietary Information in
strictest confidence and will use the Proprietary Information solely for the
business purposes set forth in Recital A above. Fund Affiliate will have in
effect, and enforce, rules and policies designed to protect against unauthorized
access to or use of the Proprietary Information, including instruction of and
written agreements with their employees and Mailing Agent to insure that they
protect the confidentiality of the Proprietary Information. Fund Affiliate may
disclose Proprietary Information to its responsible employees and Mailing Agent
only to the extent necessary to carry out the purpose for which Proprietary
Information is disclosed. Fund Affiliate shall instruct its employees not to
disclose Proprietary Information to third parties, except to Mailing Agent.
c. Fund Affiliate shall not be prevented from using or
disclosing any information or material, or any element thereof, whether or not
such information or material is Proprietary Information for the purposes of this
Agreement, to the extent any such information or material, or any element
thereof:
i. has been previously published or is published hereafter, unless such
publication is itself a breach of this Agreement or a similar confidential
disclosure agreement with Schwab;
ii. was already known to Fund Affiliate prior to being disclosed by
Schwab as evidenced by written records kept in the ordinary course of business
of Fund Affiliate or by proof of actual use by Fund Affiliate;
iii. has been or is hereafter rightfully received by Fund Affiliate from a
third person without restriction on disclosure and without breach of this
Agreement; or
iv. has been independently developed by Fund Affiliate.
It shall be presumed that any Proprietary Information in Fund Affiliate's
possession is not within exceptions (iii) or (iv) above, and the burden is on
Fund Affiliate to prove otherwise by records and documentation.
d. Fund Affiliate may release Proprietary Information if
required by law or by order or requirement of any court or governmental
authority; provided that prior to releasing Proprietary Information pursuant to
any such requirement or order, Fund Affiliate shall so notify Schwab. If
feasible, such notice shall be provided not less than five (5) business days
prior to the required disclosure. Fund Affiliate will use reasonable efforts
not to release the Proprietary Information pending the outcome of any measures
taken by Schwab to contest the requirement or order.
e. Fund Affiliate acknowledges and agrees that it or its
agent's breach of any part of this Agreement will result in irreparable harm to
Schwab for which an adequate remedy is not available at law. Accordingly, in
such event, Schwab shall be entitled, in addition to any other remedies
available, to equitable relief, including preliminary injunction and restraining
order.
f. Fund Affiliate shall receive Proprietary Information back
from any Mailing Agent, and destroy all tangible and non-tangible
representations of Proprietary Information, within thirty (30) days of its
receipt, upon receipt of Proprietary Information for a more recent month, or at
termination of this Agreement, whichever is sooner. Fund Affiliate shall, if so
requested by Schwab, deliver a letter to Schwab confirming the return and the
destruction of the Proprietary Information.
-12-
<PAGE>
g. Schwab reserves all rights in the Proprietary Information
pursuant to any patents and copyrights contained therein. Fund Affiliate
recognizes and agrees that nothing contained in this Agreement shall be
construed as granting any rights, license or otherwise, to any Proprietary
Information disclosed pursuant to this Agreement.
h. Fund Affiliate shall, at its own expense, take all
reasonable steps, including the initiation and prosecution of actions at law or
in equity, necessary to prevent disclosure of any Proprietary Information by any
representative or employee of Fund Affiliate or Mailing Agent and to prevent the
unauthorized use or disclosure of any Proprietary Information by any other
person who gained such Proprietary Information from Fund Affiliate or its agent,
representatives, or employee in violation of the terms of this Agreement.
3. RESPONSIBILITY FOR COMMUNICATIONS. Fund Affiliate acknowledges
its sole responsibility for any communication made with or mailings sent to
Schwab Institutional Customers hereunder, and the compliance of such
communications and mailings with all applicable laws and regulations.
4. INDEMNIFICATION. Fund Affiliate shall indemnify and hold
harmless Schwab and each director, officer, employee and agent of Schwab from
and against any and all claims, liabilities, losses, damages, and expenses of
any nature, including counsel fees ("Losses") arising out of (i) any use made by
Fund Affiliate or Mailing Agent of the Proprietary Information, (ii) any failure
by Fund Affiliate or Mailing Agent to comply with any applicable laws and
regulations, and (iii) any action taken or omitted to be taken by Schwab in
observance of the terms of this Agreement.
5. LIABILITY. Fund Affiliate shall cause Mailing Agent to enter
into a contract with Fund Affiliate, in which Schwab shall be named as an
express third party beneficiary, requiring that the Proprietary Information be
kept confidential as provided in this Agreement and not used for any other
purpose than envisioned under this Agreement. Fund Affiliate understands and
agrees that it shall be liable for any failure of the Mailing Agent to keep the
Proprietary Information confidential to the extent provided in this Agreement.
6. ASSIGNABILITY. This Agreement shall be binding upon, and shall
inure to the benefit of, the parties and their respective successors and
assigns. Any assignment (within the meaning of Section 2(a)(4) of the
Investment Company Act of 1940, as amended) of this Agreement by Fund Affiliate
is prohibited without Schwab's prior written consent.
7. TERMINATION. Schwab may terminate this Agreement by giving Fund
Affiliate ten (10) days prior written notice. The termination of the Agreement
shall not affect Fund Affiliate's obligations or rights with respect to
Proprietary Information disclosed prior to the effective date of termination.
8. CHOICE OF LAW. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California applicable to
agreements made and performed in California by California residents. If any
provision of this Agreement is determined to be illegal or unenforceable by
competent judicial authority, all other terms and provisions shall nevertheless
remain effective and shall be enforced to the fullest extent permitted by law.
9. SINGLE AGREEMENT. This Agreement may be signed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
-13-
<PAGE>
10. WAIVER. No delay or omission by a party in exercising any rights
under this Agreement will operate as a waiver of that or any other right. A
waiver or consent given by a party on one occasion is effective only in that
instance and will not be construed as bar to or waiver of any right on any other
occasion.
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof. Any modification
to this Agreement must be in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CHARLES SCHWAB & CO., INC.
- --------------------------------
Name of Fund Affiliate
By: By:
----------------------------- ---------------------------------
Name: Name:
--------------------------- -------------------------------
Title: Title:
-------------------------- ------------------------------
Date: Date:
--------------------------- -------------------------------
-14-
<PAGE>
CHARLES SCHWAB
Mutual Fund Marketplace-Registered Trademark-
OPERATING AGREEMENT
This Agreement is made as of November 27, 1995, between Charles Schwab
& Co., Inc. ("Schwab"), a California corporation, and each registered investment
company executing this Agreement ("Fund Company"), on its own behalf and on
behalf of each of the series or classes of shares, if any, listed on Schedule I,
as amended from time to time (such series or classes being referred to as the
"Fund(s)"). In the event there are no series or classes of shares listed on
Schedule I, then the term "Fund(s)" shall mean "Fund Company."
WHEREAS Fund Company wishes to have shares of the Fund(s) available
for purchase and redemption by Schwab's brokerage customers through Schwab's
Mutual Fund Marketplace-Registered Trademark- ("MFMP");
WHEREAS certain policies, procedures and information are necessary to
enable the Fund(s) to participate in the MFMP; and
WHEREAS Schwab is willing to permit the Fund(s) to participate in its
MFMP pursuant to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. OPERATING PROCEDURES
Schwab will open an omnibus account (the "Account") with each Fund
through which it will purchase and redeem shares, settle transactions, reconcile
transactions, obtain pricing, reinvest distributions and maintain records in
accordance with the Operating Procedures set forth in Exhibit A hereto. In
addition, the parties agree to transfer accounts, communicate with Fund
shareholders and perform other obligations in accordance with the Operating
Procedures.
2. REGISTRATION REQUIREMENTS
a. Schwab will only place purchase orders for shares of a Fund
on behalf of its customers whose addresses recorded on Schwab's books are in
states or other jurisdictions in which Fund Company has advised Schwab that such
Fund has registered or qualified its shares for sale under applicable law. Fund
Company shall advise Schwab immediately if any such registration or
qualification is terminated or if it wishes Schwab not to place purchase orders
for a Fund on behalf of its customers who reside in a particular state or other
jurisdiction.
b. Schwab will, upon request, (i) furnish Fund Company with
monthly written statements of the number of shares of each Fund purchased on
behalf of Schwab customers resident in one or more states or other jurisdictions
indicated by Fund Company or (ii) on a daily basis, transmit to an electronic
database provider with whom Schwab has established effective systems interfaces
information regarding the number of shares of each Fund sold in each state for
retrieval by Fund Company. Fund Company shall be responsible for all reasonable
fees and other reasonable charges of such database provider in connection with
Schwab's transmission of such information to and Fund Company's retrieval of
such information from such database provider.
<PAGE>
c. Fund Company agrees that any recession offer that is made to
shareholders who own shares directly with a Fund will also be made to Schwab
customers who would be entitled to such recession offer if they owned shares
directly with the Fund. Fund Company will provide Schwab with a letter on Fund
Company letterhead containing the terms of any such recission offer, and Schwab
may send this writing, or any derivation thereof, to the affected Schwab
customers. To assist Fund Company in effecting any such recission offer, Schwab
agrees to provide Fund Company with relevant information regarding any affected
Schwab customer, including the account number, the number of shares purchased
and redeemed, if any, the dates of the purchase(s) and redemption(s), if any,
and the dollar amount of such transactions.
3. COMPLIANCE RESPONSIBILITIES
a. Fund Company is responsible for (i) the compliance of each
prospectus, registration statement, annual or other periodic report, proxy
statement and item of advertising or marketing material of or relating to each
Fund with all applicable laws, rules and regulations (except for advertising or
marketing material prepared by Schwab that was not published or provided to
Schwab by Fund Company or any Affiliate (defined below) or accurately derived
from information published or provided by them), (ii) the distribution and
tabulation of proxies in accordance with all applicable laws, rules and
regulations (except for such proxy related services provided by Schwab's mailing
agent), (iii) the registration or qualification of the shares of each Fund under
all applicable laws, rules and regulations, and (iv) the compliance by Fund
Company and each "affiliated person" of Fund Company as that term is defined
under the Investment Company Act of 1940, as amended ("1940 Act"), herein
referred to as "Affiliate" with all applicable laws, rules and regulations
(including the 1940 Act and the Investment Advisers Act of 1940, as amended),
and the rules and regulations of each self-regulatory organization with
jurisdiction over Fund Company or Affiliate, except to the extent that the
failure to so comply by Fund Company or any Affiliate is caused by Schwab's
breach of this Agreement.
b. In the event that the Account holds more than five percent
(5%) of the outstanding Fund shares, Fund Company will be responsible for
requesting Schwab to confirm its status as shareholder of record and to confirm
whether any Schwab customer beneficially owns more than five percent (5%) of the
outstanding Fund shares through its Schwab brokerage account. For this purpose,
Fund Company shall indicate in its inquiry the number of Fund shares that equal
five percent (5%) of outstanding Fund shares. Schwab shall promptly reply to
any such inquiries.
c. Schwab is responsible for Schwab's compliance with all
applicable laws, rules and regulations governing Schwab's performance under this
Agreement, except to the extent that Schwab's failure to comply with any law,
rule or regulation is caused by Fund Company's breach of this Agreement.
d. Except as set forth in this Agreement or as otherwise agreed
upon in writing by the parties, any communication, instruction or notice made
pursuant to this Agreement shall be made orally, provided that such oral
communication is on a recorded telephone line or is promptly confirmed in
writing by facsimile transmission. Schwab is entitled to rely on any
communications, instructions or notices which it reasonably believes were
provided to it by Fund Company, any Affiliate or their agents authorized to
provide such communications, instructions or notices to Schwab, and on
communications, instructions or notices provided to it by its customers. Fund
Company is entitled to rely on any communications, instructions or notices it
reasonably believes were provided to it by Schwab, or its agents authorized to
provide such communications, instructions or notices to Fund Company.
-2-
<PAGE>
e. Except to the extent otherwise expressly provided in this
Agreement, neither party assumes any responsibility hereunder, or will be liable
to the other, for any damage, loss of data, delay or any other loss whatsoever
caused by events beyond its reasonable control.
f. Fund Company and each Fund shall indemnify and hold harmless
Schwab and each director, officer, employee and agent of Schwab from and against
any and all losses, claims, liabilities and expenses (including reasonable
attorney's fees) ("Losses") incurred by any of them arising out of (i) any
untrue statement of material fact or any omission of a material fact necessary
in order to make the statements made, in light of the circumstances under which
they were made, not misleading in any prospectus, registration statement, annual
or other periodic report or proxy statement of the Fund or in any advertising or
promotional material generated by Fund Company or any Affiliate or accurately
derived from information published or provided by Fund Company or any Affiliate,
(ii) any violation or any law, rule or regulation relating to the registration
or qualification of shares of the Fund, (iii) any breach by Fund Company of any
representation, warranty or agreement contained in this Agreement, or (iv) any
willful misconduct or negligence by Fund Company or a Fund in the performance
of, or failure to perform, its obligations under this Agreement, except to the
extent such Losses are caused by Schwab's breach of this Agreement or its
willful misconduct or negligence in the performance, or failure to perform, its
obligations under this Agreement. This Section 3(f) shall survive termination
of this Agreement.
4. REPRESENTATIONS AND WARRANTIES
a. Fund Company represents and warrants to Schwab that each
Fund is in compliance with the conditions and qualifications set forth in the
Rules of Fair Practice of the National Association of Securities Dealers,
Inc. ("NASD"), Article III, Section 26, as amended from time to time
("Section 26"), which enable an NASD member to offer or sell shares in the
Fund. Fund Company represents and warrants that each Fund marked with an
asterisk on Schedule I is a "no load" or "no sales charge" Fund as defined in
Section 26. If a Fund, for any reason, fails to satisfy the terms and
conditions of Section 26, Fund Company will notify Schwab immediately of the
Fund's disqualification and the reason therefor.
b. Schwab represents and warrants that Schwab is a member of
the NASD.
5. USE OF PARTIES' NAMES
a. Without Schwab's prior written consent, Fund Company will
not cause or permit the use, description, or reference to Schwab, or to the
relationship contemplated by this Agreement in any advertisement or promotional
materials or activities.
b. Fund Company authorizes Schwab to use the names or other
identifying marks of, and certain information about, Fund Company and Fund in
connection with the operation of the MFMP. Fund Company may withdraw this
authorization as to any particular use of any such name or identifying marks at
any time (i) upon Fund Company's reasonable determination that such use would
have a material adverse effect on the reputation or marketing efforts of Fund
Company or such Fund, or (ii) if any of the Funds cease to be available through
the MFMP; provided, however, that Schwab may, in its discretion, continue to use
materials prepared or printed prior to the withdrawal of such authorization or
in the process of being prepared or printed at the time of such withdrawal.
-3-
<PAGE>
6. PROPRIETARY INFORMATION
Each party hereto acknowledges that the identities of the other
party's customers, information maintained by such other party regarding those
customers, and all computer programs and procedures developed by such other
party or such other party's Affiliates or agents in connection with such other
party's performance of its duties hereunder constitute the valuable property of
such other party. Each party agrees that should it come into possession of any
list or compilation of the identities of or other information about the other
party's customers, or any other property of such party, pursuant to this
Agreement or any other agreement related to services under this Agreement, the
party who acquired such information or property shall use its best efforts to
hold such information or property in confidence and refrain from using,
disclosing, or distributing any of such information or other property, except
(i) with the other party's prior written consent, or (ii) as required by law or
judicial process. Each party acknowledges that any breach of the foregoing
agreements as to another party would result in immediate and irreparable harm to
such other party for which there would be no adequate remedy at law and agrees
that in the event of such a breach such other party will be entitled to
equitable relief by way of temporary and permanent injunctions, as well as such
other relief as any court of competent jurisdiction deems appropriate.
7. ASSIGNABILITY
This Agreement is not assignable by either party without the other
party's prior written consent, and any attempted assignment in contravention
hereof shall be null and void; provided, however, that Schwab may, without the
consent of Fund Company, assign its rights and obligations under this Agreement
to any Affiliate.
8. EXHIBITS AND SCHEDULES
All Exhibits and Schedules to this Agreement, as they may be amended
from time to time, are by this reference incorporated into and made a part of
this Agreement.
9. AMENDMENT
This Agreement may be amended only by a writing executed by each party
hereto that is to be bound by such amendment, except as provided in this Section
9. Exhibit A may be amended by Schwab on forty (40) days' written notice to
Fund Company or such earlier time as shall be agreed to by the parties.
Exhibits B and C shall be amended by Fund Company in the event of any change to
the information contained therein.
10. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws of
the State of California, as applied to contracts entered into and to be
performed entirely within the state.
11. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together shall constitute one
and the same instrument.
12. EFFECTIVENESS AND TERMINATION
a. The effective date of this Agreement as to any Fund is the
later of the date set forth opposite the name of the Fund on Schedule I or the
date Schedule I is accepted by Schwab.
-4-
<PAGE>
b. This Agreement may be terminated as to any Fund by Schwab
immediately upon written notice to Fund Company. This Agreement may be
terminated as to any Fund by Fund Company upon thirty (30) days' written notice
to Schwab.
c. Upon the termination date for any Fund, Schwab will no
longer make the Fund shares available for purchase by Schwab's customers through
the MFMP. Schwab reserves the right to transfer the Fund shares of its
customers out of the Account. If Schwab continues to hold the Fund shares on
behalf of its customers in the Account, the parties agree to be obligated under,
and act in accordance with, the terms and conditions of this Agreement with
respect to such shares.
13. The name "Westcore Trust" and references in this Agreement to
"Fund Company" refer to the Trust created under an Amended and Restated
Declaration of Trust dated November 19, 1987, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of Westcore Trust entered into the name or on behalf thereof by any
of its Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust, and all
persons dealing with the Trust must look solely to the Trust for the enforcement
of any claims against the Trust.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized representative of the parties hereto.
CHARLES SCHWAB & CO., INC. WESTCORE TRUST,
on its own behalf and on behalf of each of its
Funds listed on Schedule I hereto as amended
from time to time
By: By:
---------------------------- ---------------------------------------
Colleen Hummer
Senior Vice President/ Name:
Mutual Funds Operations -------------------------------------
Administration Title:
------------------------------------
Date: Date:
-------------------------- -------------------------------------
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<PAGE>
SCHEDULE I
TO THE OPERATING AGREEMENT
FUNDS EFFECTIVE DATE
----- --------------
Westcore Midco Growth Fund* November 27, 1995
Westcore Blue Chip Fund* November 27, 1995
Westcore Equity Income Fund* November 27, 1995
Westcore Small-Cap Opportunity Fund* November 27, 1995
Westcore Long-Term Bond Fund* November 27, 1995
Westcore Intermediate-Term Bond Fund* November 27, 1995
Westcore Colorado Tax-Exempt Fund* November 27, 1995
*Indicates that Fund is a "no load" or "no sales charge" Fund as defined in
Section 26 of the NASD's Rules of Fair Practice.
WESTCORE TRUST
[Name of Fund Company]
By:
-----------------------------------------
Title:
--------------------------------------
Date:
---------------------------------------
Accepted by Charles Schwab & Co., Inc.
By:
-----------------------------------------
Colleen Hummer
Senior Vice President/Mutual Funds
Operations Administration
Date:
---------------------------------------
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<PAGE>
EXHIBIT A
OPERATING PROCEDURES
1. THE ACCOUNT
a. Schwab will open an omnibus account with each Fund. The
Account shall registered:
Charles Schwab & Co., Inc.
Special Custody Account for the Exclusive Benefit of
Customers
Attention: Mutual Funds
101 Montgomery Street
San Francisco, California 94104
The Account will be set up for the reinvestment of capital gains and dividend
distributions.
b. The Fund shall designate the Account with account numbers.
Account numbers will be the means of identification when the parties are
transacting in the Account.
c. The parties acknowledge that the Account is an omnibus
account in Schwab's name with shares held by any number of beneficial owners.
Schwab represents that the shares in the Account are customer securities and are
segregated from Schwab's own assets. Fund Company represents that the shares in
the Account are carried free of any charge, lien or payment of any kind in favor
of the Fund or any person claiming through the Fund.
d. The Account shall be kept open on the Fund's books
regardless of a lack of activity or small position size, except to the extent
that Schwab takes specific action to close the Account, or to the extent the
Fund's prospectus reserves the right to close accounts that are inactive. In
the latter case, Fund Company will give prior notice to Schwab before closing
any Account.
e. Schwab has the right to open additional accounts from time
to time to accommodate other investment options and features, and to consolidate
existing accounts if and when appropriate to meet the needs of the MFMP. In the
event that it is necessary for Schwab to open an account with a Fund for the
payment of distributions in cash, the term "Account" shall mean both the account
for the reinvestment of capital gains and dividend distributions and the account
for the payment of distributions in cash.
f. Schwab reserves the right to issue instructions to each Fund
to move shares between the Account and any other account Schwab may open.
2. PURCHASE AND REDEMPTION ORDERS
For each day on which any Schwab customer places with Schwab a
purchase or redemption order for shares of a Fund, Schwab shall aggregate all
such purchase orders and aggregate all such redemption orders and communicate to
the Fund an aggregate purchase order and an aggregate redemption order. Schwab
will accept orders to purchase and redeem Fund shares from its customers no
later than 1:00 P.M. Pacific Time (market close). Schwab will communicate the
order to the Fund prior to a mutually agreed upon time.
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3. SETTLEMENT OF TRANSACTIONS
a. Schwab will transmit the purchase price of the aggregate
purchase order to the Fund by wire transfer on the next business day after the
trade date. For purposes of this Agreement, a "business day" is any day the New
York Stock Exchange is open for trading.
b. For each business day on which Schwab places a redemption
order for a Fund within the time designated by the Fund, Fund Company will cause
the Fund(s) to send to Schwab the aggregate proceeds of all redemption orders
for the Fund(s) placed by Schwab on that day. Such redemption proceeds will be
sent by wire transfer on the next business day following the trade date for the
redemption orders; provided that Fund Company may, in its discretion, send such
proceeds by check if the aggregate amount is less than $250. Wire transfers of
redemption proceeds shall be separate from wire transfers for other purposes.
c. Each wire transfer of redemption proceeds shall indicate, on
the Fed Funds wire system, the amount thereof attributable to each Fund;
provided, however, that if the number of entries would be too great to be
transmitted through the Fed Funds wire system, Fund Company shall, on the day
the wire is sent, notify Schwab of such entries. The cost of the wire transfer
is the responsibility of the party sending the wire. The interest cost
associated with any delayed wire is the responsibility of the party sending the
wire.
d. Should a Fund need to extend settlement on a trade, Fund
Company must contact Schwab on trade date to discuss the extension. For
purposes of determining the length of settlement, Fund Company, agrees to treat
shareholders that hold Fund shares through the Account the same as it treats
shareholders that hold Fund shares directly with the Fund.
e. In the event that a Fund cannot certify redemption proceeds,
Fund Company will settle trades and forward redemption proceeds in accordance
with this Agreement based on the information provided by Schwab. Schwab will be
responsible for the accuracy of all trade information provided by it.
f. If a trade is settled in error, Fund Company shall notify
Schwab orally and confirm in writing the name of the Fund, the Account number
and the date and amount of the error. If the error results in an overpayment to
Schwab, it shall be corrected by debiting the Account. If the error results in
an underpayment to Schwab, it shall be corrected by crediting the Account.
g. Fund Company represents that each Fund that has reserved the
right to redeem in kind has filed Form N-18F-1 with the Securities and Exchange
Commission. For purposes of complying with the Fund's election on Form N-18F-1,
Fund Company agrees that it will treat as a "shareholder" each shareholder that
holds Fund shares through the Account, provided that Schwab provides to Fund
Company, upon request, the name or account number, number of Fund shares and
other relevant information for each such shareholder. Fund Company acknowledges
that treatment of Schwab as the sole shareholder of Fund shares held in the
Account for purposes of applying the limits in Rule 18f-1 under the 1940 Act
would be inconsistent with the intent of Rule 18f-1 and the Fund's election on
Form N-18F-1 and could unfairly prejudice shareholders that hold Fund shares
through the Account.
4. ACCOUNT RECONCILIATION REQUIREMENTS
a. Schwab shall verify, on a next day basis, orders placed for
the Account with each Fund. All activity in the Account must be
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<PAGE>
reflected. Therefore, any "as of" activity must be shown with its corresponding
"as of" dates.
b. The parties agree to notify each other and correct any error
in the Account with any Fund upon discovery. Fund Company agrees to make best
efforts to avoid any errors, made by Fund Company, any Fund or agents of Fund
Company or the Fund and not corrected on a next day basis, from hindering any
routine daily requests such as transactions, transfer, dividends, etc. Fund
Company agrees to promptly notify Schwab of any adjustments to an Account with
any Fund initiated by Fund Company, any Fund or any agent of either.
c. Schwab must receive statements on or before the eighth
business day of each month, even if there has been no activity in the Account
during the period, unless Schwab can verify transactions by direct or indirect
systems access.
5. PRICING
Every business day on which there is a transaction in the Account
and for each month-end business day, Fund Company will provide to Schwab prior
to 7:00 p.m., Eastern Time, each Fund's closing net asset value and public
offering price (if applicable) for that day and/or notification of no price for
that day. Fund Company shall provide such information on a best efforts basis
taking into consideration any extraordinary circumstances arising at the Fund
(e.g. natural disasters, etc.).
6. DISTRIBUTIONS
a. Fund Company shall provide distribution information to
Schwab in a timely manner to enable Schwab to pay distributions to its
customers on or as close to payable date as practicable. As to each Fund,
Fund Company or such Fund shall provide Schwab with (i) the record date,
ex-dividend date, and payable date with respect to a Fund as soon as
practicable after it is announced, but no later than three (3) business days
prior to record date, (ii) the record date share balance in the Account and
the distribution rate per share on the first business day after record date,
and (iii) the reinvest price per share as soon as it is available. Other
distribution information contained in, and in the same format as, Schwab's
Dividend Information Sheet (provided separately) shall be provided on such
dates as are agreed upon between Schwab and Fund Company, but no later than
payable date.
b. As to each Fund, Schwab shall hold the information as to the
amount of the pending distribution in strictest confidence, and shall use such
information only for the purpose of computing the amounts of cash distributions
to be paid to Schwab customers until Fund or Fund Company shall have made such
information generally available to the public. Schwab will maintain and
enforce rules and policies designed to protect against unauthorized access to,
or use of, the information during such period by anyone other than Schwab
employees who have a need to know the information for this purpose.
c. Prior to 10:00 a.m., Eastern Time on the next business day
following receipt of the reinvest price per share as provided in paragraph
6(a)(iii) above, Schwab shall notify Fund Company of the aggregate number of
Fund shares with respect to which the purchase is required to be rescinded in
order to pay the distribution in cash to Schwab customers who have elected to
receive their capital gain distributions and/or dividends in cash. Fund Company
agrees that the purchase of such aggregate number of Fund shares may be
rescinded. Fund Company or such Fund shall wire the proceeds of such rescission
from the Fund to the Account on the same business day.
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<PAGE>
d. For each Fund that pays daily dividends, Fund Company shall
provide on a daily basis, the following record date information: daily rate,
account share balance, account accrual dividend amount (for that day), account
accrual dividend amount (for period to date), and account transfers and period-
to-date accrual amounts.
e. In the event that Schwab maintains an Account with a Fund
for the payment of distributions in cash, Fund Company shall wire on payable
date, any cash distribution from the Fund to the Account.
f. Each Fund that declares dividends daily shall accrue
dividends, commencing on the settlement date for the purchase of Fund shares and
terminating on the trade date for the redemption of Fund shares.
g. For annual tax reporting purposes, Fund Company shall inform
Schwab of the portion of each Fund's distribution that include any of the
following: foreign source income, tax exempt income by state of origin or
return of capital.
h. Schwab shall prepare and file with the appropriate
governmental agencies, such information, returns and reports as are required to
be so filed for reporting (i) dividends and other distributions made, (ii)
amounts withheld on dividends and other distributions and payments under
applicable federal and state laws, rules and regulations and (iii) gross
proceeds of sales transactions as required.
i. Upon notice from Fund Company, Schwab shall effect mergers,
splits and other reorganization activities of a Fund for its customers.
7. PRICE AND DISTRIBUTION RATE ERRORS
a. In the event adjustments are required to correct any error
in the computation of the net asset value or public offering price of a Fund's
shares or in the distribution rate for a Fund's shares, Fund Company shall
notify Schwab as soon as possible after discovering the need for such
adjustments. Notification can be made orally, but must be confirmed in writing.
The letter shall be written on Fund Company letterhead and must state for each
day on which an error occurred the incorrect price or rate, the correct price or
rate, and the reason for the price or rate change. Fund Company agrees that
Schwab may send this writing, or derivation thereof to Schwab's customers whose
accounts are affected by the price or rate change.
b. If Schwab's customers have received amounts in excess of the
amounts to which they are entitled, Schwab will, when requested by Fund Company,
and to the extent practicable and permitted by law, debit its customers'
brokerage accounts in the amount of such excess and repay it to the Fund. In
no-event, however, shall Schwab be liable to Fund Company or the Fund for any
such amounts.
c. If adjustment is necessary to correct an error which has
caused Schwab's customers to receive amounts less than the amounts to which they
are entitled, the Fund shall make all necessary adjustments to the number of
shares owned in the Account and distribute to Schwab any and all amounts of the
underpayment. Schwab will credit the appropriate amount of such payment to each
Schwab customer.
d. For purposes of making adjustments, including the collection
of overpayments, Fund Company agrees to treat shareholders that hold Fund shares
through the Account the same as it treats shareholders that hold Fund shares
directly with the Fund. When making adjustments for an error, a Fund shall not
net same day transactions in the Account. Schwab and
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<PAGE>
Fund Company shall agree promptly and in good faith to a resolution of the
error, and no adjustment for the error shall be taken in the account until such
agreement is reached.
8. RECORD MAINTENANCE
a. Schwab shall maintain records for each of its customers who
holds Fund shares through the Account, which records shall include:
i. Number of shares;
ii. Date, price and amount of purchases and redemptions
(including dividend reinvestments) and date and amounts of
dividends paid for at least the current year to date;
iii. Name and address of each of its customers, including zip
codes and social security numbers or taxpayer identification
numbers;
iv. Records of distributions and dividend payments;
v . Any transfers of shares; and
vi. Overall control records.
b. Schwab will be responsible for accurately posting
transactions in Fund shares to its customers' brokerage accounts.
9. TRANSFER OF ACCOUNTS
a. Fund Company agrees to transfer shares between accounts for
Schwab customers or other street name brokers held directly with a Fund and the
Account on the Fund's records. For the purpose of expediting direct transfers
from accounts for Schwab customers, Fund Company will accept by facsimile
transmission a summary sheet of information indicating the customers' names,
account numbers, the Fund affected and the number of shares to be re-registered.
For record keeping purposes, actual copies of transfer forms will be forwarded
to a Fund upon its request for such forms.
b. Schwab represents and warrants that for each transfer
indicated in the summary sheet of information, it holds each underlying
instruction for re-registration signed by its customer, and that its customer's
signature on such instruction is signature guaranteed by Schwab pursuant to the
New York Stock Exchange's Medallion Signature Program.
c. Schwab agrees to indemnify and hold harmless Fund Company,
the Fund and each director, officer, employee and agent of Fund Company
("indemnified person") from and against any and all Losses incurred by any of
them arising out of the impropriety of any transfer effected by the Fund in
reliance on the summary sheet of information, except to the extent such Losses
arise out of the failure of any indemnified person to comply with the
instructions on the summary sheet of information.
d. Fund Company shall process all transfer requests into the
appropriate Account. Schwab as custodian is qualified to accept in the Accounts
shares from Fund IRA, Keogh or 401(k) accounts. At no time shall any Fund
establish separate accounts registered to Schwab for the benefit of individual
shareholders. In the event any such account is mistakenly opened, Schwab
reserves the right to instruct such Fund to move Fund shares to the Account.
e. Fund Company must confirm to Schwab the completion of each
transfer on the day it occurs. The confirming information shall include the
number of shares, date ("as of" date if unavoidable delay), transaction
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<PAGE>
date, account number of the customer and the Account, registration, accrued
dividends and account type (i.e., IRA, Keogh, 401(k), etc.).
f. Transfer processing after record date but prior to payable
date will include all accrued dividends. Each Fund is responsible for
monitoring all completed full transfers for "trailing" dividends. Should a
"trailing" dividend appear in an account, a Fund shall send such dividend to
Schwab within five (5) business days, along with a specific written notification
thereof. Notification shall include details of the dividend and customer,
including the customer's social security number or taxpayer identification
number, and/or the account number for the Account to which the transfer was
made.
g. If Schwab customers submit share certificates for transfer
into their Schwab brokerage accounts, Schwab will send such certificates,
properly endorsed to the applicable Fund, for transfer into the Account with
such Fund. Upon Schwab's request, Fund Company agrees to provide the status of
said certificates and book share balances.
10. SHAREHOLDER COMMUNICATION
a. Fund Company shall arrange with a mailing agent designated
by Schwab for the distribution of the materials listed below to all of Schwab's
customers who hold Fund shares, which distribution shall be so arranged by Fund
Company as to occur immediately upon the effective date of the materials:
i. All proxy or information statements prepared for circulation
to shareholders of record of such Fund;
ii. Annual reports;
lii. Semi-annual reports;
iv. Quarterly reports (if applicable); and
v. All updated prospectuses, supplements and amendments
thereto.
Fund Company shall be responsible for providing the materials and for the
mailing agent's fees in connection with this service as well as for timely
distribution. Fund Company agrees to have the mailing agent consolidate
mailings of material to shareholders of more than one Fund if the mailing is
identical for all Funds in the Fund Company family.
b. In addition to the materials listed above, Fund Company
agrees to provide directly to Schwab all prospectuses, statements of additional
information and supplements and amendments thereto, and annual and other
periodic reports for each Fund in amounts reasonably requested by Schwab for
distribution to its customers. Fund Company is obligated to supply these
materials to Schwab in a timely manner so as to allow Schwab, at its expense, to
send current prospectuses and statements of additional information and periodic
reports, immediately upon their effective dates, to customers and prospective
customers requesting them through Schwab. Schwab will also send a current Fund
prospectus with purchase trade confirmations for the initial purchase of a Fund.
Fund Company shall notify Schwab immediately of any change to a Fund's
prospectus.
c. Fund Company shall ensure that the foregoing materials
shall be in compliance with all applicable provisions of the Securities Act
of 1933, as amended, the Securities Exchange Act of 1934, as amended, the
Shareholder Communications Improvement Act of 1990, all applicable rules and
regulations under any of and such statutes, and any and all laws, rules and
regulations that may be adopted and become applicable in the future.
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d. Fund Company shall ensure that the prospectus of each of
its Funds discloses (i) that a broker may charge transaction fees on the
purchase and/or sale of Fund shares, (ii) that the performance of the Fund
may be compared in publications to the performance of various indices and
investments for which reliable performance data is available, (iii) that the
performance of the Fund may be compared in publications to averages,
performance rankings, or other information prepared by recognized mutual fund
statistical services, and (iv) that the annual report contains additional
performance information and will be made available to investors upon request
and without charge.
e. Schwab shall mail statements to its customers on a monthly
basis (or as to accounts in which there has been no activity in a particular
month, no less frequently than quarterly) showing, among other things, the
number of shares of each Fund owned by such customer and the net asset value of
each such Fund as of a recent date.
f. Schwab shall respond to customer inquiries regarding, among
other things, share prices, account balances, dividend amounts and dividend
payment dates. With respect to Fund shares purchased by customers after the
effective date of this Agreement, Schwab shall provide average cost basis
reporting to assist customers in the preparation of income tax returns.
11. NEW PROCESSING SYSTEMS
Fund Company agrees to cooperate to the extent possible with Schwab as
Schwab develops and seeks to implement new processing systems for the MFMP.
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<PAGE>
CHARLES SCHWAB
MUTUAL FUND MARKETPLACE-Registered Trademark-
INSTITUTIONAL
SERVICES AGREEMENT
This Agreement is made as of November 27, 1995, between Charles Schwab
& Co., Inc. ("Schwab"), a California corporation, each registered investment
company ("Fund Company") executing this Agreement, on its own behalf and on
behalf of each of the series or classes of shares, if any, listed on Schedule I,
as amended from time to time (such series or classes being referred to as the
"Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement.
Fund Company and Fund Affiliate are collectively referred to herein as "Fund
Parties." In the event that there are no series or classes of shares listed on
Schedule I, the term "Fund(s)" shall mean "Fund Company."
WHEREAS Fund Affiliate is either (i) an investment adviser to or
administrator for the Funds or (ii) the principal underwriter or distributor for
the Funds.
WHEREAS Fund Parties wish to have Schwab perform certain
recordkeeping, shareholder communication, and other services for each Fund; and
WHEREAS Schwab is willing to perform such services on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties agree as follows:
1. SERVICES
a. During the term of this Agreement, Schwab shall perform the
services set forth on Exhibit A hereto, as such exhibit may be amended from time
to time by mutual consent of the parties (the "Services").
b. In processing purchase, redemption, transfer and exchange
orders placed by Schwab on behalf of its customers, and in order to facilitate
Schwab's performance of Services, the parties agree that the Operating
Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as
amended from time to time ("Operating Agreement"), is incorporated herein by
this reference. All terms and conditions of the Operating Agreement shall be
binding as between Schwab and Fund Parties, and the references to Fund Company
therein shall be deemed to mean Fund Parties for the purposes of this Agreement.
In the event of any inconsistency between the Operating Agreement and this
Agreement, this Agreement shall control.
2. FEES
For the Services, Schwab shall receive a fee (the "Fee") which
shall be calculated and paid in accordance with Exhibit B hereto. Schedule II
reflects the amount of the Fee that each Fund Party has agreed, as between them,
to pay. Should Exhibit A be amended to revise the Services, the parties shall
also amend Exhibit B and Schedule II, if necessary, in order to reflect any
changes in the Fee.
<PAGE>
3. TRANSACTION CHARGES
Schwab shall not, during the term of this Agreement, assess
against or collect from its customers any transaction fee upon the purchase or
redemption of any Fund's shares that are considered in calculating the Fee. The
parties acknowledge and agree that Schwab may collect such transaction fees from
certain customers (including "Active Traders," as Schwab may define that term)
for certain special trading services and from other customers upon such other
customers' redemption of certain shares. The value of shares as to which such
transaction fees are charged will not be included in the calculation of the Fee.
4. INDEMNIFICATION
a. Schwab shall indemnify and hold harmless Fund Parties and
their directors, officers, employees, and agents ("Indemnified Parties") from
and against any and all losses, claims, liabilities and expenses (including
reasonable attorney's fees) ("Losses") incurred by any of them arising out of
(i) Schwab's dissemination of information regarding Fund Parties or a Fund that
is materially incorrect and that was not provided to Schwab, or approved, by a
Fund Party, its affiliated persons ("Affiliates") as defined under the
Investment Company Act of 1940, as amended (the "1940 Act"), or agents or (ii)
Schwab's willful misconduct or negligence in the performance of, or failure to
perform, its obligations under this Agreement, except to the extent such Losses
result from the negligence, willful misconduct or breach of this Agreement by an
Indemnified Party.
b. In any event, no party shall be liable for any special,
consequential or incidental damages.
5. ROLE AND RELATIONSHIP OF SCHWAB
The parties acknowledge and agree that the Services under this
Agreement are recordkeeping, shareholder communication and related services only
and are not the services of an underwriter or a principal underwriter of any
Fund within the meaning of the Securities Act of 1933, as amended, or the 1940
Act. This Agreement does not grant Schwab any right to purchase shares from any
Fund (although it does not preclude Schwab from purchasing any such shares), nor
does it constitute Schwab an agent of Fund Parties or any Fund for purposes of
selling shares of any Fund to any dealer or the public. To the extent Schwab is
involved in the purchase of shares of any Fund by Schwab's customers, such
involvement will be as agent of such customer only.
6. INFORMATION TO BE PROVIDED
Fund Parties shall provide to Schwab prior to the effectiveness
of this Agreement or as soon thereafter as practicable:
a. Certified resolutions of the board of directors of each Fund
Party authorizing the Fund Party to enter into this Agreement and indicating the
officers authorized to execute this Agreement on behalf of the Fund Party; and
b. Two (2) copies of the then-current prospectus and statement
of additional information of each Fund. Fund Party shall provide Schwab with
written copies of any amendments to or changes in the Fund's prospectus or
statement of additional information as soon as practicable after such amendments
or changes become available.
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<PAGE>
7. NOTICES
All notices required by this Agreement (excluding the Operating
Agreement) shall be in writing and delivered personally or sent by first class
mail. Such notices will be deemed to have been received as of the earlier of
actual physical receipt or three (3) days after deposit, first class postage
prepaid, in the United States mail. All such notices shall be made:
if to Schwab, to: Charles Schwab & Co., Inc.
101 Montgomery Street
San Francisco, CA 94104
Attention: John McGonigle
Senior Vice President/Mutual Funds
with a copy to: General Counsel, at the same address;
if to Fund Party, to the address given below in the signature block.
8. NONEXCLUSIVITY
Each Party acknowledges that the other may enter into agreements
similar to this Agreement with other parties for the performance of services
similar to those to be provided under this Agreement, unless otherwise agreed to
in writing by the parties.
9. ASSIGNABILITY
This Agreement is not assignable by any party without the other
parties' prior written consents and any attempted assignment in contravention
hereof shall be null and void; provided, however, that Schwab may, without the
consent of Fund Parties, assign its rights and obligations under this Agreement
to any Affiliate.
10. EXHIBITS AND SCHEDULES
All Exhibits and Schedules attached to this Agreement, as they
may be amended from time to time, are by this reference incorporated into and
made a part of this Agreement.
11. ENTIRE AGREEMENT; AMENDMENT
This Agreement (including the Exhibits and Schedules hereto),
together with the Operating Agreement, constitute the entire agreement between
the parties as to the subject matter hereof and supersede any and all
agreements, representations and warranties, written or oral, regarding such
subject matter made prior to the time at which this Agreement has been executed
and delivered by Schwab and Fund Parties. This Agreement and the Exhibits and
Schedules hereto may be amended only by a writing executed by each party hereto
that is to be bound by such amendment.
12. GOVERNING LAW
This Agreement will be governed by and interpreted under the laws
of the State of California as applied to contracts entered into and to be
performed entirely within that state.
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<PAGE>
13. COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which will be deemed an original, but all of which together shall constitute
one and the same instrument.
14. EFFECTIVENESS OF AGREEMENT; TERMINATION
a. This Agreement will become effective as to a Fund as of the
later of (i) the date set forth on Schedule I opposite the name of the Fund or
(ii) such later date as Schwab may, in its discretion, designate.
b. This Agreement may be terminated as to a Fund by any party
(i) upon ninety (90) days' written notice to the other parties or (ii) upon such
shorter notice as is required by law, order, or instruction by a court of
competent jurisdiction or a regulatory body or self-regulatory organization with
jurisdiction over the terminating party or (iii) automatically, effective on the
day following the termination of any plan of distribution ("Rule 12b-1 Plan")
adopted and maintained pursuant to Rule 12b-1 under the 1940 Act by any Fund
that has a Rule 12b-1 Plan in effect as of the effective date of this Agreement,
provided that a portion of the Fee is paid pursuant to the Rule 12b-1 Plan.
c. After the date of termination as to a Fund, Fund Parties
will not be obligated to pay the Fee with respect to any shares of the Fund that
are first held in Schwab customer accounts after the date of such termination.
However, notwithstanding any such termination, Fund Parties will remain
obligated to pay Schwab the Fee as to each share of the Fund that was considered
in the calculation of the Fee as of the date of termination (a "Pre-Termination
Share"), for so long as such Pre-Termination Share is held in any Schwab
brokerage account and Schwab continues to perform substantially all of the
Services as to such Pre-Termination Share. Further, for so long as Schwab
continues to perform the Services as to any Pre-Termination Shares, this
Agreement will otherwise remain in full force and effect as to such Pre-
Termination Shares. Fund Parties shall reimburse Schwab promptly for any
reasonable expenses Schwab incurs in effecting any termination of this
Agreement, including delivery to a Fund Party of any records, instruments, or
documents reasonably requested by the Fund Party.
15. The name "Westcore Trust" and references in this Agreement to
"Fund Company" refer to the Trust created under an Amended and Restated
Declaration of Trust dated November 19, 1987, which is hereby referred to and a
copy of which is on file at the office of the State Secretary of the
Commonwealth of Massachusetts and at the principal office of the Trust. The
obligations of Westcore Trust entered into the name or on behalf thereof by any
of its Trustees, representatives or agents are made not individually, but in
such capacities, and are not binding upon any of the Trustees, shareholders, or
representatives of the Trust personally, but bind only the Trust, and all
persons dealing with the Trust must look solely to the Trust for the enforcement
of any claims against the Trust.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
CHARLES SCHWAB & CO., INC.
By:
-------------------------------------
John McGonigle
Senior Vice President/Mutual Funds
Date:
-----------------------------------
DENVER INVESTMENT ADVISORS LLC WESTCORE TRUST
[Name of Fund Affiliate] [Name of Fund Company]
By: By:
--------------------------- -----------------------------
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------ --------------------------
Address: Address:
---------------------- ------------------------
- ------------------------------ --------------------------------
Attn: Attn:
------------------------- ---------------------------
Date: Date:
------------------------- ---------------------------
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<PAGE>
EXHIBIT A
SERVICES
1. RECORD MAINTENANCE
Schwab shall maintain the following records with respect to a Fund for
each customer who holds Fund shares in a Schwab brokerage account:
a. Number of shares:
b. Date, price and amount of purchases and redemptions (including
dividend reinvestments) and dates and amounts of dividends paid for at least the
current year to date;
c. Name and address of the customer, including zip codes and social
security numbers or taxpayer identification numbers;
d. Records of distributions and dividend payments;
e. Any transfers of shares; and
f. Overall control records.
2. SHAREHOLDER COMMUNICATIONS
Schwab shall:
a. Provide to a shareholder mailing agent employed by each Fund for
the purpose of mailing certain Fund-related materials the names and addresses of
all Schwab customers who hold shares of such Fund in their Schwab brokerage
accounts. Such shareholder mailing agent shall be a person or entity engaged by
such Fund in accordance with the Operating Agreement and the Fund-related
materials to be sent by such agent shall consist of updated prospectuses and any
supplements and amendments thereto, annual and other periodic reports, proxy or
information statements and other appropriate shareholder communications;
b. Mail current Fund prospectuses and statements of additional
information and annual and other periodic reports upon customer request and, as
applicable, with confirmation statements;
c. Mail statements to customers on a monthly basis (or, as to
accounts in which there has been no activity in a particular month, no less
frequently than quarterly) showing, among other things, the number of shares of
each Fund owned by such customer and the net asset value of such Fund as of a
recent date;
d. Produce and mail to customers confirmation statements reflecting
purchases and redemptions of shares of each Fund in Schwab brokerage accounts;
e. Respond to customer inquiries regarding, among other things,
share prices, account balances, dividend amounts and dividend payment dates; and
f. With respect to Fund shares purchased by customers after the
effective date of this Agreement, provide average cost basis reporting to the
customers to assist them in preparation of income tax returns.
3. TRANSACTIONAL SERVICES
Schwab shall communicate, as to shares of each Fund, purchase,
redemption and exchange orders reflecting the orders it receives from its
customers. Schwab shall also communicate, as to shares of each Fund, mergers,
splits and other reorganization activities.
A-1
<PAGE>
4. TAX INFORMATION RETURNS AND REPORTS
Schwab shall prepare and file with the appropriate governmental
agencies, such information, returns and reports as are required to be so filed
for reporting (i) dividends and other distributions made, (ii) amounts withheld
on dividends and other distributions and payments under applicable federal and
state laws, rules and regulations, and (iii) gross proceeds of sales
transactions as required.
5. FUND COMMUNICATIONS
Schwab shall, on a daily basis and for each Fund, report the number of
shares on which the Fee is to be paid pursuant to this Agreement and the number
of shares on which no such Fee is to be paid. Schwab shall also provide each
Fund with monthly summaries of reports. Such summaries shall be expressed in
both shares and dollar amounts.
A-2
<PAGE>
EXHIBIT B
CALCULATION OF FEE
1. The Fee shall be calculated by multiplying the Daily Value of
Qualifying Shares (defined below) times the appropriate Fee Rate (indicated
below). The Fee shall be computed daily and paid monthly in arrears.
2. The Daily Value of Qualifying Shares is the aggregate daily value of
all shares of the Fund held in Schwab brokerage accounts, subject to the
following exclusions ("Qualifying Shares"). There shall be excluded from the
shares (i) shares as to which a brokerage customer paid Schwab a transaction fee
upon the purchase of such shares, (ii) shares held in a Schwab brokerage account
prior to the effective date of this Agreement as to the Fund and (iii) shares
first held in a Schwab brokerage account after the termination of this Agreement
as to the Fund.
3. The Fee Rate is determined based on the aggregate value of the
Qualifying Shares of all Funds listed on all Schedule I's, as amended from time
to time, as of the prior review date. The review dates are December 31 and June
30. The Fee Rate is effective from the next business day following the review
date up to and including the next review date. The Fee Rates are as follows:
Aggregate Value of
Qualifying Shares Fee Rate
------------------ --------
Up to and including $500 million 35 basis points per annum
Over $500 million 30 basis points per annum
The rate scale is not intended to produce a "blended rate." Rather, once a
threshold is reached, the rate applicable to the total amount of assets will be
used for all assets. Thus, if the aggregate value of Qualifying Shares of all
such Funds is $501 million as of a review date, the Fee Rate will be 30 basis
points (to be applied to the Daily Value of Qualifying Shares) until the next
review date.
4. For purposes of this Exhibit, the daily value of the shares of each
Fund will be the net asset value reported by such Fund to the National
Association of Securities Dealers, Inc. Automated Quotation System. No
adjustments will be made to the net asset values to correct errors in the net
asset values so reported for any day unless such error is corrected and the
corrected net asset value per share is reported to Schwab before 5 o'clock,
p.m., San Francisco time, on the first business day after the day to which the
error relates.
5. At the request of Fund Parties, Schwab shall provide, on each business
day, a statement detailing the calculation for each Fund, the aggregate value of
the Qualifying Shares of each Fund and the amount of the Fee for each Fund. As
soon as practicable after the end of the month, Schwab shall also provide to
Fund Parties an invoice for the amount of the Fee due for each Fund. In the
calculation of such Fee, Schwab's records shall govern unless an error can be
shown in the number of shares used in such calculation.
6. Fund Parties shall pay Schwab the Fee within thirty (30) days after
Fund Parties' receipt of such statement. Such payment shall be by wire
transfer, unless the amount thereof is less than $250. Such wire transfers
shall be separate from wire transfers of redemption proceeds or distributions
under the Operating Agreement. Amounts less than $250 may, at Fund Parties'
discretion, be paid by check.
B-1
<PAGE>
SCHEDULE I
TO THE SERVICES AGREEMENT
Fund Effective Date
---- --------------
Westcore Midco Growth Fund* November 27, 1995
Westcore Blue Chip Fund* November 27, 1995
Westcore Equity Income Fund* November 27, 1995
Westcore Small-Cap Opportunity Fund* November 27, 1995
Westcore Long-Term Bond Fund* November 27, 1995
Westcore Intermediate-Term Bond Fund* November 27, 1995
Westcore Colorado Tax-Exempt Fund* November 27, 1995
*Indicates that Fund is a "no load" or "no sales charge" Fund as defined in
Section 26 of the NASD's Rules of Fair Practice.
WESTCORE TRUST
[Name of Fund Company]
By:
---------------------------
Name:
-------------------------
Title:
------------------------
Date:
-------------------------
ACKNOWLEDGED BY
DENVER INVESTMENT ADVISORS LLC ACCEPTED BY CHARLES SCHWAB & CO. INC.
[Name of Fund Affiliate]
By: By:
--------------------------- -------------------------------------
John McGonigle
Senior Vice President/Mutual Funds
Name:
-------------------------
Title:
------------------------
Date: Date:
------------------------- -----------------------------------
<PAGE>
SCHEDULE II
TO THE SERVICES AGREEMENT
Aggregate Value of Qualifying Shares
------------------------------------
Up to
and including
$500 Million Over $500 M
------------- -----------
Fund Company: 0% 0%
- ------------ ---------- -----------
Fund Affiliate:
- --------------
Denver Investment Advisors LLC 0.35% 0.30%
---------- -----------
Fee Rate Percentage Per Annum 0.35% 0.30%
of Average Daily Value of
Fund Shares
A-23
<PAGE>
September 27, 1996
Westcore Trust
370 Seventeenth Street
Suite 2700
Denver, CO 80202
RE: POST-EFFECTIVE AMENDMENT NO. 45 TO REGISTRATION
STATEMENT ON FORM N-1A (FILE NO. 2-75677)
Gentlemen:
We have acted as counsel for Westcore Trust, a Massachusetts business
trust (the "Trust"), in connection with the registration of 1,169,897,634 of its
shares, no par value, (the "Shares") pursuant to Post-Effective Amendment No. 45
to the Trust's Registration Statement under the Securities Act of 1933, as
amended. The registration of such Shares has been made in reliance upon
Rule 24e-2 under the Investment Company Act of 1940. The Trust is an open-end
investment company authorized to issue an unlimited number of each class of
shares, without par value. We have reviewed the Trust's Declaration of Trust,
its Code of Regulations, resolutions adopted by its Board of Trustees and
shareholders, and such other legal and factual matters as we have deemed
appropriate.
In rendering this opinion, we have relied on the written advice of
Massachusetts counsel as to all matters arising under the laws of the
Commonwealth of Massachusetts.
On the basis on the foregoing, we are of the opinion that, when issued
for payment as described in the Trust's prospectus for the Shares, the Shares
will be validly issued, fully paid and non-assessable by the Trust.
Under Massachusetts law, shareholders of a Massachusetts business
trust could, under certain circumstances, be held personally liable for the
obligations of the trust. However, the Restated Declaration of Trust of the
Trust, as amended, disclaims shareholder liability for acts or obligations of
the Trust and requires that notice of such disclaimer be given in each note,
bond, contract, order or other undertaking issued
<PAGE>
Westcore Trust
September 27, 1996
Page 2
by or on behalf of the Trust or the Trustees relating to the Trust or any class
of shares of beneficial interest of the Trust. The Restated Declaration of
Trust, as amended, provides for indemnification out of the assets of the
particular class of shares for all loss and expense of any shareholder of that
class held personally liable solely by reason of his being or having been a
shareholder. Thus, the risk of a shareholder's incurring financial loss on
account of shareholder liability is limited to circumstances in which that class
of shares itself would be unable to meet its obligations.
We hereby consent to the filing of our opinion as an exhibit to the
Trust's Registration Statement referred to above.
Very truly yours,
/s/ DRINKER BIDDLE & REATH
DRINKER BIDDLE & REATH
<PAGE>
CONSENT OF COUNSEL
We hereby consent to use of our name and to the reference to our firm
under the caption "Counsel" in the Statement of Additional Information that is
included or incorporated by reference in Post-Effective Amendment No. 45 to the
Registration Statement (No. 2-75677) on Form N-1A under the Securities Act of
1933, as amended, of Westcore Trust. This consent does not constitute a consent
under Section 7 of the Securities Act of 1933, as amended, and in consenting to
the use of our name and the references to our firm under such caption 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.
/s/ Drinker Biddle & Reath
--------------------------
Drinker Biddle & Reath
Philadelphia, Pennsylvania
Dated: September 27, 1996
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Post-Effective Amendment No. 45 to Registration
Statement No. 2-75677 of our report dated June 28, 1996 of Westcore
Trust appearing in the Statement of Additional Information, which is a part
of such Registration Statement, and to the reference to us under the headings
"Financial Highlights" appearing in the Prospectus and "Auditors" appearing
in the Statement of Additional Information which are a part of such
Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Denver, Colorado
September 25, 1996
<PAGE>
Exhibit 14(a)
WESTCORE IRA APPLICATION INSTRUCTIONS
PLEASE USE THIS SHEET AS A GUIDE IN COMPLETING YOUR WESTCORE IRA APPLICATION AND
ADOPTION AGREEMENT.
To open your Westcore IRA, please complete all sections of this agreement.
If you are transferring an existing IRA to WESTCORE Trust, complete am IRA
Transfer form in addition to this application. The pink pages include your
Disclosure Statement and Custodial Agreement. We urge you to read this material
carefully. You may wish to contact your tax advisor to determine if an IRA will
fit your present circumstances.
Return your completed form, with your check to:
WESTCORE IRA
P.O. BOX 8319
BOSTON, MA 02266-8319
1. ACCOUNT HOLDER INFORMATION
Please print or type the information requested.
2. ACCOUNT TYPE
Regular IRA - For contributions of up to $2,000 annually.
Rollover IRA - An IRA used to shelter eligible distributions from a
qualified retirement plan or a rollover from another existing IRA. If you are
opening a Rollover IRA, please read the ROLLOVER STATEMENT below.
Spousal IRA - For contributions for up to $2,250 annually with a non-
earning spouse. You must open two separate accounts for your spousal IRA. No
more than $2,000 may be put in either account annually.
Transfer IRA - If you already have an IRA established with another trustee
and you wish to have those assets transferred directly into your WESTCORE IRA.
SEP/IRA - A Simplified Employee Pension IRA set up for small business and
sole proprietorships. The employer should sign an IRS Form 5305-SEP or an
individually-drafted or prototype SEP plan before establishing a SEP/IRA.
Employer contributions are limited to the lesser of $30,000 or 15% of
compensation. Employees may also make their regular IRA contributions (up to
$2,000) into their SEP.
SAR-SEP/IRA - A Simplified Employee Pension IRA Plan which includes a
salary reduction capability.
Combined IRA - For annual contributions of up to $2,000 with a Rollover IRA
from a qualified plan (either partial or lump sum ) as defined by Internal
Revenue Code Section 402(a)(5)(D), in the same account. If you are opening a
Combined IRA, please be sure to read the AUTHORIZATION TO COMBINE statement
below.
AUTHORIZATION TO COMBINE A CONTRIBUTORY IRA AND ROLLOVER IRA
I elect to make this contribution(s) to my IRA Rollover account. I
understand that by making such contribution(s), I waive any right to roll this
IRA into a Qualified Trust F(as described in Internal Revenue Code Section
<PAGE>
401(a)) in the future. I hereby release WESTCORE and the custodian from any
loss, damage, or injury that I may sustain financially as a result of my
election to waive any right of future rollover for the funds deposited to this
account.
ROLLOVER STATEMENT
I certify that the assets I now deposit as a rollover contribution meet the
requirements for a Qualifying Rollover Contribution as defined in the Disclosure
Statement, including the requirement that deposit of such cash or property is
being made within 60 days after receipt by me of the qualifying distribution. I
understand that my designation as "rollover" of any assets deposited after March
20, 1986 is irrevocable unless I later determine all or any portion of such
deposit(s) to be an excess contribution.
3. SPOUSE INFORMATION (SPOUSAL IRA ONLY)
4. CONTRIBUTION DESCRIPTION
Please indicate the amount and tax year of each contribution you are
making. Because your Regular, Spousal, SEP, SAR-SEP or Combined IRA may be
opened and funded up until the regular tax-filing date (without extensions) for
that year (for example April 15, 1992 for a 1991 plan) it is possible to
contribute for two years at the same time.
If you are making a rollover contribution, please show the amount of all
cash to be included. Your annual administration fee may be included in the
total amount of your check.
SCHEDULE OF FEES
The annual fee will be automatically debited from your account on the
anniversary of your IRA's establishment date.
5. BENEFICIARY DESCRIPTION
If you should die before your IRA account balance has been fully
distributed, your IRA distributions will be made to your primary
beneficiary(ies), or, if deceased, to the contingent beneficiary(ies) you
designate. You may name as many beneficiaries as you wish; use a separate sheet
if necessary. Please be certain to fill out all the requested information for
each beneficiary.
If you reside in a community property state, and are not naming your spouse
as your primary beneficiary, your spouse must sign the Spouse's Agreement.
6. WESTCORE INVESTMENT INSTRUCTIONS
You may select up to four funds for your IRA Investments. Be certain to
indicate the amount to be invested for each fund. Please read the current
prospectus(es) for each of the funds in which you intend to invest. They are
available from your financial advisor.
7. AUTOMATIC INVESTMENT PLAN (OPTIONAL)
If you would like to have funds transferred automatically on a regular
basis from your existing bank account into your IRA, fill out this section and
sign the Bank Authorization. You must include a voided personal check with your
IRA Agreement Form.
-2-
<PAGE>
8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL)
By checking this section, you authorize the Custodian to accept phone
instructions regarding redemptions and exchanges of your fund(s). If you agree
to this option, please be sure to read the following agreement statement:
TELEPHONE REDEMPTION AND EXCHANGE AGREEMENT
- --------------------------------------------------------------------------------
By checking 8 of the application, I have authorized the Custodian to act
upon instructions received by phone by persons reasonably believed by the
Transfer Agent to be the Registrant(s) or the broker/dealer, bank or other
financial institution ("Service Organization") acting on behalf of the
Registrant(s), for the redemption or exchange of shares owned by the
Registrant(s), for shares of any other Fund within the WESTCORE Family of Funds,
I understand that:
1. If any exchange involves an initial investment into the Fund into
which the shares are to be exchanged, the account registration will carry the
same registration as set forth above.
2. I relieve the Fund, or Custodian, or Service Organizations of any
liability for the loss, cost, or expense for acting upon such instructions
believed to be from me.
3. An exchange deemed to be the initial purchase of a Fund must meet the
minimum size requirement specified for that Fund.
4. A $7.50 fee is charged to shareholders per exchange, and applicable
sales load, if any.
9. & 10. QUALIFICATION FOR DISCOUNTS, LETTER OF INTENT, AND RIGHTS OF
ACCUMULATION
If your total funds purchase is, or will be $100,000.00 or more over a 13
month period, you may purchase shares at a reduced sales load. By signing the
letter of intent, you agree that you intend to purchase the number of shares
indicated by your check in the appropriate box. By signing the Rights of
Accumulation statement, you attest to owning shares under the account numbers
you so indicate.
11. YOUR ACCEPTANCE
Please read the acceptance statement, then sign and date the Application.
The pink pages are your copy of the WESTCORE IRA Agreement. Custodial
Agreement, and Disclosure Statement. They should be kept with your financial
records. Your financial advisor should receive the yellow copy. Attach your
check to the original (white) copy, and include the Transfer Form, if
applicable. If you have signed up for the Automatic Investment Program, be sure
to attach your voided check.
12. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION
This section will be completed by the vendor providing you with the
WESTCORE IRA.
APRIL 15 DEADLINE
Your signed WESTCORE IRA Application/Adoption Agreement must be received by
your financial advisor or the WESTCORE Custodian on or before April 15 following
the calendar year for which the contribution is being made. Your
-3-
<PAGE>
contribution check must also be postmarked no later than April 15. Individual
tax filing extensions do not affect the April 15 deadline.
-4-
<PAGE>
THE WESTCORE INDIVIDUAL RETIREMENT PLAN - IRA APPLICATION/ADOPTION AGREEMENT
I/We, the individuals signing the Adoption Agreement establish an Individual
Retirement Account (the "Account") with State Street Bank and Trust Company as
Custodian. I/We agree to the terms of the Account, which are contained in the
document entitled "State Street Bank and Trust Company Individual Retirement
Custodial Account," Disclosure Statement and the IRA Application/Adoption
Agreement. I/We certify the accuracy of the information in this Adoption
Agreement. The Account will be effective upon acceptance by State Street Bank
and Trust Company.
1. ACCOUNT HOLDER INFORMATION (PLEASE PRINT OR TYPE)
Full Name
---------------------------------------------------------------------
Address
-----------------------------------------------------------------------
City State Zip
------------------------------- ---------- --------------------
Telephone: Day ( )
---------------------------------------------------------------
Evening ( )
-------------------------------------------------------------
Social Security Number Date of Birth
---------------- -------------------------
2. ACCOUNT TYPE
I am establishing a
Regular IRA Combined IRA Transfer IRA
--- --- ---
Spousal IRA Rollover IRA SAR-SEP/IRA
--- --- ---
SEP/IRA
---
3. SPOUSE INFORMATION (FOR SPOUSAL IRA ONLY)
Full Name
---------------------------------------------------------------------
Address
-----------------------------------------------------------------------
City State Zip
------------------------------- ---------- --------------------
Telephone: Day ( )
---------------------------------------------------------------
Evening ( )
-------------------------------------------------------------
Social Security Number Date of Birth
---------------- -------------------------
-5-
<PAGE>
4. CONTRIBUTION DESCRIPTION
Your Account Spouse's Account
(if applicable)
For the tax year 19____ Contribution amount $ $
----------- -----------
For the tax year 19____ Contribution amount $ $
----------- -----------
Employer SEP Contribution amount $ $
----------- -----------
SAR-SEP Employee Contribution amount $ $
----------- -----------
Cash Rollover Contribution amount $ $
----------- -----------
Total Contribution Enclosed $ $
----------- -----------
Annual Fee ($10 per fund, maximum $30) $ $
----------- -----------
TOTAL AMOUNT OF CHECK $
--------------
(Please make checks payable to WESTCORE)
5. BENEFICIARY DESIGNATION
I hereby designate the following persons as primary and secondary
beneficiaries to receive my interest in my WESTCORE IRA according to the terms
of the Custodial Agreement, hereby revoking any such prior designations made by
me. (Attach additional sheet if necessary.)
Primary Beneficiary
Full Name
----------------------------------------------------------------------
Date of Birth Relationship
------------------------ ----------------------------
Secondary Beneficiary
Full Name
----------------------------------------------------------------------
Date of Birth Relationship
------------------------ ----------------------------
SPOUSE'S AGREEMENT: (For community property states) By signing below, I give
to my spouse any interest I may have in the funds deposited in this account and
agree that you may pay the money in my spouse's IRA as directed in the above
beneficiary designation.
Spouse's Name (please print)
----------------------------------------------------
Spouse's Signature Date
---------------------------------- --------------------
-6-
<PAGE>
6. WESTCORE INVESTMENT INSTRUCTIONS - SELECT UP TO FOUR FUNDS.
Amount to be invested
FUND NAME Your Account Spouse's Account
(if applicable)
$ $
------------------------------------------ ----------- -----------
$ $
------------------------------------------ ----------- -----------
$ $
------------------------------------------ ----------- -----------
$ $
------------------------------------------ ----------- -----------
The initial purchase minimum is $250.00 per Fund, subsequent minimum investments
are $50. Do not send currency.
I acknowledge that I have sole responsibility for my investment choices and that
I have received a current prospectus for each Fund I select. PLEASE READ THE
PROSPECTUS(ES) OF THE FUND(S) SELECTED BEFORE INVESTING.
7. AUTOMATIC INVESTMENT PLAN (OPTIONAL)
/ / Yes / / No
I hereby authorize WESTCORE and/or its custodian to draw a check on my/our
personal checking account on the designated dates in order to purchase shares in
the WESTCORE _______________________________________________________ Fund at the
Public Offering Price determined on that day and deposit to my IRA account
number ______________________.
/ / Monthly _________________ / / Semi-annually
/ / Quarterly / / Annually
on the _________ day.
Amount of each check (minimum $50) $
-----------------------
NOTE: You must sign the Bank Authorization form below and attach a voided
personal check to your WESTCORE IRA Agreement Form.
BANK AUTHORIZATION
Bank Name
----------------------------------------------------------------------
Bank Address
-------------------------------------------------------------------
Bank Account Number
------------------------------------------------------------
I/We authorize you, the above named bank, to debt my/our account for amounts
drawn by WESTCORE Trust and/or its Custodian acting as my agent. I/We agree
that your rights in respect to each withdrawal shall be the same as if it were a
check drawn upon you and signed by me/us. This authority shall remain in effect
until I/we revoke it in writing and you receive it. I/We agree that you shall
incur no liability when honoring any such check.
-7-
<PAGE>
I/We further agree that you will incur no liability to me/us if you dishonor any
such withdrawal. This will be so even though such dishonor results in the
forfeiture of investment.
- ----------------------------------- ----------------------------------------
Bank Account Holder's Name Joint Bank Account Holder's Name
- ----------------------------------- ----------------------------------------
Bank Acct. Holder's Signature Date Joint Bank Acct. Holder's Signature Date
8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL)
/ / I authorize the Transfer Agent or any Organization to act upon
instructions received by telephone to redeem or exchange shares owned by me. I
understand that all redemptions and exchanges are subject to the terms and
conditions as set out in the prospectus.
9. LETTER OF INTENT (OPTIONAL)
I agree to the Letter of Intent conditions and terms as set forth in the
Prospectus under the section Public Offering Price. Although I'm not obligated
to do so, it is my intention to invest over a 13-month period shares in one or
more of the Westcore Funds in an aggregate amount of at least:
/ / $100,000 - 249,999 / / $500,000 - 999,999
/ / $250,000 - 499,999 / / $1 million or more
Purchases made within the last 90 days will be included as part of your Letter
of Intent.
X
----------------------------------------- ------------------------------
Signature Date
10. RIGHT OF ACCUMULATION
A reduced sales load applies to any purchase of WESTCORE shares that is
sold with a sales load ("Eligible Funds") where an investor's then current
Aggregate Investment is $100,000 or more. For applicable sales loads see
"Public Offering Price" and "Aggregate Investment" as described in the
Prospectus. The reduced sales load applies only to the dollar amount of the
shares of the then current purchase.
I own shares of one or more Funds in the Westcore Family of Funds listed in
Section 6 and qualify for the cumulative quantity discount described above and
in the prospectus. My account numbers are as follows:
- ------------------------- -------------------- -------------------------
11. CUSTOMER SIGNATURE AND CERTIFICATION
I/We, the undersigned account owner(s) certify that I/we have the power and
authority to establish this Individual Retirement Account and spousal IRA
account, if applicable, and select the privileges requested. This order is
subject to acceptance by Westcore Trust. I/We acknowledge that I/we have
received, read, and understand the IRA Custodial Agreement, the IRA Disclosure
Statement and the current prospectus(es) for the fund(s) elected. I/We
-8-
<PAGE>
understand that a subsidiary of First Interstate Bank acts as the investment
advisor and receives fees for so acting. I/We hereby adopt the Custodial
Agreement which is incorporated by reference and I/we agree that Westcore Trust,
the custodian, ALPS Mutual Funds Services, Inc., First Interstate Bancorp or any
of its subsidiaries, affiliates, officers, directors, or employees will not be
liable for any loss, claim, expense, or cost, and agree to indemnify the same
from any losses and damages, for acting upon any instructions, including
telephone exchanges and redemptions (if so indicated above), and inquiries,
believed genuine. Shares of the funds are not bank deposits, are not insured by
the FDIC and are not guaranteed or otherwise supported by First Interstate
Bancorp or its affiliates. This account is subject to the terms of the
prospectus, as amended from time to time. I consent to the shareholder account
charges described in the prospectus and the IRA documents, and authorize the
Transfer Agent of the Trust, as my agent, to redeem a sufficient number of
shares from my account with the Trust on a quarterly basis to pay such charges.
Under penalty of perjury, I certify that the Social Security or taxpayer's
identification number entered above is correct. I acknowledge that I understand
past performance is not indicative of future returns.
X Date
----------------------------------------- -------------------------
Your Signature
X Date
----------------------------------------- -------------------------
Signature: Spouse (if opening a Spousal IRA)
12. CUSTODIAL ACCEPTANCE
Receipt by the Investor of the Westcore's Statement shall indicate State
Street Bank & Trust Co.'s acceptance to act as Custodian.
By Date
---------------------------------------- -------------------------
FOR WESTCORE IRA USE ONLY
WESTCORE IRA Account Number
-----------------------------------------------------
Spousal Account Number
----------------------------------------------------------
13. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION
(To be completed by the financial institution/advisor.)
We submit this application for the purchase of shares in accordance with the
terms of our selling agreement with ALPS Mutual Funds Services, Inc.
(Distributor). We agree to notify the Distributor and Transfer Agent of any
-9-
<PAGE>
purchases made under a Letter of Intent and escrow agreement or Right of
Accumulation listed within this agreement.
Firm
----------------------------------------------------------------------------
Financial Advisor Name
----------------------------------------------------------
Branch Number F/A Number
------------------------------------------ ------------
Office Telephone ( )
----------------------------------------------------------------
Branch address
------------------------------------------------------------------
City State Zip code
------------------------------- ------------- ---------------
By:
-----------------------------------------------------------------------------
(Authorized signature of dealer/Title)
-10-
<PAGE>
FOR ACTIVE PARTICIPANTS
- --------------------------------------------------------------------------------
IF YOU ARE SINGLE IF YOU ARE MARRIED THEN YOUR IRA
FILING JOINTLY CONTRIBUTION IS
- --------------------------------------------------------------------------------
Up to $25,000 Up to $40,000 Fully Deductible
- --------------------------------------------------------------------------------
Over $25,000 but less Over $40,000 but less Partly Deductible
than $35,000 than $50,000
- --------------------------------------------------------------------------------
$35,000 and up $50,000 and up Not Deductible
- --------------------------------------------------------------------------------
HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE?
If your AGI fails in the partly deductible range, you must calculate the
portion of your contribution that is deductible. To do this, multiply your
contribution by a fraction. The numerator is the amount by which your AGI
exceeds the lower limit of the partly deductible range ($25,000 if single, or
$40,000 if married filing jointly). The denominator is $10,000. Subtract this
from your contribution and then round up to the nearest $10. The deductible
amount is the greater of the amount calculated or $200 (provided you contributed
at least $200). If your contribution was less than $200, then the entire
contribution is deductible.
For example, assume that you make a $2,000 contribution to your IRA in a
year in which you are an active participant in your employer's retirement plan.
Also assume that your AGI for the year is $47,555 and you are married, filing
jointly. You would calculate the deductible portion of your contribution this
way.
1. The amount by which your AGI exceeds the lower limit of the partly -
deductible range (47,555-40,000) = 7,555
2. Divide this by 10,000 7,555 = 0.7555
------
10,000
3. Multiple this by your contribution: 0.7555 x $2,000 = $1,511
4. Subtract this from your contributions: ($2,000 - $1,551) = $489
5. Round this up to the nearest $10: = $490
6. Your deductible contribution is the greater of this amount or $200.
Even though part or all of your contribution is not deductible, you may
still contribute to your IRA up to the limit on contributions ($2,000 or $2,250
for spousal IRAs). When you file your tax return for the year, you must
designate the amount of non-deductible IRA contributions for the year. See IRS
Form 8606.
HOW DO I DETERMINE MY AGI?
AGI is your gross income minus those deductions which are available to all
taxpayers even if they don't itemize. Instructions to calculate your AGI are
provided with your income tax Form 1040 or 1040A.
WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY IRA?
The maximum contribution you can make to an IRA is $2,000 ($2,250 for
spousal IRAs) or 100% of compensation or earned income, whichever is less. Any
amount contributed to the IRA above the maximum is considered an "excess
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contribution." The excess is calculated using your CONTRIBUTION LIMIT, not the
DEDUCTIBLE LIMIT. An excess contribution is subject to excise tax of 6% for
each year it remains in the IRA.
HOW CAN I CORRECT AN EXCESS CONTRIBUTION?
Excess contributions may be corrected without paying a 6% penalty. To do
so, you must withdraw the excess and any earnings on the excess before the due
date (including extensions) for filing your federal income tax return for the
year for which you made the excess contribution. A deduction should not be
taken for any excess contribution. Earnings on the amount withdrawn must also
be withdrawn. The earnings must be included in your income for the tax year for
which the contribution was made and may be subject to a 10% premature withdrawal
tax if you have not reached age 59 1/2.
WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE
DATE?
Any excess contribution withdrawn after the tax return due date (including
any extensions) for the year for which the contribution was made will be subject
to the 6% excise tax. There will be an additional 6% excise tax for each year
the excess remains in your account.
Under limited circumstances, you may correct an excess contribution after
tax filing time by withdrawing the excess contribution (leaving the earnings in
the account). This withdrawal will not be includible in income nor will it be
subject to any premature withdrawal penalty if (1) your contributions to all
IRAs do not exceed $2,250 and (2) you did not take a deduction for the excess
amount (or you file an amended return (Form 1040X) which removes the excess
deduction).
HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY?
Unless an excess contribution qualifies for the special treatment outlined
above, the excess contribution and any earnings on it withdrawn after tax filing
time will be includible in taxable income and may be subject to a 10% premature
withdrawal penalty. No deduction will be allowed for the excess contribution
for the year in which it is made.
Excess contributions may be corrected in a subsequent year to the extent
that you contribute less than your maximum amount. As the prior excess
contribution is reduced or eliminated, the 6% excise tax will become
correspondingly reduced or eliminated for subsequent tax years. Also, you may
be able to take an income tax deduction for the amount of excess that was
reduced or eliminated, depending on whether you would be able to take a
deduction if you had instead contributed the same amount.
ROLLOVERS
CAN I ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S RETIREMENT PLAN INTO
AN IRA?
If you receive a total distribution from a tax qualified retirement plan as
a result of, for example, termination of employment, plan discontinuance, or
retirement, all or part of the distribution may be deposited into your IRA. By
doing so, you can defer income taxes on the amount rolled over until you
subsequently make withdrawals from your IRA.
The maximum amount you may roll over is the amount of employer
contributions and earnings distributed. You may not roll over any after-tax
employee contributions you made to the employer retirement plan. Also, if you
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are over age 70 1/2 and are required to take minimum distributions under the tax
laws, you may not roll over any amount required to be distributed to you under
the minimum distribution rules. A rollover to an IRA must be completed within
60 days after the distribution from the employer retirement plan is to be valid.
The rules governing rollovers are complicated. Be sure to consult your tax
advisor or the IRS if you have a question about rollovers.
ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO AN IRA, CAN I SUBSEQUENTLY ROLL
OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN?
Yes. Part or all of a total distribution received from a qualified plan
may be transferred to another qualified plan through the medium of an IRA.
However, the IRA must have no assets other than those which were previously
distributed to you from the qualified plan. Specifically, the IRA cannot
contain any regular IRA contributions. Also, the new qualified plan must accept
rollovers.
CAN I ROLL OVER A PARTIAL DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S PLAN?
Yes, in some cases you may roll over a partial distribution you receive
from your employer's plan. A rollover of a partial distribution is permitted
only if (1) the distribution equals at least 50 percent of the balance to your
credit determined immediately before the distribution; and (2) the distribution
was made on account of death, disability or separation from service.
If you elect to roll over a partial distribution, you may roll over only to
an IRA; no portion of the distribution may be rolled over to another qualified
plan or tax-sheltered annuity. Also, if you open an IRA by rolling over a
partial distribution, you may later rollover a distribution from that IRA only
to another IRA, not to an employer plan as is the case with rollovers of total
distributions.
HOW OFTEN CAN I ROLL OVER ASSETS FROM MY IRA TO ANOTHER IRA?
You may roll over withdrawals from one IRA to another only once in any
365-day period. This rule applies to each individual IRA.
WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY REGULAR CONTRIBUTIONS
IN ONE IRA?
If you wish to make both a regular annual contribution and a rollover
contribution, you may wish to open two separate IRAs by completing two adoption
agreements and two sets of forms. You should consult a tax advisor before
making your regular contribution to the IRA you established with rollover
contributions (or make a rollover contribution to the IRA to which you make your
regular contributions). This is because combining your regular annual
contributions and rollover contributions originating from an employer plan
distribution would prohibit the future rollover contributions originating from
an employer plan distribution would prohibit the future rollover of the assets
of the IRA into another qualified plan. If despite this, you still wish to
combine a rollover contribution and the IRA holding your regular contributions,
you should establish the account as an Accumulation IRA on the Adoption
Agreement and made the contributions to that account.
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<PAGE>
HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS?
Rollover contributions, if properly made, do not count toward the maximum
contribution. Also, rollovers are not deductible and they do not affect your
deduction limits as described above.
INVESTMENTS
HOW ARE MY IRA CONTRIBUTIONS INVESTED?
You control the investment and reinvestment of contributions to your IRA.
Investments must be in one or more of the Fund(s) available from time to time as
listed in the Adoption Agreement for your IRA or in an investment selection form
included with your IRA Adoption Agreement. You direct the investment of your
IRA by giving your investment instructions to the Distributor or Service Company
for the Fund(s). Since you control the investment of your IRA, you are
responsible for any losses; neither the Custodian, the Distributor, the Service
Company, nor the Fund(s) has any responsibility for any loss or diminution in
value occasioned by your exercise of investment control. Transactions for your
IRA will generally be effected at the applicable public offering price or net
asset value for shares of the Fund(s) involved next established after the
Distributor or the Service Company (whichever may apply) receives proper
investment instructions from you; consult the current prospectus for the Fund(s)
involved for additional information.
BEFORE MAKING ANY INVESTMENT, READ CAREFULLY THE CURRENT PROSPECTUS FOR ANY
FUND YOU ARE CONSIDERING AS AN INVESTMENT FOR YOUR IRA. THE PROSPECTUS WILL
CONTAIN INFORMATION ABOUT THE FUND'S INVESTMENT OBJECTIVES AND POLICIES, AS WELL
AS ANY MINIMUM INITIAL INVESTMENT OR MINIMUM BALANCE REQUIREMENTS AND ANY SALES,
REDEMPTION OR OTHER CHARGES.
Because you control the selection of investments for your IRA, the growth
in value of your IRA cannot be guaranteed or projected.
ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS?
The tax-exempt status of your IRA will be revoked if you engage in any of
the prohibited transactions listed in Section 4975 of the tax code. The fair
market value of your IRA will be includible in your taxable income in the year
in which such prohibited transaction takes place. The fair market value of your
IRA may also be subject to a 10% penalty tax as a premature withdrawal if you
have not yet reached the age of 59 1/2.
Any investment in a collectible (for example, rare stamps) by your IRA is
treated as a taxable withdrawal.
WHAT IS A PROHIBITED TRANSACTION?
Generally, a prohibited transaction is any improper use of the assets in
your IRA. Some examples of prohibited transactions are:
- - Direct or indirect sale or exchange of property between you and your IRA.
- - Transfer of any property from your IRA to yourself or from yourself to your
IRA.
Your IRA could lose its tax exempt status if you use all or part of your
interest in your IRA as security for a loan or borrow any money from your IRA.
Any portion of your IRA used as security for a loan will be taxed as ordinary
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income in the year in which the money is borrowed, if you are under age 59 1/2,
this amount will also be subject to a 10% penalty tax as a premature
distribution.
WITHDRAWALS
WHEN CAN I MAKE WITHDRAWALS FROM MY IRA?
You may withdraw from your IRA at any time. However, withdrawals before
age 59 1/2 may be subject to a 10% penalty tax in addition to regular income
taxes (see below).
WHEN MUST I START MAKING WITHDRAWALS?
If you have not withdrawn your entire IRA by the April 1 following the year
in which you reach 70 1/2, you must make minimum withdrawals in order to avoid
penalty taxes. The minimum withdrawal amount is determined by dividing the
balance in your IRA (or IRAs) by your life expectancy or the combined life
expectancy of you and your designated beneficiary. The minimum withdrawal rules
are complex. Consult your tax advisor for assistance.
The penalty is 50% of the difference between the minimum withdrawal amount and
your actual withdrawals during a year. The IRS may waive or reduce the penalty
tax if you can show that your failure to make the required minimum withdrawals
was due to reasonable cause and you are taking reasonable steps to remedy the
problem.
HOW ARE WITHDRAWALS FROM MY IRA TAXED?
Amounts withdrawn by you are includible in your gross income in the taxable
year that you receive them, and are taxable as ordinary income. Lump sum
withdrawals from an IRA are not eligible for averaging treatment available to
certain lump sum distributions from qualified employer retirement plans.
Since the purpose of the IRA is to accumulate funds for retirement, your
receipt or use of any portion of your IRA before you attain age 59 1/2 generally
will be considered as an early withdrawal and subject to a 10% penalty tax.
The 10% penalty tax for early withdrawal will not apply if the distribution
- was a result of your death or disability, or
- is one of a scheduled series of substantially equal periodic payments
for your life or life expectancy (or the joint lives or life
expectancies of you and your beneficiary).
If there is an adjustment to the scheduled series of payments, the 10%
penalty tax will apply. For example, if you begin receiving payments at age 50
under a withdrawal program providing for substantially equal payments over your
life expectancy, and at age 58 you elect to receive the remaining amount in your
IRA in a lump-sum, the 10% penalty tax will apply to the lump sum and to the
amounts previously paid to you before age 59 1/2.
HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN?
A withdrawal of nondeductible contributions (not including earnings) will
be tax-free. However, if you made both deductible and nondeductible IRA
contributions, then each distribution will be treated as partly a return of your
nondeductible contributions (not taxable) and partly a distribution of
deductible contributions and earnings (taxable). The nontaxable amount is the
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portion of the amount withdrawn which bears the same ratio as your total
nondeductible IRA contributions bear to the total balance of all your IRAs
(including rollover IRAs and SEPs).
For example, assume that you made the following IRA contributions:
Year Deductible Nondeductible
1985 $2,000
1986 $2,000
1987 $1,000 $1,000
1988 $1,000
------ ------
$5,000 $2,000
In addition assume that your IRA has total investment earnings through 1989
of $1,000. During 1989 you withdraw $500. Your total account balance as of
12-31-89 is $7,500 as shown below.
Deductible Contributions $5,000
Nondeductible Contributions $2,000
Earnings On IRAs $1,000
Less 1989 Withdrawal $ 500
------
Total Account Balance as of 12/31/89 $7,500
To determine the nontaxable portion of your 1989 withdrawal, the total 1989
withdrawal ($500) must be multiplied by a fraction. The numerator of the
fraction is the total of all nondeductible contributions remaining in the
account before the 1989 withdrawal ($2,000). The denominator is the total
account balance as of 12-31-89 ($7,500) plus the 1989 withdrawal ($500) or
$8,000. The calculation is:
Total Remaining Nondeductible Contributions $2,000 x $500 = $125
- ------------------------------------------- ------
Total Account Balance $8,000
Thus, $125 of the $500 withdrawal in 1989 will not be included in your
taxable income. The remaining $375 will be taxable for 1989. In addition, for
future calculations the remaining nondeductible contribution total will be
$2,000 minus $125, or $1,875.
A loss in your IRA investment may be deductible. You should consult your
tax advisor for further details on the appropriate calculation for this
deduction if applicable.
TAX MATTERS
WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE?
The Custodian will report all withdrawals to the IRS and the recipient on
the appropriate form. For reporting purposes, a direct transfer of assets to a
successor custodian or trustee is not considered a withdrawal.
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<PAGE>
The Custodian will report to the IRS the year-end value of your account and
the amount of any rollover or accumulation contribution made during a calendar
year, as well as the tax year for which a contribution is made. Unless the
Custodian receives an indication from you to the contrary, it will treat any
amount as a contribution for the tax year in which it is received. It is most
important that a contribution between January and April 15th for the prior year
be clearly designated as such.
WHAT TAX INFORMATION MUST I REPORT TO THE IRS?
You must file Form 5329 with the IRS for each taxable year for which you
made an excess contribution, or you take a premature withdrawal, or you withdraw
less than the required minimum amount from your IRA.
You must also report each nondeductible contribution to the IRS by
designating it a nondeductible contribution on your tax return. Use Form 8606.
In addition, for any year in which you make a nondeductible contribution or take
a withdrawal, you must include additional information on your tax return. The
information required includes: (1) the amount of your nondeductible
contributions for that year; (2) the amount of withdrawals from IRAs in that
year; (3) the amount by which your total nondeductible contributions for all the
years exceed the total amount of your distributions previously excluded from
gross income; and (4) the total value of all your IRAs as of the end of the
year. If you fail to report any of this information, the IRS will assume that
all your contributions were deductible. This will result in the taxation of the
portion of your withdrawals that should be treated as a nontaxable return of
your nondeductible contributions.
ARE IRA WITHDRAWALS SUBJECT TO WITHHOLDING?
Federal income tax will be withheld at a flat rate of 10% from any
withdrawal from your IRA, unless you elect not to have tax withheld.
ARE THE EARNINGS ON MY IRA FUNDS TAXED?
Any earnings on investments held in your IRA are generally exempt from
federal income taxes and will not be taxed until withdrawn by you, unless the
tax exempt status of your IRA is revoked.
ACCOUNT TERMINATION
You may terminate your IRA at any time after its establishment by sending a
complete withdrawal form, or a transfer authorization form, to the address that
appears at the end of the disclosure statement.
Your IRA with State Street Bank will terminate upon the first to occur of
the following:
- - The date your properly executed withdrawal form (as described above) is
received and accepted by the Custodian or, if later, the termination date
specified in the withdrawal form.
- - The date the IRA ceases to qualify under the tax code. This will be deemed
a termination.
- - The transfer of the IRA to another custodian/trustee.
- - The rollover of the amounts in the IRA to another custodian/trustee.
Any outstanding fees must be received prior to such a termination of your
account.
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<PAGE>
The amount you receive from your IRA will be treated as a withdrawal, and
thus the rules relating to IRA withdrawals will apply. For example, if the IRA
is terminated before you reach age 59 1/2 the 10% early withdrawal penalty may
apply on the amount you receive.
IRA DOCUMENTS
The terms contained in Articles I to VIII of the State Street Bank and
Trust Company Individual Retirement Custodial Account document have been
promulgated by the IRS in Form 5305-A for use in establishing an IRA custodial
account that meets the requirements of the tax laws for a valid IRA. This IRS
approval relates only to the form of Articles I to VIII and is not an approval
of the merits of the IRA or of any investment permitted by the IRA.
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<PAGE>
THE WESTCORE INDIVIDUAL RETIREMENT PLAN - IRA APPLICATION/ADOPTION AGREEMENT
I/We, the individuals signing the Adoption Agreement establish an Individual
Retirement Account (the "Account") with State Street Bank and Trust Company as
Custodian. I/We agree to the terms of the Account, which are contained in the
document entitled "State Street Bank and Trust Company Individual Retirement
Custodial Account," Disclosure Statement and the IRA Application/Adoption
Agreement. I/We certify the accuracy of the information in this Adoption
Agreement. The Account will be effective upon acceptance by State Street Bank
and Trust Company.
1. ACCOUNT HOLDER INFORMATION (PLEASE PRINT OR TYPE)
Full Name
-----------------------------------------------------------------------
Address
-------------------------------------------------------------------------
City State Zip
------------------------------- ---------- ---------------------
Telephone: Day ( )
----------------------------------------------------------------
Evening ( )
--------------------------------------------------------------
Social Security Number Date of Birth
---------------- ---------------------------
2. ACCOUNT TYPE
Regular IRA Combined IRA Transfer IRA
--- --- ---
Spousal IRA Rollover IRA SAR-SEP/IRA
--- --- ---
SEP/IRA
---
3. SPOUSE INFORMATION (FOR SPOUSAL IRA ONLY)
Full Name
---------------------------------------------------------------------
Address
-----------------------------------------------------------------------
City State Zip
------------------------------- ---------- --------------------
Telephone: Day ( )
---------------------------------------------------------------
Evening ( )
-------------------------------------------------------------
Social Security Number Date of Birth
---------------- -------------------------
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4. CONTRIBUTION DESCRIPTION
Your Account Spouse's Account
(if applicable)
For the tax year 19____ Contribution amount $ $
----------- -----------
For the tax year 19____ Contribution amount $ $
----------- -----------
Employer SEP Contribution amount $ $
----------- -----------
SAR-SEP Employee Contribution amount $ $
----------- -----------
Cash Rollover Contribution amount $ $
----------- -----------
Total Contribution Enclosed $ $
----------- -----------
Annual Fee ($10 per fund, maximum $30) $ $
----------- -----------
TOTAL AMOUNT OF CHECK $
--------------
(Please make checks payable to WESTCORE)
5. BENEFICIARY DESIGNATION
I hereby designate the following persons as primary and secondary
beneficiaries to receive my interest in my WESTCORE IRA according to the terms
of the Custodial Agreement, hereby revoking any such prior designations made by
me. (Attach additional sheet if necessary.)
Primary Beneficiary
Full Name
----------------------------------------------------------------------
Date of Birth Relationship
------------------------ ----------------------------
Secondary Beneficiary
Full Name
----------------------------------------------------------------------
Date of Birth Relationship
------------------------ ----------------------------
SPOUSE'S AGREEMENT: (For community property states) By signing below, I give
to my spouse any interest I may have in the funds deposited in this account and
agree that you may pay the money in my spouse's IRA as directed in the above
beneficiary designation.
Spouse's Name (please print)
----------------------------------------------------
Spouse's Signature Date
---------------------------------- --------------------
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6. WESTCORE INVESTMENT INSTRUCTIONS - SELECT UP TO FOUR FUNDS.
Amount to be invested
FUND NAME Your Account Spouse's Account
(if applicable)
$ $
- ------------------------------------------- ----------- -----------
$ $
- ------------------------------------------- ----------- -----------
$ $
- ------------------------------------------- ----------- -----------
$ $
- ------------------------------------------- ----------- -----------
The initial purchase minimum is $250.00 per Fund, subsequent minimum investments
are $50. Do not send currency.
I acknowledge that I have sole responsibility for my investment choices and that
I have received a current prospectus for each Fund I select. PLEASE READ THE
PROSPECTUS(ES) OF THE FUND(S) SELECTED BEFORE INVESTING.
7. AUTOMATIC INVESTMENT PLAN (OPTIONAL)
/ / Yes / / No
I hereby authorize WESTCORE and/or its custodian to draw a check on my/our
personal checking account on the designated dates in order to purchase shares in
the WESTCORE ____________________________________________________ Fund at the
Public Offering Price determined on that day and deposit to my IRA account
number _______________________.
/ / Monthly _________________ / / Semi-annually
/ / Quarterly / / Annually
on the _________ day.
Amount of each check (minimum $50) $
-----------------------
NOTE: You must sign the Bank Authorization form below and attach a voided
personal check to your WESTCORE IRA Agreement Form.
BANK AUTHORIZATION
Bank Name
----------------------------------------------------------------------
Bank Address
-------------------------------------------------------------------
Bank Account Number
------------------------------------------------------------
I/We authorize you, the above named bank, to debit my/our account for amounts
drawn by WESTCORE Trust and/or its Custodian acting as my agent. I/We agree
that your rights in respect to each withdrawal shall be the same as if it were a
check drawn upon you and signed by me/us. This authority shall remain in effect
until I/we revoke it in writing and you receive it. I/We agree that you shall
incur no liability when honoring any such check.
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I/We further agree that you will incur no liability to me/us if you dishonor any
such withdrawal. This will be so even though such dishonor results in the
forfeiture of investment.
- ----------------------------------- ----------------------------------------
Bank Account Holder's Name Joint Bank Account Holder's Name
- ----------------------------------- ----------------------------------------
Bank Acct. Holder's Signature Date Joint Bank Acct. Holder's Signature Date
8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL)
/ / I authorize the Transfer Agent or any Service Organization to act upon
instructions received by telephone to redeem or exchange shares owned by me. I
understand that all redemptions and exchanges are subject to the terms and
conditions as set out in the prospectus.
9. LETTER OF INTENT (OPTIONAL)
I agree to the Letter of Intent conditions and terms as set forth in the
Prospectus under the section Public Offering Price. Although I'm not obligated
to do so, it is my intention to invest over a 13-month period shares in one or
more of the Westcore Funds in an aggregate amount of at least:
/ / $100,000 - 249,999 / / $500,000 - 999,999
/ / $250,000 - 499,999 / / $1 million or more
Purchases made within the last 90 days will be included as part of your Letter
of Intent.
X
----------------------------------------- ------------------------------
Signature(s) Date
10. RIGHT OF ACCUMULATION
A reduced sales load applies to any purchase of WESTCORE shares that is
sold with a sales load ("Eligible Funds") where an investor's then current
Aggregate Investment is $100,000 or more. For applicable sales loads see
"Public Offering Price" and "Aggregate Investment" as described in the
Prospectus. The reduced sales load applies only to the dollar amount of the
shares of the then current purchase.
I own shares of one or more Funds in the Westcore Family of Funds listed in
Section 6 and qualify for the cumulative quantity discount described above and
in the prospectus. My account numbers are as follows:
- ------------------------- -------------------- -------------------------
11. CUSTOMER SIGNATURE AND CERTIFICATION
I/We, the undersigned account owner(s) certify that I/we have the power and
authority to establish this Individual Retirement Account and spousal IRA
account, if applicable, and select the privileges requested. This order is
subject to acceptance by Westcore Trust. I/We acknowledge that I/we have
received, read, and understand the IRA Custodial Agreement, the IRA Disclosure
Statement and the current prospectus(es) for the fund(s) elected. I/We
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<PAGE>
understand that a subsidiary of First Interstate Bank acts as the investment
advisor and receives fees for so acting. I/We hereby adopt the Custodial
Agreement which is incorporated by reference and I/we agree that Westcore Trust,
the custodian, ALPS Mutual Funds Services, Inc., First Interstate Bancorp or any
of its subsidiaries, affiliates, officers, directors, or employees will not be
liable for any loss, claim, expense, or cost, and agree to indemnify the same
from any losses and damages, for acting upon any instructions, including
telephone exchanges and redemptions (if so indicated above), and inquiries,
believed genuine. Shares of the funds are not bank deposits, are not insured by
the FDIC and are not guaranteed or otherwise supported by First Interstate
Bancorp or its affiliates. This account is subject to the terms of the
prospectus, as amended from time to time. I consent to the shareholder account
charges described in the prospectus and the IRA documents, and authorize the
Transfer Agent of the Trust, as my agent, to redeem a sufficient number of
shares from my account with the Trust on a quarterly basis to pay such charges.
Under penalty of perjury, I certify that the Social Security or taxpayer's
identification number entered above is correct. I acknowledge that I understand
past performance is not indicative of future returns.
X Date
----------------------------------------- -------------------------
Your Signature
X Date
----------------------------------------- -------------------------
Signature: Spouse (if opening a Spousal IRA)
12. CUSTODIAL ACCEPTANCE
Receipt by the Investor of the Westcore Confirmation Statement shall
indicate State Street Bank & Trust Co.'s acceptance to act as Custodian.
By Date
---------------------------------------- -------------------------
FOR WESTCORE IRA USE ONLY
WESTCORE IRA Account Number
----------------------------------------------------
Spousal Account Number
---------------------------------------------------------
13. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION
(To be completed by the financial institution/advisor.)
We submit this application for the purchase of shares in accordance with the
terms of our selling agreement with ALPS Mutual Funds Services, Inc.
(Distributor). We agree to notify the Distributor and Transfer Agent of any
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purchases made under a Letter of Intent and escrow agreement or Right of
Accumulation listed within this agreement.
Firm
----------------------------------------------------------------------------
Financial Advisor Name
----------------------------------------------------------
Branch Number F/A Number
------------------------------------------ ------------
Office Telephone ( )
---------------------------------------------------------------
Branch address
------------------------------------------------------------------
City State Zip code
------------------------------- ------------- --------------
By:
-----------------------------------------------------------------------------
(Authorized signature of dealer/Title)
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STATE STREET BANK AND TRUST COMPANY
INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT
The following provisions of Articles I to VIII are in the form promulgated
by the Internal Revenue Service in Form 5305-A for use in establishing an
individual retirement custodial account.
ARTICLE I.
The Custodian may accept additional cash contributions on behalf of the
Depositor for a tax year of the Depositor. The total cash contributions are
limited to $2,000 for the tax year unless the contribution is a rollover
contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or
408(d)(3) of the Code or an employer contribution to a simplified employee
pension plan as described in Section 408(k).
ARTICLE II.
The Depositor's interest in the balance in the custodial account is
nonforfeitable.
ARTICLE III.
1. No part of the custodial funds may be invested in life insurance
contracts, nor may the assets of the custodial account be commingled with other
property except in a common trust fund or common investment fund (within the
meaning of section 408(a)(5) of the Code).
2. No part of the custodial funds may be invested in collectibles (within
the meaning of section 408(m) of the Code).
ARTICLE IV.
1. The Depositor's entire interest in the custodial account must be, or
begin to be, distributed by the Depositor's required beginning date, the April 1
following the calendar year end in which the Depositor reaches age 701/2. By
that date, the Depositor may elect, in a manner acceptable to the Custodian, to
have the balance in the custodial account distributed in:
(a) A single-sum payment.
(b) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the life of the Depositor. The
payments must begin by April 1 following the calendar year in which the
Depositor reaches age 70 1/2.
(c) An annuity contract that provides equal or substantially equal
monthly, quarterly, or annual payments over the joint and last survivor lives of
the Depositor and his or her designated beneficiary. The payments must begin by
the April 1 following the calendar year in which the Depositor reaches age
70 1/2.
(d) Equal or substantially equal annual payments over a specified
period that may not be longer than the Depositor's life expectancy.
(e) Equal or substantially equal annual payments over a specified
period that may not be longer than the joint life and last survivor expectancy
of the Depositor and his or her designated beneficiary.
Even if distributions have begun to be made under option (d) or (e), the
Depositor may receive a distribution of the balance in the custodial account
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at any time by giving written notice to the Custodian. If the Depositor does
not choose any of the methods of distribution described above by April 1
following the calendar year in which he or she reaches age 70 1/2, distribution
to the Depositor will be made on that date by a single-sum payment. If the
Depositor elects as a means of distribution (b) or (c) above, the annuity
contract must satisfy the requirements of section 408(b)(1), (3) and (4) of the
Code.
2. If the Depositor dies before his or her entire interest is distributed
to him or her, the entire remaining interest will be distributed as follows:
(a) If the Depositor dies on or after the Depositor's required
beginning date, distribution must continue to be made in accordance with
paragraph 1.
(b) If the Depositor dies before the Depositor's required beginning
date, the entire remaining interest will, at the election of the beneficiary or
beneficiaries, either
(i) Be distributed by the December 31 of the year containing the
fifth anniversary of the Depositor's death, or
(ii) Be distributed in equal or substantially equal payments over
the life or life expectancy of the designated beneficiary or beneficiaries.
The election of either (i) or (ii) must be made by December 31 of the year
following the year of the Depositor's death. If the beneficiary or
beneficiaries do not elect either of the distribution options described in (i)
and (ii), distribution will be made in accordance with (ii) if the beneficiary
is the Depositor's surviving spouse, and in accordance with (i) if the
beneficiary or beneficiaries are or include anyone other than the surviving
spouse. In the case of distributions under (ii), distributions must commence by
the December 31 of the year following the year of the Depositor's death. If the
Depositor's spouse is the beneficiary, distributions need not commence until the
December 31 of the year the Depositor would have attained age 70 1/2, if later.
(c) If the Depositor dies before his or her entire interest has been
distributed and if the beneficiary is other than the surviving spouse, no
additional cash contributions or rollover contributions may be accepted in the
account.
3. In the case of distribution over life expectancy in equal or
substantially equal annual payments to determine the minimum annual payment for
each year, divide the Depositor's entire interest in the trust as of the close
of business on December 31 of the preceding year by the life expectancy of the
Depositor (or the joint life and last survivor expectancy of the Depositor and
the Depositor's designated beneficiary, or the life expectancy of the designated
beneficiary, whichever applies.) In the case of distributions under paragraph
(1), determine the initial life expectancy (or joint life and last survivor
expectancy) using the attained ages of the Depositor and designated beneficiary
as of their birthdays in the year the Depositor reaches age 70 1/2. In the case
of distributions under paragraph (2)(b)(ii), determine the expectancy using the
attained age of the designated beneficiary as of the beneficiary's birthday in
the year distributions are required to commence. Unless the Depositor (or
spouse) elects not to have life expectancy recalculated, the Depositor's life
expectancy (and the life expectancy of the Depositor's spouse, if applicable)
will be recalculated annually using their attained ages as of their birthdays in
the year for which the minimum annual payment is being determined. The life
expectancy of the
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designated beneficiary (other than the spouse) will not be recalculated. The
minimum annual payment may be made in a series of installments (e.g., monthly,
quarterly, etc.) as long as the total payments for the year made by the date
required are not less than the minimum amounts required.
ARTICLE V.
Unless the Depositor dies, is disabled (as defined in section 72(m) of the
Code), or reaches age 59 1/2 before any amount is distributed from the trust
account, the Custodian must receive from the Depositor a statement explaining
how he or she intends to dispose of the amount distributed.
ARTICLE VI.
1. The Depositor agrees to provide the Custodian with information
necessary for the Custodian to prepare any reports required under section 408(i)
of the Code and the related regulations.
2. The Custodian agrees to submit reports to the Internal Revenue Service
and the Depositor as prescribed by the Internal Revenue Service.
ARTICLE VII.
Notwithstanding any other articles which may be added or incorporated, the
provisions of Articles I through III and this sentence will be controlling. Any
additional articles that are not consistent with section 408(a) of the Code and
related regulations will be invalid.
ARTICLE VIII.
This agreement will be amended from time to time to comply with the
provisions of the Code and related regulations. Other amendments may be made
with the consent of the person whose signature appears on the Adoption Agreement
as Depositor.
ARTICLE IX.
1. As used in this Article IX the following terms have the following
meanings:
"Custodian" means State Street Bank and Trust Company.
"Fund" means a mutual fund or registered investment company which is
specified in the Adoption Agreement, or which is designated by the Distributor
named in the Adoption Agreement, as being available as an investment for the
custodial account; provided, however, that such a mutual fund or registered
investment company must be legally offered for sale in the state of the
Depositor's residence in order to be a Fund hereunder.
"Distributor" means the entity which has a contract with the Fund(s) to
serve as distributor of the shares of such Fund(s).
In any case where there is no Distributor, the duties assigned hereunder to
the Distributor may be performed by the Fund(s) or by an entity that has a
contract to perform management or investment advisory services for the Fund(s).
"Service Company" means the Custodian or any entity employed by the
Custodian to perform various administrative duties of the Custodian.
2. The Depositor may revoke the custodial account established hereunder
by mailing or delivering a written notice of revocation to the
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Custodian within seven days after the Depositor established the custodial
account hereunder. Mailed notice is treated as given to the Custodian on date
of the postmark (or on the date of Post Office certification or registration in
the case of notice sent by certified or registered mail). Upon timely
revocation, the Depositor's initial contribution will be returned, without
adjustment for administrative expenses, commissions or sales charges,
fluctuations in market value or other changes.
3. All contributions to the custodial account shall be invested and
reinvested in full and fractional shares of one or more Funds. Such investments
shall be made in such proportions and in such amounts as Depositor from time to
time in the Adoption Agreement or by other written notice to the Service Company
(in such form as may be acceptable to the Service Company) may direct.
The Service Company shall be responsible for promptly transmitting all
investment directions by the Depositor for the purchase or sale of shares of one
or more Funds hereunder to the Funds' transfer agent for execution. However, if
investment directions with respect to the investment of any contribution
hereunder are not received from the Depositor as required or, if received, are
unclear in the opinion of the Service Company, the contribution will be returned
to the Depositor without liability for interest or for loss of income or
appreciation. If any directions or other orders by the Depositor with respect
to the sale or purchase of shares of one or more Funds for the custodial account
are unclear in the opinion of the Service Company, the Service Company will
refrain from carrying out such investment directions or from executing any such
sale or purchase, without liability for loss of income or for appreciation or
depreciation of any asset, pending receipt of clarification for the Depositor.
All investment directions by Depositor will be subject to any minimum
initial or additional investment or minimum balance rules applicable to a Fund
as described in its prospectus.
All dividends and capital gains or other distributions received on the
shares of any Fund held in the Depositor's account shall be retained in the
account and (unless received in additional shares) shall be reinvested in full
and fractional shares of such Fund.
4. Subject to the minimum initial or additional investment, minimum
balance and other exchange rules applicable to a Fund, the Depositor may at any
time direct the Service Company to exchange all or a specified portion of the
shares of the Fund in the Depositor's account for shares and fractional shares
of one or more other Funds. The Depositor shall give such directions by written
or telephonic notice acceptable to the Service Company, and the Service Company
will process such directions as soon as practicable after receipt thereof.
5. Any purchase or redemption of shares of a Fund for or from the
Depositor's account will be effected at the public offering price or net asset
value of such Fund (as described in the then effective prospectus for such Fund)
next established after the Service Company has transmitted the Depositor's
investment directions to the transfer agent for the Fund(s).
Any purchase, exchange, transfer or redemption of shares of a Fund for or
from the Depositor's account will be subject to any applicable sales charge or
redemption charge as described in the then effective prospectus for such Fund.
6. The Service Company shall maintain adequate records of all purchases
or sales of shares of one or more Funds for the Depositor's custodial account.
Any account maintained in connection herewith shall be in
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the name of the Custodian for the benefit of the Depositor. All assets of the
custodial account shall be registered in the name of the Custodian or of a
suitable nominee. The books and records of the Custodian shall show that all
such investments are part of the custodial account.
The Custodian shall maintain or cause to be maintained adequate records
reflecting transactions of the custodial account. In the discretion of the
Custodian, records maintained by the Service Company with respect to the account
hereunder will be deemed to satisfy the Custodian's recordkeeping
responsibilities therefore. The Service Company agrees to furnish the Custodian
with any information the Custodian requires to carry out the Custodian's
recordkeeping responsibilities.
7. Neither the Custodian nor any other party providing services to the
custodial account nor the Fund will have any responsibility for rendering advice
with respect to the investment and reinvestment of Depositor's custodial account
nor shall such parties be liable for any loss or diminution of value which
results from Depositor's exercise or investment control over this custodial
account. Depositor shall have and exercise exclusive responsibility for and
control over the investment of the assets of the custodial account and neither
Custodian nor any other such party nor the Fund shall have any duty to question
the directors on that regard or to advise him regarding the purchase, retention
or sale of shares of one or more Funds for the custodial account.
8. The Depositor may appoint an investment advisor with respect to the
custodian account in a form acceptable to the Custodian and the Service Company.
The investment advisors appointment will be effective upon written notice to the
contrary is received by the Custodian and the Service Company. While an
investment advisor's appointment is in effect the investment advisor may issue
investment directions or may issue orders for the sale or purchase of shares of
one or more Funds to the Service Company and the Service Company will be fully
protected in carrying out such investment directions or orders to the same
extent as they had been given by the Depositor.
The Depositor's appointment of any investment advisor will also be
deemed to be instructions to the Custodian and the Service Company to pay such
investment advisor's fees to the investment advisor from the custodial account
hereunder without additional authorization by the Depositor or the Custodian.
9. Distribution of the assets of the custodial account shall be made at
such time and in such form as Depositor for the Beneficiary if Depositor is
deceased shall elect by written order to the Custodian. Depositor acknowledges
that any distribution (except for distribution on account of Depositor's
disability or death return of an excess contribution referred to in Code Section
408(d), or a "rollover" from this custodial account made earlier than age 59 1/2
may subject Depositor to an additional tax on early distributions under Code
Section 72(t). For that purpose, Depositor will be considered disabled if
Depositor can prove as provided in Code Section 72(m)(7), that Depositor is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or be of long-continued and indefinite duration. It is the responsibility
of the Depositor or the Beneficiary) by appropriate distribution instructions to
the Custodian to insure that the distribution requirements of Code Section
401(a)(9) and Articles IV and V above are met. Neither Custodian nor any other
party providing services to the custodial account assumes any responsibility for
the tax treatment of any distribution from the custodial account; such
responsibility rests solely with the person ordering the distribution.
10. Custodian assumes (and shall have) no responsibility to make any
distribution except upon the written order of Depositor (or Beneficiary if
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Depositor is deceased) containing such information as the Custodian may
reasonably request. Also, before making any distribution or honoring any
assignment of the custodial account. Custodian shall be furnished with any and
all applications certificates, tax waivers, signature guarantees and other
documents (including proof of any legal representative's authority) deemed
necessary or advisable by Custodian, but Custodian shall not be responsible for
complying with an order which appears on its face to be genuine, or for refusing
to comply if not satisfied it is genuine, and Custodian has no duty of further
inquiry. Any distributions from the account may be mailed, first-class postage
prepaid, to the last known address of the person who is to receive such
distribution, as shown on the Custodian's records, and such distribution shall
to the extent thereof completely discharge the Custodian's liability for such
payment.
11. The term "Beneficiary" means the person or persons designated as such
by the "designating person" (as defined below) on a form acceptable to the
Custodian for use in connection with the custodial account, signed by the
designating person, and filed with the Custodian. The form may name
individuals, trusts, estates, or other entities as either primary or contingent
beneficiaries. However, if the designation does not effectively dispose of the
entire custodial account as of the time distribution is to commence, the term
"Beneficiary" shall then mean the designating person's estate with respect to
the assets of the custodial account not disposed of by the designation form.
The form last accepted by the Custodian before such distribution is to commence
provided it was received by the Custodian (or deposited in the U.S. Mail or with
a delivery service) during the designating person's lifetime, shall be
controlling and whether or not fully dispositive of the custodial account,
thereupon shall revoke all such forms previously filed by that person. The term
"designating person" means Depositor during his/her lifetime; after Depositor's
death, it also means Depositor's spouse if the spouse begins to receive a
portion of the custodial account (pursuant to such a designation by Depositor;
under a form of distribution permitted by Article IV. A designation by
Depositor's spouse shall relate solely to the balance remaining in the spouse's
portion of the custodial account after the death of the spouse.
(a) When and after distributions from the custodial account to
Depositor's Beneficiary commence all rights and obligations assigned to
Depositor hereunder shall inure to, and be enjoyed and exercised by, Beneficiary
instead of Depositor.
12.(i) The Depositor agrees to provide information to the Custodian at
such time and in such manner as may be necessary for the Custodian to prepare
any reports required under Section 408(i) of the Code and the regulations
thereunder or otherwise.
(a) The Custodian or the Service Company will submit reports to the
Internal Revenue Service and the Depositor at such time and manner and
containing such information as is prescribed by the Internal Revenue Service.
(b) The Depositor, Custodian and Service Company shall furnish to
each other such information relevant to the custodial account as may be required
under the Code and any regulations issued or forms adopted by the Treasury
Department thereunder or as may otherwise been necessary for the administration
of the custodial account.
(c) The Depositor shall file any reports to the Internal Revenue
service which are required of him by law (including Form 5329), and neither the
Custodian nor Service Company shall have any duty to advise Depositor concerning
or monitor Depositor's compliance with such requirement.
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13.(i) Depositor hereby delegates to the Fund the right to amend this
custodial account document in any respect at any time, and hereby consents to
such amendments. Such amendments shall be effective on a stated date which
shall be at least 60 days after giving written notice of the amendment
(including its exact terms) to Custodian by registered or certified mail, unless
Custodian waives notice as to such amendment. If the Custodian does not wish to
continue serving as such under this custodial account document as so amended, it
may resign in accordance with Section 17 below.
(a) Depositor also delegates to the Custodian the Depositor's right
so to amend, provided the Custodian amends in the same manner all agreements
comparable to this one, having the same Custodian, permitting comparable
investments, which have been approved by the Fund, and under which such power
has been delegated to it; this includes the power to amend retroactively if
necessary or appropriate in the opinion of the Custodian in order to conform
this custodial account to pertinent provisions of the Code and other laws or
successor provisions of law or to obtain a governmental ruling that such
requirements are met to adopt a prototype or master form of agreement in
substitution for this Agreement, provided such substitute agreement has been
approved by the Fund, or as otherwise may be advisable in the opinion of the
Custodian. Such an amendment by the Custodian shall be communicated in writing
to Depositor, and Depositor shall be deemed to have consented thereto unless,
within 30 days after such communication to Depositor is mailed. Depositor
either (i) gives Custodian a written order for a complete distribution or
transfer of the custodian account or (ii) removes the Custodian and appoints a
successor under Section 17 below.
(b) Notwithstanding the provisions of subsections (i) and (a) above,
no amendment shall increase the responsibilities or duties of Custodian without
its prior written consent.
(c) This Section 13 shall not be construed to restrict the
Custodian's right to substitute fee schedules in the manner provided by Section
16 below, and no such substitution shall be deemed to be an amendment of this
Agreement.
14.(i) Custodian shall terminate the custodial account if this Agreement
is terminated or if within 30 days or such longer time as Custodian may agree
after resignation or removal of Custodian under Section 17 Depositor has not
appointed a successor which has accepted such appointment. Termination of the
custodial account shall be effected by distributing all assets thereof in a
single payment in cash or in kind to Depositor, or to another custodian in
accordance with Section 17 subject to Custodian's right to reserve funds as
provided in Section 17.
(a) Upon termination of the custodial account, this custodial account
document shall have no further force and effect, and Custodian shall be relieved
from all further liability hereunder or with respect to the custodial account
and all assets thereof so distributed.
15.(i) In its discretion the Custodian may appoint one or more
contractors or service providers to carry out any of its functions and may
compensate them from the custodial account for expenses attendant to those
functions.
(a) The Service Company shall be responsible for receiving all
instructions, notices, forms and remittances from Depositor and for dealing with
or forwarding the same to the transfer agent for the Fund(s).
(b) The parties do not intend to confer any fiduciary duties on
Custodian or Service Company (or any other party providing services to the
custodial account) or the Fund, and none shall be implied. Neither shall be
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liable (or assumes any responsibility) for the collection of contributions, the
proper amount, time or deductibility of any contribution to the custodial
account or the propriety of any contributions under this Agreement, or the
purpose, time, amount (including any minimum distribution amounts) or propriety
of any distribution hereunder, which matters are the responsibility of Depositor
and Depositor's Beneficiary.
(c) Not later than 60 days after the close of each calendar year (or
after the Custodian's resignation or removal), the Custodian and Service Company
shall each file with Depositor a written report or reports reflecting the
transactions effected by it during such period and the assets of the custodial
account at its close. Upon the expiration of 60 days after such a report is
sent to Depositor (or Beneficiary), the Custodian and Service Company and Fund
shall be forever released and discharged from all liability and accountability
to anyone with respect to transactions shown in or reflected by such report
except with respect to any such acts or transactions as to which Depositor shall
have filed written objections with the Custodian or Service Company within such
60 days period.
(d) The Service Company shall deliver, or cause to be delivered, to
Depositor all notices, prospectuses, financial statements and other reports to
shareholders, proxies and proxy soliciting materials relating to the shares of
the Fund(s) credited to the custodial account. No shares shall be voted, and no
other action shall be taken pursuant to such documents, except upon receipt of
adequate written instructions from Depositor.
(e) Depositor shall always fully indemnify Service Company,
Distributor, the Fund(s), and Custodian and save them harmless from any and all
liability whatsoever which may arise either (i) in connection with this
Agreement and the matters which it contemplates, except that which arises
directly out of the Service Company's, Distributor's or Custodian's negligence
or willful misconduct, or (ii) with respect to making or failing to make any
distribution, other than for failure to make distribution in accordance with an
order therefore which is in full compliance with Section 10. Neither Service
Company nor Custodian shall be obligated or expected to commence or defend any
legal action or proceeding in connection with this Agreement or such matters
unless agreed upon by that party and Depositor, and unless fully indemnified for
so doing to that party's satisfaction.
(f) The Custodian and Service Company shall each be responsible
solely for performance of those duties expressly assigned to it in this
Agreement, and neither assumes any responsibility as to duties assigned to
anyone else hereunder or by operation of law.
(g) Custodian and Service Company may each conclusively rely upon and
shall be protected in acting upon any written order from Depositor or
Beneficiary, or any investment advisor appointed under Section 8, or any other
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed, and so long as it acts in
good faith, in taking or omitting to take any other action in reliance thereon.
In addition, Custodian will carry out the requirements of any apparently valid
court order relating to the custodial account and will incur no liability or
responsibility for so doing.
16.(i) The Custodian, in consideration of its services under this
Agreement, shall receive the fees specified on the applicable fee schedule. The
fee schedule originally applicable shall be the one specified in the Disclosure
Statement furnished to the Depositor. The Custodian may substitute a different
fee schedule at any time upon 30 days written notice to Depositor. The
Custodian shall also receive reasonable fees for any services not contemplated
by any applicable fee schedule and either deemed by it to be necessary or
desirable or requested by Depositor.
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(a) Any income, gift, estate and inheritance taxes and other taxes at
any kind whatsoever, including transfer taxes incurred in connection with the
investment or reinvestment of the assets of the custodial account, that may be
levied or assessed in respect to such assets, and all other administrative
expenses incurred by the Custodian in the performance of its duties (including
fees for legal services rendered to it in connection with the custodial account)
shall be charged to the custodial account.
(b) All such fees and taxes and other administrative expenses charged
to the custodial account shall be collected either from the amount of any
contribution or distribution to or from the account, or (at the option of the
person entitled to collect such amounts) to the extent possible under the
circumstances by the conversion into cash of sufficient shares of one or more
Funds held in the custodial account (without liability for any loss incurred
thereby). Notwithstanding the foregoing, the Custodian or Service Company may
make demand upon the Depositor for payment of the amount of such fees, taxes and
other administrative expenses. Fees which remain outstanding after 60 days may
be subject to a collection charge.
17.(i) Upon 30 days prior written notice to the Custodian, the Fund or
Depositor may remove it from its office hereunder. Such notice, to be
effective, shall designate a successor custodian and shall be accompanied by the
successor's written acceptance. The Custodian also may at any time resign upon
30 days' prior written notice to the Fund and Depositor, whereupon the Fund
shall appoint a successor to the Custodian.
(a) The successor custodian shall be a bank, insured credit union, or
other person satisfactory to the Secretary of the Treasury under Code Section
408(a)(2). Upon receipt by Custodian of written acceptance by its successor of
such successor's appointment, Custodian shall transfer and pay over to such
successor the assets of the custodial account and all records (or copies
thereof) of Custodian pertaining thereto, provided that the successor custodian
agrees not to dispose of any such records without the Custodian's consent.
Custodian is authorized, however, to reserve such sum of money or property as it
may deem advisable for payment of all its fees, compensation, costs, and
expenses, or for payment of any other liabilities constituting a charge on or
against the assets of the custodial account or on or against the Custodian, with
any balance of such reserve remaining after the payment of all such items to be
paid over to the successor custodian.
(b) The Custodian shall not be liable for the acts or omissions of
its successor.
18. References herein to the "Internal Revenue Code" or "Code" and
sections thereof shall mean the same as amended from time to time, including
successors to such sections.
19. Except where otherwise specifically required in this Agreement, any
notice from Custodian to any person provided for in this Agreement shall be
effective if sent by first-class mail to such person at that person's last
address on the Custodian's records.
20. Neither Depositor nor Depositor's Beneficiary shall have the right or
power to anticipate any part of the custodial account or to sell, assign,
transfer, pledge or hypothecate any part thereof. The custodial account shall
not be liable for the debts of Depositor or Depositor's Beneficiary or subject
to any seizure, attachment, execution or other legal process in respect thereof.
At no time shall it be possible for any part of the assets of the custodial
account to be used for or diverted to purposes other than for the exclusive
benefit of the Depositor or his/her Beneficiary.
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21. When accepted by the Custodian, this agreement is accepted in and
shall be construed and administered in accordance with the laws of the
Commonwealth of Massachusetts. Any action involving the Custodian brought by
any other party must be brought in a state or federal court in such
Commonwealth.
This Agreement is intended to qualify under Code Section 408(a) as an
individual retirement custodial account and to entitle Depositor to the
retirement savings deduction under Code Section 219 if available, and if any
provision hereof is subject to more than one interpretation or any term used
herein is subject to more than one construction, such ambiguity shall be
resolved in favor of that interpretation or construction which is consistent
with that intent. However, Custodian shall not be responsible for whether or
not such intentions are achieved through use of this Agreement, and Depositor is
referred to Depositor's attorney for any such assurances.
22. Depositor should seek advice from Depositor's attorney regarding the
legal consequences (including but not limited to federal and state tax matters)
of entering into this Agreement, contributing to the custodial account, and
ordering Custodian to make distributions from the account. Depositor
acknowledges that Custodian and Service Company (and any company associated
therewith) are prohibited by law from rendering such advice.
23. Articles I through VIII of this Agreement are in the form promulgated
by the Internal Revenue Service. It is anticipated that if and when the
Internal Revenue Service promulgates changes to Form 5305-A, the Custodian will
amend this Agreement correspondingly.
24. The Depositor acknowledges that he or she has received and read the
current prospectus for each Fund in which his or her account is invested and the
Individual Retirement Account Disclosure Statement related to the Account. The
Depositor represents under penalties of perjury that his or her Social Security
number (or other Taxpayer Identification Number) as stated in the Adoption
Agreement is correct.
DISCLOSURE STATEMENT
ESTABLISHING YOUR IRA
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This disclosure statement contains information about your Individual
Retirement Custodial Account with State Street Bank and Trust Company as
Custodian. Your IRA gives you several tax benefits. Earnings on the assets held
in your IRA are not subject to federal income tax until withdrawn by you. You
may be able to deduct all or part of your IRA contribution on your federal
income tax return. State income tax treatment of your IRA may differ from
federal treatment; ask your state tax department or your personal tax advisor
for details.
All IRAs meet certain requirements. Contributions generally must be made
in cash. The IRA trustee or custodian must be a bank or other person who has
been approved by the Secretary of the Treasury. Your contributions may not be
invested in life insurance or be commingled with other property except in a
common trust or investment fund. Your interest in the amount must be
nonforfeitable at all times. You may obtain further information on IRAs from
any district office of the Internal Revenue Service.
You may revoke a newly established IRA at any time within seven days after
the date on which you established the IRA.
To revoke your IRA, mail or deliver a written notice of revocation to the
Custodian at the address which appears at the end of this Disclosure Statement.
Mailed notice will be deemed given on the date that it postmarked
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(or, if sent by certified or registered mail, on the date of certification or
registration). If you revoke your IRA within the seven-day period, you are
entitled to a return of the entire amount you contributed into your IRA, without
adjustment for such items as sales charges, administrative expenses or
fluctuations in market value.
FEES AND EXPENSES
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CUSTODIAN'S FEES
The annual fee is $10.00 per fund to a maximum of $30.00. This fee is charged
by the Custodian for maintaining your IRA.
GENERAL FEE POLICIES
- - Fees may be paid by you directly or the Custodian may deduct them from your
IRA.
- - Fees may be changed upon 30 days written notice to you.
- - The full annual maintenance fee will be charged for any calandar year during
which you have an IRA with us. This fee is not prorated for periods of less
than one full year.
- - The Custodian may charge you for its reasonable expenses for services not
covered by its fee schedule.
OTHER CHARGES
- - There may be sales or other charges associated with the purchase or redemption
of shares of a Fund in which your IRA is invested. BE SURE TO READ CAREFULLY
THE CURRENT PROSPECTUS OF ANY FUND YOU ARE CONSIDERING AS AN INVESTMENT FOR YOUR
IRA FOR A DESCRIPTION OF APPLICABLE CHARGES.
ELIGIBILITY
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WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR AN IRA?
You are eligible to establish and contribute to an IRA for a year if:
- - You received compensation (or earned income if you are self employed)
during the year for personal services you rendered. If you received
taxable alimony, this is treated like compensation for IRA purposes.
- - You did not reach age 70 1/2 during the year.
CAN I CONTRIBUTE TO AN IRA FOR MY SPOUSE?
For each year before the year when your spouse attains age 70 1/2, you can
contribute to a separate IRA for your spouse, regardless of whether your spouse
had any compensation or earned income in that year. This is called a "spousal
IRA." To make a contribution to a spousal IRA for your spouse, you must file a
joint tax return and your spouse must elect on the return to be treated as
having no compensation or earned income for that year. For a spousal IRA, your
spouse must set up a different IRA, separate from yours, to which you
contribute.
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<PAGE>
CONTRIBUTIONS
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WHEN CAN I MAKE CONTRIBUTIONS TO AN IRA?
You may make a contribution to your existing IRA or establish a new IRA for
a taxable year by the due date (not including any extensions) for your federal
income tax return for the year. Usually this is April 15 of the following year.
HOW MUCH CAN I CONTRIBUTE TO MY IRA?
For each year when you are eligible (see above), you can contribute up to
the lesser of $2,000 or 100% of your compensation (or earned income, if you are
self-employed). However, as a result of recent tax laws, all or a portion of
your contribution may not be deductible.
If you and your spouse have spousal IRAs, you may contribute each year up
to a maximum of $2,250 from your compensation (or earned income) to both spousal
IRAs. You may divide the contribution between the spousal IRAs as you wish, as
long as you do not contribute more than $2,000 to either of the spousal IRAs.
HOW DO I KNOW IF MY CONTRIBUTION IS TAX DEDUCTIBLE?
The deductibility of your contribution depends upon whether you are (or
your spouse is) an active participant in any employer-sponsored retirement plan.
If neither you nor your spouse is an active participant, the entire IRA
contribution is deductible.
If either you or your spouse is an active participant, your IRA
contribution may still be completely or partly deductible on your tax return.
This depends on the amount of your income.
HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS?
Your Form W-2 (or your spouse's W-2) should indicate if you were an active
participant in an employer-sponsored retirement plan for a year. If you have a
question, you should ask your employer or the plan administrator.
In one situation, your spouse's "active participant" status will not affect
the deductibility of your contributions to your IRA. This rule applies only if
you and your spouse file separate tax returns for the taxable year and you lived
apart at all times during the taxable year.
WHAT ARE THE DEDUCTION RESTRICTIONS?
The portion of your contribution that is deductible depends upon your
filing status and the amount of your adjusted gross income ("AGI"). The
following table shows the deduction rules.
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<PAGE>
155 Bovet Road, Suite 200
San Mateo, CA 94402
415-378-8700
Exhibit 14(b)
TRUST CONSULTANTS INC
Part of Seabury & Smith
February 25, 1993
Mr. Jack Henderson
Chairman
The WESTCORE Trust
600 17th Street, Suite 1605 South
Denver, Colorado 80202
ENGAGEMENT LETTER
Dear Mr. Henderson:
This engagement letter (hereinafter referred to as "Agreement") will serve as an
agreement as to WESTCORE Trust's (WESTCORE) use of Trust Consultant's Inc.'s
(TCI) services in the areas of prototypes, plan administration services, 401(k)
plan services, broker and headquarters training and support, and the fees for
the foregoing. The provisions of this Agreement are as follows:
1. PROTOTYPES
TCI grants a non-exclusive right to WESTCORE and its authorized agent ALPS
Mutual Funds Services, Inc. ("ALPS") collectively referred to as the
"Sponsoring Organization" to adopt as "identical adopter" the two 401 (k)
plan documents (the "Plans") which are sponsored by TCI as mass submitter
plans (the "Mass Submitter Plans"). TCI has submitted each Mass Submitter
Plan using the Internal Revenue Service Form 4461 and each Plan has received
approval as a mass submitter document (Copies of opinion letters attached as
Appendix D). Each opinion letter takes into account the requirements of the
Tax Reform Act of 1986 and later laws amending the Internal Revenue Code of
1986 to the extent possible as of the date the letters were issued. TCI will
prepare, execute and forward to the Sponsoring Organization the Internal
Revenue Service Forms 4461(b) Application and 8717 User Fee for review and
use by the Sponsoring Organization in submitting the Mass Submitter Plans for
identical adopter approval. The Sponsoring Organization will be responsible
for the submission as identical adopter to the Internal Revenue
<PAGE>
Service in Washington, D.C. and for payment of the Internal Revenue Service
User Fee of $100 per adoption agreement submitted. TCI makes no
representations that the submissions will ultimately result in Internal
Revenue Service opinion letters.
TCI will amend the Mass Submitter Plans in a timely manner to the extent
necessary to comply with statutes, regulations and rules. TCI will notify the
Sponsoring Organization of such amendment(s) in a timely fashion and shall
submit the amended Mass Submitter Plans to the Internal Revenue Service in
timely fashion for an opinion letter. TCI will notify the Internal Revenue
Service as to whether the Sponsoring Organization wishes to adopt the amended
Mass Submitter Plans. TCI will, at the request of the Sponsoring Organization,
prepare and execute the needed forms for review and use by the Sponsoring
Organization in applying for the amended prototype plan's approval. TCI will
forward such forms and any attendant documents to the Internal Revenue Service.
If the Sponsoring Organization does adopt such plans, it will notify each
employer which has adopted one of the plans it sponsors (Adopting Employer) of
such amendments. TCI will offer services to each Adopting Employer which has
engaged the administrative services of TCI for assuring the timely completion of
needed amendments. If appropriate and the Adopting Employer so elects, TCI will
also prepare forms for submission of the Adopting Employer's plan to the
Internal Revenue Service. TCI will arrange for the payments of any fees for
these services to the Adopting Employer with the individual Adopting Employer.
The Sponsoring Organization shall be responsible for such amendments as to those
Adopting Employers which have adopted the Sponsoring Organization plans but
which have not also engaged TCI for administrative services.
2. 401 (k) PLAN PROPOSAL SYSTEM
TCI will make available to the Sponsoring Organization (i) standard employee
communication materials and (ii) the "401(k) Plan Proposal System," a software
system developed by TCI which prepares qualified 401(k) plan proposals on IBM or
IBM compatible machines with MS-DOS and Lotus 1-2-3 systems. Both items may be
used on a nationwide basis by the Sponsoring Organization personnel who are
involved in the sale and promotion of 401(k) plans and promotion of the plan
administrative services of TCI. There is no limit to the number of proposals
which may be run using this software by the Sponsoring Organization . Such
proposals shall contain a description of TCI's fees and services as exemplified
by the attached appendices and an outline of the basic plan provisions. The
materials produced by the system will be coordinated with the Sponsoring
Organization 401(k) materials as agreed to in writing by both parties. Cost of
the plan proposal system is included in the fees on Appendix C.
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<PAGE>
3. 401(k) PLAN ADMINISTRATION
TCI will provide plan setup and administration services, as outlined in
Appendices A and B, to each Adopting Employer where the Adopting Employer has
engaged TCI to provide such services. TCI will charge Adopting Employers the
fees for such services exemplified by those set forth in Appendix B.
For all types of plan setup and administration fees, TCI reserves the right to
make reasonable changes in its fee schedules. TCI will review its fee schedules
at least once annually, and reserves the right to adjust its fees effective each
January 1. In addition to each annual review and adjustment, TCI may determine,
based on such things as general business conditions, legislative acts which
become law, or regulatory policy or rules published by the Internal Revenue
Service, that it is necessary to review and reasonably adjust its fee schedules
at other times besides annually. In all cases of fee schedule changes, TCI will
apprise the Sponsoring Organization of such change 60 days in advance of the
effective date of the change and will be available to discuss any and all
changes with the Sponsoring Organization. TCI will apprise the Adopting
Employers who had been referred by the Sponsoring Organization of such changes
in a timely manner. Plans set-up prior to December 31, 1992 will be guaranteed
the 1992 plan set-up fee for the 1993 plan year. Plan administration services
and fees are not included in this guarantee.
TCI will provide each Adopting Employer with "401(k) Plan Manager". 401(k) Plan
Manager is an IBM, MS-DOS compatible software package which can be used by
individual Adopting Employers to record and transmit salary data, generate
employee enrollment forms, generate personalized plan savings analysis, and
perform other functions to assist the Adopting Employer in administering its
401(k) Plan. The fee charged for 401(k) Plan Manager is included in the
administrative fees set forth in Appendix B.
TCI shall not share in any fees paid to the Sponsoring Organization in
connection with the Sponsoring Organization's services to retirement plans, and
the Sponsoring Organization shall not share in any fees paid to TCI in
connection with TCI's services to retirement plans. It is recognized that the
Sponsoring Organization has sole responsibility for setting fees charged by the
Sponsoring Organization and that TCI has sole responsibility for setting fees
charged by TCI. All setup fees to TCI are payable by the Adopting Employer in
advance and must accompany the signed adoption agreement. It is recognized that
TCI will not accept for administration plan documents which it has reason to
believe may not have been signed within the appropriate time period for the year
in question. TCI's annual administration fees will be billed directly by TCI to
each
-3-
<PAGE>
Adopting Employer on the first of each quarter in the amount of one forth of the
estimated annual fee.
Within 60 days of adoption of a plan by an Adopting Employer, TCI will provide a
representative, at First Interstate Bank's or the Sponsoring Organization's
discretion, for one full business day at the Adopting Employer's principal place
of business to assist with employee enrollment meetings, provided the Adopting
Employer has over 100 employees who are eligible to participate in the plan.
The fee charged for such service is included in the administrative fees set
forth in Appendix B. TCI fees do not include on site meetings by TCI personnel
for any Adopting Employer with less than 100 eligible employees. Such meetings
must be preapproved by First Interstate Bank and TCI and will be billed to the
Adopting Employer at the regular billing rate of the TCI person involved.
4. MARKETING SUPPORT
TCI will promptly answer questions from First Interstate Bank retirement plans'
headquarters and regional staff concerning 401(k) plans which are or have the
potential of being administered by TCI. There is no limit to the number of
questions to be replied to by TCI personnel and there will be no additional
charge for such questions. TCI will refer questions which do not relate to
actual or potential clients of TCI to the Sponsoring Organization or appropriate
departments within First Interstate Bank. Any Adopting Employers or plan
participants who inquire about or request the Sponsoring Organization
information which is non 401(k) related will be promptly referred to the
Sponsoring Organization at 1-800-392-2673. An initial two day training session
will be conducted with TCI participating in these two days. This will occur
within thirty days of the signing of this Agreement, and will include any First
Interstate Bank staff deemed necessary by First Interstate Bank as well as
representatives of ALPS. The travel and other expenses of First Interstate Bank
and ALPS personnel shall be the responsibility of their respective
organizations.
5. FEES
See Appendix C. Fees agreed to between Boston Financial Data Services ("BFDS")
and TCI are not a subject of this contract.
6. STANDARD OF CARE AND CONFIDENTIALITY
All confidential information furnished by the Sponsoring Organization to TCI or
by TCI to the Sponsoring Organization shall be held in confidence and shall not
be disclosed to third parties or used in any manner except in connection with
the provision of services hereunder, or in furtherance of the purposes of this
Agreement. Such requirements shall survive
-4-
<PAGE>
termination of this Agreement for three years from the date of termination of
this Agreement.
The foregoing restrictions shall not apply to such information which is in or
enters into public domain without fault on the part of the party who disclosed
such information, or is required to be disclosed pursuant to law or legal
process.
The Sponsoring Organization and TCI will each exercise diligence and reasonable
care in providing to each other and to each Adopting Employer the advice and
services set forth in this Agreement.
In addition to any liability to each other the parties may have arising under
this Agreement, the Sponsoring Organization and TCI each shall indemnify the
other against all losses, liabilities, claims, demands, suits, costs and
expenses (including reasonable attorney's fees) asserted against either or both
of them by third parties and arising out of, or attributable to, any negligence
or willful misconduct of the indemnifying party in discharging the
responsibilities or obligations imposed upon it by this Agreement.
7. LENGTH OF AGREEMENT
This agreement shall be in effect until cancelled by the Sponsoring Organization
or by TCI. Written notice of intended cancellation must be given at least
ninety days prior to any such cancellation.
8. MISCELLANEOUS
This agreement shall not be assigned by either party, including by operation of
law, except with the prior written consent of the other party. This Agreement,
including all appendices, constitutes the complete and full understanding of the
parties.
This Agreement may only be amended by written agreement of both parties.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Colorado.
If any provisions of this Agreement shall be held invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision, and the
Agreement shall be construed and enforced as if such provision had not been
included.
-5-
<PAGE>
The foregoing correctly sets forth the agreement between the Sponsoring
Organization and TCI.
Sponsoring Organization: Westcore Trust Consultants, Inc.
Trust and Alps Mutual Funds
Services, Inc.
______________________________ __________________________
Jack D. Henderson, Chairman Mark P. Weimer, President
on behalf of Sponsoring Organization: on behalf of Trust Consultants,
Westcore Trust and Alps Mutual Inc.
Funds Services, Inc.
-6-
<PAGE>
APPENDIX A
401(k) SET UP AND ADMINISTRATIVE SERVICES
PLAN SET UP: Preparation of Plan Document
Summary Plan Description
IRS Submission (if required)
Notice to Interested Parties
Operations Manual
Designation of Beneficiary Forms
EMPLOYEE COMMUNICATION: Provide to Employer:
Payroll Stuffer
Employee Brochure
Video or Slide Show
Enrollment Forms
ADMINISTRATION
Participant Recordkeeping
Discrimination Testing
Preparation of: 5500's (and required schedules)
Summary Annual Report
Participant Statement
Assistance in contribution calculation
Daily Valuations
Calculation of Vested Benefits
Preparation of 1099R
<PAGE>
APPENDIX B
TRUST CONSULTANTS AND TRANSFER AGENCY FEES
TRAC-2000
401(K) PLANS
FOR PLAN YEARS BEGINNING 01/01/92
ONE TIME SET UP FEES
Base Fee 1100
Per Eligible Employee (New Plans) 3
Per Eligible Employee (Existing Plans) 16
If IRS Submit is required, there is an additional fee
of $300 plus the $125 IRS User Fee.
ANNUAL ADMINISTRATION FEES
Base Fee (includes 5500) 1100
Per Eligible Employee (1-60) 37
(60-300) 27
(300+) 23
Minimum Annual Base Plus Eligible Employee Fee of $1600
TRUSTEE FEES
Up to 500 Eligible Employees 300
Above 500 Eligible Employees 1000
ADDITIONAL POTENTIAL ANNUAL FEES
Participant Terminations and Withdrawals 35
(Plus $30 for 1099 and W-2P if Self-Trusteed)
Per Loan Per Year 100
Per Insurance Policy Per Year 30
Correction of Actual or Projected Failure to Pass
Discrimination Test 160
GIC or Other Outside Investment from Prior Plan
(Plus $15 Per Participant) 300
B-1
<PAGE>
Employer Contributions other than Match
(Per Eligible Employee) 5
IF DATA IS NOT TRANSMITTED TO TRUST CONSULTANTS USING 401(k) PLAN MANAGER OR
OTHER COMPATIBLE ELECTRONIC MEDIA, THERE WILL BE AN ADDITIONAL FEE OF $100 PER
YEAR PLUS $1 PER ELIGIBLE EMPLOYEE PER PAYROLL PERIOD.
ABOVE SCHEDULE ASSUMES DAILY VALUATIONS, QUARTERLY REPORTS AND DISCRIMINATION
TESTS; ALL ASSETS HELD IN MAXIMUM OF SIX FUNDS IN ONE FAMILY OF FUNDS.
ADDITIONAL CALCULATIONS IF EMPLOYER HAS CURRENT OR PAST DEFINED BENEFIT PLAN;
WORK REDONE DUE TO EMPLOYER SUPPLIED INCORRECT DATA; AND SPECIAL SERVICES SUCH
AS AMENDMENTS OR PLAN TERMINATIONS WILL BE BILLED EXTRA.
B-2
<PAGE>
TRAC-2000
401(K) PLANS
FOR PLAN YEARS BEGINNING 01/01/93
ONE TIME SET UP FEES
New Plans:
Base Fee 1180
Per Eligible Employee 6
Takeover Plans:
Base Fee 1300
Per Eligible Employee 16
IF IRS SUBMIT IS REQUIRED, THERE IS AN ADDITIONAL FEE OF $360 PLUS THE IRS
USER FEE.
ANNUAL ADMINISTRATION FEES
Base Fee (includes 5500) 1180
Per Eligible Employee (1 -75) 38
(76-300) 28
(301+) 20
MINIMUM ANNUAL BASE PLUS ELIGIBLE EMPLOYEE FEE OF $1800.
TRUSTEE FEES
Up to 500 Eligible Employees 300
Above 500 Eligible Employees 1000
ADDITIONAL POTENTIAL ANNUAL FEES
Participant Terminations and Withdrawals (Plus $40 for 1099R
if Self-Trusteed) 40
Loans Set-Up 30
Loans Annual 80
Per Insurance Policy Per Year 30
B-3
<PAGE>
Correction of Actual or Projected Failure to Pass
Discrimination Test (Per Quarter)
(Plus $1.25 Per Eligible Employee Per Quarter) 180
GIC or Other Outside Investment from Prior Plan
(Plus $15 Per Participant Account) 300
Employer Contribution Other Than Match or Rollover
Acct (Per Eligible Employee) 6
IRS or CPA Audit (Minimum) 300
IF DATA IS NOT TRANSMITTED TO TRUST CONSULTANTS USING 401(k) PLAN MANAGER OR
OTHER COMPATIBLE ELECTRONIC MEDIA, THERE WILL BE AN ADDITIONAL FEE OF $100 PER
YEAR PLUS $1 PER ELIGIBLE EMPLOYEE PER PAYROLL PERIOD.
ABOVE SCHEDULE ASSUMES DAILY VALUATIONS, QUARTERLY REPORTS AND DISCRIMINATION
TESTS: ALL ASSETS HELD IN MAXIMUM OF SIX FUNDS IN ONE FAMILY OF FUNDS.
ADDITIONAL CALCULATIONS IF EMPLOYER HAS CURRENT OR PAST DEFINED BENEFIT PLAN:
WORK REDONE DUE TO EMPLOYER SUPPLIED INCORRECT DATA: AND SPECIAL SERVICES SUCH
AS AMENDMENTS OR PLAN TERMINATIONS WILL BE BILLED EXTRA.
B-4
<PAGE>
APPENDIX C
Trust Consultants fees charged to WESTCORE/First Interstate Bank
ANNUAL ENGAGEMENT FEE $10,000
For the Rights and Services described in Sections 1,2, and 4 of the Agreement.
Reduced in second and future years by a credit of $100 per plan sold.
ASSISTANCE WITH CUSTOMIZATION OF AND/OR $10,000
MARKETING MATERIALS (Year One Only)
OPTIONAL SERVICES (Not Elected in Year One):
PROPOSAL PREPARATION (per year) $10,000
(TCI prepares proposals at TCI on behalf of Westcore)
ROLLOUT SALES MEETINGS (per year) $10,000
The optional services above may be elected in subsequent years and will be
offered directly to First Interstate Bank. The Rollout Sales meetings would
cover ten one-day training sessions, purchased as a package of ten meetings, at
a fee of $10,000 ($1,000 per meeting). Travel expenses are included in this
fee; additional meetings will be billed extra at the hourly billing rate of the
TCI individual who conducts the meeting, determined in advance of the meeting.
The fee for TCI's assistance with the customization of the marketing materials
done in the first year of this Agreement is payable in the first year only.
This covers initial and ongoing review of the marketing materials prepared by
TCI during the first year which may, in WESTCORE's discretion, be included in
the marketing materials. Any production and printing costs incurred by TCI are
additional costs and will be billed to WESTCORE at cost.
<PAGE>
APPENDIX D
<PAGE>
Internal Revenue Service
Description: Prototype Standardized Profit Sharing Plan with CODA
50299484802-009 Case: 8902010 EIN: 94-1735408
02 Plan: 003 Letter Serial No: 0240142a
Washington, DC 20224
Trust Consultants Inc. Person to Contact: Mrs. Fleming
155 Bovet Road, Suite 201 Telephone Number: (202) 566-6421
San Mateo, CA 94402 Refer Reply to: E:EP:2:1
Date: 01/03/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
Because you are not a sponsoring organization as defined in section 3.07 of Rev.
Proc. 89-9, 1989-6 I.R.B. 14, you may not use this letter as a basis for
marketing to employers the form of the plan identified above as an approved
master or prototype plan.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). An employer who adopts this plan will be considered to have a plan
qualified under Code section 401(a) provided all the terms of the plan are
followed, and the eligibility requirements and contribution or benefit
provisions are not more favorable for officers, owners, or highly compensated
employees than for other employees. Except as stated below, the Key District
Director will not issue a determination letter with regard to this plan.
Our opinion does not apply to the form of the plan for purposes of Code section
401(a)(16) if: (1) an employer ever maintained another qualified plan for one
or more employees who are covered by this plan, other than a specified paired
plan within the meaning of section 7 of Rev. Proc. 39-9, 1989-6 I.R.B. 14; or
(2) after December 31, 1985, the employer maintains a welfare benefit fund
defined in Code section 419(e), which provides postretirement medical benefits
allocated to separate accounts for key employees as defined in Code section
419A(d)(3). In such situations, the employer should request a determination as
to whether the plan, considered with all related qualified plans and, if
appropriate, welfare benefit funds, satisfies the requirements of Code section
401(a)(16) as to limitations on benefits and contributions in Code section 415.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
<PAGE>
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
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<PAGE>
Internal Revenue Service
Description: Prototype Standardized Profit Sharing Plan with CODA
50399484802-010 Case: 8902011 EIN: 94-1735408
02 Plan: 001 Letter Serial No: 0340142a
Washington, DC 20224
Trust Consultants Inc. Person to Contact: Mrs. Fleming
155 Bovet Road, Suite 201 Telephone Number: (202) 566-6421
San Mateo, CA 94402 Refer Reply to: E:EP:2:1
Date: 01/08/90
Dear Applicant:
In our opinion, the form of the plan identified above is acceptable under
section 401 of the Internal Revenue Code for use by employers for the benefit of
their employees. This opinion relates only to the acceptability of the form of
the plan under the Internal Revenue Code. It is not an opinion of the effect of
other Federal or local statutes.
Because you are not a sponsoring organization as defined in section 3.07 of Rev.
Proc. 89-9, 1989-6 I.R.B. 14, you may not use this letter as a basis for
marketing to employers the form of the plan identified above as an approved
master or prototype plan.
Our opinion on the acceptability of the form of the plan is not a ruling or
determination as to whether an employer's plan qualifies under Code section
401(a). Therefore, an employer adopting the form of the plan should apply for a
determination letter by filing an application with the Key District Director of
Internal Revenue Service on Form 5307, Short Form Application for Determination
for Employee Benefit Plan.
If you, the plan sponsor, have any questions concerning the IRS processing of
this case, please call the above telephone number. This number is only for use
of the plan sponsor. Individual participants and/or adopting employers with
questions concerning the plan should contact the plan sponsor. The plan's
adoption agreement must include the sponsor's address and telephone number for
inquiries by adopting employers.
If you write to the IRS regarding this plan, please provide your telephone
number and the most convenient time for us to call in case we need more
information. Whether you call or write, please refer to the Letter Serial
Number and File Folder Number shown in the heading of this letter.
You should keep this letter as a permanent record. Please notify us if you
modify or discontinue sponsorship of this plan.
Sincerely yours,
Chief, Employee Plans Qualifications Branch
<PAGE>
PROTOTYPE 401(k) PROFIT SHARING PLAN ADOPTION AGREEMENT
The undersigned employer(s) __________________________________________________
hereinafter referred to as the "Employer", hereby adopts the WESTCORE Trust
Prototype 401(k) Profit Sharing Plan and Trust.
1. EMPLOYER TAX IDENTIFICATION NUMBER _______________________________
2. The EFFECTIVE DATE of the Plan shall be __________________________
3. The EFFECTIVE DATE of this amendment _____________________________
4. The ANNIVERSARY DATE of the Plan shall be
5. The ENTRY DATE(S) of the Plan:
5.1 _________________________ shall be the first Entry Date.
5.2 _________________________ shall be the second Entry Date.
5.3 _________________________ shall be the third Entry Date.
5.4 _________________________ shall be the fourth Entry Date.
(The Entry Date(s) may not postpone entry into the Plan later than the
earlier of (a) the first day of the Plan Year beginning after the date on
which an Employee satisfies the requirements of Section 6 below, or (b) the
date 6 months after the date such requirements were satisfied).
6. ELIGIBILITY REQUIREMENTS - Each Employee will be eligible to participate in
this Plan in accordance with Section 5 of this Adoption Agreement, except
the following:
6.1 ___Employees who have not attained the age of _____ (cannot exceed
21).
6.2 ___Employees who have not completed _____ Year(s) of Service (cannot
exceed 1 year unless the Plan provides a nonforfeitable right to 100%
of the Participant's account balance derived from Employer
contributions after not more than 2 Years of Service, in which case,
up to 2 years is permissible. If the Year(s) of Service selected is,
or includes, a fractional year, an Employee will not be required to
complete any specified Hours of Service to receive credit for such
fractional year.)
6.3 ___Employees included in a unit of Employees covered by a collective
bargaining agreement between the Employer and Employee
Representatives, if retirement benefits were the subject of good faith
bargaining. For this purpose, the term "Employee Representatives"
does not include any organization more than half of whose members are
employees who are owners, officers, or executives of the Employer.
6.4 ___Employees who are nonresident aliens and who earn no earned income
from the Employer which constitutes income from sources within the
United States.
The term "Employee" shall include all Employees of this Employer and any
other employer aggregated with this Employer under Internal Revenue Code
Section 414(b), (c) or (m) and individuals required to be considered
Employees or any such Employer under Code Section 414(n) or under
regulations under Code Section 414(o).
Page 1
<PAGE>
7. COMPENSATION shall mean all of each Participant's:
7.1 ___W-2 earnings
7.2 ___Compensation (as that term is defined in Section 415(c)(3) of the
Code)
Which is actually paid to the Participant during:
7.3 ___The Plan Year
7.4 ___The taxable year ending with or within the Plan Year.
7.5 ___The Limitation Year ending with or within the Plan Year.
Compensation:
7.6 ___Shall include
7.7 ___Shall not include
Employer contributions made pursuant to a salary reduction agreement which
are not includable in the gross income of the employee under sections 125,
402(a)(8), 402(h) or 403(b) of the Code.
8. NORMAL RETIREMENT AGE shall mean:
The later of age ___ (not to exceed age 65) or the ___ (not to exceed 5th)
anniversary of the first day of the First Plan Year in which the
Participant commenced participation in the Plan.
9. VESTING
If a Participant terminates prior to Normal Retirement Age he shall receive
a percentage of his Accrued Benefit according to the vesting schedule
checked below:
9.1 ___One Hundred Percent schedule.
100% at all times.
9.2 ___Twenty Percent Schedule
20% after the second Covered Year of Service and 20% for each
additional Covered Year of Service.
9.3 ___Variable Schedule
Based on Covered Years of Service after Year:
1 __________ 4 __________ (at least 60%)
2 __________ (at least 20%) 5 __________ (at least 80%)
3 __________ (at least 40%) 6 100%
9.4 ___Three Year Vesting Schedule
100% vested after the completion of three (3) Covered Years of
Service.
If the vesting schedule under the Plan(s) shifts in or out of the
above vesting schedule for any Plan Year because of the Plan's top
heavy status, such shift is an amendment to the vesting schedule and
the election in Section 1.4 of the Plan applies.
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Notwithstanding the above, the Accrued Benefit shall become fully vested at
Normal Retirement Age.
10. CONTRIBUTIONS
10.1 ___EMPLOYER CONTRIBUTIONS - The Employer may make contributions to the
Plan without regard to current or accumulated earnings and profits for
the taxable year or years ending with or within the Plan Year.
Unless this option is elected, the Plan will be subject to the
requirement that employer contributions be made out of current or
accumulated net profits. Accordingly, all employer contributions
under the Plan, including Employer discretionary contributions,
Elective Deferrals and Qualified Non-elective Contributions, will be
limited to the Employer's net profits.
10.2 ___ELECTIVE DEFERRALS - A Participant may elect to have his or her
Compensation reduced by the following percentage or amount per pay
period, or for a specified pay period or periods, as designated in
writing to the Plan Administrator:
a. ___An amount not in excess of _____ percent of a Participant's
Compensation.
b. ___An amount not in excess of $_________ of a Participant's
Compensation.
No Participant shall be permitted to have Elective Deferrals made
under this plan during any calendar year in excess of $7,000,
multiplied by the Adjustment Factor.
c. A Participant may elect to commence Elective Deferrals as of
__________ (ENTER AT LEAST ONE DATE OR PERIOD DURING A CALENDAR
YEAR). Such election shall become effective as of the __________
(ENTER NUMBER) pay period following the pay period during which
the Participant's election to commence Elective Deferrals was
made, or as soon as administratively feasible thereafter.
d. A Participant's election to have Elective Deferrals made pursuant
to a salary reduction agreement shall remain in effect until
modified or terminated. A Participant may modify the amount of
Elective Deferrals as of __________ (ENTER AT LEAST ONE DATE OR
PERIOD DURING A CALENDAR YEAR). Such election shall become
effective as of the __________(ENTER NUMBER) pay period following
the pay period during which the Participant's election to modify
Elective Deferrals was made, or as soon as administratively
feasible thereafter.
e. ___A Participant may base Elective Deferrals on cash bonuses
that, at the Participant's election, may be contributed to the
plan or received by the Participant in cash.
f. A Participant shall be afforded a reasonable period to elect to
defer amounts described above. Such election shall become
effective as of the __________ (ENTER NUMBER) pay period
following the pay period during which the Participant's election
to make such Elective Deferrals was made, or as soon as
administratively feasible thereafter.
g. A Participant shall designate the amount and frequency of his or
her Elective Deferrals in the form and manner specified by the
Plan Administrator.
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<PAGE>
10.3 ___EMPLOYER PROFIT SHARING CONTRIBUTIONS - In addition to Elective
Deferrals, Qualified Non-elective Contributions, Qualified Matching
Contributions and Matching Contributions, the Employer may make
additional contributions under the Plan which shall be made solely at
the discretion of the Employer but not in excess of 15% of Participant
Compensation, up to the maximum amount specified in Section 5.5 of the
Plan.
Employer contributions under this Section 10.3 shall be allocated in
proportion to compensation and shall vest in accordance with the
vesting schedule specified in Section 9 of this Adoption Agreement.
Forfeitures of Profit Sharing Contributions shall be:
a. _____ added to and allocated in the same manner as the
Contribution
b. _____ applied to reduce the Contribution.
11. QUALIFIED NON-ELECTIVE CONTRIBUTIONS
11.1 ___The Employer will make Qualified Non-elective Contributions to the
plan. If the Employer does make Qualified Non-elective Contributions
to the plan, then the amount of such contributions to the plan for
each Plan Year shall be:
a. ___ _______ percent (not to exceed 15 percent) of the
Compensation of all Participants eligible to share in the
allocation.
b. ___ _______ percent of the net profits, but in no event more than
$__________ for any Plan Year.
c. ___An amount as determined by the Employer. The amount of the
special Qualified Non-elective Contributions allocated under
section 11.2 below will be the amount needed to meet the Average
Actual Deferral Percentage test stated in section 11.4 of the
Plan.
11.2 Allocations of Qualified Non-elective Contributions to each
Participant's account shall be made to the accounts of:
a. ___All Participants.
b. ___Only Non-highly compensated Participants.
11.3 Allocations of Qualified Non-elective Contributions to each
Participant's account shall be made (elect one):
a. ___In the ratio in which each Participant's Compensation for the
Plan Year bears to the total Compensation of all Participants for
such Plan Year.
b. ___In the ratio in which each Participant's Compensation not in
excess of $_______ for the Plan Year bears to the total
Compensation of all Participants not in excess of $_______ for
such Plan Year.
12. QUALIFIED MATCHING CONTRIBUTIONS
12.1 ___The Employer will make Qualified Matching Contributions to the plan
on behalf of Participants who make Elective Deferrals.
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12.2 ___The Employer will make Qualified Matching Contributions to the plan
on behalf of:
a. ___All Participants who make Elective Deferrals.
b. ___All Participants who are Non-highly Compensated Employees and
who make Elective Deferrals.
12.3 The amount of such Qualified Matching Contributions made on behalf of
each Participant as specified in section 12.2 of this adoption
agreement shall be:
a. ___ _______ percent of the Elective Deferral made for each Plan
Year.
b. ___the sum of _______ percent of the portion of the Elective
Deferral which does not exceed _______ percent of the portion of
the Participant's Compensation, plus _______ percent of the
portion of the Elective Deferral which exceeds _______ percent of
the Participant's Compensation, but does not exceed _______
percent of the Participant's Compensation.
c. ___The Employer shall not match Elective Deferrals as provided in
a or b above in excess of $_______ or in excess of ___ percent of
the Participant's Compensation.
12.4 Qualified Matching Contributions and Qualified Non-Elective
Contributions may be taken into account as Elective Deferrals for
purposes of calculating the Actual Deferral Percentages. In deter-
mining Elective Deferrals for the purpose of the ADP test, the Employer
shall include:
a. ___Qualified Matching Contributions
b. ___Qualified Non-Elective Contributions
under this Plan or any other Plan of the Employer as provided by
regulations under the Code.
12.5 The amount of qualified Matching Contributions made under Section 12.1
of this plan and taken into account as Elective Deferrals for purposes
of calculating the Actual Deferral Percentage, subject to such other
requirements as may be prescribed by the Secretary of the Treasury,
shall be:
a. ___All such Qualified Matching Contributions.
b. ___Such Qualified Matching Contributions that are needed to meet
the Actual Deferral Percentage test.
12.6 The amount of Qualified Non-Elective Contributions made under Section
11 of this plan and taken into account as Elective Deferrals for
purposes of calculating the Actual Deferral Percentages, subject to
such other requirements as may be prescribed by the Secretary of the
Treasury, shall be:
a. ___All such Qualified Non-elective Contributions.
b. ___Such Qualified Non-elective Contributions that are needed to
meet the Actual Deferral Percentage test stated in section
11.4(F) of the plan.
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13. MATCHING CONTRIBUTIONS
13.1 ___The Employer will make Matching Contributions to the plan on behalf
of Participants who make Elective Deferrals. The Employer will make
Matching Contributions to the plan on behalf of:
a. ___All Participants who make Elective Deferrals.
b. ___All Participants who are Non-highly Compensated Employees and
who make Elective Deferrals.
13.2 Matching contributions will be:
a. ___Nonforfeitable when made.
b. ___Subject to the vesting schedule applicable to employer
contributions, other than Elective Deferrals and Qualified Non-
elective Contributions, under the plan.
13.3 The amount of such Matching Contributions made on behalf of each
Participant shall be:
a. ___ _______ percent of the Elective Deferral made for each Plan
Year.
b. ___ the sum of _______ percent of the portion of the Elective
Deferral which does not exceed _____ percent of the Participant's
Compensation plus _____ percent of the portion of the Elective
Deferral which exceeds _____ percent of the Participant's
Compensation, but does not exceed _____ percent of the
Participant's Compensation.
c. ___The Employer shall not match Elective Deferrals as provided in
a or b above in excess of $_______ or in excess of _____ percent
of the Participant's Compensation.
The level of contributions chosen by the Employer is subject to
both the section 401(m)(2) discrimination test and the section
415 limitations.
14. SPECIAL DISTRIBUTIONS
Elective Deferrals, Qualified Matching Contributions, Qualified Non-
elective Contributions and income allocable to such amounts shall be
distributable upon separation from service, death, or disability, as defined
in the underlying plan document, and, in addition:
14.1 ___Termination of the plan without the establishment of another
defined contribution plan.
14.2 ___As soon as administratively feasible after the disposition by the
Employer to an unrelated corporation of substantially all of the
assets (within the meaning of Code Section 409(d)(2)) used in a trade
or business of the Employer if the Employer continues to maintain this
Plan after such disposition, but only with respect to Employees who
continue employment with the corporation acquiring such assets.
14.3 ___As soon as administratively feasible after the disposition by the
Employer to an unrelated entity of the Employer's interest in a
subsidiary (within the meaning of Code Section 409(d)(3)) if the
Employer continues to maintain this Plan, but only with respect to
Employees who continue employment with such subsidiary.
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14.4 ___Upon the hardship of the Participant, to the extent provided for in
Section 11.6(C) of the Plan, and subject to applicable regulations
prescribed by the Secretary of the Treasury.
15. CLAIMS FOR EXCESS ELECTIVE DEFERRALS - Participants who claim Excess
Elective Deferrals for the preceding calendar year must submit their claims
in writing to the plan administrator by ____________ (SPECIFY A DATE
BETWEEN MARCH 1 AND APRIL 15).
Excess Elective Deferrals that are distributed after April 16 are not only
includable in the Participant's gross income in the taxable year when made,
but are also includable in the Participant's gross income again in the year
when distributed.
The Plan permits distributions of Excess Contributions and Excess Aggregate
Contributions on or before the last day of the Plan Year after the Plan
Year in which such excess amounts arose. Distribution of such amounts, or
other corrective action, is required under sections 401(k)(8) and 401(m)(6)
of the Code if the plan is to maintain its tax-qualified status. However,
if such excess amounts, plus any income and minus any loss allocable
thereto, are distributed more than 2 1/2 months after the last day of the
Plan Year in which such excess amounts arose, then section 4979 of the Code
imposes a ten (10) percent excise tax on the Employer maintaining the
plan with respect to such amounts.
The Employer may choose to limit its acceptance of claims to a date that is
no later than March 1.
16. Average Contribution Percentage
16.1 In computing the Average Contribution Percentage, the employer shall
take into account, and include as Contribution Percentage Amounts:
a. ___Elective Deferrals
b. ___Qualified Non-elective Contributions under this plan or any
employer, as provided by regulations.
16.2 The amount of Qualified Non-elective Contributions that are made under
Section 11.4(I) of this plan and taken into account as Contribution
Percentage Amounts for purposes of calculating the Average
Contribution Percentage, subject to such other requirements as may be
prescribed by Secretary of the Treasury, shall be:
a. ___All such Qualified Non-elective Contributions.
b. ___Such Qualified Non-elective Contributions that are needed to
meet the Average Contribution Percentage test stated in section
11.8 of the plan.
16.3 The amount of Elective Deferrals made under Section 11.4(B) of this
plan and taken into account as Contribution Percentage Amounts for
purposes of calculating the Average Contribution Percentage, subject
to such other requirements as may be prescribed by the Secretary of
the Treasury, shall be:
a. ___All such Elective Deferrals.
b. ___Such Elective Deferrals that are needed to meet the Average
Contribution Percentage test stated in Section 11.8 of the Plan.
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17. FORFEITURES - Forfeitures of Matching Contributions shall be: (Required
if the Employer elects to make Matching Contributions in this Adoption
Agreement)
17.1 ___Applied in the current year of forfeiture to reduce employer
contributions.
17.2 ___Allocated in the current year of forfeiture, after all other
forfeitures under the plan, to each Participant's Matching
Contribution account in the ratio which each Participant's
Compensation for the Plan Year bears to the total Compensation of all
Participants for such Plan Year. Such forfeitures will not be
allocated to the account of any Highly Compensated Employee.
18. INDIVIDUAL INVESTMENT ACCOUNTS:
Individual Investment Accounts for Elective Deferrals, Qualified
Non-elective Contributions, Qualified Matching Contributions and Matching
Contributions:
18.1 ___Will not be used.
18.2 ___Will be used as follows:
Each Participant will have a separate Individual Investment
Account which will contain the amount allocated to the
Participant Account. Each Participant will have the power to
direct the investment with respect to his Individual Investment
Account subject to such rules as the Administrator and the
Trustee may deem necessary. Gains and losses of the Account
shall accrue to such Account only.
Individual Investment Accounts for Employer Contributions under Section
10.3 of this Adoption Agreement
18.3 ___Will not be used.
18.4 ___Will be used as follows:
Each Participant will have a separate Individual Investment
Account which will contain the amount allocated to the
Participant Account. Each Participant will have the power to
direct the investment with respect to his Individual Investment
Account subject to such rules as the Administrator and the
Trustee may deem necessary. Gains and losses of the Account
shall accrue to such Account only.
19. LIMITATION YEAR shall mean each 12 consecutive month period ending on
____________.
NOTE: A written resolution must be adopted by the Employer if the
Limitation Year is other than the calendar year.
20. LIMITATION IN BENEFITS - If the Employer maintains or has ever, maintained,
in addition to this Plan, one or more plans which are either qualified
defined benefit plans or qualified defined contribution plans other than
paired plan:
Plan #01 - Adoption Agreement 001
in which any Participant in this Plan is (or was) a participant or could
possibly become a participant, the Employer must complete this Section.
The Employer must also complete this Section if it maintains a welfare
benefit fund, as defined in Code Section 419(e), or an individual medical
account, as
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<PAGE>
defined in Code Section 415(l)(2) under which amounts are treated as annual
additions with respect to any Participant in this Plan.
If the Participant is covered under another qualified defined contribution
plan maintained by the Employer, other than a master or prototype plan:
20.1 ___The provisions of Section 5.5(B) of the Plan will apply as if the
other plan were a master or prototype plan.
20.2 ___The total Annual Additions will be limited to the maximum
permissible amount and excess amounts will be reduced in a manner that
precludes Employer discretion, as follows:
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
20.3 ___If the Participant is or has ever been a Participant in a defined
benefit plan maintained by the Employer, the benefits under the plans
will be limited as follows (this method must preclude Employer
discretion):
______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
21. MINIMUM CONTRIBUTION FOR TOP HEAVY PLAN - If the Employer maintains one or
more defined benefit plans in which a Participant participates in addition
to this Plan and does not maintain any other defined contribution plans in
which a Participant participates, the minimum benefit requirement
applicable to Top Heavy Plans shall be met under this Plan.
If the minimum benefit requirement is met under this Plan, the additional
minimum benefit:
21.1 ___Shall be provided.
21.2 ___Shall not be provided.
22. YEAR OF SERVICE shall mean
22.1 ___1000 Hours of Service
22.2 ___Hours of Service (less than 1000 Hours of Service).
In the event the plan would otherwise fail the nondiscrimination tests of
Code Sections 401(a)(26) or 410(b), for purposes of allocating Employer
Profit Sharing Contribution the above Hour of Service requirement shall be
changed for that Year to a 500 hour requirement.
23. PREDECESSOR EMPLOYER - Service with the following Predecessor Employer(s):
_______________________________________________________________________
shall be counted for purposes of:
23.1 ___eligibility Years of Service
23.2 ___vesting (Covered Years of Service)
24. ADMINISTRATOR shall mean:
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24.1 ___The Employer
24.2 ___Individuals specified in Section 28.
25. OTHER BENEFITS
25.1 ___Early Retirement Benefit (fully vested): Subject to the Joint and
Survivor Annuity requirements, any Participant may retire and receive
the entire amount in his Participant Account provided he has attained
age _____ and has at least _____ Covered Years of Service.
26. ACTUARIAL EQUIVALENT
For purposes of establishing present value to compute the top heavy ratio,
benefit payments shall be discounted only for mortality and interest based
on the following:
26.1 ___Pre-Retirement Interest Rate _______%.
26.2 ___Post-Retirement Mortality Table: __________ with _______%
interest.
27. PARTICIPATING AFFILIATES - Each Affiliate (i.e., each member of a
controlled group of corporations, commonly controlled group of businesses,
or an affiliated service group within the meaning of section 414 of the
Code) must adopt this Plan as a Participating Affiliate. [Attach
additional signature pages if there is more than one Participating
Affiliate.]
Participating Affiliate Name_____________________ Employer I.D.________
Address______________________________________ Taxable Year_____________
By_______________________ Title________________________ Date____________
28. ADMINISTRATOR - If Option 24.2 is elected the following named individuals
shall serve as Plan Administrator.
Signature by the Administrator (if other than the Employer) is in
acknowledgment of acceptance of appointment.
Administrator(s) Name(s) Signature(s):
__________________________________ ____________________________________
__________________________________ ____________________________________
__________________________________ ____________________________________
29. Appointment of Trustee or Custodian (Select 29.1 or 29.2)
Incorporated businesses must name a Trustee. Unincorporated businesses
covering one or more Self Employed Individuals may appoint a Custodian or a
Trustee.
29.1 _____Trustee - Signature by the Trustee is in acknowledgement of
acceptance of appointment.
Trustee Name: Signature:
__________________________________ ____________________________________
29.2 _____Custodian - ___________________ is hereby appointed as Custodian.
________________________________________________________
Signature of Authorized Individual Accepting Appointment
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30. ADOPTION AGREEMENT USAGE
This Adoption Agreement is only to be used with basic Defined Contribution
Plan document 02.
An Employer who has ever maintained or who later adopts any plan (including
a welfare benefit fund, as defined in Section 419(e) of the Code, which
provides post-retirement medical benefits allocated to separate accounts
for key employees as defined in Code Section 419A(d)(3), or an individual
medical account, as defined in Section 415(l)(2) of the code) in addition
to this Plan other than paired plans:
Plan #01 - Adoption Agreement 001
may not rely on the opinion letter issued by the National Office of the
Internal Revenue Service as evidence that this Plan is qualified under
Section 401 of the Internal Revenue Code. If the Employer who adopts or
maintains multiple plans other than the paired plans identified above
wishes to obtain reliance that its plans are qualified, application for a
determination letter should be made to the appropriate Key District
Director of Internal Revenue.
Failure of the Employer to properly complete this Adoption Agreement may
result in the disqualification of this Plan.
31. SPONSORING ORGANIZATION - The Sponsoring organization or its authorized
representative identified below will inform the adopting employer of any
amendments made to the Plan or of the discontinuance or abandonment of the
Plan.
The organization sponsoring this Plan is WESTCORE Trust.
The authorized representative of the sponsoring organization is
Mark Pougnet
WESTCORE Trust
600 17th St. Suite 1605 So.
Denver, Colorado 80202
The Employer represents that the legal and tax aspects of this Plan and
Trust have been duly considered and passed upon by its attorney and/or tax
advisor who has determined that it is suitable and has been properly
completed and adopted.
ADOPTION FOR THE EMPLOYER
Date of Execution __________ ________________________ Title_____________
Signature
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<PAGE>
Table of Contents
1.0 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 NAME OF PLAN. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 APPROVAL OF INTERNAL REVENUE SERVICE. . . . . . . . . . . . . 1
1.4 AMENDMENT OR TERMINATION. . . . . . . . . . . . . . . . . . . 2
2.0 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1 ACCRUED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 ACTIVE PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . 4
2.3 ACTUARIAL EQUIVALENT. . . . . . . . . . . . . . . . . . . . . 4
2.4 ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 ADOPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 4
2.6 ANNIVERSARY DATE. . . . . . . . . . . . . . . . . . . . . . . 4
2.7 ANNUAL ADDITIONS. . . . . . . . . . . . . . . . . . . . . . . 5
2.8 AVERAGE ANNUAL COMPENSATION . . . . . . . . . . . . . . . . . 5
2.9 BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.10 BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.11 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 COVERED YEARS OF SERVICE. . . . . . . . . . . . . . . . . . . 7
2.13 EARLY RETIREMENT DATE . . . . . . . . . . . . . . . . . . . . 7
2.14 EARNED INCOME . . . . . . . . . . . . . . . . . . . . . . . . 7
2.15 EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . 8
2.16 ELIGIBLE CLASS. . . . . . . . . . . . . . . . . . . . . . . . 8
2.17 EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.18 EMPLOYER. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.19 ENTRY DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.20 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.21 FORMER PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . 8
2.22 FUTURE SERVICE. . . . . . . . . . . . . . . . . . . . . . . . 9
2.23 HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . . . 9
2.24 HOUR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 10
2.25 INACTIVE PARTICIPANT. . . . . . . . . . . . . . . . . . . . . 12
2.26 INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.27 INVESTMENT MANAGER. . . . . . . . . . . . . . . . . . . . . . 12
2.28 JOINT AND SURVIVOR ANNUITY. . . . . . . . . . . . . . . . . . 12
2.29 LATE RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . . 13
2.30 LIMITATION YEAR . . . . . . . . . . . . . . . . . . . . . . . 13
2.31 NET PROFITS . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.32 NORMAL RETIREMENT AGE . . . . . . . . . . . . . . . . . . . . 13
2.33 NORMAL RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . 13
2.34 ONE YEAR BREAK IN SERVICE . . . . . . . . . . . . . . . . . . 13
2.35 OWNER-EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . 14
2.36 PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.37 PARTICIPANT ACCOUNT . . . . . . . . . . . . . . . . . . . . . 14
2.38 PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.39 PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.40 PREDECESSOR EMPLOYER. . . . . . . . . . . . . . . . . . . . . 15
2.41 PARTICIPANT CONTRIBUTION ACCOUNT. . . . . . . . . . . . . . . 15
2.42 QUALIFIED LEAVE OF ABSENCE. . . . . . . . . . . . . . . . . . 15
2.43 SELF-EMPLOYED INDIVIDUAL. . . . . . . . . . . . . . . . . . . 16
2.435 SHORT FORM ADOPTION AGREEMENT . . . . . . . . . . . . . . . . 16
2.44 SOCIAL SECURITY COVERED COMPENSATION. . . . . . . . . . . . . 16
2.45 TAXABLE WAGE BASE . . . . . . . . . . . . . . . . . . . . . . 16
2.46 TOTAL AND PERMANENT DISABILITY. . . . . . . . . . . . . . . . 16
2.47 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.48 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.49 YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.50 YEAR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 17
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3.0 ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 ELIGIBILITY REQUIREMENTS. . . . . . . . . . . . . . . . . . . 18
3.2 RE-ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 LEAVE OF ABSENCE. . . . . . . . . . . . . . . . . . . . . . . 20
4.0 FUNDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1 CONTRIBUTION FORMULA. . . . . . . . . . . . . . . . . . . . . 20
4.2 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.3 MISTAKE OF FACT . . . . . . . . . . . . . . . . . . . . . . . 21
4.4 DISALLOWANCE OF DEDUCTION . . . . . . . . . . . . . . . . . . 21
4.5 VOLUNTARY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 21
4.6 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. . . . . . . . . . 22
4.7 ROLLOVER ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . 22
4.8 EMPLOYER CONTRIBUTION ACCOUNT . . . . . . . . . . . . . . . . 23
4.9 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES . . . . . . . . . 23
4.10 ALLOCATION OF TRUST GAINS AND LOSSES. . . . . . . . . . . . . 24
4.11 SEGREGATION OF PARTICIPANT ACCOUNTS . . . . . . . . . . . . . 24
5.0 BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.1 AMOUNT OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 25
5.2 FORM OF BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 26
5.3 DISTRIBUTION OF BENEFITS. . . . . . . . . . . . . . . . . . . 27
5.4 VESTING ON TERMINATION AND RE-EMPLOYMENT. . . . . . . . . . . 34
5.5 LIMITATION ON BENEFITS AND CONTRIBUTIONS. . . . . . . . . . . 37
5.6 ALIENATION PROHIBITED . . . . . . . . . . . . . . . . . . . . 44
5.7 JOINT AND SURVIVOR ANNUITY REQUIREMENTS . . . . . . . . . . . 44
5.8 PERMITTED DISPARITY IN PLAN CONTRIBUTIONS . . . . . . . . . . 51
6.0 LIFE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1 AUTHORIZATION TO PURCHASE . . . . . . . . . . . . . . . . . . 55
6.2 PAYMENT OF PREMIUMS . . . . . . . . . . . . . . . . . . . . . 55
6.3 DISPOSITION OF POLICIES AT RETIREMENT . . . . . . . . . . . . 55
6.4 LIMITATION ON AMOUNTS . . . . . . . . . . . . . . . . . . . . 55
6.5 CONFLICT WITH INSURANCE CONTRACTS . . . . . . . . . . . . . . 56
7.0 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
7.1 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 56
7.2 DISCHARGE RIGHTS PRESERVED. . . . . . . . . . . . . . . . . . 58
7.3 BENEFICIARY DESIGNATED BY PARTICIPANT . . . . . . . . . . . . 59
7.4 PRIORITY OF ADOPTION AGREEMENT. . . . . . . . . . . . . . . . 59
7.5 REFERENCE TO INTERNAL REVENUE CODE. . . . . . . . . . . . . . 59
7.6 SAVING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . 59
7.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 59
7.8 MERGER OR CONSOLIDATION OF PLAN . . . . . . . . . . . . . . . 60
7.9 AGREEMENT BINDING ON ALL PARTIES. . . . . . . . . . . . . . . 60
7.10 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.11 SINGULAR INCLUDES PLURAL, ETC.. . . . . . . . . . . . . . . . 60
7.12 FORFEITURE OF BENEFITS. . . . . . . . . . . . . . . . . . . . 60
7.13 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDER . 61
8.0 TOP HEAVY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.1 PRECEDENCE OF SECTION . . . . . . . . . . . . . . . . . . . . 61
8.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.3 COMPENSATION IN TOP HEAVY PLAN YEAR . . . . . . . . . . . . . 64
8.4 VESTING IN TOP HEAVY PLAN YEAR. . . . . . . . . . . . . . . . 64
8.5 MINIMUM CONTRIBUTION UNDER TOP HEAVY PLAN . . . . . . . . . . 65
8.6 MINIMUM CONTRIBUTION UNDER MULTIPLE PLANS . . . . . . . . . . 66
8.7 NONFORFEITABILITY OF MINIMUM BENEFIT. . . . . . . . . . . . . 66
8.8 ADJUSTMENT TO DEFINED BENEFIT AND DEFINED CONTRIBUTION FRACTION
FOR SUPER TOP-HEAVY PLAN. . . . . . . . . . . . . . . . . . . 66
9.0 AFFILIATED EMPLOYER. . . . . . . . . . . . . . . . . . . . . . . . . . 67
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9.1 MEMBERS OF CONTROLLED GROUP . . . . . . . . . . . . . . . . . 67
9.2 LEASED EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . 67
9.3 PLAN OF A PREDECESSOR EMPLOYER. . . . . . . . . . . . . . . . 68
9.4 CONTROLLED TRADES OR BUSINESS OF OWNER-EMPLOYEES. . . . . . . 68
10.0 TRUST PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 69
10.1 ESTABLISHMENT OF TRUST. . . . . . . . . . . . . . . . . . . . 69
10.2 APPOINTMENT OF ADMINISTRATOR AND TRUSTEE. . . . . . . . . . . 69
10.3 ADMINISTRATOR FUNCTIONS . . . . . . . . . . . . . . . . . . . 70
10.4 TRUSTEE FUNCTIONS . . . . . . . . . . . . . . . . . . . . . . 73
10.5 INVESTMENT OF TRUST ASSETS. . . . . . . . . . . . . . . . . . 79
10.6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 82
10.7 INSURANCE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 84
10.8 SPECIAL RULES FOR VOTING INVESTMENT COMPANY
SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.9 SPECIAL RULES FOR VOTING OF EMPLOYER STOCK. . . . . . . . . . 85
10.10 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 85
11.0 CASH OR DEFERRED ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . 85
11.1 PURPOSE AND EFFECTIVE DATE. . . . . . . . . . . . . . . . . . 85
11.2 ELIGIBILITY TO PARTICIPATE. . . . . . . . . . . . . . . . . . 85
11.3 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 85
11.4 ELECTIVE DEFERRALS. . . . . . . . . . . . . . . . . . . . . . 88
11.5 TOP-HEAVY REQUIREMENTS. . . . . . . . . . . . . . . . . . . . 94
11.6 SPECIAL DISTRIBUTION RULES. . . . . . . . . . . . . . . . . . 94
11.7 MATCHING CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 97
11.8 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND
MATCHING CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 97
11.9 PROFITS NOT REQUIRED UNDER THE CODA . . . . . . . . . . . . . 102
11.10 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 102
Defined Contribution Plan and Trust Document
1.0 GENERAL
1.1 PURPOSE
This Prototype Defined Contribution Plan and Trust with its Adoption
Agreement constitute an employee pension benefit plan created hereby for the
exclusive Benefit of eligible Employees of the Employer. All contributions
thereto shall be made for the purpose of distributing to such eligible Employees
their Accrued Benefit. Prior to satisfaction of all liabilities with respect to
the Participants and their Beneficiaries, no part of the corpus or income of the
Trust shall at any time be used for or diverted to purposes other than for the
exclusive benefit of such Participants or their Beneficiaries. It is further
the purpose of the Plan to provide benefits in accordance herewith for those
Participants who remain in the employ of the Employer until their Accrued
Benefit is vested or until they reach Normal Retirement Age, at which time
benefits will be distributed in accordance herewith. It is further the intent
to provide other benefits as are set forth in the Adoption Agreement.
1.2 NAME OF PLAN
The name of the Plan shall be the legal name of the Employer as set forth
in the Adoption Agreement followed by the name of the plan as set forth in the
Adoption Agreement followed by the words "and Trust".
1.3 APPROVAL OF INTERNAL REVENUE SERVICE
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This Plan is contingent upon and subject to obtaining such initial approval
of the District Director of Internal Revenue as may be necessary to establish
the qualification for income tax purposes pursuant to Section 401 of the
Internal Revenue Code of 1986 (Code) and as may be necessary to qualify for tax
exemption under the provisions of Section 501 or other applicable provisions of
the Code. Any modification or amendment of the Plan may be made if necessary or
appropriate to initially qualify or maintain qualification of the Plan. If a
final adverse action with respect to initial qualification or requalification is
issued by the Internal Revenue Service, the Plan shall be treated as an
individually designed plan and the Employer shall no longer participate in this
prototype Plan.
1.4 AMENDMENT OR TERMINATION
(A) Amendment
(1) The sponsoring organization may amend any part of the Plan.
For purposes of sponsoring organization amendments, the mass submitter shall be
recognized as the agent of the sponsoring organization. If the sponsoring
organization does not adopt the amendments made by the mass submitter, it will
no longer be identical to or a minor modifier of the mass submitter plan. The
Employer may:
(a) Change the choice of options in the Adoption Agreement,
(b) Add overriding language in the Adoption Agreement when
such language is necessary to satisfy Section 415 or Section 416 of the Code
because of the required aggregation of multiple plans, and
(c) Add certain model amendments published by the Internal
Revenue Service which specifically provide that their adoption will not cause
the Plan to be treated as individually designed. An Employer that amends the
Plan for any other reason including a waiver of the minimum funding requirement
under Code Section 412(d), will no longer participate in this prototype plan and
will be considered to have an individually designed plan. When this Plan is
used to amend an existing plan, the terms and conditions of the prior plan
document shall prevail as to obligations and rights of the parties to the Plan
during the effective period of the prior plan document. No amendment to the
Plan shall decrease the Accrued Benefit of any Participant. If the Employer
amends any of the provisions of this Plan, it will be considered to be an
individually designed plan.
(2) No amendment to the Plan shall be effective to the extent
that it has the effect of decreasing a Participant's Accrued Benefit.
Notwithstanding the preceding sentence, a Participant's Accrued Benefit may be
reduced to the extent permitted under Code Section 412(c)(8). For purposes of
this paragraph, a Plan amendment which has the effect of:
(a) Decreasing a Participant's Accrued Benefit, or
(b) Eliminating an optional form of benefit, with respect
to benefits attributable to service before the amendment, shall be treated as
reducing Accrued Benefits. Furthermore, if the vesting schedule of the Plan is
amended, in the case of an Employee who is a Participant as of the later of the
date such amendment is adopted or the date it becomes effective, the
nonforfeitable percentage (determined as of such date) of such Employee's
Employer - derived accrued benefit will not be less than the percentage computed
under the Plan without regard to such amendment.
(3) If the Plan's vesting schedule is amended or the Plan is
amended in any way that directly or indirectly affects the computation of a
Participant's nonforfeitable percentage, or if the Plan is deemed amended by an
automatic change to or from a top-heavy vesting schedule, each Participant with
at least three (3) Years of Service with the Employer may elect within a
reasonable
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period after the adoption of the amendment or change, to have his nonforfeitable
percentage computed under the Plan without regard to such amendment or change.
For Participants who do not have at least one (1) Hour of Service in any Plan
Year beginning after December 31, 1988, the preceding sentence shall be applied
by substituting "five (5) Years of Service" for "three (3) Years of Service"
where such language appears. The period during which the election may be made
shall commence with the date the amendment is adopted or deemed to be made and
shall end on the latest of:
(a) Sixty (60) days after the amendment is adopted;
(b) Sixty (60) days after the amendment becomes effective; or
(c) Sixty (60) days after the Participant is issued written
notice of the amendment by the Employer or Administrator.
(B) The Employer also reserves the right to terminate the Plan and
Trust at any time. In the event of the termination or partial termination of
the Plan, or the complete discontinuance of contributions under a Profit Sharing
Plan, the rights of all affected Active Participants and Inactive Participants
to their Accrued Benefit as of the date of the termination or partial
termination or the complete discontinuance of contributions under a Profit
Sharing Plan, shall be non-forfeitable. Former Participants shall vest
according to the vesting schedule in effect on their date of termination of
service with the Employer. In no event, however, shall any amount be allocated
to a Participant under this Section 1.4 which would cause the Plan to fail to
meet the integration requirements of Revenue Ruling 71-446 or the limitation
specified under Section 5.8 of the Plan.
2.0 DEFINITIONS
2.1 ACCRUED BENEFIT
"Accrued Benefit" shall mean the balance of the Participant Account of
each Participant.
2.2 ACTIVE PARTICIPANT
"Active Participant" means each Participant who is a member of the
Eligible Class on the Anniversary Date or such other date as of which the
Accrued Benefit of a Participant is determined.
2.3 ACTUARIAL EQUIVALENT
(A) "Actuarial Equivalent" shall mean a benefit payable in an
alternative mode which is equivalent to a benefit payable in a given mode under
the Plan when computed using the rate of interest and the Mortality Table
specified in the Adoption Agreement.
(B) Anything in Section 2.3(A) notwithstanding, for purposes of the
Short Form Adoption Agreement and for purposes of establishing present value to
compute the top heavy ratio, benefit payments shall be discounted only for
mortality and interest based upon a pre-retirement interest rate of 6.0% and the
83IAM Mortality Table at 6.0% interest.
2.4 ADMINISTRATOR
(A) "Administrator" shall mean the Employer or other entity
designated in the Adoption Agreement.
(B) For purposes of the Short Form Adoption Agreement,
"Administrator" shall mean the Employer.
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(C) For purposes of the EZFLEX Adoption Agreement the "Administrator"
shall always be the employer.
2.5 ADOPTION AGREEMENT
"Adoption Agreement" shall mean that document which is attached hereto and
is made a part hereof and which is an integral part of this document. It sets
forth the detailed specifications of the Plan.
2.6 ANNIVERSARY DATE
"Anniversary Date" shall mean the date as of which the Plan shall be
evaluated, which date shall be specified in the Adoption Agreement.
2.7 ANNUAL ADDITIONS
"Annual Additions" shall mean, with respect to each Participant for any
Plan Year, the sum of the following amounts credited to a Participant's account
for the Limitation Year:
(A) Contributions made by the Employer on behalf of the Participant
to all qualified defined contribution plans of the Employer,
(B) Forfeitures allocated to the account(s) of the Participant,
(C) The Participant's contributions, and
(D) Amounts allocated after March 31, 1984 to an individual medical
account, as defined in Code Section 415 (l)(2), which is part of a pension or
annuity plan maintained by the Employer, are treated as Annual Additions to a
defined contribution plan; and amounts derived from contributions paid or
accrued after December 31, 1985, in taxable years ending after such date, which
are attributable to post-retirement medical benefits allocated to the separate
account of a key Employee, as defined in Code Section 419(A)(d)(3), under a
welfare benefit fund, as defined in Code Section 419(e), maintained by the
Employer, are treated as Annual Additions to a defined contribution plan.
(E) For this purpose, any excess amount applied pursuant to the
provisions of Section 5.5 in the Limitation Year to reduce Employer
Contributions will be considered Annual Additions for such Limitation Year.
2.8 AVERAGE ANNUAL COMPENSATION
"Average Annual Compensation" shall mean:
(A) The average of a Participant's Compensation over the period of
time specified in the Adoption Agreement, which shall not be less than three (3)
consecutive Plan Years which produce the highest average. If the Participant
has less than the period of time specified in the Adoption Agreement,
Compensation is averaged over the Participant's total period of service.
Compensation shall be annualized for any period of service which is less than
twelve (12) months.
(B) If the Adoption Agreement provides for permitted disparity under
Internal Revenue Code Section 401(1), Final Average Compensation shall mean the
greater of:
(1) The Participant's Average Annual Compensation over:
(a) The three (3) consecutive year period ending with the
current year, or
(b) If shorter, the Participant's full period of service,
or
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(2) The Participant's highest Average Annual Compensation for
any other period of three (3) consecutive years.
2.9 BENEFICIARY
"Beneficiary" shall mean the person or persons or legal entity designated
as such by a Participant and which is entitled to receive benefits under the
Plan.
2.10 BOARD
"Board" shall mean the Board of Directors of the Employer. Board shall
also mean the sole proprietor of a sole proprietorship or the directing partners
of a partnership.
2.11 COMPENSATION
As elected by the Employer in the Adoption Agreement, Compensation will
mean all of each Participant's:
(A) W-2 earnings or
(B) Compensation (as that term is defined in section 415(c)(3) of the
Code).
(1) For any Self-Employed Individual covered under the plan,
compensation will mean Earned Income. Compensation shall include only that
Compensation which is actually paid to the Participant during the applicable
period. Except as provided elsewhere in this Plan, the applicable period shall
be the period elected by the Employer in the Adoption Agreement. If the
Employer makes no election, the applicable period shall be the Plan Year.
(2) Notwithstanding the above, if elected by the Employer in the
Adoption Agreement, Compensation shall include any amount which is contributed
by the Employer pursuant to a salary reduction agreement and which is not
includible in the gross income of the Employee under Sections 125, 402(a)(8),
402(h) or 403(b) of the Code.
(3) The annual Compensation of each Participant taken into
account under the Plan for any year shall not exceed $200,000, as adjusted by
the Secretary at the same time and in the same manner as under Section 415(d) of
the Code. In determining the Compensation of a Participant for purposes of this
limitation, the rules of Section 414(q)(6) of the Code shall apply, except in
applying such rules, the term "family" shall include only the Spouse of the
Participant and any lineal descendants of the Participant who have not attained
age 19 before the close of the year. If, as a result of the application of such
rules the adjusted $200,000 limitation is exceeded, then (except for purposes of
determining the portion of Compensation up to the integration level if this Plan
provides for permitted disparity), the limitation shall be prorated among the
affected individuals in proportion to each such individual's Compensation as
determined under this Section 2.11 prior to the application of this limitation.
(C) Anything in Section 2.11(A) or (B) notwithstanding, for purposes
of the Short Form Adoption Agreement, "Compensation" shall mean Compensation as
that term is defined in Section 415(c)(3) of the Code which is actually paid to
an Employee during the Plan Year.
2.12 COVERED YEARS OF SERVICE
"Covered Years of Service" shall mean each Year of Service with which a
Participant is credited for purposes of computing his vested interest in his
Accrued Benefit, as determined under the vesting schedule specified in the
Adoption Agreement.
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2.13 EARLY RETIREMENT DATE
(A) "Early Retirement Date" shall mean the Anniversary Date nearest
the date on which a Participant meets the requirements for early retirement
specified in the Adoption Agreement.
(B) Anything in Section 2.13(A) notwithstanding, for purposes of the
Short Form Adoption Agreement, early retirement shall not be permitted under the
Plan.
2.14 EARNED INCOME
"Earned Income" shall mean the net earnings from self-employment with the
Employer for which the personal services of the individual are a material income
producing factor. Net earnings will be determined without regard to items not
included in gross income and the deductions allocable to such items. Net
earnings are reduced by contributions by the Employer to a qualified plan to the
extent deductible under Code Section 404. Net earnings shall be determined with
regard to the deduction allowed to the Employer by Code Section 164(f) for
taxable years beginning after December 31, 1989.
2.15 EFFECTIVE DATE
"Effective Date" of the Plan shall mean the date specified in the Adoption
Agreement.
2.16 ELIGIBLE CLASS
"Eligible Class" shall mean any Employee who is not excluded from
participation under the Adoption Agreement.
2.17 EMPLOYEE
(A) "Employee" shall mean any employee of the Employer maintaining the Plan
or of any other employer required to be aggregated with such Employer as a
related business under Sections 414(b), (c), (m) or (o) of the Code.
The term Employee shall also include any leased employee deemed to be an
employee of any employer described in the previous paragraph as provided in
sections 414(n) or (o) of the Code.
(B) Anything in Section 2.17(A) notwithstanding, for purposes of
eligibility under Section 6 of the Short Form Adoption Agreement, the term
"Employee" shall include all Employees of the Employer adopting the Plan and any
other employer aggregated with this Employer under Internal Revenue Code Section
414(b), (c), or (m) and individuals required to be considered Employees of any
such Employer under Code Section 414(n).
2.18 EMPLOYER
"Employer" shall mean the Employer named in the Adoption Agreement.
2.19 ENTRY DATE
"Entry Date" shall mean the date the Participant enters the Plan, as
specified in the Adoption Agreement.
2.20 ERISA
"ERISA" shall mean the Employee Retirement Income Security Act of 1974 and
any amendments thereto.
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2.21 FORMER PARTICIPANT
"Former Participant" shall mean any former Employee who is entitled to
receive a distribution from the Trust.
2.22 FUTURE SERVICE
"Future Service" shall mean each Year of Participation by an Active
Participant prior to his Normal Retirement Date.
2.23 HIGHLY COMPENSATED EMPLOYEE
(A) Highly Compensated Employee includes highly compensated active
Employees and highly compensated former Employees.
(B) A highly compensated active Employee includes any Employee who
performs service for the Employer during the determination year and who, during
the look-back year:
(1) Received Compensation from the Employer in excess of $75,000
(as adjusted pursuant to section 415(d) of the Code);
(2) Received Compensation from the Employer in excess of $50,000
(as adjusted pursuant to section 415(d) of the Code) and was a member of the
top-paid group for such year; or
(3) Was an officer of the Employer and received Compensation
during such year that is greater than 50 percent of the dollar limitation in
effect under section 415(b)(1)(A) of the Code.
(C) The term Highly Compensated Employee also includes:
(1) Employees who are both described in Section 2.23(B) if the
term "determination year" is substituted for the term "look-back year" and the
Employee is one of the 100 Employees who received the most Compensation from the
Employer during the determination year; and
(2) Employees who are 5 percent owners at any time during the
look-back year or determination year.
(D) If no officer has satisfied the Compensation requirement of
Section 2.23(B)(3) above during either a determination year or look-back year,
the highest paid officer for such year shall be treated as a Highly Compensated
Employee.
(E) For this purpose, the determination year shall be the Plan Year.
The look-back year shall be the twelve-month period immediately preceding the
determination year.
(F) A highly compensated former employee includes any Employee who
separated from service (or was deemed to have separated) prior to the
determination year, performs no service for the Employer during the
determination year, and was a highly compensated active Employee for either the
separation year or any determination Year ending on or after the Employee's 55th
birthday.
(G) If an Employee is, during a determination year or look-back year,
a family member of either a 5 percent owner who is an active or former Employee
or a Highly Compensated Employee who is one of the 10 most Highly Compensated
Employees ranked on the basis of Compensation paid by the Employer during such
year, then the family member and the 5 percent owner or top-ten Highly
Compensated Employee shall be aggregated. In such case, the family member and 5
percent owner or top-ten Highly Compensated Employee shall be treated as a
single Employee receiving Compensation and Plan contributions or benefits equal
to the sum of such
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Compensation and contributions or benefits of the family member and 5 percent
owner or top-ten Highly Compensated Employee. For purposes of this Section
2.23(G), family member includes the spouse, lineal ascendants and descendants of
the Employee or former Employee and the spouses of such lineal ascendants and
descendants.
(H) The determination of who is a Highly Compensated Employee,
including the determinations of the number and identity of Employees in the
top-paid group, the top 100 Employees, the number of Employees treated as
officers and the Compensation that is considered, will be made in accordance
with Section 414(q) of the Code and the regulations thereunder.
2.24 HOUR OF SERVICE
(A) "Hour of Service" shall mean each Hour of Service for which:
(1) An Employee is directly or indirectly paid or entitled to
payment by the Employer for the performance of duties. These hours shall be
credited to the Employee for the period or periods in which the duties were
performed;
(2) An Employee is paid or entitled to payment by the Employer
on account of a period of time during which no duties are performed
(irrespective of whether the employment relationship has terminated) due to
vacation, holiday, illness, incapacity (including disability), layoff, jury
duty, military duty, Qualified Leave of Absence, or other leave of absence. No
more than five hundred one (501) Hours of Service will be credited under this
Section 2.24(A)(2) for a single computation period (whether or not the period
occurs in a single computation period). These hours shall be credited to the
Employee for the period or periods the payment pertains to rather than the
period or periods in which the payment is made; and
(3) Back pay, irrespective of mitigation of damage, has been
either awarded or agreed to by the Employer. These hours shall be credited to
the Employee for the period or periods to which the award or agreement pertains.
In no event shall an Employee be credited with an Hour of Service under this
Section 2.24(A)(3) for a period or periods in which he was credited with Hours
of Service under Section 2.24(A)(1) or 2.24(A)(2).
(B) Where the Employer uses this Plan to maintain a plan of a
Predecessor Employer, an Hour of Service for purposes of eligibility, vesting
and accrual for such Predecessor Employer shall be treated as an Hour of Service
for the Employer. Where the Employer is a member of a controlled group of
corporations, a group of trades or businesses under common control or an
affiliated service group, as defined in Code Section 414(b), (c) or (m), an Hour
of Service for purposes of eligibility or vesting for a member of the above
groups shall be treated as an Hour of Service for the Employer. Hours of
Service will also be credited for any individual considered an employee under
Section 414(n) and any other entity required to be aggregated with the Employer
pursuant to Code Section 414(o) and the regulations thereunder. Notwithstanding
the foregoing, nothing in this Section shall be construed as denying an Employee
credit for Hours of Service pursuant to Section 2530.200(b)-2 of the Department
of Labor Regulations which are hereby incorporated herein by this reference.
Nothing herein shall be construed as denying an Employee credit for an Hour
of Service if credit is required by separate federal law.
(C) Solely for purposes of determining whether a One Year Break in
Service, as defined in Section 2.34, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be determined, eight (8)
Hours of Service per
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day of such absence. For purposes of this Section 2.24(C), an absence from work
for maternity or paternity reasons means an absence:
(1) By reason of the pregnancy of the individual,
(2) By reason of a birth of a child of the individual,
(3) By reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or
(4) For purposes of caring for such child for a period beginning
immediately following such birth or placement.
(D) The Hours of Service credited under Section 2.24(C), above, shall
be credited:
(1) In the computation period in which the absence begins if the
crediting is necessary to prevent a One Year Break in Service in that period, or
(2) In all other cases, in the following computation period.
2.25 INACTIVE PARTICIPANT
"Inactive Participant" shall mean any current Employee who was a
Participant in the Plan who is currently excluded from participation as a result
of his loss of status as a member of the Eligible Class.
2.26 INSURER
"Insurer" shall mean any insurance company selected by the Administrator to
issue any life insurance or annuity contracts.
2.27 INVESTMENT MANAGER
"Investment Manager" shall mean any fiduciary (other than the Trustee or
Administrator):
(A) Who has the power to manage, acquire, or dispose of any asset of
the Plan;
(B) Who is (1) registered as an investment advisor under the
Investment Advisors Act of 1940, (2) is a bank as defined in that Act; or (3) is
an insurance company qualified to perform services described in paragraph
2.27(A), above, under the laws of more than one state, and;
(C) Has acknowledged in writing that he is a fiduciary with respect
to the Plan.
2.28 JOINT AND SURVIVOR ANNUITY
"Joint and Survivor Annuity" shall mean an immediate annuity for the life
of the Participant with a survivor annuity for the life of his spouse which is
not less than one-half (1/2), nor greater than, the annuity payable during the
joint lives of the Participant and his spouse. The Joint and Survivor Annuity
will be the amount of benefit which can be purchased with the Participant's
account balance. The percentage of the survivor annuity shall be fifty percent
(50%). The consent of the Participant's spouse is required if the account
balance is payable in any form other than a qualified Joint and Survivor Annuity
and the Plan is required by law to offer a Qualified Joint and Survivor Annuity.
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2.29 LATE RETIREMENT DATE
"Late Retirement Date" shall mean the first day of the month following a
Participant's separation from service with the Employer after his Normal
Retirement Date.
2.30 LIMITATION YEAR
(A) "Limitation Year" shall mean the twelve (12) consecutive month
period ending on the date specified in the Adoption Agreement.
(B) Anything in 2.30(A) notwithstanding, for purposes of the Short
Form Adoption Agreement "Limitation Year" shall mean the twelve (12) consecutive
month period ending on December 31.
2.31 NET PROFITS
"Net Profits" shall mean the current and accumulated earnings of the
Employer before Federal and State taxes and contributions to this Plan and any
other qualified Plan.
2.32 NORMAL RETIREMENT AGE
(A) "Normal Retirement Age" shall mean the age specified in the
Adoption Agreement.
Notwithstanding the vesting schedule elected under the Adoption
Agreement, a Participant's Accrued Benefit shall be fully vested and
non-forfeitable upon attainment of his Normal Retirement Age. If the Employer
enforces a mandatory retirement age, the Normal Retirement Age is the lesser of
that mandatory age or the age specified in the Adoption Agreement.
(B) Anything in 2.32(A) notwithstanding, for purposes of the Short
Form Adoption Agreement, "Normal Retirement Age" shall mean age 65.
2.33 NORMAL RETIREMENT DATE
"Normal Retirement Date" shall mean the Anniversary Date nearest the
Participant's Normal Retirement Age.
2.34 ONE YEAR BREAK IN SERVICE
"One Year Break in Service" shall mean a twelve (12) consecutive month
period (computation period) during which a Participant has not completed more
than 500 Hours of Service. For purposes of determining a One Year Break in
Service, the twelve (12) consecutive month computation period shall be the same
computation period used in determining Years of Service.
2.35 OWNER-EMPLOYEE
"Owner-Employee" shall mean a sole-proprietor or a partner who owns more
than ten percent (10%) of either the capital or profits interest of the
Employer.
2.36 PARTICIPANT
(A) "Participant" shall mean any Employee who has fulfilled the
eligibility requirements as specified in the Adoption Agreement and has become a
member of the Plan.
(B) Anything in 2.36(A) notwithstanding, for purposes of the Short
Form Adoption Agreement, Participant shall not include any Employee who is
included in a unit of Employees covered by a collective bargaining agreement
between the Employer
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and Employee representatives, if retirement benefits were the subject of good
faith bargaining. For this purpose, the term "Employee Representative" does not
include any organization more than half of whose members are Employees who are
owners, officers or executives of the Employer.
2.37 PARTICIPANT ACCOUNT
"Participant Account" shall mean the records maintained to record a
Participant's (or his Beneficiary's) interest in the Trust. Each Participant
(or, when applicable, Beneficiary) shall have an Employer Contribution Account
and, when applicable, a Participant Contribution Account, a Participant
Deductible Contribution Account and those accounts necessary for a cash or
deferred arrangement. If this Plan is part of a qualified cash or deferred
arrangement, Employee deferrals shall be allocated to the Employer Contribution
Account established for such Participant.
2.38 PLAN
"Plan" shall mean this Prototype Defined Contribution Plan together with
its related Adoption Agreement, as adopted by the Employer.
2.39 PLAN YEAR
"Plan Year" shall mean the period between the Effective Date and the first
Anniversary Date following the Effective Date, and thereafter the twelve (12)
consecutive calendar month period ending on each subsequent Anniversary Date.
For periods prior to the Effective Date of the Plan, Plan Year shall mean each
12 month period ending on the Anniversary Date of the Plan, had the Plan then
been in place.
2.40 PREDECESSOR EMPLOYER
(A) "Predecessor Employer" shall mean any predecessor corporation,
partnership or sole proprietorship to the Employer. For purposes of determining
a Participant's Years of Service for eligibility and Covered Years of Service
for vesting, service with the Predecessor Employer shall be considered service
with the Employer, if elected in the Adoption Agreement.
(B) Anything in Section 2.40(A) notwithstanding, for purposes of the
Short Form Adoption Agreement, service with a Predecessor Employer, as defined
in Section 2.40(A), shall be counted for purposes of eligibility Years of
Service and Vesting (covered Years of Service).
2.41 PARTICIPANT CONTRIBUTION ACCOUNT
"Participant Contribution Account" shall mean that portion of the
Participant Account which is established to record a Participant's voluntary,
nondeductible contributions to the Plan as adjusted for allocations of gains and
losses and withdrawals.
2.42 QUALIFIED LEAVE OF ABSENCE
"Qualified Leave of Absence" shall mean a leave of absence granted by the
Employer on a uniform basis for service in the Armed Forces, or for sickness,
accident, or other cause, provided, however, that a Participant granted such
leave of absence for service in the Armed Forces shall be required to report for
work within ninety (90) days following the date he was first eligible for
discharge from such service; and provided further that any Active Participant or
Inactive Participant who fails to return to active employment at or before the
expiration of his leave of absence, shall, for the purposes of this Plan, be
deemed to have terminated his employment as of the date of commencement of his
leave of absence; provided further, however, that should he fall to return to
work because of death or disability, his service, and participation if he was an
Active Participant at the
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time such leave of absence commenced, shall be deemed to have continued until
the date of his death or of the termination of his employment for disability.
In granting Qualified Leaves of Absence pursuant to the provisions of this
paragraph, the Employer shall not discriminate as between individuals covered by
the Plan, and shall apply the same rules with respect to Qualified Leaves of
Absence to all individuals covered thereby.
2.43 SELF-EMPLOYED INDIVIDUAL
"Self-Employed Individual" means any person who has Earned Income from the
Employer for which the Plan is established for the taxable Year or who would
have had Earned Income but for the fact that the Employer had no net profits for
the taxable Year.
2.435 SHORT FORM ADOPTION AGREEMENT
"Short Form Adoption Agreement" shall mean Money Purchase Pension Plan
Adoption Agreement 001 and Profit Sharing Adoption Agreement 003.
2.44 SOCIAL SECURITY COVERED COMPENSATION
"Social Security Covered Compensation" shall mean either:
(A) The amount of Compensation which would be used to calculate the
Participant's old age and survivor insurance benefits under the Social Security
Act if the Participant's annual compensation for each year until age sixty-five
(65) equaled the taxable wage base. Social Security Covered Compensation shall
be determined according to the table specified in the Adoption Agreement.
However, no amendment increasing the amount of Social Security Covered
Compensation shall reduce anyone's Accrued Benefit under the Plan.
(B) The dollar amount specified in the Adoption Agreement. Such
amount shall not exceed the maximum Social Security Covered Compensation under
Section 2.44(A) above for the oldest possible Participant in the Plan. No
amendment which increases a Participant's Social Security Covered Compensation
shall reduce the Accrued Benefit of any Participant.
2.45 TAXABLE WAGE BASE
"Taxable Wage Base" shall mean the maximum amount of earnings which may be
considered wages for such Year under Code Section 3121(a)(1) in effect as of the
beginning of the Plan Year.
2.46 TOTAL AND PERMANENT DISABILITY
"Total and Permanent Disability" shall mean a disability where a licensed
medical practitioner satisfactory to the Administrator certifies:
(A) That a Participant has become totally disabled by bodily injury
or disease so as to be prevented from engaging in any occupation suited to him
by reason of education, training and experience.
(B) That such disability can be expected to result in death or shall
have continued or be expected to continue for a period of not less than twelve
(12) consecutive months, and will be permanent and continuous during the
remainder of his lifetime. The rules with respect to disability shall be
uniformly and consistently applied to all Participants in similar circumstances.
If the Plan is integrated with Social Security, the Participant must have
commenced to receive disability benefits under the Federal Old Age Survivor and
Disability Insurance Act.
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2.47 TRUST
"Trust" shall mean the legal entity created under the trust agreement
relating to the Plan to hold all monies, securities, and assets held by the
Trustee for the benefit of Participants and Beneficiaries.
2.48 TRUSTEE
"Trustee" shall mean the Trustee(s) appointed by the Board under the trust
agreement relating to the Plan and any duly appointed successor(s).
2.49 YEAR
"Year" shall mean twelve (12) consecutive calendar months.
2.50 YEAR OF SERVICE
(A) "Year of Service" shall mean each Plan Year in which an Employee
is credited with at least one thousand (1000) Hours of Service, unless a lesser
number of Hours of Service is elected in the Adoption Agreement. For purposes
of determining an Employee's eligibility to participate in the Plan, Year of
Service shall also mean the twelve (12) consecutive months of employment with
the Employer beginning on the date for which the Employee is first credited with
an Hour of Service for the Employer (Employment Commencement Date) and ending on
the anniversary of such date during which he is credited with at least one
thousand (1000) Hours of Service or the Hours of Service specified in the
Adoption Agreement as constituting a Year of Service, if less than one thousand
(1000). For purposes of computing an Employee's nonforfeitable right to the
account balance derived from Employer contributions, Years of Service and One
Year Breaks in Service will be measured by the Plan Year.
(B) Short Form Adoption Agreement.
(1) Anything in Section 2.50(A) notwithstanding, for purposes of
the Short Form Adoption Agreement, a Year of Service shall mean each Plan Year
in which an Employee is credited with at least one thousand (1000) Hours of
Service.
(2) If the Years of Service selected in Option 6.2 of the Short
Form Adoption Agreement is or includes a fraction of a Year of Service, an
Employee shall not be required to complete any specified number of Hours of
Service to receive credit for such fractional year.
(C) Where this definition is used for purposes of contributions and
allocations, it is possible that the Plan can fail the nondiscrimination tests
under Code Sections 401(a)(26) and 410(b) by creating a group of nonbenefitting
employees who have not incurred a Break in Service and because of the Year of
Service requirement, are not entitled to receive an allocation of the Employer
contribution.
Each Nonstandard Adoption Agreement shall specifically address and remedy
this problem so that the Plan will pass the required nondiscrimination tests.
Each Standardized and Standardized Short Form Adoption Agreement will
require that a Participant who has not incurred a Break in Service will be
entitled to receive an allocation of the Employer contribution. For purposes of
the EZFLEX Adoption Agreement only, an Employer may elect with regard to a
Profit Sharing Discretionary Contribution that a Participant who terminates
Employment for reasons other than death, disability or retirement, who is not
employed on the last day of the Plan Year and who is not credited with at least
501 hours of services shall not receive a contribution.
3.0 ELIGIBILITY
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3.1 ELIGIBILITY REQUIREMENTS
(A) Initial Eligibility. An Employee shall become a Participant in
the Plan on the Entry Date coinciding with or next following the date he
satisfies the requirements for eligibility specified in the Adoption Agreement,
provided that he is then a member of the Eligible Class. For purposes of
determining Years of Service and One Year Breaks in Service for purposes of
eligibility, the initial eligibility computation period is the twelve (12)
consecutive month period beginning on the date the Employee first performs an
Hour of Service for the Employer (Employment Commencement Date).
(B) Subsequent Eligibility. An Employee who fails to meet the
requirements for participation in the Plan on the Entry Date on which he would
otherwise commence participation in the Plan shall become a Participant on the
Entry Date coinciding with or next following his completion of twelve (12)
consecutive month period commencing on the date the Participant is first
credited with one (1) Hour of Service with the Employer (Employment Commencement
Date) and each subsequent anniversary thereof. The succeeding twelve (12)
consecutive month periods commence with the first anniversary of the Employee's
Employment Commencement Date.
Where an Employer has specified an eligibility computation period which is
greater than one (1) Year of Service, the number of Years of Service (and
fractions thereof, if any) specified in the Adoption Agreement shall be
substituted for one (1) Year of Service in Section 3.1 (B), above.
(C) All Years of Service with the Employer are counted toward
eligibility except the following:
(1) If an Employee has a One Year Break in Service before
satisfying the Plan's requirement for eligibility, service before such break
will not be taken into account. This Section 3.1 (C)(1) shall apply only if a
participant is 100% vested upon completion of not more than two (2) Years of
Service.
(2) In the case of a Participant who does not have any
nonforfeitable right to the account balance derived from Employer contributions,
Years of Service before a period of consecutive One Year Breaks in Service will
not be taken into account in computing eligibility service if the number of
consecutive One Year Breaks in Service in such period equals or exceeds the
greater of 5 or the aggregate number of Years of Service. Such aggregate number
of Years of Service will not include any Years of Service disregarded under the
preceding sentence by reason of prior breaks in service.
(3) If a Participant's Years of Service are disregarded pursuant
to the preceding paragraph, such Participant will be treated as a new Employee
for eligibility purposes. If a Participant's Years of Service may not be
disregarded pursuant to the preceding paragraph, such Participant shall continue
to participate in the Plan, or, if terminated, shall participate immediately
upon reemployment.
3.2 RE-ELIGIBILITY
If a Participant terminates employment, incurs a One Year Break in Service
and is subsequently re-employed, such Former Participant shall become a
Participant immediately upon his re-employment. In the event an Active
Participant becomes ineligible to participate because he is no longer a member
of the Eligible Class, but has not incurred a One Year Break in Service, such
Employee shall again become an Active Participant as of the date on which he
again becomes a member of the Eligible Class. If such Participant incurs a One
Year Break in Service, eligibility will be determined under the break in service
rules of the Plan. In the event an Employee who is not a member of the Eligible
Class becomes a member of the Eligible Class, such Employee shall participate
immediately if such Employee has satisfied the requirements for eligibility
specified in the Adoption Agreement and would have
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previously become an Active Participant had he then been a member of the
Eligible Class.
3.3 LEAVE OF ABSENCE
If an Employee leaves the employment of the Employer for the expressed
purpose of a Qualified Leave of Absence authorized by the Employer, or for the
expressed purpose of entering the Armed Forces and serves therein, the time
spent on such Qualified Leave of Absence or the time spent in the Armed Forces
shall be included in determining his eligibility to participate in the Plan,
provided that re-employment occurs within ninety (90) days following such
Qualified Leave of Absence. If re-employment does not occur within said ninety
(90) day period, his rights under the Plan, if any, shall be determined as of
the date the absence began. All Employees, under similar circumstances, shall
be treated alike according to uniform and impartial rules.
4.0 FUNDING
4.1 CONTRIBUTION FORMULA
(A) Profit Sharing Plan. The Employer contribution for each Plan
Year will be such amount as may be approved by the Board, in its sole
discretion, without regard to the Net Profits of the Employer. In no event,
however, shall such contribution exceed, in total, the maximum amount which is
deductible under Code Section 404. Except as required by Section 8.5, no
contribution shall be made on behalf of a Participant who has not been credited
with a Year of Service during the Plan Year for which the contribution is made.
(B) Money Purchase Pension Plan. The Employer contribution for each Plan Year
shall be determined according to the formula specified in the Adoption
Agreement.
(B) Target Benefit Pension Plan. The Employer contribution for each
Plan Year shall be determined according to the formula specified in the Adoption
Agreement.
4.2 FORFEITURES
Forfeitures shall be added to the Employer contribution for the current
Plan Year and allocated therewith, in accordance with the Adoption Agreement.
Forfeitures arising hereunder will be allocated only for the benefit of
Employees of the Employer who adopted this Plan.
4.3 MISTAKE OF FACT
In the event that the Employer shall make a contribution by reason of a
mistake of fact, the Employer shall be entitled to recover from the Trustee that
portion of the contribution contributed by virtue of the mistake of fact within
one (1) Year of the date the contribution is made by reason of a mistake of
fact.
4.4 DISALLOWANCE OF DEDUCTION
In the event that the deduction for a contribution made by the Employer is
not allowed under Section 404(a) of the Code, the Employer shall be entitled to
recover from the Trustee that portion of such contribution which is in excess of
the allowable deduction under Section 404(a) of the Code within one (1) Year of
the date the deduction is disallowed. However, any income attributable to the
portion of the contribution made in excess of the allowable deduction shall not
revert to the Employer and any loss attributable thereto shall be used to reduce
the amount to be returned.
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4.5 VOLUNTARY CONTRIBUTIONS
(A) Beginning with the Plan Year in which this Plan is adopted by the
Employer, this Plan will no longer accept nondeductible Employee contributions
and matching contributions. Employee contributions for Plan Years beginning
after December 31, 1986, together with any matching contributions as defined in
Section 401(m) of the Code, will be limited so as to meet the nondiscrimination
test of section 401(m).
(B) A separate "Participant Contribution Account" shall be maintained
by the Trustee for the nondeductible voluntary contributions of each
Participant. The assets of the Trust shall be valued annually at fair market
value as of the last day of the Plan Year. On such date, the earnings and
losses attributable to the Participant Contribution Account will be added to
each Participant's Participant Contribution Account in the ratio that such
account balance bears to all such account balances. The total market value of
the Employee contributions shall be nonforfeitable at all times. No forfeitures
will occur solely as a result of a Participant's withdrawal of voluntary
contributions.
(C) A Participant may request withdrawal of an amount not to exceed
the lesser of the total amount of actual contributions made by him or the total
market value of said contributions, subject to the following conditions:
(1) The Participant shall bear the administrative expense
incident to this withdrawal of contributions.
(2) Each Participant shall be limited to one such
withdrawal in any Plan Year.
(D) Subject to the Joint and Survivor Annuity requirements of Section
5.7, but notwithstanding any other provisions of this Plan to the contrary, the
Participant Contribution Account, adjusted for gains and losses, of a
Participant shall be paid to him, as the Administrator shall direct, upon his
termination of employment for any reason (including retirement), or to his
beneficiary in the event of his death while a Participant.
(E) Neither the Employer, the Trustee, nor the Administrator to any
extent warrants or represents that the value of a Participant Contribution
Account at any time shall equal the total of the amounts previously credited
thereto.
(F) All amounts allocated to the Participant's Participant
Contribution Account shall be invested in the same manner as Employer
contributions to the Plan unless directed by the Participant pursuant to the
provisions of Section 4.11.
4.6 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS
The Administrator will not accept deductible employee contributions which
are made for a taxable year beginning after December 31, 1986. Contributions
made prior to that date will be maintained in a separate account which will be
nonforfeitable at all times. The assets of the trust will be valued annually at
fair market value as of the last day of the Plan Year. On such date, the
earnings and losses of the trust attributable to the accumulated deductible
voluntary contribution will be allocated to each Participant's deductible
voluntary contributions account in the ratio that such account balance bears to
all such account balances. No part of the deductible voluntary contribution
account will be used to purchase life insurance. Subject to Section 5.7, Joint
and Survivor Annuity requirements (if applicable), the Participant may withdraw
any part of the deductible voluntary contribution account by making a written
application to the Plan Administrator.
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4.7 ROLLOVER ACCOUNT
(A) If permitted by the Administrator and under rules established by
the Administrator on a non-discriminatory basis, any Employee who is or will
become eligible to participate in the Plan may at the sole discretion of the
Administrator roll over to the Trust any lump sum distribution received by such
Employee from a tax-qualified plan under Code Section 401(a) or 408(k), an
annuity plan qualified under Code Section 403(a) or 403(b) or accumulated
deductible employee contributions as defined in Code Section 72(o)(5) that were
distributed from a qualified retirement plan and rolled over pursuant to Code
Sections 402(a)(5), 402(a)(7), 403(a)(4) or 409(d)(3) within sixty (60) days of
the date such distribution occurred. Provided, however, that any Employee who
transferred such lump sum distribution into an Individual Retirement Account
under Code Section 408 within sixty (60) days of the date such distribution
occurred may roll over such transferred amount to this Plan. The Plan will not
accept rollovers of accumulated deductible employee contributions from a plan in
which the Employee was covered as a Self-Employed Individual under Code Section
401(c).
(B) The Employee's rollover contribution shall be maintained in a
separate "Rollover Account" in which the Employee will be one hundred percent
(100%) vested at all times.
(C) An Employee may withdraw his Rollover Account at any time with
the approval of the Administrator, in its sole discretion.
(D) An Employee shall receive the benefits attributable to his
Rollover Account in the manner specified in Section 5.2 and at the time
specified in Section 5.3 of the Plan.
(E) All amounts allocated to an Employee's Rollover Account shall be
invested in the same manner as Employer contributions to the Plan unless
directed by the Participant pursuant to the Provisions of Section 4.11.
4.8 EMPLOYER CONTRIBUTION ACCOUNT
A separate Employer Contribution Account shall be opened and maintained by
the Administrator for each Participant who has become eligible to participate in
the Plan in which shall be recorded the amounts of the Employer's contribution
allocated to such Participant, adjustments for allocation of Trust earnings,
forfeitures, distributions, and all other information affecting the value of
such Employer Contribution Account. This account shall include such subaccounts
as required to meet accounting rules for the plan.
4.9 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES
(A) The Employer's contributions to the Trust for each Plan Year,
together with any forfeitures, shall be allocated to the Employer Contribution
Account for each Active Participant as specified in the Adoption Agreement.
(B) Anything in Section 4.9(A) notwithstanding, for purposes of the
Short Form Adoption Agreement, Employer contributions shall be allocated among
Participant Accounts in the ratio which each Active Participant's Compensation
bears to the Compensation paid to all Active Participants.
4.10 ALLOCATION OF TRUST GAINS AND LOSSES
(A) The Participant's account balance attributable to his Employer
Contribution Account, Participant Contribution Account, Participant Deductible
Contribution Account and his Rollover Account (Participant Account) shall be
determined on each Anniversary Date in the following manner:
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(1) The Participant's Participant Account on the preceding
Anniversary Date; plus
(2) Any contributions to such Participant's Participant Account
with respect to the Plan Year ended on the current Anniversary Date; minus
(3) The amount of any withdrawals from such Participant Account
during the Plan Year ended on the current Anniversary Date; plus or minus
(4) The Participant's pro-rata share of the earnings or losses
of that portion of the Trust, since the preceding Anniversary Date, attributable
to all Participant Accounts, as determined under Section 4.10(B).
(B) The earnings or losses of the Trust fund attributable to
Participant Accounts shall be valued annually at fair market value and allocated
as of the last day of each Plan Year and any other interim date selected by the
Administrator for valuing the Trust ("Valuation Date") to each Participant in
the ratio that his Participant Account on such Valuation Date bears to the total
of all Participant Accounts on such Valuation Date. For purposes of this
Section 4.10(B), in determining a Participant's Participant Account on such
Valuation Date, any Participant contributions or rollovers actually contributed
subsequent to the next preceding Valuation Date shall be disregarded.
4.11 SEGREGATION OF PARTICIPANT ACCOUNTS
(A) Subject to uniform rules established by the Administrator on a
non-discriminatory basis, a Participant may request, subject to the approval of
the Administrator, that his Participant Account and/or Participant Deductible
Contribution Account and/or his Rollover Account be segregated in a separate
account. The Administrator shall establish rules regarding the manner and the
times by which such request can be made and/or revoked. The Plan Administrator
shall adopt rules and regulations concerning all aspects of the segregated
account including the adjustment of the segregated account for earnings and
losses generated by the general Trust Fund if and where applicable. If the Plan
Administrator authorized the segregation of any such Participant's account, such
Participant shall have the full authority to direct the investment of such
segregated account, held on his behalf, by written instruction delivered to the
Trustee, in which event the Trustee shall follow, as soon as practicable, the
directions of the Participant with respect to the investment of such segregated
account, provided, however, that such an investment is not prohibited by statute
or by any other provision of the Plan and Trust. In so doing, the Trustee shall
be completely exonerated from any liability and held harmless by the Participant
and the Plan Administrator with respect to such investments. Contributions made
during the period in which a segregated account is maintained for the
Participant shall be allocated appropriately to such segregated account.
Notwithstanding the provisions of Section 4.10, the Participant's
applicable segregated account shall be increased and/or decreased solely by the
net earnings and/or losses resulting from the investments of the segregated
account. All expenses incurred as a result of such an election and operation of
the segregated account shall be charged to and deducted directly from said
account.
Upon retirement of the Participant, if any of his account balances are
still segregated, his benefits shall be equal to the assets in his segregated
account.
(B) For purposes of the Short Form Adoption Agreement, each
Participant will have a separate Individual Investment Account which will
contain the amount allocated to the Participant Account. Each Participant will
have the power to direct the investment with respect to his Individual
Investment Account, as provided in Section 4.11(A).
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5.0 BENEFIT
5.1 AMOUNT OF DISTRIBUTION
(A) A Participant who attains Normal Retirement Age or who terminates
his employment with the Employer by reason of death or Total and Permanent
Disability shall be entitled to receive one hundred percent (100%) of the amount
credited to his Employer Contribution Account as of the preceding valuation date
together with one hundred percent (100%) of the amounts credited to his
Participant Contribution Account and his Participant Deductible Contribution
Account, if any.
(B) A Participant who terminates his employment with the Employer for
any reason other than death, Total and Permanent Disability or attainment of
Normal Retirement Age will be entitled to receive his vested account balance.
(C) For purposes of the Short Form Adoption Agreement, a Participant
shall be vested 100% in his account balance at all times.
(D) Anything in this Plan and Trust to the contrary notwithstanding;
(1) A Participant under a Profit Sharing Plan may be able to
take an in-service withdrawal of the funds which have accumulated in the Plan
after two years provided that
(a) such a distribution is on account of hardship, and
(b) the Administrator approves such hardship as qualifying
under the plan.
(2) For purposes of this Section 5.1(D), a distribution will be
on account of hardship if the distribution is necessary in light of immediate
and heavy financial needs of the Employee. A distribution based upon financial
hardship cannot exceed the amount required to meet the immediate need created by
the hardship and the Employee lacks other available resources.
5.2 FORM OF BENEFIT
(A) If this plan is a new profit sharing plan or an amended profit
sharing plan which does not and has never permitted benefit forms subject to the
joint and survivor requirements of Code Sections 401 (a)(11) or 417, and meets
the requirements of Section 5.7(F) of this Plan, the Participant may elect to
receive his benefit in one of the following optional forms:
(1) a single lump sum payment, or
(2) substantially equal monthly, quarterly or annual
installments over a period of years not to exceed the life expectancy of the
Participant or that of the Participant and his spouse.
(B) In all cases to which Section 5.2(A) does not apply,
notwithstanding anything in this document to the contrary, the Participant may
elect, subject to the requirements of Section 5.7 of this document, to receive
his benefit in one of the following optional forms:
(1) In the form of a single lump sum payment,
(2) In the form of substantially equal monthly, quarterly or
annual installments over a period of years which does not exceed the life
expectancy of the Participant or the life expectancy of the Participant and his
spouse;
(3) In the form of an annuity for the life of the Participant;
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(4) In the form of an annuity for the life of the Participant,
with the provision that if he dies prior to having received monthly benefit
payments for a period of five (5), ten (10) or fifteen (15) years, the benefit
payments remaining for the balance of the specified period shall continue to be
paid to his Beneficiary;
(5) In the form of a Joint and Survivor Annuity where the
monthly amount payable to the contingent annuitant is fifty percent (50%) or one
hundred percent (100%) of the amount payable during the joint lives of the
Participant and the contingent annuitant.
(C) The terms of any annuity contract purchased and distributed by
the Plan to a Participant or spouse shall comply with the requirements of this
Plan.
If the Participant's Benefit is distributed in the form of an annuity
purchased from an insurance company, distributions thereunder shall be made in
accordance with the requirements of section 401(a)(9) of the Code and the
Proposed Regulations thereunder.
5.3 DISTRIBUTION OF BENEFITS
(A) Unless the Participant elects otherwise, distribution of benefits
will begin no later than the 60th day after the latest of the close of the Plan
Year in which:
(1) The Participant attains age 65 (or Normal Retirement Age, if
earlier);
(2) Occurs the 10th anniversary of the year in which the
Participant commenced participation in the Plan; or,
(3) The Participant terminates service with the Employer.
Notwithstanding the foregoing, the failure of a Participant and spouse to
consent to a distribution while a benefit is immediately distributable, within
the meaning of section 5.4(D) of the Plan, shall be deemed to be an election to
defer commencement of payment of any benefit sufficient to satisfy this Section.
A Participant who has satisfied the service requirement for Early
Retirement, but separated from service (with any non-forfeitable right to his
Accrued Benefit) before satisfying the age requirement for such Early
Retirement, shall be entitled to elect upon the satisfaction of such age
requirement a benefit equal to the benefit to which he would be entitled at
Normal Retirement Age. Any annuity contract distributed under this Plan shall
be non-transferable.
(B) Subject to Section 5.7, Joint and Survivor Annuity Requirements,
the requirements of this Section 5.3 shall apply to any distribution of a
Participant's interest and will take precedence over any inconsistent provisions
of this Plan. Unless otherwise specified, the provisions of this Section 5.3
apply to calendar years beginning after December 31, 1984.
All distributions required under this Section 5.3 shall be determined and
made in accordance with the Proposed Regulations under Section 401(a)(9) of the
Code, including the minimum distribution incidental benefit requirement of
Section 1.401(a)(9)-2 of the Proposed Regulations.
(C) Required Beginning Date. The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
required beginning date.
(D) Limits on Distribution Periods. As of the first distribution
calendar year, distributions, if not made in a single-sum, may only be made over
one of the following periods (or a combination thereof):
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(1) The life of the Participant,
(2) The life of the Participant and a designated Beneficiary,
(3) A period certain not extending beyond the life expectancy of
the Participant, or
(4) A period certain not extending beyond the joint and last
survivor expectancy of the Participant and a designated Beneficiary.
(E) Determination of amount to be distributed each year. If the
Participant's interest is to be distributed in other than a single sum, the
following minimum distribution rules shall apply on or after the required
beginning date:
(1) Individual Account.
(a) If a Participant's benefit is to be distributed over
(i) a period not extending beyond the life expectancy of the Participant or the
joint life and last survivor expectancy of the Participant and the Participant's
designated Beneficiary or (ii) a period not extending beyond the life expectancy
of the designated Beneficiary, the amount required to be distributed for each
calendar year, beginning with distributions for the first distribution calendar
year, must at least equal the quotient obtained by dividing the Participant's
benefit by the applicable life expectancy.
(b) For calendar years beginning before January 1, 1989, if
the Participant's spouse is not the designated Beneficiary, the method of
distribution selected must assure that at least 50% of the present value of the
amount available for distribution is paid within the life expectancy of the
Participant.
(c) For calendar years beginning after December 31, 1988,
the amount to be distributed each year, beginning with distributions for the
first distribution calendar year shall not be less than the quotient obtained by
dividing the Participant's benefit by the lesser of:
(i) The applicable life expectancy or
(ii) If the Participant's spouse is not the designated
Beneficiary, the applicable divisor determined from the table set forth in Q&A-4
of section 1.401(a)(9)-2 of the Proposed Regulations. Distributions after the
death of the Participant shall be distributed using the applicable life
expectancy in section 5.3(E)(1)(a) above as the relevant divisor without regard
to Proposed Regulations section 1.401(a)(9)-2.
(d) The minimum distribution required for the Participant's
first distribution calendar year must be made on or before the Participant's
required beginning date. The minimum distribution for other calendar years,
including the minimum distribution for the distribution calendar year in which
the Employee's required beginning date occurs, must be made on or before
December 31 of that distribution calendar year.
(2) If the Participant's benefit is distributed in the form of
an annuity Purchased from an insurance company, distributions thereunder shall
be made in accordance with the requirements of section 401(a)(9) of the Code and
the Proposed Regulations thereunder.
(F) Death Distribution Provisions.
(1) Distribution beginning before death. If the Participant
dies after distribution of his interest has begun, the remaining portion of such
interest
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will continue to be distributed at least as rapidly as under the method of
distribution being used prior to the Participant's death.
(2) Distribution beginning after death. If the Participant dies
before distribution of his interest begins, distribution of the Participant's
entire interest shall be completed by December 31 of the calendar year
containing the fifth anniversary of the Participant's death except to the extent
that an election is made to receive distributions in accordance with (a) or (b)
below:
(a) If any portion of the Participant's interest is payable
to a designated Beneficiary, distributions may be made over the life or over a
period certain not greater than the life expectancy of the designated
Beneficiary commencing on or before December 31 of the calendar year immediately
following the calendar year in which the Participant died;
(b) If the designated Beneficiary is the Participant's
surviving Spouse, the date distributions are required to begin in accordance
with (a) above shall not be earlier than the later of (1) December 31 of the
calendar year immediately following the calendar year in which the Participant
died and (2) December 31 of the calendar year in which the Participant would
have attained age 70 1/2.
If the Participant has not made an election pursuant to this Section
5.3(F)(2) by the time of his or her death, the Participant's designated
Beneficiary must elect the method of distribution no later than the earlier of
(1) December 31 of the calendar year in which distributions would be required to
begin under this Section, or (2) December 31 of the calendar year which contains
the fifth anniversary of the date of death of the Participant. If the
Participant has no designated Beneficiary, or if the designated Beneficiary does
not elect a method of distribution, distribution of the Participant's entire
interest must be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant's death.
(3) For purposes of Section 5.3(F)(2) above, if the surviving
spouse dies after the Participant, but before payments to such spouse begin, the
provisions of Section 5.3(F)(2), with the exception of paragraph (b) therein,
shall be applied as if the surviving spouse were the Participant.
(4) For purposes of this Section (F), any amount paid to a child
of the Participant will be treated as if it had been paid to the surviving
spouse if the amount becomes payable to the surviving spouse when the child
reaches the age of majority.
(5) For the purposes of this Section (F), distribution of a
Participant's interest is considered to begin on the Participant's required
beginning date (or, if Section 5.3(F)(3) above is applicable, the date
distribution is required to begin to the surviving spouse pursuant to Section
5.3(F)(2) above). If distribution in the form of an annuity irrevocably
commences to the Participant before the required beginning date, the date
distribution is considered to begin is the date distribution actually commences.
(G) Definitions
(1) Applicable life expectancy. The life expectancy (or joint
and last survivor expectancy) calculated using the attained age of the
Participant (or designated Beneficiary) as of the Participant's (or designated
Beneficiary's) birthday in the applicable calendar year reduced by one for each
calendar year which has elapsed since the date life expectancy was first
calculated. If life expectancy is being recalculated, the applicable life
expectancy shall be the life expectancy as so recalculated. The applicable
calendar year shall be the first distribution calendar year, and if life
expectancy is being recalculated such succeeding calendar year.
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(2) Designated beneficiary. The individual who is designated as
the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code
and the regulations thereunder.
(3) Distribution calendar year. A calendar year for which a
minimum distribution is required. For distributions beginning before the
Participant's death, the first distribution calendar year is the calendar year
immediately preceding the calendar year which contains the Participant's
required beginning date. For distributions beginning after the Participant's
death, the first distribution calendar year is the calendar year in which
distributions are required to begin pursuant to Section F above.
(4) Life expectancy. Life expectancy and joint and last
survivor expectancy are computed by use of the expected return multiples in
Tables V and VI of Section 1.72-9 of the Income Tax Regulations.
Unless otherwise elected by the Participant (or spouse, in the case of
distributions described in Section 5.3(F)(2)(b) above) by the time distributions
are required to begin, life expectancies shall be recalculated annually. Such
election shall be irrevocable as to the Participant (or spouse) and shall apply
to all subsequent years. The life expectancy of a nonspouse Beneficiary may not
be recalculated.
(5) Participant's benefit.
(a) The account balance as of the last valuation date in
the calendar year immediately preceding the distribution calendar year
(valuation calendar year) increased by the amount of any contributions or
forfeitures allocated to the account balance as of dates in the valuation
calendar year after the valuation date and decreased by distributions made in
the valuation calendar year after the valuation date.
(b) Exception for second distribution calendar year. For
purposes of paragraph (a) above, if any portion of the minimum distribution for
the first distribution calendar year is made in the second distribution calendar
year on or before the required beginning date, the amount of the minimum
distribution made in the second distribution calendar year shall be treated as
if it had been made in the immediately preceding distribution calendar year.
(6) Required beginning date.
(a) General rule. The required beginning date of a
Participant is the first day of April of the calendar year following the
calendar year in which the Participant attains age 70 1/2.
(b) Transitional rule. The required beginning date of a
Participant who attains age 70 1/2 before January 1, 1988, shall be determined
in accordance with (i) or (ii) below:
(i) Non-5-percent owners. The required beginning date
of a Participant who is not a "5-percent owner" (as defined in (c) below) is the
first day of April of the calendar year following the calendar year in which the
later of retirement or attainment of age 70 1/2 occurs.
(ii) 5-percent owners. The required beginning date of
a Participant who is a 5-percent owner during any year beginning after December
31, 1979, is the first day of April following the later of:
(1) The calendar year in which the Participant
attains age 70 1/2, or
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(2) The earlier of the calendar year with or
within which ends the Plan Year in which the Participant becomes a 5-percent
owner, or the calendar year in which the Participant retires.
The required beginning date of a Participant who is not a
5-percent owner who attains age 70 1/2 during 1988 and who has not retired as of
January 1, 1989, is April 1, 1990.
(c) 5-percent owner. A Participant is treated as a
5-percent owner for purposes of this Section if such Participant is a 5-percent
owner as defined in Section 416(i) of the Code (determined in accordance with
Section 416 but without regard to whether the Plan is top-heavy) at any time
during the Plan Year ending with or within the calendar year in which such owner
attains age 66 1/2 or any subsequent Plan Year.
(d) Once distributions have begun to a 5-percent owner
under this Section, they must continue to be distributed, even if the
Participant ceases to be a 5-percent owner in a subsequent year.
(H) Transitional Rule
(1) Notwithstanding the other requirements of this Section 5.3
and subject to the requirements of Section 5.7, Joint and Survivor Annuity
Requirements, distribution on behalf of any Employee, including a 5-percent
owner, may be made in accordance with all of the following requirements
(regardless of when such distribution commences):
(a) The distribution by the trust is one which would not
have disqualified such trust under Section 401(a)(9) of the Internal Revenue
Code as in effect prior to amendment by the Deficit Reduction Act of 1984.
(b) The distribution is in accordance with a method of
distribution designated by the Employee whose interest in the trust is being
distributed or, if the Employee is deceased, by a Beneficiary of such Employee.
(c) Such designation was in writing, was signed by the
Employee or the Beneficiary, and was made before January 1, 1984.
(d) The Employee had accrued a benefit under the Plan as of
December 31, 1983.
(e) The method of distribution designated by the Employee
or the Beneficiary specifies the time at which distribution will commence, the
period over which distributions will be made, and in the case of any
distribution upon the Employee's death, the Beneficiaries of the Employee listed
in order of priority.
(2) A distribution upon death will not be covered by this
transitional rule unless the information in the designation contains the
required information described above with respect to the distributions to be
made upon the death of the Employee.
(3) For any distribution which commences before January 1, 1984,
but continues after December 31, 1983, the Employee, or the Beneficiary, to whom
such distribution is being made, will be presumed to have designated the method
of distribution under which the distribution is being made if the method of
distribution was specified in writing and the distribution satisfies the
requirements in Sections 5.3(H)(1)(a) and (e).
(4) If a designation is revoked any subsequent distribution must
satisfy the requirements of Section 401(a)(9) of the Code and the Proposed
Regulations thereunder. If a designation is revoked subsequent to the date
distributions are required to begin, the trust must distribute by the end of the
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calendar year following the calendar year in which the revocation occurs the
total amount not yet distributed which would have been required to have been
distributed to satisfy Section 401(a)(9) of the Code and the Proposed
Regulations thereunder, but for the Section 242(b)(2) election. For calendar
years beginning after December 31, 1988, such distributions must meet the
minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of
the Proposed Regulations. Any changes in the designation will be considered to
be a revocation of the designation. However, the mere substitution or addition
of another Beneficiary (one not named in the designation) under the designation
will not be considered to be a revocation of the designation, so long as such
substitution or addition does not alter the period over which distributions are
to be made under the designation, directly or indirectly (for example, by
altering the relevant measuring life). In the case in which an amount is
transferred or rolled over from one plan to another plan, the rules in Q&A J-2
and Q&A J-3 of Section 1.401(a)(9)-1 of the Proposed Regulations shall apply.
5.4 VESTING ON TERMINATION AND RE-EMPLOYMENT
(A) If a Participant terminates employment, incurs a One Year Break in
Service and is subsequently re-employed, Covered Years of Service completed
prior to such break shall not be counted for vesting purposes until such time as
the Participant has been re-employed by the Employer and has completed a Year of
Service after his return to service. Such Year of Service will be measured by
the twelve (12) month period beginning on the first day on which the Employee is
credited with an Hour of Service for the performance of duties after the first
eligibility computation period in which the Employee incurs a One Year Break in
Service and on each subsequent anniversary of such date. After that time, that
Year of Service shall be counted as a Covered Year of Service for vesting
purposes, and all Covered Years of Service prior to the One Year Break in
Service, except as provided in paragraph (C) below, shall be included in the
aggregate of Covered Years of Service for vesting purposes.
(B) If an Employee terminates service:
(1) And the value of the Employee's Employer Contribution
Account and Participant Contribution Account is not greater than $3,500, the
Employee will receive a distribution of the value of the entire vested portion
of such account balance and the non-vested portion will be treated as a
forfeiture. For purposes of this Section 5.4(B)(1), if the value of a
Participant's vested account balance is zero, the Employee shall be deemed to
have received a distribution of such vested account balance. A Participant's
vested account balance shall not include accumulated deductible employee
contributions within the meaning of Section 7.2(o)(5)(B) of the Code for Plan
Years beginning prior to January 1, 1989.
(2) And elects, in accordance with the requirements of Section
5.4(D), to receive the value of the Employee's Employer Contribution Account and
Participant Contribution Account, the non-vested portion will be treated as a
forfeiture. If the Employee elects to have distributed less than the entire
vested portion of the Employer Contribution Account, the part of the non-vested
portion that will be treated as a forfeiture is the total non-vested portion
multiplied by a fraction, the numerator of which is the amount of the
distribution attributable to Employer contributions and the denominator of which
is the total value of the vested Employer Contribution Account.
(3) And receives or is deemed to receive a distribution pursuant
to this Section 5.4(B) which is less than the value of the Employee's account
balance derived from Employer contributions, and resumes employment covered
under this Plan, the Employee's account will be restored to the amount on the
date of distribution if the Employee repays to the Plan the full amount of the
distribution on or before the Employee incurs five (5) consecutive One Year
Breaks in Service following the date of distribution.
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If a distribution is made at a time when a Participant has a
nonforfeitable right to less than 100 percent of the account balance derived
from Employer contributions and the Participant may increase the nonforfeitable
percentage in the account:
(a) A separate account will be established for the
Participant's interest in the Plan as of the time of the distribution, and
(b) At any relevant time the Participant's nonforfeitable
portion of the separate account will be equal to an amount ("X") determined by
the formula:
X=P(AB + (R x D)) - (R x D)
For purposes of applying the formula: P is the nonforfeitable
percentage at the relevant time, AB is the account balance at the relevant time,
D is the amount of the distribution, and R is the ratio of the account balance
at the relevant time to the account balance after distribution.
(C) In the case of a Participant who has 5 or more consecutive One
Year Breaks in Service, all service after such One Year Breaks in Service will
be disregarded for the purpose of vesting the Employer-derived account balance
that accrued before such One Year Breaks in Service. Such Participant's
pre-break service will count in vesting the post-break Employer-derived account
balance only if either:
(1) such Participant has any nonforfeitable interest in the
account balance attributable to Employer contributions at the time of separation
from service; or
(2) upon returning to service the number of consecutive One Year
Breaks in Service is less than the number of Years of Service.
Separate accounts will be maintained for the Participant's pre-break
and post-break Employer-derived account balance. Both accounts will share in
the earnings and losses of the fund. If a Participant's Years of Service are
disregarded pursuant to the preceding paragraph, such Participant will be
treated as a new Employee for eligibility purposes. If a Participant's Years of
Service may not be disregarded pursuant to the preceding paragraph, such
Participant shall continue to participate in the Plan, or, if terminated, shall
participate immediately upon reemployment.
(D) If the value of a Participant's vested account balance derived
from Employer and Employee contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and the Participant's spouse (or where either the
Participant or the spouse has died, the survivor) must consent to any
distribution of such account balance. The consent of the Participant and the
Participant's spouse shall be obtained in writing within the 90-day period
ending on the annuity starting date. The annuity starting date is the first day
of the first period for which an amount is paid as an annuity or any other form.
The Plan Administrator shall notify the Participant and the Participant's spouse
of the right to defer any distribution until the Participant's account balance
is no longer immediately distributable. Such notification shall include a
general description of the material features, and an explanation of the relative
values of, the optional forms of benefit available under the Plan in a manner
that would satisfy the notice requirements of section 417(a)(3), and shall be
provided no less than 30 days and no more than 90 days prior to the annuity
starting date. Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a qualified Joint and
Survivor Annuity while the account balance is immediately distributable.
(Furthermore, if payment in the form of a qualified Joint and Survivor Annuity
is not required with respect to the Participant pursuant to
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Section 5.7 of the Plan, only the Participant need consent to the distribution
of an account balance that is immediately distributable.) Neither the consent of
the Participant nor the Participant's spouse shall be required to the extent
that a distribution is required to satisfy section 401(a)(9) or section 415 of
the Code. In addition, upon termination of this Plan if the Plan does not offer
an annuity option (purchased from a commercial provider), the Participant's
account balance may, without the Participant's consent, be distributed to the
Participant or transferred to another defined contribution plan (other than an
employee stock ownership plan as defined in section 4975(e)(7) of the Code)
within the same controlled group.
An account balance is immediately distributable if any part of the account
balance could be distributed to the Participant (or surviving spouse) before the
Participant attains or would have attained if not deceased) the later of Normal
Retirement Age or age 62.
(E) For purposes of determining the applicability of the foregoing
consent requirements to distributions made before the first day of the first
Plan Year beginning after December 31, 1988, the Participant's vested account
balance shall not include amounts attributable to accumulated deductible
employee contributions within the meaning of section 72(o)(5)(B) of the Code.
5.5 LIMITATION ON BENEFITS AND CONTRIBUTIONS
(A) No Participation in Another Qualified Plan or Welfare Benefit
Fund
(1) If the Participant does not participate in, and has never
participated in another qualified plan or a welfare benefit fund, as defined in
Section 419(e) of the Code, maintained by the adopting Employer or an individual
medical account, as defined in Code Section 415(i)(2) of the Code, maintained by
the Employer, which provides an Annual Addition as defined in Section 2.7, the
amount of Annual Additions which may be credited to the Participant's account
for any Limitation Year will not exceed the lesser of the Maximum Permissible
Amount or any other limitation contained in this Plan. If the Employer
contribution that would otherwise be contributed or allocated to the
Participant's account would cause the Annual Additions for the Limitation Year
to exceed the Maximum Permissible Amount, the amount contributed or allocated
will be reduced so that the Annual Addition for the Limitation Year will equal
the Maximum Permissible Amount.
(2) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant on the basis of a reasonable estimation of the
Participant's Compensation for the Limitation Year, uniformly determined for all
Participants similarly situated.
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
(4) If pursuant to Section 5.5(A)(3) or as the result of the
allocation of forfeitures, there is an excess amount, the excess will be
disposed of as follows:
(a) Any non-deductible voluntary employee contributions, to
the extent they would reduce the excess amount, will be returned to the
Participant;
(b) If after the application of Section 5.5(A)(4)(a) an
excess amount still exists, and the Participant is covered by the Plan at the
end of the Limitation Year, the excess amount in the Participant's account will
be used to reduce Employer contributions (including any allocation of
forfeitures) for such
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Participant in the next Limitation Year, and each succeeding Limitation Year, if
necessary;
(c) If after the application of Section 5.5(A)(4)(a) an
excess amount still exists, and the Participant is not covered by the Plan at
the end of a Limitation Year, the excess amount will be held unallocated in a
suspense account. The suspense account will be applied to reduce future
Employer contributions (including allocation of any forfeitures) for all
remaining Participants in the next Limitation Year, and each succeeding
Limitation Year, if necessary;
(d) If a suspense account is in existence at any time
during a Limitation Year pursuant to this Section 5.5, it will not participate
in the allocation of the Trust's investment gains and losses. If a suspense
account is in existence at any time during a particular Limitation Year, all
amounts in the suspense account must be allocated and reallocated to
Participant's accounts before Employer contributions or any Employee
contributions may be made to the Plan for that Limitation Year. Excess amounts
may not be distributed to Participants or Former Participants.
(B) Participation in Another Qualified Master or Prototype Plan or
Welfare Benefit Fund.
(1) This Section 5.5(B)(1) applies if, in addition to this Plan,
the Participant is covered under another qualified master or prototype defined
contribution plan maintained by the Employer, a welfare benefit fund, as defined
in Section 419(e) of the Code, maintained by the Employer or an individual
medical account, as defined in Code Section 415(l)(2) of the Code, maintained by
the Employer, which provides an Annual Addition as defined in Section 2.7,
during any Limitation Year. The Annual Additions which may be credited to a
Participant's account under this Plan for any such Limitation Year will not
exceed the Maximum Permissible Amount reduced by the Annual Additions credited
to a Participant's account under the other plans and welfare benefit funds for
the same Limitation Year. If the Annual Additions with respect to the
Participant under other defined contribution plans and welfare benefit funds
maintained by the Employer are less than the Maximum Permissible Amount, and the
Employer contribution that would otherwise be contributed or allocated to the
Participant's account under this Plan would cause the Annual Additions for the
Limitation Year to exceed this limitation, the amount contributed or allocated
will be reduced so that the Annual Additions under all such plans and funds for
the Limitation Year will equal the Maximum Permissible Amount. If the Annual
Additions with respect to the Participant under such other defined contribution
plans and welfare benefit funds in the aggregate are equal to or greater than
the Maximum Permissible Amount, no amount will be contributed or allocated to
the Participant's account under this Plan for the Limitation Year.
(2) Prior to determining the Participant's actual Compensation
for the Limitation Year, the Employer may determine the Maximum Permissible
Amount for a Participant in the manner described in Section 5.5(A)(2).
(3) As soon as is administratively feasible after the end of the
Limitation Year, the Maximum Permissible Amount for the Limitation Year will be
determined on the basis of the Participant's actual Compensation for the
Limitation Year.
(4) If, pursuant to Section 5.5(B)(3) or as a result of the
allocation of forfeitures, a Participant's Annual Additions under this Plan and
such other plans would result in an excess amount for a Limitation Year, the
excess amount will be deemed to consist of the Annual Additions last allocated,
except that Annual Additions attributable to a welfare benefit fund or
individual medical account will be deemed to have been allocated first
regardless of the actual allocation date.
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(5) If an excess amount was allocated to a Participant on an
allocation date of this Plan which coincides with an allocation date of another
plan, the excess amount attributed to this Plan will be the product of: The
total excess amount allocated as of such date, times the ratio of the Annual
Additions allocated to the Participant for the Limitation Year, as of such date
under this Plan to the total Annual Additions allocated to the Participant for
the Limitation Year as of such date under this and all the other qualified
master or prototype defined contribution plans.
(6) Any excess amount attributed to this Plan will be disposed
in the manner described in Section 5.5(A)(4).
(C) If the Participant is covered under another qualified defined
contribution plan maintained by the Employer which is not a master or prototype
plan, Annual Additions which may be credited to the Participant's account under
this Plan for any Limitation Year will be limited in accordance with Section
5.5(B) as though the other plan were a master or prototype plan, unless the
Employer provides other limitations in the Adoption Agreement. For purposes of
the Short Form Adoption Agreement, the provisions of Section 5.5(B) of the Plan
will apply as if the other plan were a master or prototype plan.
(D) If the Employer maintains, or at any time maintained, a qualified
defined benefit plan (other than paired plan #01) covering any Participant in
this Plan, the sum of the Participant's defined benefit plan fraction and
defined contribution plan fraction will not exceed 1.0 in any Limitation Year.
The Annual Additions which may be credited to the Participant's account under
this Plan for any Limitation Year will be limited in accordance with the
Adoption Agreement. If the Employer maintains, or at any time maintained, a
qualified defined benefit plan other than paired plan #01, the Employer cannot
adopt the Short Form Adoption Agreement.
(E) Definitions
(1) Compensation: A Participant's earned income, wages,
salaries, and fees for professional services and other amounts received for
personal services actually rendered in the course of employment with the
Employer maintaining the Plan (including, but not limited to, commissions paid
salesmen, compensation for services on the basis of a percentage of profits,
commissions on insurance premiums, tips and bonuses), and excluding the
following:
(a) Employer contributions to a plan of deferred
compensation which are not includible in the Employee's gross income for the
taxable year in which contributed, or Employer contributions under a simplified
employee pension plan to the extent such contributions are deductible by the
Employee, or any distributions from a plan of deferred compensation;
(b) Amounts realized from the exercise of a nonqualified
stock option, or when restricted stock (or property) held by the Employee either
becomes freely transferable or is no longer subject to a substantial risk of
forfeiture;
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option; and
(d) Other amounts which received special tax benefits, or
contributions made by the Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity described in Section 403(b) of the
Internal Revenue Code (whether or not the amounts are actually excludable from
the gross income of the Employee).
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For purposes of applying the limitations of this Section 5.5,
Compensation for a Limitation Year is the Compensation actually paid or
includible in gross income during such year.
Notwithstanding the preceding sentence, Compensation for a
Participant in a defined contribution plan who is permanently and totally
disabled (as defined in Section 22(e)(3) of the Internal Revenue Code) is the
Compensation such Participant would have received for the Limitation Year if the
Participant had been paid at the rate of Compensation paid immediately before
becoming permanently and totally disabled; such imputed Compensation for the
disabled Participant may be taken into account only if the Participant is not a
highly compensated employee as defined in Code Section 414(q); and contributions
made on behalf of such Participant are non-forfeitable when made.
(2) Defined benefit fraction: A fraction, the numerator of
which is the sum of the Participant's projected annual benefits under all the
defined benefit plans (whether or not terminated) maintained by the Employer;
and the denominator of which is the lesser of 125 percent of the dollar
limitation determined for the Limitation Year under Sections 415(b) and (d) of
the Internal Revenue Code, or 140 percent of the highest average compensation
including any adjustments under Code Section 415(b).
Notwithstanding the above, if the Participant was a participant as of
the first day of the first Limitation Year beginning after December 31, 1986 in
one or more defined benefit plans maintained by the Employer which were in
existence on May 6, 1986, the denominator of this fraction will not be less than
125 percent of the sum of the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year beginning
before January 1, 1987 disregarding any changes in the terms and conditions of
the Plan after May 5, 1986. The preceding sentence applies only if the defined
benefit plans individually and in the aggregate satisfied the requirements of
Section 415 for all Limitation Years beginning before January 1, 1987.
(3) Defined contribution dollar limitation: $30,000 or if
greater, one-fourth of the defined benefit dollar limitation set forth in
section 415(b)(1) of the Code as in effect for the Limitation Year.
(4) Defined contribution fraction: A fraction, the numerator of
which is the sum of the Annual Additions to the Participant's account under all
the defined contribution plans (whether or not terminated) maintained by the
Employer for the current and all prior Limitation Years (including the Annual
Additions attributable to the Participant's non-deductible employee
contributions to all defined benefit plans, whether or not terminated,
maintained by the Employer, and the Annual Additions attributable to all welfare
benefit funds, as defined in Section 419(e) of the Code and individual medical
accounts, as defined in Code Section 415(l)(2), maintained by the Employer); and
the denominator of which is the sum of the maximum aggregate amounts for the
current and all prior Limitation Years of service with the Employer (regardless
of whether a defined contribution plan was maintained by the Employer). The
maximum aggregate amount in any Limitation Year is the lesser of 125 percent of
the dollar limitation determined under Code Sections 415(b) and (d) in effect
under Section 415(c)(1)(A) of the Code or 35 percent of the Participant's
Compensation for such year. If the Employee was a Participant as of the end of
the first day of the first Limitation Year beginning after December 31, 1986, in
one or more defined contribution plans maintained by the Employer which were in
existence on May 6, 1986, the numerator of this fraction will be adjusted if the
sum of this fraction and the defined benefit fraction would otherwise exceed 1.0
under the terms of this Plan. Under the adjustment, an amount equal to the
product of the excess of the sum of the fractions over 1.0 times the denominator
of this fraction, will be permanently subtracted from the numerator of this
fraction. The adjustment is calculated using the fractions as they would be
computed as of the end of the last Limitation Year beginning before January 1,
1987, and disregarding any changes in the terms and conditions of the Plan made
after May 5, 1986, but using
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the section 415 limitation applicable to the first Limitation Year beginning on
or after January 1, 1987. The Annual Addition for any Limitation Year beginning
before January 1, 1987, shall not be recomputed to treat all Employee
contributions as Annual Additions.
(5) Employer: For purposes of this Section 5.5, Employer shall
mean the Employer that adopts this Plan, and all members of a controlled group
of corporations (as defined in Section 414(b) of the Internal Revenue Code as
modified by Section 415(h)), all commonly controlled trades or businesses (as
defined in Section 414(c) as modified by Section 415(h) or affiliated service
groups (as defined in Section 414(m)) of which the adopting Employer is a part,
and any other entity required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o).
(6) Excess amount: The excess of the Participant's Annual
Additions for the Limitation Year over the maximum permissible amount.
(7) Highest average compensation: The average compensation for
the three consecutive Years of Service with the Employer that produces the
highest average. A Year of Service with the Employer is the 12-consecutive
month period ending on the Anniversary Date defined in Section 4 of the Adoption
Agreement.
(8) Limitation Year: A calendar year or the 12-consecutive
month period elected by the Employer in the Adoption Agreement. All qualified
plans maintained by the Employer must use the same Limitation Year. If the
Limitation Year is amended to a different 12-consecutive month period, the new
Limitation Year must begin on a date within the Limitation Year in which the
amendment is made.
(9) Master or prototype plan: A plan, the form of which, is the
subject of a favorable option letter from the Internal Revenue Service.
(10) Maximum permissible amount. The maximum Annual Addition that
may be contributed or allocated to a Participant's account under the Plan for
any Limitation Year shall not exceed the lesser of:
(a) The defined contribution dollar limitation, or
(b) 25 percent of the Participant's Compensation for the
Limitation Year.
The Compensation limitation referred to in (b) shall not apply to
any contribution for medical benefits (within the meaning of Section 401(h) or
Section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition
under section 415(l)(1) or 419A(d)(2) of the Code.
If a short Limitation Year is created because of an amendment
changing the Limitation Year to be a different 12- consecutive month period, the
maximum permissible amount will not exceed the defined contribution dollar
limitation multiplied by the following fraction:
Number of months in the short limitation year / 12
(11) Projected annual benefit: The annual retirement benefit
(adjusted to an actuarially equivalent straight life annuity if such benefit is
expressed in a form other than a straight life annuity or qualified Joint and
Survivor Annuity) to which the Participant would be entitled under the terms of
the Plan assuming:
(a) the Participant will continue employment until Normal
Retirement Age under the Plan (or current age, if later), and
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(b) the Participant's Compensation for the current
Limitation Year and all other relevant factors used to determine benefits under
the Plan will remain constant for all future Limitation Years.
5.6 ALIENATION PROHIBITED
No benefit or interest available under the Plan shall be subject in any
manner to alienation, anticipation, assignment, charge, encumbrance, pledge,
sale or transfer, either voluntary or involuntary, and any attempt to do so
shall be void. No benefit under the Plan shall in any manner be liable or
subject to the debts, contracts, liabilities, engagements, or torts of any
person. The preceding sentences shall also apply to the creation, assignment,
or recognition of a right to any benefit payable with respect to a Participant
pursuant to a domestic relations order, unless such order is determined to be a
qualified domestic relations order, as defined in Code Section 414(p), or any
domestic relations order entered before January 1, 1985.
5.7 JOINT AND SURVIVOR ANNUITY REQUIREMENTS
(A) The Provisions of this Section 5.7 shall apply to any Participant
whose vested Accrued Benefit exceeds $3,500 and who is credited with at least
one Hour of Service with the Employer on or after August 23, 1984, and such
other Participants as provided in Section 5.7(G).
(B) Unless an optional form of benefit is selected pursuant to a
Qualified Election within the 90-day period ending on the annuity starting date,
a married Participant's vested Accrued Benefit will be paid in the form of a
qualified Joint and Survivor Annuity and an unmarried Participant's vested
Accrued Benefit will be paid in the normal form of an immediate life annuity.
The Participant may elect to have such annuity distributed upon attainment of
the Earliest Retirement Age under the Plan.
(C) Unless an optional form of benefit has been selected within the
election period pursuant to a Qualified Election, if a Participant dies before
the annuity starting date, then the Participant's vested account balance shall
be applied toward the purchase of an annuity for the life of the surviving
Spouse. The surviving Spouse may elect to have such annuity distributed within
a reasonable period after the Participant's death.
(D) Definitions.
(1) Election Period: The period which begins on the first day
of the Plan Year in which the Participant attains age 35 and ends on the date of
the Participant's death. If a Participant separates from service prior to the
first day of the Plan Year in which age 35 is attained, with respect to benefits
accrued prior to separation, the Election Period shall begin on the date of
separation.
Pre-age 35 waiver: A Participant who will not yet attain age 35
as of the end of any current Plan Year may make a special qualified election to
waive the qualified preretirement survivor annuity, for the period beginning on
the date of such election and ending on the first day of the Plan Year in which
the Participant will attain age 35. Such election shall not be valid unless the
Participant receives a written explanation of the qualified preretirement
survivor annuity in such terms as are comparable to the explanation required
under Section 5.7(E). Qualified preretirement survivor annuity coverage will be
automatically reinstated as of the first day of the Plan Year in which the
Participant attains age 35. Any new waiver on or after such date shall be
subject to the full requirements of this Section 5.7.
(2) Earliest Retirement Age: The earliest date on which, under
the Plan, the Participant could elect to receive retirement benefits.
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(3) Qualified Election: A waiver of a qualified Joint and
Survivor Annuity or a qualified preretirement survivor annuity. Any waiver of a
qualified Joint and Survivor Annuity or a qualified preretirement survivor
annuity shall not be effective unless:
(a) the Participant's Spouse consents in writing to the
election;
(b) the election designates a specific alternate
Beneficiary, including any class of Beneficiaries or any contingent
Beneficiaries, which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further spousal
consent;
(c) the Spouse's consent acknowledges the effect of the
election, and
(d) the Spouse's consent is witnessed by a Plan
representative or notary public.
Additionally, a Participant's waiver of the qualified Joint and
Survivor Annuity will not be effective unless the election designates a form of
benefit payment which may not be changed without spousal consent (or the Spouse
expressly permits designations by the Participant without any further spousal
consent. If it is established to the satisfaction of a Plan representative that
such written consent may not be obtained because there is no Spouse or the
Spouse cannot be located, a waiver will be deemed a Qualified Election.
Any consent by a Spouse obtained under this provision (or
establishment that the consent of a Spouse may not be obtained) shall be
effective only with respect to such Spouse. A consent that permits designations
by the Participant without any requirement of further consent by such Spouse
must acknowledge that the Spouse has the right to limit consent to a specific
Beneficiary, and a specific form of benefit where applicable, and that the
Spouse voluntarily elects to relinquish either or both of such rights. A
revocation of a prior waiver may be made by a Participant without the consent of
the Spouse at any time prior to the commencement of benefits. The number of
revocations shall not be limited. No consent obtained under this provision
shall be valid unless the participant has received notice as provided in Section
5.7(E) below.
(4) Qualified Joint and Survivor Annuity: An immediate annuity
for the life of the Participant with a survivor annuity for the life of the
Spouse which is not less than 50 percent and not more than 100 percent of the
amount of the annuity which is payable during the joint lives of the Participant
and the Spouse and which is the amount of benefit which can be purchased with
the Participant's vested account balance.
(5) Spouse (Surviving Spouse): The Spouse or Surviving Spouse
of the Participant, provided that a former Spouse will be treated as the Spouse
or Surviving Spouse and a current Spouse will not be treated as the Spouse or
surviving Spouse to the extent provided under a qualified domestic relations
order as described in Section 414(p) of the Code.
(6) Annuity Starting Date: The first day of the first period
for which an amount is paid as an annuity or any other form.
(7) Vested Account Balance: The aggregate value of the
Participant's vested Account Balance derived from Employer and Employee
contributions (including rollovers) whether vested before or upon death,
including the proceeds of insurance contracts, if any, on the Participant's
life. The provisions of this Section 5.7 shall apply to a Participant who is
vested in amounts attributable to Employer contributions, Employee contributions
(or both) at the time of death or distribution.
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(E) Notice Requirements
(1) In the case of a qualified Joint and Survivor Annuity as
described in Section 5.7(B), the Plan Administrator shall provide each
Participant no less than 30 days and no more than 90 days prior to the annuity
starting date a written explanation of: (a) the terms and conditions of a
qualified Joint and Survivor Annuity; (b) the Participant's right to make and
the effect of an election to waive the qualified Joint and Survivor Annuity form
of benefit; (c) the rights of a Participant's Spouse; and (d) the right to make,
and the effect of, a revocation of a previous election to waive the qualified
Joint and Survivor Annuity.
(2) In the case of a qualified preretirement survivor annuity as
described in Sections 5.7(C), the Plan Administrator shall provide each
Participant within the applicable period for such Participant, a written
explanation of the qualified preretirement survivor annuity in such terms and in
such a manner as would be comparable to the explanation provided for meeting the
requirements of Section 5.7(E)(1) applicable to a qualified Joint and Survivor
Annuity.
The applicable period for a Participant is whichever of the
following periods ends last: (a) the period beginning with the first day of the
Plan Year in which the Participant attains age 32 and ending with the close of
the Plan Year preceding the Plan Year in which the Participant attains age 35;
(b) a reasonable period ending after the individual becomes a Participant; (c) a
reasonable period ending after Section 5.7(E)(3) ceases to apply to the
Participant; (d) a reasonable period ending after this Section 5.7 first applies
to the Participant. Notwithstanding the foregoing, notice must be provided
within a reasonable period ending after separation of service in case of a
Participant who separates from service before attaining age 35.
For purposes of the preceding paragraph, a reasonable period
ending after the enumerated events described in (b), (c) and (d) is the end of
the two year period beginning one year prior to the date the applicable event
occurs and ending one year after that date. In the case of a Participant who
separates from service before the Plan Year in which age 35 is attained, notice
shall be provided within the two year period beginning one year prior to
separation and ending one year after separation, If such a Participant
thereafter returns to employment with the Employer, the applicable period for
such Participant shall be redetermined.
(3) Notwithstanding the other requirements of this Section
5.7(E), the respective notices prescribed by this Section need not be given to
the Participant if:
(a) the Plan "fully subsidizes" the costs of a Qualified
Joint and Survivor Annuity or qualified preretirement survivor annuity, and
(b) the Plan does not allow the Participant to waive the
Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity
and does not allow a married Participant to designate a nonspouse beneficiary.
For purposes of this Section 5.7(E)(3), a Plan fully subsidizes the costs of a
benefit if no increase in cost, or decrease in benefits to the Participant may
result from the Participant's failure to elect another benefit.
(F) Safe harbor rules.
(1) This Section 5.7(F) shall apply to a Participant in a profit
sharing plan, and to any distribution, made on or after the first day of the
first Plan Year beginning after December 31, 1988, from or under a separate
account attributable solely to accumulated deductible employee contributions, as
defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a
Participant in a money purchase pension plan (including a target benefit plan),
if the following conditions are satisfied: (1) the Participant does not or
cannot elect payments in the form of a life annuity; and (2) on the death of a
Participant, the Participant's
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vested account balance will be paid to the Participant's surviving Spouse, but
if there is no surviving Spouse, or if the surviving Spouse has consented in a
manner conforming to a qualified election, then to the Participant's designated
Beneficiary. The surviving Spouse may elect to have distribution of the vested
account balance commence within the 90-day period following the date of the
Participant's death. The account balance shall be adjusted for gains or losses
occurring after the Participant's death in accordance with the provisions of the
Plan governing the adjustment of account balances for other types of
distributions. This Section 5.7(F) shall not be operative with respect to a
Participant in a profit sharing plan if the plan is a direct or indirect
transferee of a defined benefit plan, money purchase plan, a target benefit
plan, stock bonus, or profit sharing plan which is subject to the survivor
annuity requirements of Section 401 (a)(11) and Section 417 of the Code. If
this Section 5.7(F) is operative, then the provisions of this Section 5.7 other
than Section 5.7(G), shall be inoperative.
(2) The Participant may waive the spousal death benefit
described in this Section 5.7 at any time provided that no such waiver shall be
effective unless it satisfies the conditions described in Section 5.7(D)(3)
(other than the notification requirement referred to therein) that would apply
to the Participant's waiver of the qualified preretirement survivor annuity.
(3) For purposes of this Section 5.7(F), vested account balance
shall mean, in the case of a money purchase pension plan or a target benefit
plan, the Participant's separate account balance attributable solely to
accumulated deductible employee contributions within the meaning of Section
72(o)(5)(B) of the Code. In the case of a profit sharing plan, vested account
balance shall have the same meaning as provided in Section 5.7(D)(7).
(G) Transitional Rules.
(1) Any living Participant not receiving benefits on August 23,
1984, who would otherwise not receive the benefits prescribed by the previous
sections of this Section 5.7 must be given the opportunity to elect to have the
prior sections of this Section 5.7 apply if such Participant is credited with at
least one Hour of Service under this Plan or a predecessor plan in a Plan Year
beginning on or after January 1, 1976, and such Participant had at least 10
years of vesting service when he separated from service.
(2) Any living Participant not receiving benefits on August 23,
1984, who was credited with at least one Hour of Service under this Plan or a
predecessor plan on or after September 2, 1974, and who is not otherwise
credited with any service in a Plan Year beginning on or after January 1, 1976,
must be given the opportunity to have his benefits paid in accordance with
Section 5.7(G)(4).
(3) The respective opportunities to elect (as described in
Section 5.7(G)(1) and (2) above) must be afforded to the appropriate
Participants during the period commencing on August 23, 1984, and ending on the
date benefits would otherwise commence to said Participants.
(4) Any Participant who has elected pursuant to Section
5.7(G)(2) and any Participant who does not elect under Section 5.7(G)(1) or who
meets the requirement of Section 5.7(G)(1) except that such Participant does not
have at least 10 years of vesting service when he separates from service, shall
have his benefits distributed in accordance with all of the following
requirements if benefits would have been payable in the form of a life annuity:
(a) Automatic joint and survivor annuity. If benefits in
the form of a life annuity become payable to a married Participant who:
(i) Begins to receive payments under the plan on or
after Normal Retirement Age; or
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(ii) Dies on or after Normal Retirement Age while still
working for the Employer; or
(iii) Begins to receive payments on or after the
qualified early retirement age, or
(iv) Separates from service on or after attaining
Normal Retirement Age (or the qualified early retirement age) and after
satisfying the eligibility requirements for the payment of benefits under the
Plan and thereafter dies before beginning to receive such benefits; then such
benefits will be received under this Plan in the form of a qualified Joint and
Survivor Annuity, unless the Participant has elected otherwise during the
Election Period. The Election Period must begin at least 6 months before the
Participant attains qualified early retirement age and end not more than 90 days
before the commencement of benefits. Any election hereunder will be in writing
and may be changed by the Participant at any time.
(b) Election of early survivor annuity. A Participant who
is employed after attaining the qualified early retirement age will be given the
opportunity to elect, during the Election Period, to have a survivor annuity
payable on death. If the Participant elects the survivor annuity, payments
under such annuity must not be less than the payments which would have been made
to the Spouse under the qualified Joint and Survivor Annuity if the Participant
had retired on the day before his death. Any election under this provision will
be in writing and may be changed by the Participant at any time. The election
period begins on the later of (i) the 90th day before the Participant attains
the qualified early retirement age, or (ii) the date on which participation
begins, and ends on the date the Participant terminates employment.
(c) For purposes of this Section 5.7(G)(4):
(i) Qualified early retirement age is the latest of:
(1) The earliest date, under the plan, on which
the Participant may elect to receive retirement benefits,
(2) The first day of the 120th month beginning
before the Participant reaches Normal Retirement Age, or
(3) The date the Participant begins
participation.
(ii) Qualified Joint and Survivor Annuity is an annuity
for the life of the Participant with a survivor annuity for the life of the
Spouse as described in Section 5.10(G)(4).
5.8 PERMITTED DISPARITY IN PLAN CONTRIBUTIONS
(A) Profit Sharing Plan
(1) A Profit Sharing Plan meets the requirements of Code Section
401 (1) if the Excess Contribution Percentage does not exceed the Base
Contribution Percentage by more than the Profit Sharing Maximum Disparity Rate.
(2) "Profit Sharing Maximum Disparity Rate" means the lesser of:
(a) The greater of:
(i) 2.7% (5.7% if not Top Heavy)
(ii) The percentage equal to the portion of the rate of
tax under Code Section 3111(a) (in effect as of the beginning of the Plan Year)
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which is attributable to old age insurance, less the percentage allocated under
Section 11.2(2) of the Adoption Agreement.
(b) The applicable percentage determined in accordance with
the table below:
If the Integration Level:
is more than but not the applicable
more than percentage is:
$0 X* 2.7% (5.7% if not Top Heavy)
X* of TWB 80% of TWB 1.3% (4.3% If not Top Heavy)
80% of TWB Y** 2.4% (5.4% if not Top Heavy)
TWB = Taxable Wage Base
*X = the greater of $10,000 or 20 percent of the Taxable Wage Base.
**Y = any amount more than 80% of the Taxable
Wage Base but less than 100% of the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is the percentage specified in Section 5.8(A)(2)(a) above.
(B) Money Purchase Pension Plan
(1) A Money Purchase Pension Plan meets the requirements of Code
Section 401(l) if the Excess Contribution Percentage does not exceed the Base
Contribution Percentage by more than the Money Purchase Maximum Disparity Rate.
(2) "Money Purchase Maximum Disparity Rate" means the applicable
of:
(a) If Section 10.2 of the Adoption Agreement is elected,
the lesser of:
(i) The greater of:
(aa) 5.7%
(bb) The percentage equal to the portion of the
rate of tax under Code Section 3111(a) (in effect as of the beginning of the
Plan Year) which is attributable to old age insurance.
(ii) If the Integration Level:
is more than but not the applicable
more than percentage is:
$0 X* 5.7%
X* of TWB 80% of TWB 4.3%
80% of TWB Y** 5.4%
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TWB = Taxable Wage Base
* X = the greater of $10,000 or 20 percent of the Taxable Wage Base.
**Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is the percentage specified in Section 5.8(B)(2)(a)(i)(aa)
above.
(b) If Sections 10.1 and 11.2 of the Adoption Agreement are
elected, the lesser of:
(i) The greater of:
(aa) 2.7% (5.7% if not Top Heavy)
(bb) The percentage equal to the portion of the
rate of tax under Code Section 3111(a) (in effect as of the beginning of the
Plan Year) which is attributable to old age insurance, less the percentage
allocated under Section 11.2(2) of the Adoption Agreement.
(ii) If the integration level:
is more than but not the applicable
more than percentage is:
$0 X* 2.7% (5.7% if not Top Heavy)
X* of TWB 80% of TWB 1.3% (4.3% if not Top Heavy)
80% of TWB Y** 2.4% (5.4% if not Top Heavy)
TWB = Taxable Wage Base
*X = the greater of $10,000 or 20 percent of the Taxable Wage Base.
**Y = any amount more than 80% of the Taxable Wage Base but less than
100% of the Taxable Wage Base.
If the Integration Level used is equal to the Taxable Wage Base, the
applicable percentage is the percentage specified in Section 5.8(B)(2)(b)(i)
above.
(C) Target Benefit Plan - See Adoption Agreement
(D) Definitions
The following definitions apply to Sections 5.8(A) and (B) above:
(1) "Excess Contribution Percentage" means the percentage of
Compensation which is contributed under the Plan with respect to that portion of
each Participant's Compensation in excess of the Integration Level specified in
the Adoption Agreement.
(2) "Base Contribution Percentage" means the percentage of
Compensation contributed under the Plan with respect to that portion of each
Participant's Compensation which is not in excess of the Integration Level
specified in the Adoption Agreement.
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(3) "Integration Level" means the amount of Compensation
specified under the Plan (by dollar amount or formula) at or below which the
rate at which contributions or benefits are provided (expressed as a percentage)
is less than such rate above such amount. The Integration Level shall be equal
to the Taxable Wage Base or such lesser amount elected by the Employer in the
Adoption Agreement. In no event shall the Integration Level exceed the
contribution and benefit base in effect under Section 230 of the Social Security
Act for such Plan Year.
(4) "Compensation" shall mean compensation as defined in Code
Section 414(S).
(E) If this Plan is paired with another plan sponsored by the
Employer, the permitted disparity under this Section 5.8 shall be in only one of
the paired plans. Such permitted disparity shall be as follows:
(1) If this Plan is paired with a Money Purchase Pension Plan,
the permitted disparity shall be in the Money Purchase Pension Plan.
(2) If this Plan is paired with a Defined Benefit Pension Plan,
the permitted disparity shall be in the Defined Benefit Pension Plan.
(3) If the paired plans are a Profit Sharing Plan and a Target
Benefit Pension Plan, the permitted disparity shall be in the Target Benefit
Pension Plan.
6.0 LIFE INSURANCE
6.1 AUTHORIZATION TO PURCHASE
The Administrator may direct the Trustee to invest a portion of each
Participant Account in an annual premium contract on a Participant's life issued
by a legal reserve life insurance company. The Administrator shall direct the
purchase of life insurance as an earmarked investment for a Participant, if said
Participant consents to such purchase. If any life insurance is purchased, the
option to purchase shall be available to each Participant in a nondiscriminatory
manner.
6.2 PAYMENT OF PREMIUMS
The Trustee shall normally pay premiums on any policy subject hereto as
such premiums fall due. Dividends, experience rating credits, or surrender or
cancellation credits shall be allocated to the Employer Contribution Account of
the Participant for whose benefit the contract is held. If at any time the
Administrator shall decide that the premium on any policy is not to be paid in
cash, the Administrator, in its sole discretion, shall decide whether such
premium is to be paid by policy loan (if the policy contains such a provision)
or whether the policy is to be continued as a paid-up policy, or whether some
other action is to be taken under the policy. Notwithstanding the above, policy
loans may cause Unrelated Business Income tax to become payable by the Trust.
6.3 DISPOSITION OF POLICIES AT RETIREMENT
Subject to Section 5.7, when any Participant whose policy is held hereunder
shall reach his actual retirement date, or if this Trust shall terminate, the
Trustee at the direction of the Administrator shall convert the contracts on a
Participant's life to cash or an annuity or distribute such contracts to the
Participant upon commencement of benefits. If insurance contracts are
distributed, the modes of settlement under the contract shall be limited to
those provided under the Plan. Any annuity contract distributed hereunder must
be non-transferable.
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6.4 LIMITATION ON AMOUNTS
The amount of life insurance held by the Trustee on the life of any
Participant shall be limited as follows:
(A) Ordinary Life - For purposes of these incidental insurance
provisions, ordinary life insurance contracts are contracts with both
non-decreasing death benefits and non-increasing premiums. If such contracts
are purchased, less than one-half (1/2) of the aggregate Employer contributions
allocated to any Participant shall be used to pay premiums on ordinary life
insurance contracts.
(B) Term Life - No more than one-fourth (1/4) of the aggregate
Employer contributions allocated to any Participant shall be used to pay
premiums on term life insurance contracts and all other life insurance contracts
which are not ordinary life.
(C) Combination - The sum of one-half (1/2) of the ordinary life
insurance premiums and all other life insurance premiums shall not exceed
one-fourth (1/4) of the aggregate Employer contributions allocated to any
Participant.
6.5 CONFLICT WITH INSURANCE CONTRACTS
The Trustee shall apply for and will be the owner of any insurance contract
purchased under the terms of this Plan. The insurance contract(s) must provide
that proceeds will be payable to the Trustee; however, the Trustee shall be
required to pay over all proceeds of the contract(s) to the Participant's
designated Beneficiary in accordance with the distribution provisions of this
Plan. A Participant's spouse will be the designated Beneficiary of the proceeds
in all circumstances unless a qualified election has been made in accordance
with Section 5.7, Joint and Survivor Annuity Requirements, if applicable. Under
no circumstances shall the Trust retain any part of the proceeds. In the event
of any conflict between the terms of this Plan and the terms of any insurance
contract purchased hereunder, the Plan provisions shall control.
7.0 MISCELLANEOUS
7.1 LOANS TO PARTICIPANTS
The Administrator may, in its sole discretion, establish a loan program and
direct the Trustee to make a loan to a Participant or Beneficiary, other than
shareholder-Employees or Owner-Employees.
(A) Loans made pursuant to this program shall be subject to such
rules as the Administrator, in its sole discretion, shall adopt, provided that
such rules and regulations do not discriminate in favor of officers,
shareholders or highly compensated Employees of the Employer and that loans
shall be available to all Participants or Beneficiaries on a non-discriminatory
basis. No loans shall be made under this Section 7.1 to any
shareholder-Employees or Owner-Employees.
(B) Any loan to a Participant made under this program shall comply
with the following terms and conditions:
(1) An application for a loan shall be made in writing to the
Administrator, whose action thereon shall be final.
(2) The loan shall be adequately secured, pursuant to Section 5,
below.
(3) The loan shall bear a reasonable rate of interest, as
determined by the Plan Administrator in its sole discretion. The interest rate
shall be comparable to the rate charged by commercial lenders in the
geographical area of
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the Employer for similar types of loans, as determined by conditions customarily
taken into account by such lenders in the making of similar types of loans.
(4) A loan shall be made for fixed period of time, as determined
by the Plan Administrator in its sole discretion, which in no event shall exceed
five (5) Years from the date of such loan, except that such five (5) Year
repayment rule shall not apply to any loan used to acquire a dwelling unit
which, within a reasonable period of time, will be used as a principal residence
of the Participant.
Security for Loans to Participants is described in section 10.6.
(5) No distribution shall be made to any Active Participant,
inactive Participant, Former Participant or Beneficiary of any such Participant
unless and until all unpaid loans, including accrued interest thereon, have been
satisfied.
(6) Loans shall be made available to all Participants and
Beneficiaries on a reasonably equivalent basis.
(7) No loan to any Participant or Beneficiary can be made to the
extent that the amount of the loan, when added to the outstanding balance of all
other loans to the Participant or Beneficiary, would exceed the lesser of:
(a) $50,000 reduced by the excess (if any) of the highest
outstanding balance of loans during the one year period ending on the day before
the loan is made, over the outstanding balance of loans from the Plan on the
date the loan is made, or
(b) one-half the value of the vested account balance of the
Participant. For the purpose of the above limitation, all loans from all
qualified plans of the Affiliated Employers are aggregated.
(8) In the event of default, foreclosure on and attachment of
security will not occur until a distributable event occurs in the Plan.
(9) Loans shall not be made available to highly compensated
employees (as defined in Section 414(g) of the Code) in an amount greater than
the amount made available to other Employees.
(10) A Participant must obtain the consent of his Spouse, if any,
to use of the Accrued Benefit as security for the loan. Spousal consent shall
be obtained no earlier than the beginning of the 90-day period that ends on the
date on which the loan is to be so secured. The consent must be in writing,
must acknowledge the effect of the loan, and must be witnessed by a Plan
representative or notary public. Such consent shall thereafter be binding with
respect to the consenting Spouse or any subsequent Spouse with respect to that
loan. A new consent shall be required if the Accrued Benefit is used for
renegotiation, extension, renewal, or other revision of the loan. If a valid
spousal consent has been obtained in accordance with this Section 7.1(c)(11),
then, notwithstanding any other provision of this Plan, the portion of the
Participant's vested Accrued Benefit used as a security interest held by the
Plan by reason of a loan outstanding to the Participant shall be taken into
account for purposes of determining the amount of the Accrued Benefit payable at
the time of death or distribution, but only if the reduction is used as
repayment of the loan. If less than 100% of the Participant's vested Accrued
Benefit (determined without regard to the preceding sentence) is payable to the
surviving Spouse, then the Accrued Benefit shall be adjusted by first reducing
the vested Accrued Benefit by the amount of the security used as repayment of
the loan, and then determining the benefit payable to the surviving Spouse.
(C) No loan may be made to any Owner Employee or shareholder
Employee. For purposes of this requirement, a shareholder Employee means an
Employee or officer of an electing small business (Sub Chapter S) corporation
who owns (or is
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considered as owning within the meaning of Code Section 318(a)(1)), on any day
during the taxable year of such corporation, more than five percent (5%) of the
outstanding stock of the corporation.
7.2 DISCHARGE RIGHTS PRESERVED
The Plan shall not be deemed to constitute an employment contract or to be
consideration for the employment of any Employee.
7.3 BENEFICIARY DESIGNATED BY PARTICIPANT
Subject to the Joint and Survivor Annuity requirements of Section 5.7, a
beneficiary designation shall be filed by all Participants with the
Administrator at the time they become Participants. In the absence of a
valid designation or the survival of any Beneficiary designated by the
Participant, the Administrator may, either before or after the Participant's
death, designate the Participant's Beneficiary or Beneficiaries from among
the following order of Priority: spouse, children, grandchildren, parents,
brothers and sisters, nephews and nieces, or his estate.
7.4 PRIORITY OF ADOPTION AGREEMENT
Should the terms and conditions of this Plan and the related trust
agreement conflict with the terms and conditions of the Adoption Agreement, the
latter shall prevail. The Adoption Agreement, therefore, has the function of
amending the terms of this Plan and trust agreement when necessary or
appropriate. In the event of any conflict between the terms of the Plan or the
Adoption Agreement and the terms of any insurance contract issued hereunder, the
Plan or Adoption Agreement provisions shall control.
7.5 REFERENCE TO INTERNAL REVENUE CODE
All references herein to Sections of the Internal Revenue Code, or any
regulations or ruling thereunder shall be deemed to refer to such Sections as
they may subsequently be modified, amended, replaced, or amplified by any
Federal tax statutes, regulations or rulings of similar application and import.
7.6 SAVING CLAUSE
In the event any provision of the Plan is held illegal or invalid for any
reason, said illegality or invalidity shall not affect the remaining parts of
the Plan, but this instrument shall be construed and enforced as if said
provision had never been included.
7.7 GOVERNING LAW
This Plan shall be construed, administered, and governed in all respects
under and by ERISA and to the extent applicable, the laws of the Home State of
the Employer, provided, however, that if any provision is susceptible to more
than one interpretation, such interpretation shall be given thereto as is
consistent with this Plan and Trust being a qualified employees' pension benefit
plan and trust within the meaning of the Code and ERISA.
7.8 MERGER OR CONSOLIDATION OF PLAN
In the case of a merger or consolidation of this Plan with another plan or
transfer of assets or liabilities to another plan, each participant in the
successor plan shall (if the Plan then terminated) receive a benefit immediately
after the merger, consolidation or transfer which is at least equal to the
benefit he would have been entitled to receive immediately before the merger,
consolidation or transfer (if the Plan had then terminated).
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7.9 AGREEMENT BINDING ON ALL PARTIES
This Agreement shall be binding upon the heirs, executors, administrators,
successors and assigns, as such terms shall apply, or any and all parties
hereto, present and future.
7.10 HEADINGS
Headings in this instrument are inserted for convenience of reference only.
They constitute no part of this instrument.
7.11 SINGULAR INCLUDES PLURAL, ETC.
Whenever appropriate, words used herein in the singular may include the
plural or the plural may be read as the singular and the masculine may include
the feminine.
7.12 FORFEITURE OF BENEFITS
(A) If a retirement benefit become payable under this Plan to a
Participant (or his Beneficiary) and such retirement benefit remains unpaid for
a period of five (5) Years from the date such retirement benefit first became
payable because the Participant (or his Beneficiary) cannot be located, the
retirement benefit shall be deemed to be a forfeiture under the Plan and shall
be used to reduce future Employer contributions to the Plan as soon as
practicable after the deemed forfeiture.
(B) Anything in this Section 7.12 to the contrary notwithstanding, if
a retirement benefit is forfeited under the provisions of Section 7.12(A) and
the Participant (or his Beneficiary) is located, the retirement benefit shall be
reinstated and paid to the Participant (or his Beneficiary) under the terms of
this Plan. The Employer shall make up any loss to the Plan as a result of the
reinstatement of a retirement benefit as soon as practicable thereafter.
7.13 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDER
Anything in Section 5.3 notwithstanding, the Plan Administrator may,
pursuant to procedures which do not discriminate in favor of highly compensated
employees as defined in Code Section 414(q), and at the request of the
Participant and his former Spouse, elect to treat a Qualified Domestic Relations
Order as immediately distributable even though the Participant had not yet
attained the Earliest Retirement Age under the Plan.
8.0 TOP HEAVY PLAN
8.1 PRECEDENCE OF SECTION
Anything in this Plan or the Adoption Agreement to the contrary
notwithstanding, this Section 8 shall supersede and take precedence over any
other provisions of the Plan or the Adoption Agreement for any Plan Year
commencing on or after January 1, 1984, for which the Plan is determined to be a
Top Heavy Plan or Super Top Heavy Plan under this Section 8.
8.2 DEFINITIONS
For purposes of determining whether the Plan is a Top Heavy Plan or Super
Top Heavy Plan for any Plan Year commencing on or after January 1, 1984, the
following terms, wherever capitalized, shall have the meanings set forth below:
(A) "Determination Date" shall mean the date on which the Plan is
tested to determine if it is a Top Heavy Plan or Super Top Heavy Plan, which
date
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shall be the last day of the Plan Year for the first Plan Year and the last day
of the preceding Plan Year for all subsequent Plan Years.
(B) "Key Employee" shall mean any Employee or former Employee (or
Beneficiary) in the Plan who, at any time during the "Determination Period," is
or was:
(1) An officer of the Employer if such individual's annual
Compensation exceeds fifty percent (50%) of the dollar limitation under Code
Section 415(b)(1)(A) (not more than 10% of the Employees of the Employer to a
maximum of 50 such Employees shall be considered officers for this purpose);
(2) An owner (or considered an owner under Code Section 3 18) of
one (1) of the ten largest interests in the Employer if such individual's
Compensation exceeds one hundred percent (100%) of the dollar limitation under
Code Section 415(c)(1)(A);
(3) An owner of five percent (5%) or more of an Employer; and
(4) An owner of one percent (1%) or more of the Employer having
an annual Compensation from the Employer which is in excess of $150,000.00.
Annual Compensation means Compensation as defined in Section 415(c)(3) of
the Code but includes amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the Employee's gross income under
Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code.
"Determination Period" is the Plan Year containing the Determination Date and
the four (4) preceding Plan Years. The determination of who is a Key Employee
and will be made in accordance with Code Section 416(i)(1) and the regulations
thereunder.
(C) "Permissive Aggregation Group" shall mean the Required Aggregation
Group of plans plus any other plan or plans of the Employer which, when
considered as a group with the Required Aggregation Group, would continue to
satisfy the requirements of Section 401(a)(4) and 410 of the Code.
(D) "Present Value" shall be based only on the interest and mortality
rates specified in the Adoption Agreement.
(E) "Required Aggregation Group" shall mean:
(1) Each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the determination
period (regardless of whether the Plan terminated); and
(2) Any other qualified plan of the Employer which enables a plan
described in Section 8.2(E)(1) above to meet the requirements of Sections
401(a)(4) or 410 of the Code.
(F) "Top Heavy Plan" shall mean the Plan where, with respect to any
Plan Year commencing after December 31, 1983, any of the following conditions
exist:
(a) If the Top-Heavy Ratio for this Plan exceeds 60 percent and
this Plan is not part of any Required Aggregation Group or Permissive
Aggregation Group of plans,
(b) If this Plan is a part of a Required Aggregation Group of
plans (but which is not part of a Permissive Aggregation Group) and the
Top-Heavy Ratio for the group of plans exceeds 60 percent, or
(c) If this Plan is a part of a Required Aggregation Group of
plans and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds 60 percent.
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(G) "Top-Heavy Ratio" shall mean:
(1) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer has not
maintained any defined benefit plans which during the 5-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio
for this Plan alone or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the account
balances of all Key Employees as of the Determination Date(s) (including any
part of any account balance distributed in the five-year period ending on the
Determination Date(s)), and the denominator of which is the sum of all account
balances (including any part of any account balances distributed in the
five-year period ending on the Determination Date(s)), both computed in
accordance with Code Section 416 and the regulations thereunder. Both the
numerator and denominator of the Top-Heavy Ratio are increased to reflect any
contribution not actually made as of the Determination Date, but which is
required to be taken into account on that date under Section 416 of the Code and
the regulations thereunder.
(2) If the Employer maintains one or more defined contribution
plans (including any Simplified Employee Pension Plan) and the Employer
maintains or has maintained one or more defined benefit plans which during the
5-year period ending on the Determination Date(s) has or has had any accrued
benefits, the Top Heavy Ratio for any Required or Permissive Aggregation Group
as appropriate is a fraction, the numerator of which is the sum of the present
value of accrued benefits under the aggregate defined benefit plan or plans for
all Key Employees and the sum of account balances under the aggregated defined
contribution plan or plans for all Key Employees, determined in accordance with
(1) above, as of the Determination Date(s), and the denominator of which is the
sum of the present values of accrued benefits under the aggregated defined
benefit plan or plans for all Participants and the sum of the account balances
under the aggregated defined contribution plan or plans, determined in
accordance with (1) above, for all participants as of the Determination Date(s),
all determined in accordance with Section 416 of the Code and the regulations
thereunder. The accrued benefits under a defined benefit plan in both the
numerator and denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year period ending on the
Determination Date.
(3) For purposes of (1) and (2) above, the value of account
balances and the present value of accrued benefits will be determined as of the
most recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Section 416 of the Code
and the regulations thereunder for the first and second plan years of a defined
benefit plan. The account balances and accrued benefits of a Participant (a)
who is not a Key Employee but who was a Key Employee in a prior year, or (b) who
has not been credited with at least one (1) Hour of Service with any Employer
maintaining the Plan at any time during the 5-year period ending on the
Determination Date will be disregarded. The calculation of the Top-Heavy Ratio,
and the extent to which distributions, rollovers, and transfers are taken into
account will be made in accordance with Section 416 of the Code and the
regulations thereunder. Deductible employee contributions will not be taken
into account for purposes of computing the Top-Heavy Ratio. When aggregating
plans, the value of account balances and accrued benefits will be calculated
with reference to the Determination Dates that fall within the same calendar
year.
The Accrued Benefit of a Participant other than a key employee shall be
determined under (a) the method, if any, that uniformly applies for accrual
purposes under all defined benefit plans maintained by the Employer, or (b) if
there is no such method, as if such benefit accrued not more rapidly than the
slowest accrual rate permitted under the fractional rule of section 41
l(b)(1)(C) of the Code.
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(H) "Valuation Date" shall mean the date as of which account balances
or accrued benefits are valued for purposes of calculating the Top-Heavy Ratio
which date shall be the last day of the Plan Year.
8.3 COMPENSATION IN TOP HEAVY PLAN YEAR
During any Plan Year in which the Plan is determined to be a Top Heavy Plan
or Super Top Heavy Plan, the Compensation used to determine a Participant's
Accrued Benefit under Section 11 of the Adoption Agreement shall be limited to
$200,000.00, as adjusted annually for increases in the cost of living by the
Secretary of the Treasury, as described in Code Section 416(d)(2).
8.4 VESTING IN TOP HEAVY PLAN YEAR
When a Plan is determined to be a Top Heavy Plan or a Super Top Heavy Plan
for a Plan Year, each Participant's Accrued Benefit shall be subject to the
following vesting schedule provided that the Participant has at least (1) Hour
of Service during any Plan Year in which the Plan is determined to be a Top
Heavy Plan or Super Top Heavy Plan:
Years of Service Vesting Percentage
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
This Section 8.4 shall be applicable only in the event that the Employer has
adopted a variable vesting schedule under Section 9 of the Adoption Agreement
which is not as favorable as the above vesting schedule in all years. If the
vesting schedule under the Plan shifts in or out of the above schedule for any
Plan Year because of the Plan's top-heavy status, such shift is an amendment to
the vesting schedule and the election in Section 1.4(A)(3) of the Plan applies.
The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) except those attributable to Employee contributions, including
benefits accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became top heavy. Further, no decrease in a
Participant's nonforfeitable percentage may occur in the event the Plan's status
as a Top Heavy Plan changes for any Plan Year.
8.5 MINIMUM CONTRIBUTION UNDER TOP HEAVY PLAN
(A) Except as otherwise provided in Sections 8.5(C) and (D) below, the
Employer contributions and forfeitures allocated in any Plan Year in which the
plan is determined to be a Top Heavy Plan or a Super Top Heavy Plan, on behalf
of any Participant who is not a Key Employee, shall not be less than the lesser
of three percent (3%) of such Participant's Compensation or, in the case where
the Employer has no defined benefit plan which designates this Plan to satisfy
section 416 of the Code, the largest percentage of Employer contributions and
forfeitures, as a percentage of the first $200,000 of the Key Employee's
Compensation, allocated on behalf of any Key Employee for that Year. The
minimum allocation is determined without regard to any Social Security
contribution. This minimum allocation shall be made even though, under other
plan Provisions, the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation for the Year because of
(1) the Participant's failure to complete 1,000 Hours of Service (or any
equivalent provided in the Plan); (2) the Participant's failure to make
mandatory employee contributions to the Plan; or (3) Compensation less than a
stated amount.
(B) For purposes of computing the minimum allocation, Compensation
will mean Compensation as defined in Section 2.11 of the Plan.
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(C) The provision in (A) above shall not apply to any Participant who
was not employed by the Employer on the last day of the Plan Year.
(D) The provision in (A) above shall not apply to any Participant to
the extent the Participant is covered under any other plan or plans of the
Employer, and the Employer has provided in the Adoption Agreement that the
minimum allocation or benefit requirement applicable to Top Heavy Plans will be
met in the other plan or plans.
8.6 MINIMUM CONTRIBUTION UNDER MULTIPLE PLANS
(A) If the Employer elects to provide the additional minimum benefit
under the Adoption Agreement, when the paired plans are top heavy but not super
top heavy, the Employer will provide each non-key Employee who is a participant
in paired defined benefit plan #01 a minimum non-integrated contribution of
seven and one-half percent (7 1/2%) of Compensation. A minimum non-integrated
contribution of four percent (4%) of Compensation will be provided to any
non-key Employee otherwise entitled to receive top heavy contributions from this
Plan who is not entitled to receive a minimum benefit from the paired defined
benefit plan.
(B) If the Employer does not elect to provide the additional minimum
benefit under the Adoption Agreement, if the paired plans are top heavy, or when
the paired plans are super top heavy, then the top heavy requirements set forth
in Section 8.5 of this Plan shall apply except that each non-key Employee who is
a Participant in paired defined contribution plan #02 and who is also a
participant in paired-defined benefit plan #01 shall receive a minimum
contribution of five percent (5%) of such Employee's total Compensation. For
purposes of the Short Form Adoption Agreement, if the minimum benefit
requirement is met under this Plan, the additional minimum benefit shall not be
provided.
8.7 NONFORFEITABILITY OF MINIMUM BENEFIT
The minimum benefit required under Section 8.5 and 8.6 of the Plan (to
the extent required to be nonforfeitable under Code Section 416(b)) may not be
suspended or forfeited under Code Section 411(a)(3)(B) or Section 411(a)(3)(D).
8.8 ADJUSTMENT TO DEFINED BENEFIT AND DEFINED CONTRIBUTION FRACTION FOR
SUPER TOP-HEAVY PLAN
In any Plan Year in which the Top-Heavy Ratio exceeds ninety percent (90%)
(i.e., the Plan becomes a super Top-Heavy Plan) or sixty percent (60%) where the
Employer does not elect to provide the additional minimum benefit in the
Adoption Agreement the denominators of the defined benefit fraction as defined
in Section 5.5(E)(2) of the Plan, and defined contribution fraction as defined
in Section 5.5(E)(3) of the Plan shall be computed using 100 percent of the
dollar limitation instead of 125 percent.
9.0 AFFILIATED EMPLOYER
9.1 MEMBERS OF CONTROLLED GROUP
All employees of all corporations which are members of a controlled group
of corporations (as defined in Section 414(b) of the Code), all employees of all
trades or businesses (whether or not incorporated) which are under common
control (as defined in Section 414(c) of the Code) and all employees of members
of affiliated service groups (as defined in Section 414(m) of the Code) shall be
treated as employed by a single employer.
9.2 LEASED EMPLOYEES
(A) "Leased Employee" shall mean any person (other than an Employee of
the recipient) who pursuant to an agreement between the recipient and any other
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person ("leasing organization") has performed services for the recipient (or for
the recipient and related persons determined in accordance with Section
414(n)(6) of the Code) on a substantially full-time basis for a period of at
least one year, and such services are of a type historically performed by
employees in the business field of the recipient Employer. Contributions or
benefits provided a Leased employee by the leasing organization which are
attributable to services performed for the recipient employer shall be treated
as provided by the recipient employer.
(B) A leased Employee shall not be considered an employee of the
recipient if:
(1) Such employee is covered by a money purchase pension plan
providing:
(a) A nonintegrated employer contribution rate of at least
10 percent of compensation, as defined in section 415(c)(3) of the Code, but
including amounts contributed pursuant to a salary reduction agreement which are
excludable from the employee's gross income under section 125, section
402(a)(8), section 402(h) or section 403(b) of the Code.
(b) Immediate participation, and
(c) Full and immediate vesting; and
(2) Leased Employees do not constitute more than 20 percent of
the recipient's nonhighly compensated workforce.
9.3 PLAN OF A PREDECESSOR EMPLOYER
If the Employer maintains this Plan as a successor to the plan of a
Predecessor Employer, Years of Service and Covered Years of Service with the
Predecessor Employer shall be treated as Years of Service and Covered Years of
Service with the Employer.
9.4 CONTROLLED TRADES OR BUSINESSES OF OWNER-EMPLOYEES
(A) If this Plan provides contributions or benefits for one (1) or
more Owner-Employees who control both the business for which the Plan is
established and one (1) or more other, trades or businesses, this Plan and the
plan established for such other trades or businesses must, when looked at as a
single plan, satisfy Section 401(a) and (d) of the Code for the Employees of
this and all other trades or businesses.
(B) If the Plan provides contributions or benefits for one (1) or more
Owner-Employees who control one (1) or more other trades or businesses, the
employees of the other trades or businesses must be included in a plan which
satisfies Code Sections 401(a) and (d) and which provides contributions and
benefits not less favorable than provided for Owner-Employees under this Plan.
(C) If an individual is covered as an Owner-Employee under the plans
of two (2) or more trades or businesses which are not controlled and such
individual controls at least one (1) other trade or business, the contributions
and benefits provided for the employees under the plan of such controlled trade
or business must be as favorable as those provided for such individual under the
most favorable plan of the trade or business which is not controlled.
(D) For purposes of this Section 9.4, an Owner-Employee, or two (2) or
more Owner-Employees, will be considered to control a trade or business if the
Owner-Employee, or two (2) or more Owner-Employees together:
(1) Own the entire interest in an unincorporated trade or
business; or
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(2) In the case of a partnership, own more than fifty percent
(50%) of either the capital interest or the profits interest in the partnership.
(E) For purposes of section 9.4(D), an Owner-Employee or two (2) or
more Owner-Employees will be treated as owning any interest in a partnership
which is owned, directly or indirectly, by a partnership which such
Owner-Employee or such two (2) or more Owner-Employees are considered to control
within the meaning of Section 9.4(D).
10.0 TRUST PROVISIONS
10.1 ESTABLISHMENT OF TRUST
It is the intention of the Employer that the Trust established Pursuant to
this Section 10 shall be a qualified Trust under Section 501(a) of the Internal
Revenue Code, and under such other Federal or State statute of a similar import,
in order that the Trust created hereby may qualify as a tax exempt employees'
Trust under all applicable law. However, notwithstanding any other provisions
of the Trust, if the Internal Revenue Service is requested to issue to the
Company a favorable written determination or ruling with respect to the initial
qualification of the Plan and exemption of the Trust from tax and such request
is denied, the Trustee shall, after receiving a written direction from the
Employer or Administrator, pay to each Participant that portion of the Trust
Fund applicable to said Participant's voluntary contributions, if any, and
provided the Plan so states, pay to the Company any part of the Trust Fund
attributable to Company contributions then remaining in the Trustee's
possession. As a condition to such repayment, the Company must execute,
acknowledge, and deliver to the Trustee its written undertaking, in form
satisfactory to the Trustee, to indemnify, defend, and hold the Trustee harmless
from all claims, actions, demands, or liabilities arising in connection with
such repayment, and provided further that such repayment will occur within one
year after the date the request for qualification is denied.
10.2 APPOINTMENT OF ADMINISTRATOR AND TRUSTEE
(A) The Board shall appoint the Administrator, who may be a person or
committee consisting of any number of members. Any member of the Administrator
may resign by giving notice in writing to the Employer. The Board shall have
the power to remove a member of the Administrator for any or no reason. A
member shall cease to be such upon his death or upon being declared legally
incompetent.
(B) The Board shall appoint the Trustee(s) (hereinafter referred to as
the Trustee). The Trustee may resign at any time upon sixty (60) days written
notice to the Board. The Trustee may be removed for any or no reason at any
time by the Board upon sixty (60) days written notice to the Trustee. In the
event of resignation, death,or removal of the Trustee, or one or more of the
Trustees, the Board shall appoint a successor Trustee who shall become effective
upon acceptance in writing by the successor Trustee or Co-Trustee. Upon such
resignation, death or removal of the Trustee or in the event of termination of
this Trust, the Trustee shall have the right to a settlement of its account,
which may be made, at the option of the Trustee, either
(1) By judicial settlement in an action instituted by the Trustee
in a court of competent Jurisdiction, or
(2) By agreement of settlement between the Trustee and the
Administrator.
Upon such settlement, all right, title and interest of the Trustee in the
assets of the Trust and all rights and privileges under this Agreement
heretofore vested in the Trustee shall vest in the successor Trustee and
thereupon all future liability of the Trustee shall terminate; provided however
that the Trustee shall execute, acknowledge and deliver all documents and
written instruments which are
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necessary to transfer and convey the right, title and interest in the Trust
assets and all rights and privileges to the successor Trustee.
10.3 ADMINISTRATOR FUNCTIONS
(A) As of each Anniversary Date, the Employer shall, as soon as
possible, certify to the Administrator the name, date of birth, date of
employment, Hours of Service, and Compensation of each Employee who has become a
Participant hereunder within the Plan Year in question; and shall also certify
the name, Hours of Service, and Compensation of each Employee who was a
Participant on the prior Anniversary Date and who was such at any time during
the Plan Year in question. As soon as the above is determined, the Employer
shall notify the Administrator of the amount of the contribution due to be made
by it or made by it as of the Anniversary Date in question. The Administrator,
upon receipt of such certifications from the Employer, shall compute therefrom
the Accrued Benefit of each Participant. The Administrator shall keep complete
records which shall show its actions under this Plan. The Administrator shall
also keep such records for such periods as may be required under ERISA and
regulations issued thereunder and under any other Federal law or regulations
issued thereunder. The Administrator shall also maintain and retain records on
matters for which disclosure is required by ERISA in sufficient detail that the
information disclosed may be verified, and it shall keep such records available
for examination for a period of not less than six (6) years after the filing
date of documents containing the disclosed information.
(B) The Administrator shall prepare, or cause to have prepared by any
plan service organization as may be retained to do so, a written Participant
statement to be delivered to the Participant setting forth the Accrued Benefit
of such Participant. The statement of a Participant's Accrued Benefit shall not
be made available for examination by any other Participant without the consent
of the Administrator.
(C) Upon the occurrence of an event giving rise to the payment of
benefits under the Plan, the Administrator shall undertake to calculate such
benefits based on the records of the Administrator and such other pertinent
information as may be put before the Administrator by outside agencies or the
Participant or the Beneficiary of the Participant and shall direct the Trustee
to distribute the benefits at the time that such benefit becomes due and
payable.
(D) The Administrator shall give a Participant, or the Beneficiary of
a deceased Participant, written notice, addressed to his last known address, by
certified mail, of any denial of claim for benefits under the Plan, setting
forth the specific reasons for such denial, written in a manner calculated to be
understood by him. Such notice shall be sent within ninety (90) days after such
denial and shall grant such Participant, or the Beneficiary of a deceased
Participant, a reasonable opportunity within sixty (60) days after registered
receipt of such notice to appear before the named members of the Administrator
at a stated place, date and time for a full and fair review by them of the
decision to deny the claim. Failure of the Participant, or the Beneficiary of a
deceased Participant, to so appear before the Administrator within such sixty
(60) day period, shall constitute an irrevocable consent by such Participant, or
the Beneficiary of a deceased Participant, to the decision denying the claim
made by the Administrator. The Administrator shall extend such sixty (60) day
period an additional thirty (30) days and shall provide another stated place,
date and time for such review or appearance, if it receives a written request to
do so by the Participant, or the Beneficiary of a deceased Participant, within
the first sixty (60) day period. The Administrator shall also change the stated
time and date of such appearance if requested to do so by the Participant, or
the Beneficiary of a deceased Participant, and if the parties are able to agree
upon such other time and date. The written notice by the Administrator shall
explain such irrevocable consent upon failure to appear before the Administrator
at the stated place, time and date, and the right of the Participant, or the
Beneficiary of a deceased Participant, to one thirty (30) day extension for his
appearance, and his right to
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request a different time and date within such period. The Administrator shall
maintain minutes of any meeting denying a claim for benefits and of any review
thereof and copies thereof shall be made available to the Participant, or the
Beneficiary of a deceased Participant, upon written request.
(E) The Administrator may retain and consult with legal counsel, who
may be counsel for the Employer, with respect to the meaning or construction of
this agreement or its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall be fully protected with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such legal counsel, provided that the Administrator acts prudently in
choosing such legal counsel. The Administrator may retain such other persons or
organizations including actuaries, accountants and benefit, financial or
administrative consultants to assist in the plan ministerial services. The
Administrator shall have the sole ultimate to construe Plan terms and determine
eligibility for benefits.
(F) The Employer may directly pay the reasonable expenses of the
Administrator in the administration of this Trust, including legal, accounting,
and advisor fees or expenses. Should the Employer, for any reason, fail to pay
such expenses, the same shall be paid by the Trustee out of the Trust. No
member of the Administrator shall be entitled to compensation for his services
as such member, but the Employer agrees to supply such stenographic or office
help as may be necessary to assist the Administrator in the performance of his
powers, duties and discretions.
(G) The Administrator shall establish a funding policy so that the
Trust will meet Plan needs. The Administrator shall review the funding policy
just prior to the end of each Fiscal Year for its appropriateness under the
circumstances then prevailing. In establishing a funding policy for the Trust,
the Administrator shall follow the procedures set forth in this paragraph. The
Administrator shall first determine the following matters:
(1) Approximate value of the assets in the Trust;
(2) Anticipated Employer contribution for the Plan Year then
ending;
(3) Approximate amount to be transferred to segregated accounts
of the Trust during the following year;
(4) Anticipated income of the Trust during the following year;
(5) Estimate of the anticipated withdrawals during the following
year from Participants' voluntary contribution accounts;
(6) Anticipated distributions from the Trust during the following
year to retired Participants, terminated Participants and to Beneficiaries; and
(7) Estimate as to such distributions for the next five (5)
years.
Following a review of this material and consideration of anticipated
contributions and income and distributions, the Administrator shall determine a
funding policy for the Trust bearing in mind both the short-run and long-run
needs and goals of the Plan. Such funding policy shall be communicated to the
Trustee if the investment policy has been delegated to the Trustee or to the
Investment Manager of the Trust, if one shall have been appointed, so that the
investment policy of the Trust can be coordinated with Plan needs.
10.4 TRUSTEE FUNCTIONS
The Administrator hereby delegates to the Trustee the following functions:
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(A) The Trustee shall hold in safekeeping the funds and assets
received by the Trustee under this Trust subject to the terms of this Agreement
and for the purposes herein set forth. The Trustee shall be responsible only
for such funds and assets as shall actually be received by the Trustee as
Trustee hereunder. So long as a Trustee is acting, title to any of the assets
of the Trust may be held or registered in the name of a nominee of the Trustee
for ease of dealing with the same, provided that the books of the Trust reflect
actual ownership. The assets so held or registered shall at all times remain in
the possession or under the control of the Trustee. The Trustee may not
maintain the indicia of ownership of any assets of the Trust outside the
jurisdiction of the district courts of the United States except as authorized by
Regulations. The Trustee may retain and consult with legal counsel, who may be
legal counsel for the Employer, with respect to the meaning or construction of
this agreement or its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall be fully protected with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such legal counsel, provided that the Trustee acts prudently in
choosing such legal counsel and in retaining such legal counsel. The Trustee
may retain such other persons or organization including actuaries, accountants
and benefit, financial or administrative consultants to assist in the Trust
ministerial services.
(B) The Trustee shall have such powers as may from time to time be
necessary, appropriate or expedient to perform its functions in the management
of the Trust. In addition to the powers enumerated herein, the Trustee shall
have each and all the powers for trustees enumerated in the Statutes of the Home
State of the Employer. The enumeration herein of a lesser, greater or other
power shall not be deemed to exclude any statutory power. Without limiting the
generality of the foregoing, the Trustee has the power to:
(1) Receive the income of the Trust;
(2) Hold uninvested any cash contributions to the Trust and to
create reserves of cash or other assets of the Trust for the payment of expenses
or for distribution pursuant to the Plan, or for any other purpose in connection
with the Plan;
(3) Enter into any contracts with, or purchase any annuities
from, any insurance company or insurance companies for the purpose of providing
for the payment of all or any part of the retirement income payable under the
Plan, and to disburse under any such contracts or for the purchase of any such
annuities any monies held in the Trust;
(4) Deposit any monies at any time held in the Trust in any
savings and loan association or in the savings department of any bank, including
the savings department of the Trustee;
(5) Purchase, or subscribe for, any securities or property and to
retain the same in the Trust;
(6) Sell, exchange, convey, transfer, or otherwise dispose of,
any securities or property held by it, by private contract or public action, and
no person dealing with the Trustee shall be bound to see the application of the
purchase money or to inquire into the validity, expediency, or propriety of any
such sale or other dispositions;
(7) Accept and retain for such time as it shall be determined any
securities or other property received or acquired by the Trustee hereunder,
whether or not such securities or other property would normally be purchased as
investments hereunder;
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(8) Renew or extend, or to participate in the renewal or
extension of, any mortgage, upon such terms as may be deemed advisable by the
Plan Administrator or the Investment Manager, as the case may be;
(9) Vote upon any stocks, bonds or other securities; to give
general or special proxies or powers of attorney with or without powers of
substitution; to exercise any conversion privileges, subscription rights or
other options, and to make payments incidental thereto; to oppose, or to consent
to, or otherwise participate in, corporate reorganizations or other changes
affecting corporate securities, and to delegate discretionary powers, and to pay
any assessments or charges in connection therewith; to abandon any property
determined by it to be worthless; and generally to exercise any of the powers of
an owner with respect to stocks, bonds, securities and other property held as
part of the Trust;
(10) Borrow or raise monies for the purposes of the Trust from
anyone (other than a "party in interest" as defined in Section 3(14) of ERISA)
in such amount, and upon such terms and conditions, as the Plan Administrator
may deem advisable; and, for any sum so borrowed, to issue its promissory note
as Trustee, and to secure the repayment thereof by pledging all, or any part, of
the Trust; and no person lending money to the Trustee shall be bound to see to
the application of the money lent or to inquire into the validity, expediency or
propriety of such borrowing; it being intended that the Trustee shall also have
the power to borrow from itself;
(11) Settle, compromise, or submit to arbitration any claims,
debts or damages due or owing from the Trust, to commence or defend suits or
legal or administrative proceedings, and to represent the Trust in all suits and
legal and administrative proceedings;
(12) Repair, alter or improve any buildings which may be on any
real estate forming part of the Trust or to erect an entirely new structure
thereon;
(13) Register any investment held as part of the Trust Fund in
its own name or in the name of a nominee or to hold any investment in bearer
form; provided, however, that the books and records of the Trustee shall at all
times show that all such investments are part of the Trust;
(14) Engage such attorneys, investment advisors, accountants and
such other advisors as it may deem necessary or helpful in connection with the
administration of the Trust, at such wages, fees, remuneration, consideration or
otherwise, and upon such terms and conditions as it shall deem proper. Such
compensation shall in no event be deducted from any commissions or other
compensation payable to the Trustee;
(15) Make, execute, acknowledge and deliver any and all documents
of transfer and conveyance and any and all other instruments that may be
necessary or appropriate to carry out the powers herein granted;
(16) Lend or borrow securities, write or sell options or futures
or enter into repurchase agreements unless specifically prohibited by the Plan
Administrator, subject to such restrictions as the Trustee in its sole
discretion may impose;
(17) Do all such acts, and exercise all such rights and
privileges, although not specifically mentioned herein, as may be necessary or
proper for the accomplishment of the purposes for which the Trust is
established; and
(18) Settle securities trades effected by the Administrator or
the Investment Manager through a securities depository utilizing an
institutional delivery system. In such event, the Trustee may deliver or
receive securities in accordance with appropriate trade reports or statements
given to the Trustee by the
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depository without having received communications or instructions directly from
the Administrator or the Investment Manager.
(C) The Trustee shall receive from the Employer its contributions in
cash made under the Plan. If Participant contributions are required under the
Plan, the Trustee shall receive from the Employer such Participant contributions
in cash. All contributions so received, together with the income and earnings
therefrom and any increments thereto, shall be held, managed, and administered
in trust pursuant to the terms of this Plan and Trust, to provide benefits under
the Plan according to its terms. The Trustee shall be under no duty to
determine whether any contribution made to this Trust is in a proper amount; nor
shall the Trustee have any duty or responsibility to collect any sum which the
Employer is to contribute under this Trust.
(D) The Trustee shall from time to time, on the written directions of
the Administrator, make benefit payments out of the Trust to Participants or
Beneficiaries in such manner, in such amounts, and for such purposes as may be
specified by the Administrator. The Trustee shall not be responsible in any way
for the purpose or application of such payments.
The Trustee shall not be required to make any investigation beyond
contacting the Social Security Administration to determine the mailing address
of any retired or terminated Participant entitled to benefits under this
agreement, or to determine the identity and mailing address of any person
entitled to death benefits, and shall be entitled to withhold making any
payments or deliveries until such mailing address of retired or terminated
Participants, and identity and mailing address of persons entitled to death
benefits, have been certified to the Trustee by the Administrator or Social
Security Administration.
(E) As agreed upon from time to time by the Employee and Trustee, the
Trustee may be paid reasonable compensation for services rendered, or reimbursed
expenses properly and actually incurred in the performance of duties with
respect to the Trust. However, no Trustee who already receives full time pay
from the Employer shall receive compensation from such Trust, except for
reimbursement of expenses properly and actually incurred. In the absence of
specific arrangement for such payments, any compensation or reimbursed expenses
shall be withdrawn by the Trustee from the Trust, unless paid by the Employer.
Such compensation shall include accounting, legal and administrative services
rendered by or to the Trustee unless specifically excluded by appropriate
written agreement. If so excluded, the Trustee may charge and withdraw from the
Trust the cost of such services as may be authorized by the Employer. To the
extent that the Trustee fees are to be charged against Employee contributions,
the Employer shall so advise each Participant.
(F) The Trustee shall keep accurate and detailed records of the
administration of the Trust hereunder which shall be open to inspection at all
reasonable times by any person designated by the Administrator or by the Board.
At the end of each Plan Year, as soon as is practicable after the close of such
other periods as may be agreed upon between the Trustee and the Employer and
within sixty (60) days after the removal or resignation of the Trustee, the
Trustee shall file with the Employer a written report setting forth all
investments, receipts, disbursements and other transactions effected by it
during such Plan Year or other period. The report shall contain an exact
description of all securities, contracts, or other property purchased and sold,
the cost or net proceeds of sale, (excluding accrued interest paid or received),
and showing the securities and investments held at the end of such Plan Year or
other period, and the cost and fair market value of each item thereof as carried
on the books of the Trustee, and the total market value of the Trust at the end
of such Plan Year or other period. The approval of the Administrator, or the
lack of written objection from him within sixty (60) days after submission, of
any report or accounting by the Trustee shall be a complete release and
discharge to the Trustee and shall be binding upon all Participants and all
persons claiming in place of or through such Participants, provided that they do
not contain any statement that is a result of a breach of any fiduciary duty by
the
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Trustee or they do not omit or conceal such breach. If the Trustee shall
determine that the Trust consists in whole or in part of property not traded
freely on a recognized market, or that information necessary to ascertain the
fair market value thereof is not readily available to the Trustee, the Trustee
shall request the party determining investment policy to instruct the Trustee as
to the value of such property for all purposes under the Plan and Trust, and
such party shall comply with such request. The value placed upon such property
by such party in its instructions to the Trustee shall be conclusive and binding
upon the Employer, the Administrator, Participants, their Beneficiaries and all
other persons with an interest herein. If such party determining investment
policy fails or refuses to instruct the Trustee as to the value of such property
within a reasonable time after receipt of the Trustee's request, the Trustee
shall engage a competent appraiser to fix the fair market value of such property
for all purposes hereunder. The determination of any such property shall be
conclusive upon all parties interested therein and the Trustee shall have no
liability in connection therewith. The reasonable fees and expenses incurred
for any such appraisal shall be paid by the Trustee out of the Trust or, at the
option of the Employer, by the Employer. The Trustee shall prepare and file
such other reports, publications, statements, tax returns and forms required to
be filed by the Trustee with the Secretary of Labor or Secretary of Treasury as
the Trustee shall agree to undertake.
(G) If the Administrator directs, the Trustee will commingle into one
Trust the assets of two or more Employer plans each of which shall be qualified
under Section 401(a) of the Internal Revenue Code. The Trustee shall have no
responsibility to determine the value of each separate plan; such responsibility
shall remain with the Administrator. Should one or more plans be disqualified,
the Administrator shall notify the Trustee and the Trustee shall segregate the
funds of such plan or plans.
(H) If the Administrator directs, the Trustee shall keep full accounts
of all receipts and disbursements for each Participant's account. The Trustee
shall render an annual report for each Participant's account to the Plan
Administrator within sixty (60) days after the end of each Plan Year, said
report to contain a complete accounting showing the total assets in the Trust
and the fair market value of such assets as of that date, as well as a statement
of purchases, sales and any investment changes and all income, expenses and
disbursements since the last such report.
(I) Notwithstanding any other provision contained in this Trust, the
Trustee, at the direction of the Administrator and at the election of the
Participant, shall transfer, upon termination of a Participant, the
non-forfeitable interest to another trust forming part of a pension, profit
sharing or stock bonus plan maintained by such Participant's new employer and
meeting the requirements of Code Section 401(a), provided that the trust to
which such transfers are made permits the transfer to be made. With the consent
of the Administrator, the Trustee may accept funds transferred from another
Trust forming part of a pension, profit sharing or stock bonus plan maintained
by such Participant's previous employer and meeting the requirements of Internal
Revenue Code Section 401(a) for the account of a Participant under this Plan,
provided that the trust from which such funds are transferred permits the
transfer to be made and, in the opinion of legal counsel for the Employer, the
transfer will not jeopardize the exempt status of the Trust or create adverse
tax consequences to the Employer. In the event of such a transfer to a
Participant's account under this Trust, the Trustee shall maintain a separate,
non-forfeitable account for the amount transferred and its share of the gains or
losses of the Trust hereafter, as provided under Section 4.7.
(J) The duties and responsibilities of the Trustee shall be solely
those set forth in this document and the Trustee shall not have the authority to
interpret the Plan.
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10.5 INVESTMENT OF TRUST ASSETS
(A) If an individual Trustee has been appointed by the Board, the
Trustee shall have the authority and duty to direct the investment and
management of all of the Trust assets and the Trustee shall be the fiduciary
with respect to the investment and management of such Trust assets and the
Administrator shall have no responsibility therefore, to the extent that such
authority and duty has not been delegated to the Administrator or an Investment
Manager by the Board. If more than one (1) individual Trustee is appointed by
the Board, each such individual Trustee shall have full investment and
management powers with respect to the Trust assets as if such Trustee was the
sole Trustee, unless such investment and management authority is restricted by
the Board or the Administrator.
(B) If a bank or other corporate Trustee has been appointed by the
Board, the Administrator shall have the authority and duty to direct the
investment and management of all of the Trust assets, to the extent that such
authority and duty has not been delegated to the Trustee or an Investment
Manager by the Administrator.
(1) The Administrator may by appropriate action appoint the
Trustee to direct the investment and management of all or a portion of the
assets of the Trust pursuant to the powers enumerated in Section 10.5. Written
direction of the Administrator's action shall be delivered to the Trustee
whereupon the Trustee shall be the fiduciary with respect to the investment and
management of such Trust assets and the Administrator shall have no
responsibility therefore. Any transfer of investment and management to the
Trustee may be revoked by a written notice to that effect by the Administrator.
(C) The Board or the Administrator, by appropriate action, may appoint
an Investment Manager to direct the Trustee to invest and manage all or a
portion of the assets of the Trust pursuant to the powers enumerated in Section
10.5. If investment of the Trust Fund is to be directed in whole or in part by
an Investment Manager, the Plan Administrator shall deliver to the Trustee a
copy of each of the following documents: (1) Instrument appointing the
Investment Manager; (2) Instrument evidencing the Investment Manager's
acceptance of such appointment; (3) Investment Manager's acknowledgment that it
is a fiduciary of the Plan; and (4) Certificate evidencing the Investment
Manager's current registration under the Investment Advisor's Act of 1940,
whereupon the Investment Manager shall be the fiduciary with respect to the
investment and management of such Trust assets and the Administrator and the
Trustee shall have no responsibility therefore. The Trustee shall be fully
protected in relying upon such documents until such time as it is otherwise
notified in writing of some change by the Plan Administrator.
(D) The party who has been charged with the duty and authority to
direct the investment and management of Trust assets shall have such powers as
may front time to time be necessary, appropriate or expedient to perform its
functions in the management of the Trust. The term "Power" is used herein in
its broad sense and as including powers, implied powers, rights, privileges and
immunities. Without limiting the foregoing, such party shall have the following
enumerated powers:
(1) To sell, convey, exchange, lease, convert, transfer, divide,
repair, partition, consent to partition, or otherwise dispose of any property at
any time held in trust hereunder;
(2) (a) Subject to the provisions of Sections 404, 405 and 407
of ERISA, to invest and reinvest the Trust and keep the Trust invested, without
distinction between principal and income in such securities or in such property,
real or personal, whenever situated, as they shall deem advisable and which is
available for acquisition and actually acquired through the "Sponsoring
Organization."
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(b) Such investment may include but shall not be limited
to annuity contracts, insurance contracts, real estate, management commodity
assets, stocks, common or preferred, options, futures, contract options on
futures in trust and participation certificates, bonds and mortgages (including
part interests in bonds and mortgages or notes and mortgages insured by the
Federal Housing Administration), leaseholds on improved and unimproved real
estate, qualifying securities or qualifying real property of the Employer or any
of its affiliates to the maximum extent permitted under ERISA, partnership
interest, interests in joint ventures, insurance company investment contracts,
trust funds established by the Trustee, common or collective trust fund or
pooled investment fund maintained for the investment of qualified retirement
trusts by a bank, trust company or other financial institution acting in a
fiduciary or custodial capacity for the Plan, (investment in a common or
collective trust or pooled investment fund shall constitute adoption of the
instrument or agreement creating such fund), and other evidences indebtedness or
ownership provided that such investment is an investment which is available for
acquisition and actually acquired through the Sponsoring Organization.
(3) Borrow money, and to secure the same by mortgage, deed of
trust, or pledge of the Trust, or any assets constituting a part thereof, and to
pay and discharge any and all indebtedness of the Trust or any liens or other
charges against the Trust;
(4) Borrow the cash values of annuity or insurance contracts.
Such borrowed funds may be invested in any security or other property including
premiums for insurance or annuity contracts. Notwithstanding anything herein to
the contrary, the Administrator will only direct the Trustee to exercise its
power hereunder to the extent that the unborrowed cash values of the contracts
issued to the accounts of highly compensated Participants and officers or
shareholders of the Employer are proportionally no greater than the unborrowed
cash values of insurance contracts issued to the accounts of other Participants;
(5) To have, with respect to bonds, shares of stock and other
securities, all the rights, powers and privileges of an owner, including holding
securities in the name of the Trustee or in the name of a nominee with or
without disclosures of the Trust, voting, giving proxies, making payment of
calls, assessments, or other sums deemed by the Trustee expedient for the
protection of the Trust, exchanging securities, selling or exercising stock
subscriptions or conversion rights, participating in foreclosures,
reorganizations, consolidations, mergers, liquidations, pooling agreements,
voting trusts, and assenting to corporate sales, leases and encumbrances;
(6) Settle, compromise or submit to arbitration any claims,
debts, or damages due or owing to or from the Trust, to commence to defend legal
proceedings for or against the Trust; and to represent the Trust in all
proceedings in any court of law or equity or before any other body or tribunal.
The Trustee shall not exercise these powers conferred on it without first giving
notice of the action proposed to be taken by the Administrator and obtaining
written approval of such action from the Administrator;
(7) Invest, on a uniform basis for all Participants, in an annual
premium contract on his life issued by a legal reserve life insurance company
and, if permitted by the policy purchased, at the Participant's retirement, to
pay to such insurance company additional amounts from the Participant's account
for the purpose of converting such policy so as to provide a retirement income;
(8) Invest in any common or collective trust funds in which an
Employee Benefit Trust is eligible to participate if such trust is established
and maintained by the Trustee. The Declaration of Trust, as amended from time
to time, shall be deemed to be a part hereof to the same extent as if fully set
forth at length herein at the time of execution; and
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(9) Deposit funds in any interest bearing savings account at the
bank which may also serve as Trustee.
(E) If a Participant or Beneficiary exercises control over the assets
in his account under the Plan, the Trustee shall invest such account as directed
by such Participant or Beneficiary in writing. Provided, however, that the
Trustee shall have no duty or obligation with respect to any such individually
directed investments beyond the duties and obligations imposed upon the Trustee
in this Section 10 with respect to non-individually directed investments.
(F) All directions concerning investments made by the Administrator or
the Investment Manager shall be verbal unless the Trustee requires written
confirmation. The Trustee shall be under no duty to question any directions of
the Administrator or Investment Manager nor to review any securities or other
property of the Trust constituting assets thereof with respect to which the
Administrator or the Investment Manager has investment responsibility, nor to
make any suggestions to such Administrator or the Investment Manager in
connection therewith. The Trustee shall, as promptly as possible, comply with
any written directions given by the Administrator or the Investment Manager
hereunder. The Trustee shall not be liable, in any manner nor for any reason,
for the making or retention of any investment pursuant to such directions of the
Administrator or the Investment Manager, nor shall the Trustee be liable for its
failure to invest any or all of the Trust in the absence of such written
direction. The Administrator or the Investment Manager shall not direct the
purchase, sale or retention of any assets of the Trust if such directions are
not in compliance with the applicable provision of ERISA and any Regulations or
Rulings issued thereunder.
(G) The Trustee shall not be liable nor responsible for losses or
unfavorable results arising from the Trustee's compliance with proper directions
of the Administrator or Investment Manager which are made in accordance with the
terms of the Plan and Trust and which are not contrary to the provisions of any
applicable Federal or State statute regulating such investment and management of
the assets of any employee benefit trust.
10.6 MISCELLANEOUS
(A) This Trust is declared to be irrevocable. However, although the
Employer has established the Trust with the bona fide intention and expectation
that it will be able to make contributions to it indefinitely, the Employer is
not and shall not be under any obligation or liability whatsoever to continue
its contributions or to maintain the Plan for any given length of time. The
Employer may in its sole and absolute discretion completely discontinue its
contributions or terminate the Trust in accordance with the provisions of the
Plan at any time. Unless sooner terminated in accordance with the other
provisions of this agreement, this Trust shall in any event terminate:
(1) Upon the date specified in a written notice of termination of
the Plan and Trust, executed by the Employer and delivered to the Trustee; or
(2) Upon the complete accomplishment of all the purposes for
which the Plan is created.
The assets of a Plan shall never inure to the benefit of any Employer and
shall be held for the exclusive purposes of providing benefits to Participants
in the Plan and their Beneficiaries and defraying reasonable expenses of
administering the Trust. Any contribution made by the Employer because of a
mistake of fact must be returned to the Employer within one year of the
contribution. In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must be
returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the
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Employer's return for the taxable year in which the Plan is adopted, or such
later date as the Secretary of the Treasury may prescribe.
(B) The Trustee and the Administrator as well as all other fiduciaries
under the Trust shall discharge their duties with respect to this Trust solely
in the interest of the Participants and their Beneficiaries; and
(1) For the exclusive purpose of providing benefits to
Participants and their Beneficiaries, and defraying reasonable expenses of
administering this Trust;
(2) Acting prudently, with the care, skill, prudence and
diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims;
(3) By diversifying the investments of the Trust so as to
minimize the risk of large losses, unless under the circumstances it is clearly
not prudent to do so; and
(4) In accordance with the terms of this Trust insofar as they
are consistent with Title I of the Employee Retirement Income Security Act of
1974.
(C) The Trust created hereby shall not terminate or be held to have
terminated upon any theory of merger based on the fact that the same persons
are, by the terms of this instrument, made sole Participant and Trustee of said
Trust; and said Participants are expressly given the right and privilege to
participate in the profits, dividends, earnings and increases thereof, without
regard to the relation as Trustee which such Participants may bear to said
Trust.
(D) The Trust will be administered in the Home State of the Trustee,
and its validity, construction, and all rights hereunder shall be governed by
ERISA and, to the extent not preempted, by the laws of the Home State of the
Trustee. If any provisions of this Agreement shall be invalid or unenforceable,
the remaining provisions shall continue to be fully effective.
(E) Custodial Account, Custodian and Custodianship: If elected in the
Adoption Agreement: Everywhere that the terms "Trust" or "Trustee" appear in
this Prototype Defined Contribution Plan and Trust, they shall be interpreted to
read and mean "Custodial Account" and "Custodian," respectively, and Plan assets
will be held in a custodial account by the Sponsoring Organization as custodian
and the agreement shall be called a "Custodial Account Agreement" in accordance
with the provisions of the Custodial Account Agreement, as authorized by section
401(f) of the Internal Revenue Code.
However, under section 403 of ERISA, certain plans must have a trustee; for
such plans, the Custodial Account Agreement also serves as a trust agreement,
and the adopting Employer shall appoint a Trustee to serve thereunder, as named
in the Adoption Agreement.
10.7 Intentionally left blank.
10.8 SPECIAL RULES FOR VOTING INVESTMENT COMPANY SHARES
All Investment Company Shares shall be registered in the name of the
Trustee or its nominee. Subject to any requirement of applicable law, the
Trustee will transmit to Participants or the Employer, as the case may be,
copies of any notices of shareholders' meetings, proxies and proxy-soliciting
materials, prospectuses and the annual or other reports to shareholders, with
respect to Investment Company Shares held in the Trust. The Trustee shall act
in accordance with directions received from such Participants or Employer, as
the case may be, with respect to matters to be voted upon by the shareholders of
the Investment Company. Such
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directions must be in writing on a form approved by the Trustee, signed by the
addressee and delivered to the Trustee within the time prescribed by it. The
Trustee will not vote Investment Company shares as to which it receives no
written directions. For the purposes of this Section, Investment Company means
an open-end registered investment company provided that its prospectus offers
its shares under the Plan.
10.9 Intentionally left blank.
10.10 LOANS TO PARTICIPANTS
(A) All loans shall be secured by assignment of fifty percent of the
Participant's entire right, title and interest in and to the trust fund,
evidenced by the Participant's collateral promissory note for the amount of the
loan payable to the order of the Trustee.
11.0 CASH OR DEFERRED ARRANGEMENT
11.1 PURPOSE AND EFFECTIVE DATE
(A) Purpose. If so elected in the cash or deferred arrangement (CODA)
adoption agreement, it is the intention of the Employer to incorporate a CODA,
which satisfies the requirements of Section 401(k) of the Code, as part of its
profit sharing plan.
(B) Effective Date. The CODA is effective upon adoption by the
adopting employer.
11.2 ELIGIBILITY TO PARTICIPATE
(A) Notwithstanding any other provision of the Plan, an Employee will
be eligible to make Elective Deferrals on the Entry Date next following the
earlier of:
(1) The date on which the Employee meets the age and service
requirements specified in Section 6 of the Adoption Agreement, or
(2) The date on which the Employee attains age 21 and is credited
with one (1) Year of Service.
11.3 DEFINITIONS
The following definitions shall apply for purposes of this amendment only:
(A) "Actual Deferral Percentage" or "ADP" shall mean, for a specified
group of Participants for a Plan Year, the average of the ratios (calculated
separately for each Participant in such group) of
(1) The amount of Employer contributions actually paid over to
the trust on behalf of such Participant for the Plan Year to
(2) The Participant's Compensation for such Plan Year (whether or
not the Employee was a Participant for the entire Plan Year). Employer
contributions on behalf of any Participant shall include:
(a) Any Elective Deferrals made pursuant to the
Participant's deferral election, including Excess Elective Deferrals, but
excluding Elective Deferrals that are taken into account in the Contribution
Percentage test (provided the ADP test is satisfied both with and without
exclusion of these Elective Deferrals); and
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(b) At the election of the Employer, Qualified Non-elective
Contributions and Qualified Matching Contributions. For purposes of computing
Actual Deferral Percentages, an Employee who would be a Participant but for the
failure to make Elective Deferrals shall be treated as a Participant on whose
behalf no Elective Deferrals are made.
(B) "Adjustment Factor" shall mean the cost of living factor
prescribed by the Secretary of the Treasury under Section 415(d) of the Code for
years beginning after December 31, 1987, as applied to such items and in such
manner as the Secretary shall provide.
(C) "Affiliated Employer" shall mean any corporation which is a member
of a controlled group of corporations (as defined in Section 414(b) of the Code)
which includes the Employer; any trade or business (whether or not incorporated)
which is under common control (as defined in Section 414(c) of the Code) with
the Employer; any organization (whether or not incorporated) which is a member
of an affiliated service group (as defined in Section 414(m) of the Code) which
includes the Employer; and any other entity required to be aggregated with the
Employer pursuant to regulations under Section 414(o) of the Code.
(D) "Average Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Actual Deferral Percentages of the
Participants in a group.
(E) "Code" shall mean the Internal Revenue Code of 1986.
(F) "Compensation" shall mean, unless otherwise elected in the CODA
adoption agreement, compensation paid by the Employer to the Participant during
the Plan Year which is required to be reported as wages on the Participant's
Form W-2, or which, in the case of a self-employed individual, constitutes
payment for services includible in the self-employed individual's gross income.
For purposes of the EZFLEX Adoption Agreement: the Employer may elect that
Compensation shall not include earnings prior to the date an Employee became a
Plan Participant. This definition shall apply solely for purposes of
determining the Actual Deferral Percentage under Section 11.4(F) and the
Contribution Percentage under Section 11.8(A).
(G) "Elective Deferrals" shall mean any Employer contributions made to
the Plan at the election of the Participant, in lieu of cash Compensation, and
shall include contributions made pursuant to a salary reduction agreement or
other deferral mechanism. With respect to any taxable year, a Participant's
Elective Deferral is the sum of all Employer contributions made on behalf of
such Participant pursuant to an election to defer under any qualified CODA as
described in Section 401(k) of the Code, any simplified employee pension cash or
deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred
compensation plan under Section 457, any plan as described under Section
501(c)(18), and any Employer contributions made on the behalf of a Participant
for the purchase of an annuity contract under Section 403(b) pursuant to a
salary reduction agreement.
(H) "Employee" shall mean employees of the Employer and shall include
leased employees within the meaning of Section 414(n)(2) of the Code.
Notwithstanding the foregoing, if such leased employees constitute less than
twenty (20) percent of the Employer's Non-highly Compensated work force within
the meaning of Section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall
not include those leased employees covered by a plan described in Section
414(n)(5)(B) of the Code unless otherwise provided by the terms of this plan
other than this amendment.
(I) "Employee Contributions" shall mean contributions to the plan made
by a Participant during the Plan Year.
(J) "Employer" shall mean the entity that establishes or maintains the
plan, any successor to such entity, and any Affiliated Employer.
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(K) "Excess Contributions" shall mean, with respect to any Plan Year,
the excess of:
(1) The aggregate amount of employer contributions actually taken
into account in computing the ADP of Highly Compensated Employees for such Plan
Year, over
(2) The maximum amount of such contributions permitted by the ADP
test (determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the ADPs, beginning with the highest of such percentages).
(L) "Excess Elective Deferrals" shall mean those Elective Deferrals
that are includible in a participant's gross income under Section 402(g) of the
Code to the extent such participant's Elective Deferrals for a taxable year
exceed the dollar limitation under such Code section. Excess Elective Deferrals
shall be treated as annual additions under the plan.
(M) "Family Member" shall mean an individual described in Section
414(q)(6)(B) of the Code.
(N) "Highly Compensated Employee" shall mean an Employee described in
Section 2.23 of the Plan and in Section 414(q) of the Code.
(O) "Matching Contribution" shall mean any contribution to the plan
made by the Employer for the Plan Year and allocated to a Participant's account
by reason of the Participant's Employee Contributions or Elective Deferrals.
Matching Contributions are subject to the distribution provisions applicable to
Employer contributions in the underlying Plan document.
(P) "Non-highly Compensated Employee" shall mean the Employee of the
Employer who is neither a Highly Compensated Employee nor a Family Member.
(Q) "Participant" shall mean any Employee of the Employer who has met
the eligibility and participation requirements of the Plan.
(R) "Plan Year" shall mean the Plan Year otherwise specified in the
Plan.
(S) "Qualified Non-elective Contributions" shall mean
contributions (other than Matching Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participant's accounts that
the Participants may not elect to receive in cash until distributed from the
Plan; that are nonforfeitable when made; and that are distributable only in
accordance with the distribution provisions that are applicable to Elective
Deferrals and Qualified Matching Contributions.
(T) "Qualified Matching Contributions" shall mean Matching
Contributions which are subject to the distribution and nonforfeitability
requirements under Section 401(k) of the Code when made.
11.4 ELECTIVE DEFERRALS
(A) Allocation of Deferrals. The Employer shall contribute and
allocate to each Participant's Elective Deferral account an amount equal to the
amount of a Participant's Elective Deferrals.
(B) Elective Deferrals Pursuant to a Salary Reduction Agreement. To
the extent provided in the CODA adoption agreement, a Participant may elect to
have Elective Deferrals made under this plan. Elective Deferrals shall include
both single-sum and continuing contributions made pursuant to a salary reduction
agreement. A Participant shall designate the amount and frequency of his or her
Elective Deferrals in the form and manner specified by the Plan Administrator.
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(1) Commencement of Elective Deferrals: A Participant shall be
afforded a reasonable period at least once each calendar year, as specified in
Section 10.2 of the CODA adoption agreement, to elect to commence Elective
Deferrals. Such election shall not become effective before the time specified
in Section 10.2 of the CODA adoption agreement.
(2) Modification and Termination of Elective Deferrals. A
Participant's election to commence Elective Deferrals shall remain in effect
until modified or terminated. A Participant shall be afforded a reasonable
period at least once each calendar year, as specified in Section 10.2(e) of the
CODA adoption agreement, to modify the amount or frequency of his or her
Elective Deferrals. A Participant may terminate his or her election to make
Elective Deferrals at any time.
(C) Cash bonuses. To the extent provided in Section 10.2 of the CODA
adoption agreement, a Participant may also base Elective Deferrals on cash
bonuses that, at the Participant's election, may be contributed to the CODA or
received by the Participant in cash.
(1) Time and Manner of Election. A Participant shall be afforded
a reasonable period, as provided in Section 10.2(f) of the CODA adoption
agreement, to elect to defer amounts described in Section 11.4(c) above to the
CODA. Such election shall not become effective before the time specified in
Section 10.2(a) of the CODA adoption agreement.
(D) Maximum Amount of Elective Deferrals. A Participant's Elective
Deferrals are subject to any limitations imposed in Section 10.2 of the CODA
adoption agreement and any further limitations under the plan. No Participant
shall be permitted to have Elective Deferrals made under this Plan during any
calendar year in excess of the maximum dollar limitation under Section 402(g) of
the Code in effect at the beginning of the calendar year.
(E) Distribution of Excess Elective Deferrals. A participant may
assign to this Plan any Excess Elective Deferrals made during a taxable year of
the Participant by notifying the Plan Administrator on or before the date
specified in the adoption agreement of the amount of the Excess Elective
Deferrals to be assigned to the Plan.
Notwithstanding any other provisions of the Plan, Excess Elective Deferrals,
plus any income and minus any loss allocable thereto, shall be distributed no
later than April 15 to any Participant to whose account Excess Elective
Deferrals were assigned for the preceding year and who claims Excess Elective
Deferrals for such taxable year.
(1) The Participant's claim shall be in writing, shall be
submitted to the plan administrator not later than the date elected in Section
15 of the CODA adoption agreement; shall specify the amount of the Participant's
Excess Elective Deferral for the preceding calendar year; and shall be
accompanied by the Participant's written statement that if such amounts are not
distributed, such Excess Elective Deferrals, when added to amounts deferred
under other plans or arrangements described in Sections 401(k), 408(k), or
403(b) of the Code, will exceed the limit imposed on the Participant by Section
402(g) of the Code for the year in which the deferral occurred.
(2) Determination of income and loss: Excess Elective Deferrals
shall be adjusted for any income or loss up to the date of distribution. The
income or loss allocable to Excess Elective Deferrals is the sum of:
(a) Income or loss allocable to the Participant's Elective
Deferral account for the taxable year multiplied by a fraction, the numerator of
which is such Participant's Excess Elective Deferrals for the year and the
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denominator is the Participant's account balance attributable to Elective
Deferrals without regard to any income or loss occurring during such taxable
year; and
(b) Ten percent of the amount determined under (a)
multiplied by the number of whole calendar months between the end of the
Participant's taxable year and the date of distribution, counting the month of
distribution if distribution occurs after the 15th of such month.
(F) Actual Deferral Percentage. The Actual Deferral Percentage "ADP"
for Participants who are Highly Compensated Employees for each Plan Year and the
ADP for Participants who are Non-highly Compensated Employees for the same Plan
Year must satisfy one of the following tests:
(1) The ADP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ADP for Participants who are Non-highly
Compensated Employees for the Plan Year multiplied by 1.25; or
(2) The ADP for Participants who are Highly Compensated
Employees for the Plan Year shall not exceed the ADP for Participants who are
Non-highly Compensated Employees for the Plan Year multiplied by 2.0,
provided that the ADP for Participants who are Highly Compensated Employees
does not exceed the ADP for Participants who are Non-highly Compensated
Employees by more than two (2) percentage points.
(G) Special Rules:
(1) The ADP for any Participant who is a Highly Compensated
Employee for the Plan Year and who is eligible to have Elective Deferrals (and
Qualified Non-elective Contributions or Qualified Matching Contributions, or
both, if treated as Elective Deferrals for purposes of the ADP test) allocated
to his accounts under two or more arrangements described in Section 401(k) of
the Code, that are maintained by the Employer, shall be determined as if such
Elective Deferrals (and, if applicable, such Qualified Non-elective
Contributions or Qualified Matching Contributions, or both) were made under a
single arrangement. If a Highly Compensated Employee participates in two or
more cash or deferred arrangements that have different Plan Years, all cash or
deferred arrangements ending with or within the same calendar year shall be
treated as a single arrangement.
(2) In the event that this Plan satisfies the requirements of
Section 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of such
sections of the Code only if aggregated with this Plan, then this Section shall
be applied by determining the ADP of Employees as if all such plans were a
single plan. For Plan Years beginning after December 31, 1989, plans may be
aggregated in order to satisfy Section 401(k) of the Code only if they have the
same Plan Year.
(3) For purposes of determining the ADP of a Participant who is a
5-percent owner or one of the ten most highly-paid Highly Compensated Employees,
the Elective Deferrals (and Qualified Non-elective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for purposes
of the ADP test) and Compensation of such Participant shall include the Elective
Deferrals (and, if applicable, Qualified Non-elective Contributions and
Qualified Matching Contributions, or both) and Compensation for the Plan Year of
Family Members (as defined in Section 414(q)(6) of the Code). Family Members,
with respect to such Highly Compensated Employees, shall be disregarded as
separate employees in determining the ADP both for Participants who are
Non-highly Compensated Employees and for Participants who are Highly Compensated
Employees.
(4) For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-elective Contributions and Qualified Matching Contributions must
be
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made before the last day of the twelve-month period immediately following the
Plan Year to which contributions relate.
(5) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such test.
(6) The determination and treatment of the ADP amounts of any
participant shall satisfy such other requirements as may be prescribed by the
Secretary of the Treasury.
(H) Distribution of Excess Contributions. Notwithstanding any other
provision of this Plan, Excess Contributions, plus any income and minus any loss
allocable thereto, shall be distributed no later than the last day of each Plan
Year to Participants to whose accounts such Excess Contributions were allocated
for the preceding Plan Year. If such excess amounts are distributed more than 2
1/2 months after the last day of the Plan Year in which such excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer maintaining
the Plan with respect to such amounts. Such distributions shall be made to
Highly Compensated Employees on the basis of the respective portions of the
Excess Contributions attributable to each of such Employees. Excess
Contributions shall be allocated to Participants who are subject to the family
member aggregation rules of Section 414(q)(6) of the Code in the manner
prescribed by the regulations. Excess Contributions (including the amounts
recharacterized) shall be treated as Annual Additions under the Plan.
(1) Determination of Income or Loss: Excess Contributions shall
be adjusted for any income or loss up to the date of distribution. The income
or loss allocable to Excess Contributions is the sum of:
(a) Income or loss allocable to the Participant's Elective
Deferral account (and, if applicable, the Qualified Non-elective Contribution
account or the Qualified Matching Contributions account or both) for the Plan
Year multiplied by a fraction, the numerator of which is such Participant's
Excess Contributions for the year and the denominator is the Participant's
account balance attributable to Elective Deferrals (and Qualified Non-Elective
Contributions or Qualified Matching Contributions, or both, if any of such
contributions are included in the ADP test) without regard to any income or loss
occurring during such Plan Year; and
(b) Ten Percent of the amount determined under (a)
multiplied by the number of whole calendar months between the end of the Plan
Year and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
(2) Accounting for Excess Contributions: Excess Contributions
shall be distributed from the Participant's Elective Deferral account and
Qualified Matching Contribution account (if applicable) in proportion to the
Participant's Elective Deferrals and Qualified Matching Contributions (to the
extent used in the ADP test) for the Plan Year. Excess Contributions shall be
distributed from the Participant's Qualified Non-elective Contribution account
only to the extent that such Excess Contributions exceed the balance in the
Participant's Elective Deferral account and Qualified Matching Contribution
account.
(3) A Participant may treat his Excess Contributions as an amount
distributed to the Participant and then contributed by the Participant to the
Plan. Recharacterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Elective Deferrals. Amounts may not be
recharacterized by a Highly Compensated Employee to the extent that such amount
in combination with other Employee Contributions made by that Employee would
exceed any stated limit under the Plan on Employee Contributions.
Recharacterization must occur no later than two and one-half months after the
last day of the Plan Year in which such Excess Contributions arose and is deemed
to occur no earlier than the date the last
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Highly Compensated Employee is informed in writing of the amount recharacterized
and the consequences thereof. Recharacterized amounts will be taxable to the
Participant for the Participant's tax year in which the Participant would have
received them in cash.
(I) Qualified Non-Elective Contributions
(1) The Employer may elect to make Qualified Non-elective
Contributions under the Plan on behalf of Employees as provided in the Adoption
Agreement.
(2) In addition, in lieu of distributing Excess Contributions as
provided in Section 11.4(H) of the Plan, or Excess Aggregate Contributions as
provided in Section 11.8(D) of the Plan, and to the extent elected by the
Employer in the Adoption Agreement, the Employer may make Qualified Non-elective
Contributions on behalf of Non-highly Compensated Employees that are sufficient
to satisfy either the Actual Deferral Percentage test or the Average
Contribution Percentage test, or both, pursuant to regulations under the Code.
(J) Separate Accounts. A separate account shall be maintained for
that portion of a Participant's accrued benefit that is attributable to Elective
Deferrals and a separate account shall be maintained for that portion of a
Participant's accrued benefit that is attributable to Qualified Non-elective
Contributions. Each separate account shall be credited with the applicable
contributions, earnings and losses, distributions, and other applicable
adjustments.
(K) Under no circumstances may Elective Deferrals and Qualified
Non-elective Contributions be contributed and allocated to the trust under the
plan later than thirty (30) days after the close of the Plan Year for which the
contributions are deemed to be made, or such other time as provided in
applicable regulations under the Code.
11.5 TOP-HEAVY REQUIREMENTS
(A) If the underlying plan document does not designate another plan to
satisfy the top-heavy requirements of Section 416 of the Code, or if the
underlying plan document allocates less than three (3) percent of each Non-key
Employee's top-heavy Compensation under the Plan to such Participant's account
for a Plan Year, then the minimum top-heavy allocation under the Plan shall be
allocated on behalf of Non-key Employees in accordance with Section 416 of the
Code. Such allocation shall not be less than the lesser of three (3) percent of
such Participant's Compensation or, in the case where the Employer has no
defined benefit plan which designates this Plan to satisfy Section 401 of the
Code, the largest percentage of Employer contributions and forfeitures, as a
percentage of the first $200,000 of the Key Employee's compensation, allocated
on behalf of any Key Employee for that year.
(B) For purposes of satisfying the minimum contribution on behalf of
each Non-key Employee under Section 11.5(A) above, Elective Deferrals and
Matching Contributions shall not be taken into account.
(C) For purposes of determining whether a plan is top-heavy under
Section 416 of the Code, Elective Deferrals are considered employer
contributions.
11.6 SPECIAL DISTRIBUTION RULES
(A) Elective Deferrals, Qualified Non-elective Contributions and
Qualified Matching Contributions and income allocable thereto are not
distributable to the Participant, or the Participant's Beneficiary or
Beneficiaries, in accordance with the Participant's or Beneficiary's election,
earlier than upon separation from service, death, or disability.
(B) Such amounts may also be distributed upon:
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(1) Termination of the Plan without the establishment of another
defined contribution plan.
(2) The disposition by a corporation to an unrelated corporation
of substantially all of the assets (within the meaning of Section 409(d)(2) of
the Code) used in a trade or business of such corporation if such corporation
continues to maintain this Plan after the disposition, but only with respect to
Employees who continue employment with the corporation acquiring such assets.
(3) The disposition by a corporation to an unrelated entity of
such corporation's interest in a subsidiary (within the meaning of Section
409(d)(3) of the Code) if such corporation continues to maintain this Plan, but
only with respect to Employees who continue employment with such subsidiary.
(4) The hardship of the Participant as described in Section
11.6(C).
(5) The attainment of age 59 1/2 in the case of a Profit Sharing
Plan.
All distributions that may be made pursuant to one or more of the
foregoing distributable events are subject to the spousal and participant
consent requirements (if applicable) contained in Sections 401(a)(11) and 417 of
the Code.
(C) Distribution of Elective Deferrals (and earnings thereon accrued
as of December 31, 1988) may be made to a Participant in the event of hardship.
For the purposes of this Section, hardship is defined as an immediate and heavy
financial need of the Employee where such Employee lacks other available
resources. Hardship distributions are subject to the spousal consent
requirements contained in Sections 401(a)(11) and 417 of the Code.
(1) The following are the only financial needs considered
immediate and heavy: deductible medical expenses (within the meaning of Section
213(d) of the Code) of the Employee, the Employee's spouse, children, or
dependents; the purchase (excluding mortgage payments) of a principal residence
for the Employee; payment of tuition for the next quarter or semester of
post-secondary education for the Employee, the Employee's spouse, children or
dependents, or the need to prevent the eviction of the Employee from, or a
foreclosure on the mortgage of, the Employee's principal residence.
(2) A distribution will be considered as necessary to satisfy an
immediate and heavy financial need of the Employee only if:
(a) The Employee has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained by
the Employer;
(b) All plans maintained by the Employer provide that the
Employee's Elective Deferrals (and Employee Contributions) will be suspended for
twelve months after the receipt of the hardship distribution;
(c) The distribution is not in excess of the amount of an
immediate and heavy financial need; and
(d) All plans maintained by the Employer provide that the
Employee may not make Elective Deferrals for the Employee's taxable year
immediately following the taxable year of the hardship distribution in excess of
the applicable limit under Section 402(g) of the Code for such taxable year less
the amount of such Employee's Elective Deferrals for the taxable year of the
hardship distribution.
(3) The determination of the existence of financial hardship, and
the amount required to be distributed to meet the need created by the hardship,
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shall be made by a person or persons designated by the Employer (unless a
different person or persons are given authority elsewhere in the plan to approve
hardship distributions).
(4) All determinations regarding financial hardship shall be made
in accordance with written procedures that are established by the person or
persons described in Section 11.6(C)(3) above, and applied in a uniform and
nondiscriminatory manner. Such written procedures shall specify the
requirements for requesting and receiving distributions on account of hardship,
including what forms must be submitted and to whom. All determinations
regarding financial hardship must be made in accordance with objective criteria
set forth in Section 7.2(a) through (c) of the CODA adoption agreement. Such
determinations must also comply with applicable regulations under the Code.
(5) Processing of applications and distributions of amounts under
this Section, on account of a bona fide financial hardship, must be made as soon
as administratively feasible.
(6) If this Plan document provides for distributions on account
of hardship, but does not comply with the requirements for hardship as stated in
this Section 11.6(C), and as otherwise provided in applicable regulations under
the Code, then Elective Deferrals may be distributed on account of hardship only
in accordance with this Section 11.6(C).
11.7 MATCHING CONTRIBUTIONS
(A) If elected by the Employer in the CODA adoption agreement, the
Employer will make Matching Contributions to the Plan. The amount of such
Matching Contributions shall be calculated by reference to the Participant's
Elective Deferrals as specified by the Employer in the Adoption Agreement.
(B) Separate Account. A separate account shall be maintained for that
portion of a Participant's accrued benefit that is attributable to Matching
Contributions. Such separate account shall be credited with the applicable
contributions, earnings and losses, distributions, and other adjustments.
(C) Vesting. Matching Contributions will be vested in accordance with
the Employer's election in Section 13.2 of the CODA adoption agreement. In any
event, Matching Contributions shall be fully vested at Normal Retirement Age,
upon the complete or partial termination of the Profit Sharing Plan, or upon the
complete discontinuance of Employer contributions.
(D) Forfeitures. Forfeitures of Matching Contributions other than
Excess Aggregate Contributions shall be made in accordance with Section 4.2 of
the Plan.
(E) Qualified Matching Contributions. If elected by the Employer in
Section 12 of the CODA adoption agreement, the Employer will make Qualified
Matching Contributions to the plan. The amount of such Qualified Matching
Contributions shall be calculated by reference to the Participant's Elective
Deferrals as specified in the CODA adoption agreement.
11.8 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING
CONTRIBUTIONS
(A) The Average Contribution Percentage ("ACP") for Participants who
are Highly Compensated Employees for each Plan year and the ACP for Participants
who are Non-highly Compensated Employees for the same Plan Year must satisfy one
of the following tests:
Page 68
<PAGE>
(1) The ACP for Participants who are Highly Compensated Employees
for each Plan Year shall not exceed the ACP for Participants who are Non-highly
Compensated Employees for the same Plan Year multiplied by 1.25; or
(2) The ACP for Participants who are Highly Compensated Employees
for the Plan Year shall not exceed the ACP for Participants who are Non-highly
Compensated Employees for the same Plan Year multiplied by two (2), provided
that the ACP for Participants who are Highly Compensated Employees does not
exceed the ACP for Participants who are Non-highly Compensated Employees by more
than two (2) percentage points.
(B) Definitions:
(1) "Aggregate Limit" shall mean the sum of:
(a) 125 percent of the greater of the ADP of the Non-highly
Compensated Employees for the Plan Year or the ACP of Non-highly Compensated
Employees under the plan subject to Code Section 401(m) for the Plan Year
beginning with or within the Plan Year of the CODA and
(b) The lesser of 200% or two plus the lesser of such ADP or
ACP.
(2) "Average Contribution Percentage" shall mean the average of
the Contribution Percentages of the Eligible Participants in a group.
(3) "Contribution Percentage" shall mean the ratio (expressed as
a percentage) of the Participant's Contribution Percentage Amounts to the
Participant's Compensation for the Plan Year (whether or not the Employee was a
Participant for the entire Plan Year).
(4) "Contribution Percentage Amounts" shall mean the sum of the
Employee Contributions. Matching Contributions, and Qualified Matching
Contributions (to the extent not taken into account for purposes of the ADP
test) made under the plan on behalf of the Participant for the Plan Year. Such
Contribution Percentage Amounts shall include forfeitures of Excess Aggregate
Contributions or Matching Contributions allocated to the Participant's account
which shall be taken into account in the year in which such forfeiture is
allocated. If so elected in the adoption agreement the Employer may include
Qualified Non-elective Contributions in the Contribution Percentage Amounts.
The employer also may elect to use Elective Deferrals in the Contribution
Percentage Amounts so long as the ADP test is met before the Elective Deferrals
are used in the ACP test and continues to be met following the exclusion of
those Elective Deferrals that are used to meet the ACP test.
(5) "Eligible Participant" shall mean any Employee who is
eligible to make an Employee Contribution, or an Elective Deferral (if the
employer takes such contributions into account in the calculation of the
Contribution Percentage), or to receive a Matching Contribution (including
forfeitures) or a Qualified Matching Contribution. If an Employee Contribution
is required as a condition of participation in the Plan, any Employee who would
be a Participant in the Plan if such Employee made such a contribution shall be
treated as an Eligible Participant on behalf of whom no Employee Contributions
are made.
(6) "Employee Contribution" shall mean any contribution made to
the Plan by or on behalf of a Participant that is included in the Participant's
gross income in the year in which made and that is maintained under a separate
account to which earnings and losses are allocated.
(7) "Matching Contribution" shall mean an Employer contribution
made to this or any other defined contribution plan on behalf of a Participant
on
Page 69
<PAGE>
account of an Employee Contribution made by such Participant, or on account of a
Participant's Elective Deferral, under a plan maintained by the Employer.
(C) Special Rules:
(1) Multiple Use: If one or more Highly Compensated Employees
participate in both a CODA and a plan subject to the ACP test maintained by the
Employer and the sum of the ADP and ACP of those Highly Compensated Employees
subject to either or both tests exceeds the Aggregate limit, then the ACP of
those Highly Compensated Employees who also participate in a CODA will be
reduced (beginning with such Highly Compensated Employee whose ACP is the
highest) so that the limit is not exceeded. The amount by which each Highly
Compensated Employee's Contribution Percentage Amounts is reduced shall be
treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly
Compensated Employees are determined after any corrections required to meet the
ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the
Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP
of the Non-highly Compensated Employees.
(2) For purposes of this Section, the Contribution Percentage for
any Participant who is a Highly Compensated Employee and who is eligible to have
Contribution Percentage Amounts allocated to his account under two or more plans
described in Section 401(a) of the Code, or arrangements described in Section
401(k) of the Code that are maintained by the Employer, shall be determined as
if the total of such Contribution Percentage Amounts was made under such plan.
If a Highly Compensated Employee participates in two or more cash or deferred
arrangements that have different plan years, all cash or deferred arrangements
ending with or within the same calendar year shall be treated as a single
arrangement.
(3) In the event that that Plan satisfies the requirements of
Section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or
more other plans, or if one or more other plans satisfy the requirements of such
Sections of the Code only if aggregated with this Plan, then this Section shall
be applied by determining the Contribution Percentage of Employees as if all
such plans were a single plan. For plan years beginning after December 31,
1989, plans may be aggregated in order to satisfy Section 401(m) of the Code
only if they have the same Plan Year.
(4) For purposes of determining the Contribution Percentage of a
Participant who is a five-percent owner or one of the ten most highly-paid
Highly Compensated Employees, the Contribution Percentage Amounts and
Compensation of such Participant shall include the Contribution Percentage
Amounts and Compensation for the Plan Year of Family Members (as defined in
Section 414(g)(6) of the Code). Family Members, with respect to Highly
Compensated Employees, shall be disregarded as separate Employees in determining
the Contribution Percentage both for Participants who are non-highly Compensated
Employees and for Participants who are Highly Compensated Employees.
(5) For purposes of determining the Contribution Percentage test,
Employee Contributions are considered to have been made in the Plan Year in
which contributed to the Trust. Matching Contributions and Qualified
Non-elective Contributions will be considered made for a Plan Year if made no
later than the end of the twelve-month period beginning on the day after the
close of the Plan Year.
(6) The Employer shall maintain records sufficient to demonstrate
satisfaction of the ACP test and the amount of Qualified Non-elective
Contributions or Qualified Matching Contributions, or both, used in such test.
(7) The determination and treatment of the Contribution
Percentage of any Participant shall satisfy such other requirements as may be
prescribed by the Secretary of the Treasury.
Page 70
<PAGE>
(D) Distribution of Excess Aggregate Contributions
(1) Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus any income and minus any loss allocable thereto,
shall be forfeited, if forfeitable, or if not forfeitable, distributed no later
than the last day of each Plan year to Participants to whose accounts such
Excess Aggregate Contributions were allocated for the preceding Plan Year.
Excess Aggregate Contributions shall be allocated to Participants who are
subject to the Family Member aggregation rules of Section 414(q)(6) of the Code
in the manner prescribed by the regulations. If such Excess Aggregate
Contributions are distributed more than 2 1/2 after the last day of the Plan
Year in which such excess amounts arose, a ten (10) percent excise tax will be
imposed on the Employer maintaining the Plan with respect to those amounts.
Excess Aggregate Contributions shall be treated as Annual Additions under the
Plan.
(2) Determination of Income or Loss: Excess Aggregate
Contributions shall be adjusted for any income or loss up to the date of
distribution. The income or loss allocable to Excess Aggregate Contributions is
the sum of:
(a) Income or loss allocable to the Participant's Employee
Contribution account, Matching Contribution account (if any, and if all amounts
therein are not used in the ADP test) and, if applicable, Qualified Non-elective
Contribution account and Elective Deferral account for the Plan Year multiplied
by a fraction, the numerator of which is such Participant's Excess Aggregate
Contributions for the year and the denominator is the Participant's account
balance(s) attributable to Contribution Percentage Amounts without regard to any
income or loss occurring during such Plan Year; and
(b) Ten Percent of the amount determined under (a)
multiplied by the number of whole calendar months between the end of the Plan
Year and the date of distribution, counting the month of distribution if
distribution occurs after the 15th of such month.
(3) Forfeitures of Excess Aggregate Contributions: Forfeitures
of Excess Aggregate Contributions may either be reallocated to the accounts of
Non-highly Compensated Employees or applied to reduce Employer contributions, as
elected by the Employer in Section 17 of the CODA Adoption Agreement.
(4) Accounting for Excess Aggregate Contributions: Excess
Aggregate Contributions shall be forfeited, if forfeitable or distributed on a
pro-rata basis from the Participant's Employee Contribution account, Matching
Contribution account, Qualified Matching Contribution account (and, if
applicable, the Participant's Qualified Non-elective Contribution account or
Elective Deferral account, or both).
(E) "Excess Aggregate Contributions" shall mean, with respect to any
Plan Year, the excess of:
(1) The aggregate Contribution Percentage Amounts taken into
account in computing the numerator of the Contribution Percentage actually made
on behalf of Highly Compensated Employees for such Plan Year, over
(2) The maximum Contribution Percentage Amounts permitted by the
ACP test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages beginning with
the highest of such percentages).
Such determination shall be made after first determining Excess
Elective Deferrals pursuant to Section 11.4(E) and then determining Excess
Contributions pursuant to Section 11.4(H).
Page 71
<PAGE>
11.9 PROFITS NOT REQUIRED UNDER THE CODA
(A) If the Employer elects, Employer contributions to the CODA may be
made without regard to profits in accordance with Section 10.1 of the CODA
Adoption Agreement. The Plan shall continue to be designed to qualify as a
profit sharing plan for purposes of Section 401(a), 402, 412, and 417 of the
Code.
11.10 FORFEITURES
The Participant's Accrued Benefit derived from Elective Deferral,
Qualified Non-elective Contributions, Employee Contributions, and Qualified
Matching Contributions is nonforfeitable. Separate accounts for Elective
Deferrals, Qualified Non-elective Contributions, Employee Contributions,
Matching Contributions, and Qualified Matching Contributions will be maintained
for each Participant. Each account will be credited with the applicable
contributions and earnings thereon.
Page 72
<PAGE>
Small-Cap Opportunity Fund--Institutional Class
TOTAL RETURN FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1994
ERV(1/n)
T = [(-----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the
beginning of the period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Period ended May 31, 1994:
ERV = $999.75 p = $1,000 n = 1
999.75(1/1)
T = [(---------) - 1] = (0.03)%
1,000
<PAGE>
Small-Cap Opportunity Fund--Retail Class
TOTAL RETURN FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1994
ERV(1/n)
T = [(-----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the
beginning of the period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Period ended May 31, 1994:
ERV = $955.00 p = $1,000 n = 1
955.00(1/1)
T = [(---------) - 1] = (4.50)%
1,000
<PAGE>
COLORADO TAX-EXEMPT FUND
TAX-EQUIVALENT YIELD FOR THE 30-DAY PERIOD ENDED AUGUST 31, 1991
Tax-Equivalent Yield = 7.76%
Formula:
Tax-Equivalent Yield = (30-day yield) + (1 - Stated Tax
Rate)
30-day yield = 5.60%
Stated Tax Rate = 28% 1991 Federal Tax Bracket
7.76% = 5.60% + (1 - 28%)
Colorado Tax-Equivalent Yield = 8.36%
Formula: 8.36% = 5.60% + (1-33%)
Stated Tax Rate = 5% 1991 Colorado Tax Bracket + 28% = 33%
TOTAL RETURN FOR THE PERIOD JUNE 1, 1991 THROUGH AUGUST 31, 1991
ERV(1/n)
T = [ (----) - 1 ]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning
of the period.
P = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
ERV = $ 1,016.99 p = $1,000 n = 1/4
1,016.99(1/1/4)
T = [ (--------) - 1 ] = 1.70%
1,000
<PAGE>
GROWTH AND INCOME
TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990
ERV 1/n
T = [(----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the
period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Year ended May 31, 1990:
ERV = $1,094.19 p = $1,000 n = 1
1,094.19(1/1)
T = [(------------) - 1] = 9.42
1,000
<PAGE>
BLUE CHIP
TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990
ERV 1/n
T = [(----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the
period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Year ended May 31, 1990:
ERV = $1,067.12 p = $1,000 n = 1
1,067.12(1/1)
T = [(------------) - 1] = 6.71
1,000
<PAGE>
MIDCO GROWTH
TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990
ERV 1/n
T = [(----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the
period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Year ended May 31, 1990:
ERV = $1,101.39 p = $1,000 n = 1
1,101.39(1/1)
T = [(------------) - 1] = 10.14
1,000
<PAGE>
INTERMEDIATE BOND
TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990
ERV 1/n
T = [(----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the
period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Year ended May 31, 1990:
ERV = $1,029.73 p = $1,000 n = 1
1,029.73(1/1)
T = [(------------) - 1] = 2.97
1,000
<PAGE>
INTERMEDIATE-TERM BOND
Schedule for Computation of Performance
Quotations
---------------------------------------
YIELD FOR THE 30-DAY PERIOD ENDED MAY 31, 1990
a-b
Yield = 2 [ ( ------- + 1 )6 - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = net asset value per share on the last day of the period.
For the 30 day period ended May 31, 1990
a = $ 851,058.37
b = $ 53,143.20
c = 10,805,237.196
d = $ 9.91
Yield = 9.110%
<PAGE>
LONG-TERM BOND
TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990
ERV 1/n
T = [(----) - 1]
p
Where: T = average total return for the period.
ERV = ending redeemable value at the end of the period covered by the
computation of a hypothetical $1,000 payment made at the beginning of the
period.
p = hypothetical initial payment of $1,000.
n = period covered by the computation, expressed in terms of years.
Year ended May 31, 1990:
ERV = $1,022.49 p = $1,000 n = 1
1,022.49(1/1)
T = [(------------) - 1] = 2.25
1,000
<PAGE>
LONG-TERM BOND
Schedule for Computation of Performance
Quotations
---------------------------------------
YIELD FOR THE 30-DAY PERIOD ENDED MAY 31, 1990
a-b
Yield = 2 [ ( ------- + 1 )6 - 1]
cd
Where: a = dividends and interest earned during the period.
b = expenses accrued for the period (net of reimbursements).
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends.
d = net asset value per share on the last day of the period.
For the 30 day period ended May 31, 1990
a = $ 139,952.04
b = $ 12,064.48
c = 1,779,472.442
d = $ 10.11
Yield = 8.683%
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> BLUE CHIP FUND
<SERIES>
<NUMBER> 5
<NAME> BLUE CHIP FUND (MODERN VALUE)
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 47970
<INVESTMENTS-AT-VALUE> 64866
<RECEIVABLES> 3496
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 9
<TOTAL-ASSETS> 68371
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 85
<TOTAL-LIABILITIES> 85
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46690
<SHARES-COMMON-STOCK> 3921
<SHARES-COMMON-PRIOR> 3574
<ACCUMULATED-NII-CURRENT> 184
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4516
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16896
<NET-ASSETS> 68286
<DIVIDEND-INCOME> 1477
<INTEREST-INCOME> 134
<OTHER-INCOME> 0
<EXPENSES-NET> (677)
<NET-INVESTMENT-INCOME> 934
<REALIZED-GAINS-CURRENT> 8541
<APPREC-INCREASE-CURRENT> 6773
<NET-CHANGE-FROM-OPS> 16248
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (977)
<DISTRIBUTIONS-OF-GAINS> (4827)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1073
<NUMBER-OF-SHARES-REDEEMED> (1060)
<SHARES-REINVESTED> 334
<NET-CHANGE-IN-ASSETS> 15740
<ACCUMULATED-NII-PRIOR> 227
<ACCUMULATED-GAINS-PRIOR> 801
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 399
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 765
<AVERAGE-NET-ASSETS> 61407
<PER-SHARE-NAV-BEGIN> 14.70
<PER-SHARE-NII> .25
<PER-SHARE-GAIN-APPREC> 4.03
<PER-SHARE-DIVIDEND> (.27)
<PER-SHARE-DISTRIBUTIONS> (1.30)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 17.41
<EXPENSE-RATIO> 1.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> GROWTH & INCOME FUND (FORMERLY, EQUITY INCOME FUND)
<SERIES>
<NUMBER> 6
<NAME> GROWTH & INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 19987
<INVESTMENTS-AT-VALUE> 25124
<RECEIVABLES> 422
<ASSETS-OTHER> 6
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25552
<PAYABLE-FOR-SECURITIES> 108
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 165
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 19257
<SHARES-COMMON-STOCK> 2060
<SHARES-COMMON-PRIOR> 2942
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (144)
<ACCUMULATED-NET-GAINS> 1137
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5137
<NET-ASSETS> 25387
<DIVIDEND-INCOME> 650
<INTEREST-INCOME> 61
<OTHER-INCOME> 0
<EXPENSES-NET> 341
<NET-INVESTMENT-INCOME> 370
<REALIZED-GAINS-CURRENT> 3441
<APPREC-INCREASE-CURRENT> 2696
<NET-CHANGE-FROM-OPS> 6507
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (540)
<DISTRIBUTIONS-OF-GAINS> (1458)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 847
<NUMBER-OF-SHARES-REDEEMED> (1511)
<SHARES-REINVESTED> 151
<NET-CHANGE-IN-ASSETS> (5513)
<ACCUMULATED-NII-PRIOR> 26
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (845)
<GROSS-ADVISORY-FEES> 179
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 419
<AVERAGE-NET-ASSETS> 26249
<PER-SHARE-NAV-BEGIN> 10.50
<PER-SHARE-NII> .15
<PER-SHARE-GAIN-APPREC> 2.57
<PER-SHARE-DIVIDEND> (.24)
<PER-SHARE-DISTRIBUTIONS> (.66)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.31
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> LONG TERM BOND FUND
<SERIES>
<NUMBER> 8
<NAME> LONG TERM BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
<INVESTMENTS-AT-COST> 23593
<INVESTMENTS-AT-VALUE> 23721
<RECEIVABLES> 1382
<ASSETS-OTHER> 7
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 25110
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 40
<TOTAL-LIABILITIES> 40
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 24577
<SHARES-COMMON-STOCK> 2615
<SHARES-COMMON-PRIOR> 3389
<ACCUMULATED-NII-CURRENT> 29
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 337
<ACCUM-APPREC-OR-DEPREC> 127
<NET-ASSETS> 25070
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2096
<OTHER-INCOME> 0
<EXPENSES-NET> (272)
<NET-INVESTMENT-INCOME> 1825
<REALIZED-GAINS-CURRENT> 811
<APPREC-INCREASE-CURRENT> (1392)
<NET-CHANGE-FROM-OPS> 2451
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (1852)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 629
<NUMBER-OF-SHARES-REDEEMED> (1571)
<SHARES-REINVESTED> 168
<NET-CHANGE-IN-ASSETS> 25070
<ACCUMULATED-NII-PRIOR> 56
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (474)
<GROSS-ADVISORY-FEES> 135
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 322
<AVERAGE-NET-ASSETS> 30056
<PER-SHARE-NAV-BEGIN> 9.87
<PER-SHARE-NII> .61
<PER-SHARE-GAIN-APPREC> (.27)
<PER-SHARE-DIVIDEND> (.62)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
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<EXPENSE-RATIO> 1.07
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> COLORADO TAX EXEMPT FUND
<SERIES>
<NUMBER> 19
<NAME> COLORADO TAX EXEMPT FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13764
<SHARES-COMMON-STOCK> 1312
<SHARES-COMMON-PRIOR> 1008
<ACCUMULATED-NII-CURRENT> 12
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (10)
<ACCUM-APPREC-OR-DEPREC> 156
<NET-ASSETS> 13922
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> (50)
<NET-INVESTMENT-INCOME> 554
<REALIZED-GAINS-CURRENT> (7)
<APPREC-INCREASE-CURRENT> (140)
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (540)
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<NUMBER-OF-SHARES-SOLD> 334
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<SHARES-REINVESTED> 32
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<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> (2)
<OVERDIST-NET-GAINS-PRIOR> (3)
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<GROSS-EXPENSE> 163
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<PER-SHARE-NAV-BEGIN> 10.70
<PER-SHARE-NII> .52
<PER-SHARE-GAIN-APPREC> (.10)
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<PER-SHARE-NAV-END> 10.61
<EXPENSE-RATIO> 1.43
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> SMALL CAP OPPORTUNITY FUND
<SERIES>
<NUMBER> 24
<NAME> SMALL CAP OPPORTUNITY FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
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<INVESTMENTS-AT-VALUE> 24420
<RECEIVABLES> 31
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<TOTAL-ASSETS> 24631
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<TOTAL-LIABILITIES> 680
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18314
<SHARES-COMMON-STOCK> 1122
<SHARES-COMMON-PRIOR> 667
<ACCUMULATED-NII-CURRENT> 1
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 489
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5147
<NET-ASSETS> 23951
<DIVIDEND-INCOME> 205
<INTEREST-INCOME> 62
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<EXPENSES-NET> (226)
<NET-INVESTMENT-INCOME> 41
<REALIZED-GAINS-CURRENT> 1021
<APPREC-INCREASE-CURRENT> 4454
<NET-CHANGE-FROM-OPS> 5516
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (49)
<DISTRIBUTIONS-OF-GAINS> (421)
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<NUMBER-OF-SHARES-SOLD> 557
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<SHARES-REINVESTED> 24
<NET-CHANGE-IN-ASSETS> 13314
<ACCUMULATED-NII-PRIOR> 9
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<OVERDIST-NET-GAINS-PRIOR> (111)
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<GROSS-EXPENSE> 384
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<PER-SHARE-NAV-BEGIN> 15.95
<PER-SHARE-NII> .04
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<PER-SHARE-DIVIDEND> (.06)
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<PER-SHARE-NAV-END> 21.35
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> MIDCO GROWTH FUND
<SERIES>
<NUMBER> 2
<NAME> MIDCO GROWTH FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
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<TOTAL-ASSETS> 660385
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 400528
<SHARES-COMMON-STOCK> 28664
<SHARES-COMMON-PRIOR> 24963
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (3131)
<ACCUMULATED-NET-GAINS> 34853
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 224240
<NET-ASSETS> 656490
<DIVIDEND-INCOME> 1931
<INTEREST-INCOME> 1736
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<EXPENSES-NET> (5931)
<NET-INVESTMENT-INCOME> (2264)
<REALIZED-GAINS-CURRENT> 53406
<APPREC-INCREASE-CURRENT> 126272
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<DISTRIBUTIONS-OF-GAINS> (19219)
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<NUMBER-OF-SHARES-SOLD> 8692
<NUMBER-OF-SHARES-REDEEMED> (4438)
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<OVERDISTRIB-NII-PRIOR> (867)
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<GROSS-EXPENSE> 6063
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<PER-SHARE-NAV-BEGIN> 17.12
<PER-SHARE-NII> (.08)
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<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (.72)
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<PER-SHARE-NAV-END> 22.90
<EXPENSE-RATIO> 1.08
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> INTERM. TERM BOND FUND
<SERIES>
<NUMBER> 7
<NAME> INTERM. TERM BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-START> JUN-01-1995
<PERIOD-END> MAY-31-1996
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<ACCUM-APPREC-OR-DEPREC> (931)
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<PER-SHARE-NII> .60
<PER-SHARE-GAIN-APPREC> (.17)
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<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> GROWTH & INCOME FUND (FORMERLY, EQUITY INCOME FUND)
<SERIES>
<NUMBER> 062
<NAME> GROWTH & INCOME FUND - RETAIL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-31-1996
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 25553
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<ACCUMULATED-NET-GAINS> 1547
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 2112
<NET-ASSETS> 29212
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<NUMBER-OF-SHARES-REDEEMED> (374)
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<NET-CHANGE-IN-ASSETS> (1688)
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<OVERDIST-NET-GAINS-PRIOR> (845)
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<PER-SHARE-NAV-BEGIN> 10.51
<PER-SHARE-NII> .05
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<PER-SHARE-DIVIDEND> (.06)
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<EXPENSE-RATIO> 1.61
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> MIDCO GROWTH FUND
<SERIES>
<NUMBER> 022
<NAME> MIDCO GROWTH FUND - RETAIL CLASS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-31-1996
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<PER-SHARE-NII> (.01)
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000357204
<NAME> SMALL CAP OPPORTUNITY FUND
<SERIES>
<NUMBER> 242
<NAME> SMALL CAP OPPORTUNITY FUND - RETAIL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-31-1996
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<RESTATED>
<CIK> 0000357204
<NAME> INTERMEDIATE TERM BOND FUND
<SERIES>
<NUMBER> 072
<NAME> INTERMEDIATE TERM BOND FUND - RETAIL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> MAY-31-1996
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</TABLE>
