<PAGE>
DENVER INVESTMENT ADVISORS
WESTCORE FUNDS
370 SEVENTEENTH STREET
SUITE 2700
DENVER, COLORADO 80202
1-800-392-CORE (2673)
PROSPECTUS FOR
WESTCORE MIDCO GROWTH FUND
This Prospectus describes one mutual fund (the "Fund") offered by
Westcore Trust ("Westcore" or the "Trust"). The Fund is a no-load
investment. This permits you to purchase and sell shares of the 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 for the 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
Fund's 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 the 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.
October 1, 1996 as revised August 1, 1997
<PAGE>
TABLE OF CONTENTS
FUND INFORMATION
Fund Highlights . . . . . . . . . . . . . . . . . . . . . .
Expense Information . . . . . . . . . . . . . . . . . . . .
Financial Highlights. . . . . . . . . . . . . . . . . . . .
Fund Specifics. . . . . . . . . . . . . . . . . . . . . . .
Investment Objectives and Policies . . . . . . . . . .
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 Fund. . . . . . . . . . . . . . . . . . .
Inquiries . . . . . . . . . . . . . . . . . . . . . . . . .
SUPPLEMENTAL INFORMATION
Information on Investment Policies
and Additional Risk Factors . . . . . . . . . . . . . . .
--------------------
APPENDIX
Rating Categories . . . . . . . . . . . . . . . . . . . . . A-1
i
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FUND INFORMATION
FUND HIGHLIGHTS
This section provides you with a brief overview of the Westcore
MIDCO Growth Fund and summarizes the Fund's investment objective. A detailed
discussion of its investment objective, policies and risks begins on page __
and complete information on how to purchase, exchange and redeem Fund shares
begins on page __.
WESTCORE MIDCO GROWTH FUND -- seeks to maximize long-term capital
appreciation by investing primarily in medium-sized growth companies.
EXPENSE 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.
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WESTCORE
MIDCO GROWTH FUND
- ------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES None
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ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
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Management Fees 0.65%
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12b-1 Fees None
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All Other Expenses 0.50%
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TOTAL OPERATING EXPENSES 1.15%
(after fee waivers and expense reimbursements)
- ------------------------------------------------------------------------------
EXAMPLE: ASSUME YOU INVEST $1,000, THE ANNUAL RETURN ON THE FUND IS 5%, AND
THE 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 FUND.
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One Year $ 12
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Three Years 37
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Five Years 64
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Ten Years 140
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<PAGE>
The table and example above show you the various costs and
expenses you will bear directly or indirectly as an investor in the Fund.
SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying, exchanging
or selling shares of the Fund. The no-load Westcore MIDCO Growth Fund does 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 the Fund's assets and include fees
for portfolio management, maintenance of shareholder accounts, general Fund
administration, shareholder servicing, accounting and other services.
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 Fund's operating expenses, see "How to Invest" and "Management of the
Fund" in this Prospectus and the financial statements and related notes
included in the Statement of Additional Information.
-2-
<PAGE>
FINANCIAL HIGHLIGHTS
WESTCORE MIDCO GROWTH FUND
(FOR A FUND SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED.)
The table below provides supplementary information to the Fund's
financial statements contained in the Statement of Additional Information and
sets forth certain information concerning the historic investment results of
Fund shares. The financial highlights are based on the financial statements
of the Fund, which have been audited by Deloitte & Touche LLP, the Trust's
independent auditors, except that the information in the Financial Highlights
(except for total return) for the period ended May 31, 1987 was audited by
other auditors. You should read the table together with the financial
statements and related notes included in the Statement of Additional
Information. Further information about the performance of the Fund 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 Westcore Trust at 1-800-392-CORE (2673).
<TABLE>
For the Year Ended May 31,
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1996 1995 1994 1993 1992 1991 1990
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Net asset value--beginning of period $17.12 $16.09 $15.79 $14.38 $14.00 $11.57 $12.18
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.08) 0.00 0.00 0.04 0.06 0.07 0.24
Net realized and unrealized gain (loss)
on investments 6.58 1.56 1.34 2.48 1.84 3.16 1.32
- -----------------------------------------------------------------------------------------------------------------------
Total income (loss) from investment
operations 6.50 1.56 1.34 2.52 1.90 3.23 1.56
- -----------------------------------------------------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income 0.00 0.00 0.00 0.00 (0.32) (0.08) (0.24)
Distributions from net realized gain
on investments (0.72) (0.53) (1.03) (1.11) (1.20) (0.72) (1.93)
Return of Capital 0.00 0.00 (0.01) 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)
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Net asset value--end of period $22.90 $17.12 $16.09 $15.79 $14.38 $14.00 $11.57
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Total Return 38.62% 10.05% 8.37% 18.04% 14.09% 30.44% 15.33%
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RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $656,490 $401,760 $335,453 $231,595 $180,681 $131,420 $85,209
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Ratio of expenses to average net assets 1.08% 0.94% 0.84% 0.83% 0.80% 0.78% 0.83%
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets (0.42%) (0.03%) (0.09%) 0.04% 0.12% 0.58% 2.05%
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Ratio of expenses to average net
assets without fee waivers 1.10% 0.96% 0.87% 0.85% 0.85% 0.88% 0.88%
- -----------------------------------------------------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets
without fee waivers (0.44%) (0.05%) (0.12%) 0.02% 0.07% 0.48% 2.00%
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Portfolio turnover rate(2) 62.83% 50.19% 52.05% 56.23% 48.17% 75.43% 86.62%
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<CAPTION>
For the Year Ended May 31,
-----------------------------
1989 1988 1987(1)
-----------------------------
Net asset value--beginning of period $9.82 $12.20 $10.00
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) 0.19 0.03 0.20
Net realized and unrealized gain (loss)
on investments 2.52 (1.47) 2.00
- -----------------------------------------------------------------------------
Total income (loss) from investment
operations 2.71 (1.44) 2.20
- -----------------------------------------------------------------------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.10) (0.28) 0.00
Distributions from net realized gain
on investments (0.25) (0.66) 0.00
Return of Capital 0.00 0.00 0.00
- -----------------------------------------------------------------------------
Total dividends, distributions and
return of capital to shareholders (0.35) (0.94) 0.00
- -----------------------------------------------------------------------------
Net asset value--end of period $12.18 $9.82 $12.20
- -----------------------------------------------------------------------------
Total Return 28.46% (13.09%) 26.53%(3)(4)
- -----------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $81,948 $557 $439
- -----------------------------------------------------------------------------
Ratio of expenses to average net assets 0.80% 1.33% 0.00%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income (loss)
to average net assets 1.21% 0.02% 2.52%(3)
- -----------------------------------------------------------------------------
Ratio of expenses to average net
assets without fee waivers 0.85% 2.20% 2.20%(3)
- -----------------------------------------------------------------------------
Ratio of net investment income
(loss) to average net assets
without fee waivers 1.16% (0.85%) 0.32%(3)
- -----------------------------------------------------------------------------
Portfolio turnover rate(2) 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.
-3-
<PAGE>
FUND SPECIFICS
THIS SECTION LOOKS MORE CLOSELY AT THE FUND'S INVESTMENT OBJECTIVE, POLICIES
AND SECURITIES IN WHICH IT INVESTS. YOU SHOULD CAREFULLY CONSIDER YOUR OWN
INVESTMENT GOALS, TIME HORIZON AND RISK TOLERANCE BEFORE INVESTING IN THE
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 FUND MAY INVEST
AND THEIR ASSOCIATED RISKS. THERE CAN BE NO ASSURANCE THAT THE FUND WILL
ACHIEVE ITS INVESTMENT OBJECTIVE.
INVESTMENT OBJECTIVE AND POLICIES
Upon notice to shareholders, the 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
the Fund remains a suitable investment for you.
The Westcore MIDCO Growth Fund is designed for long-term investors
who can tolerate the risks associated with investments in common stocks. It
is 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 MIDCO Growth Fund.
WHAT IS THE 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. Medium-sized companies may also have better
opportunities for growth by gaining market share. In the Investment Adviser's
view, medium-sized company securities may tend to be less volatile than the
securities of smaller companies, while providing higher returns than larger
company stocks.
IN WHAT TYPES OF SECURITIES DOES THE FUND 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.
WHAT ARE THE OTHER INVESTMENT POLICIES OF THE FUND?
The Fund may invest in options and futures, preferred stocks,
warrants and foreign currency transactions. Additionally, the Fund may
invest up to 15% of its total assets in
-4-
<PAGE>
securities convertible into common stock rated below investment grade (i.e.,
lower-rated securities) or unrated securities determined to be of comparable
quality. The Fund may also invest, directly or indirectly, up to 25% of its
total assets in securities issued by foreign companies.
The 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,
the Fund may borrow money from banks and may enter into reverse repurchase
agreements for temporary purposes on a limited basis. The 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
Fund may invest, see "Supplemental Information--Information on Investment
Policies and Additional Risk Factors" beginning on page __.
IS THE FUND DIVERSIFIED AND WHAT DOES THAT MEAN?
The Fund is diversified. Diversification is a means of reducing
risk by investing the 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.
HOW DOES THE FUND TRY TO REDUCE RISK?
- Diversification of the Fund's assets reduces the effect of
any single holding on its overall portfolio value.
- The Fund may adjust the securities it holds to include
issues which are believed to involve less risk.
- The Fund may use futures, options and similar instruments to
attempt to hedge its portfolio against disadvantageous
movements in securities prices and interest rates. The Fund
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 the 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.
-5-
<PAGE>
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 Fund.
IN GENERAL
FUND SPECIFICS
WHAT POTENTIAL RISKS AND REWARDS MAY I EXPERIENCE IF I INVEST IN THE FUND?
An investment in the Fund presents the potential rewards and risks
common to securities investments. The Fund invests 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 market value of debt obligations held by the Fund will also
fluctuate, normally rising when interest rates fall and falling when interest
rates rise. The value of some debt obligations may be more volatile than
other types of instruments.
The Fund 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.
The 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" on page __.
The Fund may lend its 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 Fund's investment adviser, Denver Investment Advisors will
evaluate the rewards and risks presented by all securities purchased by the
Fund and will determine how they will be used in furtherance of the investment
objective of the Fund. It is possible, however, that Denver Investment
Advisors' evaluations will prove to be inaccurate and, even when accurate, it
is possible that the Fund will incur losses.
FUNDAMENTAL INVESTMENT LIMITATIONS
WHAT ARE FUNDAMENTAL INVESTMENT LIMITATIONS?
Fundamental investment limitations are those investment
limitations that the Fund may not change without the approval of the holders
of a majority of the Fund's outstanding shares. Some are summarized in the
-6-
<PAGE>
table on the facing page (a complete list is set forth in the Statement of
Additional Information).
============================================================================
The Westcore MIDCO Growth Fund may not:
- ----------------------------------------------------------------------------
- Purchase securities if more than 5% of the 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 the Fund may purchase and hold debt
instruments and enter into repurchase agreements in accordance
with its investment objective and policies. The Fund may also
lend portfolio securities in an amount not exceeding 30% of its
total assets.
============================================================================
The Fund will not 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 the 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.
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.
PLEASE CALL THE TRUST AT 1-800-392-CORE (2673) IF YOU HAVE ANY
QUESTIONS OR NEED ANY INFORMATION.
ALPS Mutual Fund Services, Inc. is the distributor for the Trust
and has its principal office at 370 Seventeenth Street, Suite 2700, Denver,
Colorado 80202.
HOW TO INVEST
You may open an account and purchase shares of the Fund 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).
-7-
<PAGE>
HOW TO OPEN AND ADD TO YOUR ACCOUNT
=============================================================================
TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT
- -----------------------------------------------------------------------------
Send a completed Account Send a check or money order
Application and a check payable in U.S. dollars and
or money order payable drawn on a bank located in
in U.S. dollars and drawn the U.S. to Westcore Trust,
BY MAIL on a bank located in the P.O. Box 8319, Boston, MA
U.S. to Westcore Trust, 02266-8319. Specify your
P.O. Box 8319, Boston, MA account number and the name
02266-8319. of the MIDCO Growth Fund.
- -----------------------------------------------------------------------------
Bring your completed Bring your check or money
Account Application and order payable to
a check or money order Westcore/SSB, to Westcore
IN PERSON payable to Westcore/SSB, Trust, 370 Seventeenth
to Westcore Trust, 370 Street, Suite 2700, Denver,
Seventeenth Street, CO 80202.
Suite 2700, Denver, CO
80202.
- -----------------------------------------------------------------------------
Complete the Automatic Complete at any time an
Investment Plan Section Automatic Investment Plan
of your new Account application to have $50 or
AUTOMATICALLY Application ($50 minimum more automatically withdrawn
(FROM YOUR BANK per transaction) and from your bank account
ACCOUNT) return it to Westcore monthly, quarterly, or
Trust, P.O. Box 8319, annually.
Boston, MA 02266-8319.
- -----------------------------------------------------------------------------
Call 1-800-392-CORE Call 1-800-392-CORE
BY WIRE (2673) to receive (2673) to receive
wiring 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 the Fund.
-8-
<PAGE>
HOW TO EXCHANGE FUND SHARES
You may exchange your Fund shares for shares of the other Westcore
Investment Portfolios or the Compass Capital Money Market Portfolio.(1)
Exchanges must be for at least $1,000 in value per transaction. You should
read the Prospectus for the Westcore Investment Portfolio 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.
=============================================================================
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).
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 day of purchase to
allow the purchase to clear.
- -------------------
(1) 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.
-9-
<PAGE>
=============================================================================
HOW TO REDEEM SHARES
- -----------------------------------------------------------------------------
- Call 1-800-392-CORE (2673) and give the account
BY TELEPHONE name, account number, name of Fund and amount of
(AVAILABLE ONLY IF exchange ($1,000 minimum).
YOU CHECKED THE
APPROPRIATE BOX ON THE - If you do not have and would like to add the
ACCOUNT APPLICATION) telephone redemption feature, send a written
request to Westcore Trust, P.O. Box 8319, Boston,
- - NOT AVAILABLE FOR MA 02266-8319. The request must be signed (and
RETIREMENT ACCOUNTS signatures guaranteed) by each account owner.
OR SHARES HELD IN
CERTIFICATE FORM. - The Trust may impose a dollar limit on
telephone redemptions.
- -----------------------------------------------------------------------------
During normal business hours, bring your written
request to
Westcore Trust,
IN PERSON 370 Seventeenth Street,
Suite 2700,
Denver, CO 80202.
- -----------------------------------------------------------------------------
- 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
BY MAIL guarantee is required for any redemption over
$10,000 or any redemption being mailed to any
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.
- -----------------------------------------------------------------------------
- Call 1-800-392-CORE (2673) or write Westcore
Trust, P.O. Box 8319, Boston, MA 02266-8319.
You will need to provide: account name and
BY WIRE number, name of MIDCO Growth Fund; and amount of
(AVAILABLE ONLY IF YOU redemption ($1,000 minimum per transaction if
CHECKED THE APPROPRIATE made by telephone).
BOX ON THE ACCOUNT
APPLICATION) - 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.
- -----------------------------------------------------------------------------
- Request quarterly or monthly withdrawals in
any multiple of $50. Call 1-800-392-CORE (2673)
BY SYSTEMATIC for more information or a form.
WITHDRAWAL
- Participation requires a minimum of $10,000 in
a Fund in order to initiate this Plan.
=============================================================================
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. The Fund's NAV is determined by the Administrators
-10-
<PAGE>
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, purchase
orders will be processed at the NAV next determined after the Service
Organization acting on their behalf receives the purchase order.
The 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.
The 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 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. The Trust
and its 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 Fund by telephone
during periods of unusual market activity. If this happens, you may redeem
your shares by mail as described above.
The Trust 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
-11-
<PAGE>
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 Fund.
Duplicate mailings of Fund materials to shareholders who reside at the
same address may be eliminated.
The Fund will issue share certificates upon written request only.
OTHER INFORMATION
DISTRIBUTIONS AND TAXES
The Fund's income from dividends and interest and any net realized
short-term capital gains are paid to shareholders as income dividends. The
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).
The Fund distributes income dividends and capital gain distributions in
December only.
TAXES
As with any investment, you should consider the tax implications of an
investment in the Fund. The following briefly summarizes some of the
important tax considerations generally affecting the Fund and its
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 Fund 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.
Any capital gain dividend paid by the 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 the 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.
-12-
<PAGE>
You may realize a taxable gain or loss when you redeem, transfer
or exchange shares of the 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 the Fund intends to qualify as a "regulated investment
company" under the Internal Revenue Code (the "Code"), the Fund generally will
not be required to pay federal income taxes on its income and capital gains.
PERFORMANCE REPORTING
This section will help you understand various terms that are
commonly used to describe the 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
the 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.
AGGREGATE TOTAL RETURN -- reflects income and capital
appreciation/depreciation and establishes a total percentage change in the
value of an investment in the Fund over a specified measuring period.
AVERAGE ANNUAL TOTAL RETURN -- represents the average annual
percentage change in the value of an investment in the 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 the 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 the Fund during the period in Fund shares.
Any fees charged by your Service Organization directly to your
account in connection with an investment in the Fund will not be included in
the Fund's calculations of total return.
Performance quotations of the 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 the 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.
-13-
<PAGE>
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES -- The business and affairs of the 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 serves as the
investment adviser to the Fund. 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 Fund, 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 Fund and places
orders for all purchases and sales of the Fund's portfolio securities.
INVESTMENT PERSONNEL -- Todger Anderson, CFA, President of Denver
Investment Advisors, has been primarily responsible for the day-to-day
management of the 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.
BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS
The 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 the Fund's average daily net assets:
- --------------------------------------------------------------------------------
EFFECTIVE ADVISORY FEES
CONTRACTUAL ADVISORY FOR THE YEAR ENDED
FEE SCHEDULE FEES(%) MAY 31, 1996(%)
- --------------------------------------------------------------------------------
Westcore MIDCO Growth Fund .65% .65%
- --------------------------------------------------------------------------------
The Investment Adviser may from time to time voluntarily waive all
or any portion of these fees and reimburse expenses of the 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 Fund (the "Administrators"). As Administrators, they have agreed to:
assist in maintaining the Fund's office; furnish the Fund 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 the Fund's
expense accruals; monitor compliance with the Fund's investment policies and
limitations; and generally assist in the Fund's operations. The
Administrators are entitled to receive a fee from the Fund for administrative
services, computed daily and payable monthly, at the aggregate annual rate of
.30% of the Fund's average daily net assets. The Administrators may
voluntarily waive all or any portion of their administration fees from time to
time.
-14-
<PAGE>
Pursuant to a separate agreement, ALPS has agreed to maintain the
financial accounts and records of the Fund and to compute the net asset value
and certain other financial information relating to the 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 the Fund
through omnibus accounts ("Beneficial Shares"). The amount reimbursed with
respect to the 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 the Fund without taking into account such 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 the Fund or its shareholders.
TRANSFER AGENT
- - State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02015,
provides the Fund 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 Fund. 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 the Fund will vote separately 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, therefore, under the 1940 Act, may be deemed to be a
controlling person of the Trust.
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
Fund.
-15-
<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 THE FUND'S INVESTMENT OBJECTIVE.
U.S. GOVERNMENT OBLIGATIONS
The 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
The 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.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS
In a repurchase agreement, the 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.
The Fund may borrow money for temporary purposes by entering into
reverse repurchase agreements. Under these agreements, the 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
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
-16-
<PAGE>
impact that legislation restricting lower-rated securities may have on their
market.
SECURITIES LENDING
The Fund may lend its 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 the Fund's outstanding loans exceeds 30% of its total assets.
RESTRICTED SECURITIES
The Fund will not 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 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 Fund during periods that
qualified institutional buyers become uninterested in purchasing these
restricted securities.
CONVERTIBLE SECURITIES
The Fund 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 Fund uses 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.
OPTIONS AND FUTURES
The Fund 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
the Fund maintains in a segregated account with its custodian cash or U.S.
Governmental 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 the Fund owns or has the 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 the Fund will not exceed 5%,
and options written by the Fund will not exceed 25%, of its net assets. All
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<PAGE>
options will be listed on a national securities exchange and issued by the
Options Clearing Corporation.
The Fund may also invest to a limited extent in futures contracts
and options on futures contracts in order to reduce its exposure to movements
of security prices pending investment, for hedging purposes or to maintain
liquidity. Futures contracts obligate the Fund, at maturity, to take or make
delivery of certain securities or the cash value of a contract or securities
index. The 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, the Fund's commodities transactions must constitute bona fide
hedging or other permissible transactions. In addition, the 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, the 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) the 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
Because the Fund may buy and sell securities and receive amounts
denominated in currencies other than the U.S. dollar, it may enter into
currency exchange transactions from time to time. The 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 the 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.
The Fund may maintain "short" positions in forward foreign
currency exchange transactions whereby the Fund would agree to exchange
currency that it 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 the 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.
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<PAGE>
WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS
The 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 the 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 delivery occurs. Because the 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 Fund does not intend
to engage in when-issued purchases and forward commitments for speculative
purposes.
SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES
The Fund may invest in securities issued by other investment
companies subject to the requirements of applicable securities laws. When the
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
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.
PORTFOLIO TURNOVER
The 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.
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<PAGE>
RISK FACTORS ASSOCIATED WITH DERIVATIVE INSTRUMENTS
The 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 currency contracts and
structured debt obligations.
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 the 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
<TABLE>
RATING CATEGORIES
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
BOND
RATING EXPLANATION
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
STANDARD & POOR'S AAA Highest rating; extremely strong capacity to pay
RATINGS GROUP, DIVISION 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 the issuer's
CCC, CC, capacity to meeting required interest and principal
C payments. BB-lowest degree of speculation; C-the
highest degree of speculation. Quality and protective
characteristics outweighed by larger uncertainties or
major risk exposure to adverse conditions.
-------------------------------------------------------------------
D In default.
- ----------------------------------------------------------------------------------------------
MOODY'S INVESTORS Aaa Highest quality, smallest degree of investment risk.
SERVICE, INC.
-------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
BOND
RATING EXPLANATION
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
MOODY'S INVESTORS Caa Poor standing, may be in default; elements of danger
SERVICE, INC. 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.
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>
A-2
