<PAGE> 1
As filed with the Securities and Exchange Commission on July 18, 2000
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. 51 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY [X]
ACT OF 1940
AMENDMENT NO. 52 [X]
WESTCORE TRUST
(Exact Name of Registrant as Specified in Charter)
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Registrant's Telephone Number: (303) 623-2577
W. BRUCE McCONNEL, III
Drinker Biddle & Reath LLP
One Logan Square
18th and Cherry Streets
Philadelphia, Pennsylvania 19103-6996
(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)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[x] 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.
Title of Securities being registered: Shares of Beneficial Interest.
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.
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[FRONT COVER]
[MOUNTAIN LOGO]
WESTCORE FUNDS
EQUITY & BOND FUNDS PROSPECTUS
[Black and white photograph of mountain and trees]
October 1, 2000
WESTCORE EQUITY FUNDS
Westcore MIDCO Growth Fund
Westcore Growth and Income Fund
Westcore International Frontier Fund
Westcore Small-Cap Growth Fund
Westcore Micro-Cap Fund
Westcore Select Fund
Westcore International Select Fund
Westcore Blue Chip Fund
Westcore Mid-Cap Opportunity Fund
Westcore Small-Cap Opportunity Fund
Westcore International Small-Cap Value Fund
WESTCORE BOND FUNDS
Westcore Flexible Income Fund
Westcore Plus Bond Fund
Westcore Colorado Tax-Exempt Fund
------------------------------------------------------------
Westcore Funds are managed by Denver Investment Advisors LLC.
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THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE
FUNDS' SHARES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. IT IS A
CRIMINAL OFFENSE TO STATE OTHERWISE.
<PAGE> 4
Table of Contents
<TABLE>
<CAPTION>
PAGES
<S> <C>
Risk/Return Summary..................................................................2
Westcore Equity Funds................................................................2
Westcore Bond Funds..................................................................7
Performance Tables..................................................................10
Fees and Expenses of the Funds......................................................19
Types of Investment Risk............................................................21
How to Invest and Obtain Information................................................32
Purchasing Shares...................................................................33
Exchanging Shares...................................................................34
Redeeming Shares....................................................................36
Additional Information on Telephone and Online Service..............................36
General Account Policies............................................................37
Distributions and Taxes.............................................................40
Management of the Funds.............................................................43
Appendix I.........................................................................A-1
Prior Performance of Investment Adviser for Growth and Income Fund.................A-1
Prior Performance of Investment Adviser for Westcore Plus Bond Fund................A-4
Appendix II........................................................................B-1
Bond Rating Categories.............................................................B-1
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</TABLE>
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Risk/Return Summary
WESTCORE EQUITY FUNDS
THE WESTCORE EQUITY FUNDS are designed for long-term investors seeking
capital appreciation who can tolerate the risks associated with investments in
common stocks.
WHAT ARE THE INVESTMENT OBJECTIVES OF THE WESTCORE EQUITY FUNDS?
WESTCORE GROWTH FUNDS:
o WESTCORE MIDCO GROWTH FUND - long-term capital appreciation by investing
primarily in medium-sized growth companies.
o WESTCORE GROWTH AND INCOME FUND - long-term total return by investing in
equity securities selected for their growth potential and
income-producing abilities.
o WESTCORE INTERNATIONAL FRONTIER FUND - long-term growth of capital
primarily through investments in international, small-cap growth
companies.
o WESTCORE SMALL-CAP GROWTH FUND - long-term growth of capital primarily
through investments in small companies with growth potential.
o WESTCORE MICRO-CAP FUND - long-term growth of capital primarily through
investments in very small companies with growth potential.
o WESTCORE SELECT FUND - long-term growth of capital primarily through
investments in companies of any size selected for their growth
potential.
o WESTCORE INTERNATIONAL SELECT FUND - long-term growth of capital
primarily through investments in international companies of any size
selected for their growth potential.
WESTCORE VALUE FUNDS:
o WESTCORE BLUE CHIP FUND - long-term total return by investing in stocks
of large, well-established companies whose stocks appear to be
undervalued.
o WESTCORE MID-CAP OPPORTUNITY FUND - long-term capital appreciation by
investing primarily in medium-sized companies whose stocks appear to be
undervalued.
o WESTCORE SMALL-CAP OPPORTUNITY FUND - long-term capital appreciation
primarily through investments in companies with small capitalizations
whose stocks appear to be undervalued.
o WESTCORE INTERNATIONAL SMALL-CAP VALUE FUND - long-term capital
appreciation by investing primarily in international companies with
small capitalizations whose stocks appear to be undervalued.
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<PAGE> 6
Upon notice to shareholders, each fund's investment objective may be changed by
the Trust's Board of Trustees without the approval of shareholders.
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WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE WESTCORE EQUITY FUNDS?
WESTCORE GROWTH FUNDS: emphasize investments in companies that have the
potential to grow their earnings faster than the general economy.
The portfolio managers of the Growth Funds perform intensive research to
identify companies in businesses and economic sectors with attractive growth
prospects. To identify attractive stocks, the portfolio managers study a
company's business by analyzing its financial information, industry, markets and
competitors, frequently visiting their operations and/or interviewing
management. Generally, a company is considered for a Fund if the portfolio
managers believe the company's management team has the ability to execute their
business plans and increase market share with innovative products or services,
strong balance sheets and/or the access to money to finance their growth. Stocks
may be sold when conditions have changed and the company's prospects are no
longer attractive. If the portfolio manager is unable to find investments with
above average revenue and earnings growth potential, a significant portion of
the Fund's assets may be in cash or similar investments.
WESTCORE MIDCO GROWTH FUND invests primarily in the common stock of
medium-sized companies. Medium-sized companies may benefit from factors such as
new products and services and more entrepreneurial management. These companies
may also have better opportunities for growth by increasing their shares of the
markets they serve.
Under normal circumstances, the Fund invests at least 65% of its assets in
common stocks of companies whose market capitalizations, at the time of
purchase, are between $500 million and $14 billion.
WESTCORE GROWTH AND INCOME FUND invests primarily in the common stock of
large- and medium-sized companies. The Fund may invest up to 25% of its total
assets in bonds convertible into common stock, which provide greater income
while maintaining similar characteristics of common stocks. This Fund is
designed to outperform the total return of the S&P 500 Index while seeking
comparable dividend levels and risk.
WESTCORE INTERNATIONAL FRONTIER FUND invests primarily in equity securities
of international companies with market capitalizations of $1.5 billion or less
at the time of purchase that appear to have above average revenue and earnings
growth potential. Under normal circumstances, the Fund invests at least 65% of
its assets in common stocks of foreign companies in at least five different
developed countries. However, at times the Fund may invest in fewer than five
developed countries or even a single developed country. In addition, the Fund
may invest in larger foreign companies or in U.S.-based companies if, in our
opinion, they represent better prospects for long-term growth.
The Fund considers foreign companies to include those domiciled outside the
United States, deriving at least half of their revenue form sales or production
outside the United States, or with the principal trading market of their
securities outside the United States. The Fund considers developed countries to
include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Israel, Italy, Japan, Mexico, the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
Emerging market countries are considered to be those countries not listed as
developed countries above.
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The Fund may enter into foreign currency exchange transactions from time to
time to hedge the risks of fluctuations in foreign currencies.
WESTCORE SMALL-CAP GROWTH FUND invests primarily in the common stock of
small companies which appear to have above average revenue and earnings growth
potential. This includes, but is not limited to, Initial Public Offerings
("IPO"), a corporation's first offering of stock to the public. Small companies
may benefit from factors such as new products and services and more
entrepreneurial management. Small company stocks may have higher return/risk
potential than larger company stocks.
Under normal market conditions at least 65% of the value of this Fund's
total assets is invested in companies with market capitalizations of $2.5
billion or less at the time of purchase.
WESTCORE MICRO-CAP FUND invests primarily in common stock of a limited
number of very small companies which appear to have above average revenue and
earnings growth potential. This includes, but is not limited to, Initial Public
Offerings ("IPO"), a corporation's first offering of stock to the public. Very
small companies may benefit from factors such as new products and services and
more entrepreneurial management. Very small company stocks may have higher
return/risk potential than larger company stocks, including small company
stocks.
Under normal market conditions at least 65% of the value of this Fund's
total assets is invested in companies with market capitalizations of $500
million or less at the time of purchase.
WESTCORE SELECT FUND invests primarily in common stock of a limited number
of companies of any size, with an emphasis on larger companies. The portfolio
manager looks for companies in attractive industries with above average revenue
and earnings growth opportunities. The Fund normally invests in a core group of
20 to 35 common stocks.
WESTCORE INTERNATIONAL SELECT FUND invests primarily in a limited number of
equity securities of international companies of any size. The portfolio manager
looks for companies in attractive industries with above average revenue and
earnings growth opportunities. Under normal market conditions the Fund invests
at least 65% of the value of its total assets in a core group of 20 to 35 common
stocks in at least five different countries, either developed or emerging
markets. However, at times the Fund may invest in fewer than five countries or
even a single country. In addition, the Fund may invest in U.S.-based companies
if, in our opinion, they represent better prospects for long-term growth.
The Fund considers foreign companies to include those domiciled outside the
United States, deriving at least half of their revenue from sales or production
outside the United States, or with the principal trading market of their
securities outside the United States. The Fund considers developed countries to
include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Israel, Italy, Japan, Mexico, the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
Emerging market countries are considered to be those countries not listed as
developed countries above.
The Fund may enter into foreign currency exchange transactions from time to
time to hedge the risks of fluctuations in foreign currencies.
WESTCORE VALUE FUNDS emphasize investments in companies that are
undervalued and have improving business prospects due to strong company and
industry dynamics.
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<PAGE> 8
As the first step in identifying stocks for purchase, the portfolio managers
use a proprietary computer model to find stocks that appear to be undervalued
based on traditional measures such as price/earnings, price/book value and
price/cash flow. The model also incorporates positive earnings and stock price
momentum in order to assist the portfolio managers in the timing of buy
decisions. The second step in the process involves fundamental research of
companies in order to evaluate their business model, products and management.
Particular attention is paid to identifying a catalyst for unleashing the value
in a stock. A Value Fund may sell a stock when the model indicates it is no
longer undervalued or its fundamental business prospects change. If the
portfolio manager is unable to find investments with above average revenue and
earnings growth potential, a significant portion of the Fund's assets may be in
cash or similar investments. The following describes our four Value Funds, which
execute this strategy for the large-, medium- and small-company universes.
WESTCORE BLUE CHIP FUND invests in approximately 50 large, well-established
companies whose stocks appear to be undervalued. 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
may result in increased stability for the company and a lower-risk investment
for the Fund.
WESTCORE MID-CAP OPPORTUNITY FUND invests primarily in medium-sized
companies whose stocks appear to be undervalued. Medium-sized companies may
benefit from factors such as new products and services and more entrepreneurial
management. These companies may also have better opportunities for growth by
increasing their shares of the markets they serve.
Under normal market conditions, at least 65% of the value of this Fund's
total assets is invested in companies with market capitalizations of $500
million to $14 billion at the time of purchase.
WESTCORE SMALL-CAP OPPORTUNITY FUND invests primarily in small companies
with unrecognized potential whose stocks appear to be undervalued. Small
companies may benefit from factors such as new products and services and more
entrepreneurial management. Small company stocks may have higher return/risk
potential than larger company stocks.
Under normal market conditions, at least 65% of the value of this Fund's
total assets is invested in companies with market capitalizations of $2.5
billion or less at the time of purchase.
WESTCORE INTERNATIONAL SMALL-CAP VALUE FUND invests primarily in equity
securities of international companies with market capitalizations of $1.5
billion or less at the time of purchase with unrecognized potential whose stocks
appear to be undervalued. Under normal circumstances, the Fund invests at least
65% of its assets in common stocks of small-cap foreign companies in at least
five different developed countries. However, at times the Fund may invest in
fewer than five developed countries or even a single developed country. In
addition, the Fund may invest in larger foreign companies or in U.S.-based
companies, if in our opinion, they represent better prospects for appreciation.
The Fund considers foreign companies to include those domiciled outside the
United States, deriving at least half of their revenue from sales or production
outside the United States, or with the principal trading market of their
securities outside the United States. The Fund considers developed countries to
include Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany,
Hong Kong, Ireland, Israel, Italy, Japan, Mexico, the Netherlands, New Zealand,
Norway, Portugal, Singapore, Spain, Sweden, Switzerland, and the United Kingdom.
Emerging market countries are considered to be those countries not listed as
developed countries above.
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The Fund may enter into foreign currency exchange transactions from time to
time to hedge the risks of fluctuations in foreign currencies.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE WESTCORE EQUITY FUNDS?
As with any equity fund, the value of your investment will fluctuate over
short, or even extended periods of time in response to overall movements in the
stock market (market risk). In addition, each of the Equity Funds is subject to
the additional risk that the particular types of stocks held by the Fund will
underperform other stocks and may decline in value (management risk). Therefore,
you could lose money by investing in the Equity Funds.
WESTCORE INTERNATIONAL FRONTIER, WESTCORE INTERNATIONAL SELECT AND WESTCORE
INTERNATIONAL SMALL-CAP VALUE FUNDS' exposure to foreign markets can regularly
effect the net asset value (NAV) and total return of the Fund due to
fluctuations in currency exchange rates or changing political or economic
conditions in a particular country (foreign risk). Emerging market securities
are particularly subject to foreign risks. Therefore the value of these Funds
may be more volatile than equity funds investing only in domestic companies.
The Fund may use a variety of currency hedging techniques to manage exchange
rate risk. The manager believes the use of these techniques will benefit the
Fund, however the Fund's performance could be worse if the manager's judgement
proves incorrect.
WESTCORE INTERNATIONAL FRONTIER, WESTCORE SMALL-CAP GROWTH, WESTCORE
MICRO-CAP, WESTCORE SMALL-CAP OPPORTUNITY AND WESTCORE INTERNATIONAL SMALL-CAP
VALUE FUNDS are subject to the additional risk that the stocks of smaller and
newer issuers can be more volatile due to lack of financial resources, product
diversification and competitive strengths of larger companies (small company
risk). Therefore the value of these Funds may be more volatile.
WESTCORE MICRO-CAP FUND is subject to increased levels of small company
risk.
WESTCORE SELECT, WESTCORE INTERNATIONAL SELECT AND WESTCORE MICRO-CAP FUNDS
are non diversified. This means they may from time to time invest in fewer
companies and/or industries than diversified funds. These companies and/or
industries may react similarly to certain negative market or industry
conditions. Also the appreciation or depreciation of a single stock may have a
greater impact on net asset value than if the Fund held a greater number of
issues (concentration risk). Therefore the value of these Funds may be more
volatile than funds which hold a greater number of issuers.
THE WESTCORE SELECT FUND portfolio manager believes that investment returns
are more important than limiting portfolio turnover. This may result in higher
short-term capital gains and higher brokerage commissions and other transaction
costs, which could reduce the Fund's net returns. Prospective investors should
carefully consider whether to invest through taxable or tax-deferred accounts.
The Westcore Equity Funds, but predominantly WESTCORE GROWTH AND INCOME,
WESTCORE INTERNATIONAL FRONTIER, WESTCORE SMALL-CAP GROWTH, WESTCORE MICRO-CAP,
WESTCORE SELECT, WESTCORE INTERNATIONAL SELECT, WESTCORE MID-CAP OPPORTUNITY AND
WESTCORE INTERNATIONAL SMALL-CAP VALUE FUNDS currently participate in the
initial public offering (IPO) market. A significant portion of the Funds'
returns may be attributable to its investments in IPOs. If the Funds have a
smaller asset base, IPOs may have a magnified impact. As the Funds' assets grow,
it is probable that the effect of the Funds' investments in IPOs
-6-
<PAGE> 10
on its total returns will decline, which may reduce the Funds' total returns. In
addition, IPO shares, in particular, are subject to market risk and liquidity
risk. The price of IPO shares can be highly unstable, due to factors including
the absence of a prior public market, unseasoned trading, the small number of
shares available for trading and limited investor information (IPO risk). The
purchase of IPO shares may involve higher transaction costs.
An investment in these Funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
WESTCORE BOND FUNDS
The Westcore Bond Funds are designed for long-term investors seeking current
income who can tolerate the risks associated with investing in bonds.
WHAT ARE THE INVESTMENT OBJECTIVES OF THE WESTCORE BOND FUNDS?
o WESTCORE FLEXIBLE INCOME FUND (Formerly Long-Term Bond Fund) -
long-term total rate of return, primarily through investments in bonds,
and to a lesser extent through convertible securities and high-yielding
equities, consistent with preservation of capital.
o WESTCORE PLUS BOND FUND (Formerly Intermediate-Term Bond Fund) -
long-term total rate of return, consistent with preservation of
capital, by investing primarily in investment-grade bonds of varying
maturities.
o WESTCORE COLORADO TAX-EXEMPT FUND - income exempt from both federal and
Colorado state personal income taxes by emphasizing insured Colorado
municipal bonds with intermediate maturities.
Upon notice to shareholders, each Fund's investment objective may be changed
by the Trust's Board of Trustees without the approval of shareholders.
WHAT ARE THE MAIN INVESTMENT STRATEGIES OF THE WESTCORE BOND FUNDS?
WESTCORE FLEXIBLE INCOME FUND invests primarily in a wide variety of
income-producing securities such as corporate bonds and notes, government
securities and preferred stock. Under normal market conditions, the fund will
invest at least 80% of its assets in income-producing securities. The fund may
own an unlimited amount of high-yield/high risk bonds.
WESTCORE PLUS BOND FUND invests primarily in investment-grade debt
securities - those rated in the top four rating categories by nationally
recognized rating agencies such as Moody's or Standard and Poor's. Under normal
market conditions, the fund will invest at least 65% of its assets in fixed
income securities of varying maturities. The dollar-weighted average quality is
expected to be "Baa" or better. A "Baa" rating typically is the lowest of the
four investment-grade categories, and includes medium-grade bonds where interest
and principal payments appear adequate presently, but certain protective
elements may be lacking or may be unreliable over any great length of time.
Westcore Plus Bond Fund maintains an average dollar-weighted maturity of between
4 and 10 years. The fund may invest 25% of its assets in high-yield/high risk
bonds and 10% in securities denominated in foreign currencies, and may invest
beyond this limit in U.S. dollar-denominated securities of foreign issuers.
The Funds emphasize corporate bonds, which may generate more income than
government securities. Corporate bonds also provide opportunities for the
portfolio manager and analysts' research to identify
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<PAGE> 11
companies with stable or improving credit characteristics, which may result in
price appreciation. In addition, the Funds invest in other securities, including
debt issued by REITs and mortgage-backed and asset-backed bonds, which may also
offer higher interest yield than government bonds. The attractiveness of REIT
debt and corporate, mortgage- and asset-backed bonds relative to government
bonds is monitored to determine the target weightings for each sector. The
combination of valuation and a disciplined credit research process is the basis
for buy/sell decisions.
WESTCORE COLORADO TAX-EXEMPT FUND invests at least 80% of its assets in
bonds 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, instrumentalities and political
subdivisions ("Tax-Exempt Obligations"). The Fund normally will invest at least
65% of its total assets in Colorado Obligations. The Fund maintains an average
dollar-weighted maturity of between 7 and 10 years.
The investment adviser invests in Colorado municipal bonds that are 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 municipal bonds rated at the time of purchase in the fourth highest
investment-grade category. The fourth category is the lowest investment-grade
category, and these obligations have speculative characteristics. The Fund may
invest in unrated bonds if the portfolio manager determines they are comparable
in quality to instruments that meet the Fund's rating requirements.
The portfolio manager's strategy emphasizes quality. To fully understand the
issuers' ability to generate revenues or levy taxes in order to meet their
obligations, the portfolio manager and a team of analysts researches the
financial condition of various counties, public projects, school districts and
taxing authorities whose bonds the Fund owns or may purchase. The Fund holds
bonds from all areas of the state to reduce the risk to the portfolio of any one
local economy that is suffering. The portfolio manager enhances the quality of
the Fund by investing at least 75% of the assets in bonds where the risk of
interest and principal payment default is protected by a third-party insurer.
ALL WESTCORE BOND FUNDS
If the rating on an obligation held by a Fund is reduced below the Fund's
rating requirements, the investment adviser will sell the obligation if and when
the investment advisor determines it is in the Fund's best interest to do so.
WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE WESTCORE BOND FUNDS?
Although bond funds may fluctuate less in value than equity funds, bond fund
returns and yields will vary. Therefore you could lose money by investing in the
Bond Funds.
A principal risk of investing in bond funds is that the value of these
securities will fall if interest rates rise (interest rate risk). Generally, the
value of a fixed-income portfolio will decrease when interest rates rise, which
means the Fund's net asset value (NAV) will likewise decrease. Another principal
risk associated with bond funds is credit risk, which is the risk that an issuer
will be unable to make principal and interest payments when due.
A general decline in interest rates may result in prepayments of certain
obligations the Funds will acquire. These prepayments may require the Fund to
reinvest at a lower rate of return. They may also reduce the Fund's share price,
because the value of those securities may depreciate or may not appreciate as
rapidly as debt securities, which cannot be prepaid.
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<PAGE> 12
WESTCORE FLEXIBLE INCOME and PLUS BOND FUNDS are subject to the additional
risk that each may invest in High-yield/High-risk bonds (or commonly referred to
as "junk" bonds). These are bonds rated below investment grade by the primary
rating agencies such as Standard & Poor's and Moody's. Lower quality bonds may
make these Funds subject to greater levels of interest rate, credit and
liquidity risk than funds that do not invest in such securities. High yield
securities are considered predominantly speculative with respect to the issuer's
continuing ability to make principal and interest payments. In addition, there
may be less of a market for these securities, which could make it harder to sell
them at an acceptable price. These types of investments are therefore subject to
higher volatility in prices which can result in a corresponding high volatility
in the value of these Funds' NAV.
WESTCORE FLEXIBLE INCOME and PLUS BOND FUNDS' exposure to foreign markets
can regularly effect the net asset value (NAV) and total return of these Funds
due to fluctuations in currency exchange rates or changing political or economic
conditions in a particular country (foreign risk). Emerging market securities
are particularly subject to foreign risks. Therefore the value of these Funds
may be more volatile than bond funds investing only in domestic companies. The
Funds may use a variety of currency hedging techniques to manage exchange rate
risk. The manager believes the use of these techniques will benefit the Funds,
however, the Funds' performance could be worse if the manager's judgement proves
incorrect.
WESTCORE COLORADO TAX-EXEMPT FUND is subject to the additional risk that it
concentrates its investments in instruments issued by or on behalf of the state
of Colorado. Due to the level of investment in municipal obligations issued by
the state of Colorado and its political subdivisions, the performance of the
Fund will be closely tied to the economic and political conditions in the state
of Colorado. Therefore, an investment in the Fund may be riskier than an
investment in other types of municipal bond funds. Also, the Fund's performance
may be dependent upon fewer securities than is the case with a less concentrated
portfolio, such as a national tax-exempt fund. The Westcore Colorado Tax-Exempt
Fund is not diversified.
An investment in these Funds is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any other
government agency.
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<PAGE> 13
BAR CHARTS AND
PERFORMANCE TABLES The bar charts and tables on the following pages provide an
indication of the risk of investing in the Funds by showing
changes in the Funds' performance from year to year and by
showing how the Funds' average annual returns for one, five
and ten years compare with those of a widely recognized,
unmanaged index of common stock or bond prices, as
appropriate. The bar charts and performance tables assume
reinvestment of dividends and distributions. The Funds' past
performance does not necessarily indicate how they will
perform in the future. No performance is shown for Westcore
International Frontier, Micro-Cap, Select, International
Select and International Small-Cap Value Funds, since they
have been in operation for less than one full calendar year.
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<PAGE> 14
WESTCORE MIDCO GROWTH FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.42 67.04 6.45 17.47 (1.01) 27.42 16.99 14.89 10.40
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q1 '91 28.82% Worst Quarter: Q3 '98 (18.75)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(AUGUST 1, 1986)
<S> <C> <C> <C> <C>
WESTCORE MIDCO GROWTH FUND % % % %
RUSSELL MIDCAP GROWTH INDEX % % % %
The Russell Midcap Growth Index measures the performance of those Russell Midcap
companies with higher price-to-book ratios and higher forecasted growth values.
The Russell Midcap companies are comprised of the 800 smallest companies in the
Russell 1000 Index, which represents approximately 26% of the total market
capitalization of the Russell 1000 Index.
</TABLE>
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<PAGE> 15
WESTCORE GROWTH AND INCOME FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(2.80) 31.21 4.96 11.33 (8.39) 22.45 23.25 27.25 6.63
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q4 '98 19.59% Worst Quarter: Q3 '98 (16.81)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(JUNE 1, 1988)
<S> <C> <C> <C> <C>
WESTCORE GROWTH AND INCOME FUND % % % %
S&P 500 INDEX % % % %
</TABLE>
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The S&P 500 Index figures do not reflect any fees or expenses. Investors
cannot invest directly in the Index.
-12-
<PAGE> 16
WESTCORE BLUE CHIP FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(0.26) 34.48 2.04 12.43 0.36 36.43 21.24 30.92 17.88
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q4 '98 20.31% Worst Quarter: Q3 '90 (15.63)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(JUNE 1, 1988)
<S> <C> <C> <C> <C>
WESTCORE BLUE CHIP FUND % % % %
S&P 500 INDEX % % % %
</TABLE>
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally
considered representative of the U.S. stock market. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The S&P 500 Index figures do not reflect any fees or expenses. Investors
cannot invest directly in the Index.
-13-
<PAGE> 17
WESTCORE MID-CAP OPPORTUNITY FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
--------
1999
--------
--------
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: % Worst Quarter: %
----- ----- ----- -----
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
1 YEAR SINCE INCEPTION
(OCTOBER 1, 1998)
WESTCORE MID-CAP OPPORTUNITY FUND
RUSSELL MIDCAP INDEX
The Russell Midcap Index measures the performance of the 800 smallest companies
in the Russell 1000 Index, which represents approximately 26% of the total
market capitalization of the Russell 1000 Index.
-14-
<PAGE> 18
WESTCORE SMALL-CAP OPPORTUNITY FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- --------
1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
0.33 29.48 25.58 27.78 (5.73)
-------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q3 '97 15.95% Worst Quarter: Q3 '98 (20.56)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION
(DECEMBER 28, 1993)
<S> <C> <C> <C>
WESTCORE SMALL-CAP OPPORTUNITY FUND % % %
RUSSELL 2000 INDEX % % %
</TABLE>
The Russell 2000 Index is an unmanaged index of the smallest 2,000 companies in
the Russell 3000 Index, as ranked by total market capitalization. The Russell
2000 is widely regarded in the industry as an index that accurately reflects the
universe of small capitalization stocks. The Russell 2000 Index figures do not
reflect any fees or expenses. Investors cannot invest directly in this Index.
-15-
<PAGE> 19
WESTCORE FLEXIBLE INCOME FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
5.14 19.44 8.93 15.92 (7.13) 26.69 0.74 13.95 10.21
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q2 '89 9.62% Worst Quarter: Q1 '96 (5.04)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(JUNE 1, 1988)
<S> <C> <C> <C> <C>
WESTCORE FLEXIBLE INCOME FUND % % % %
LEHMAN BROTHERS AGGREGATE BOND INDEX % % % %
LEHMAN BROTHERS LONG-TERM % % % %
GOVERNMENT/CORPORATE BOND INDEX
</TABLE>
The Lehman Brothers Aggregate Bond Index is an unmanaged, fixed income,
market-value-weighted index generally representative of intermediate-term
government bonds, investment grade corporate debt securities and mortgage-backed
securities. The Lehman Brothers Intermediate Term Government/Corporate Bond
Index figures do not reflect any fees or expenses. Investors cannot invest
directly in this Index.
The Lehman Brothers Long-Term Government/Corporate Bond Index is an unmanaged
index comprised of U.S. Treasury issues, publicly issued debt of U.S. Government
agencies, corporate debt guaranteed by the U.S. Government and all publicly
issued, fixed-rate, nonconvertible investment-grade dollar-denominated,
SEC-registered corporate debt. The Index includes bonds with maturities of ten
years or longer. The Lehman Brothers Long-Term Government/Corporate Bond Index
figures do not reflect any fees or expenses. Investors cannot invest directly in
this Index.
Effective October 1, 2001 the Fund has changed its benchmark from the Lehman
Brothers Long-Term Government/Corporate Bond Index to the Lehman Brothers
Aggregate Bond Index as of October 1, 2000. Due to the Fund's change in
investment objectives and policies effective October 1, 2000, the Lehman
Brothers Aggregate Bond Index provides a more appropriate benchmark for periods
after October 1, 2000.
30-DAY YIELD AS OF MAY 31, 2000: %
CURRENT YIELD INFORMATION: For current yield information please call
1-800-392-CORE (2673).
-16-
<PAGE> 20
WESTCORE PLUS BOND FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1.57 20.23 7.14 9.87 (3.38) 15.01 3.79 8.25 6.47
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q2 '89 6.12% Worst Quarter: Q1 '94 (2.62)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
(JUNE 1, 1988)
<S> <C> <C> <C> <C>
WESTCORE PLUS BOND FUND % % % %
LEHMAN BROTHERS AGGREGATE BOND INDEX % % % %
LEHMAN BROTHERS INTERMEDIATE TERM % % % %
GOVERNMENT/CORPORATE BOND INDEX
</TABLE>
The Lehman Brothers Aggregate Bond Index is an unmanaged, fixed income,
market-value-weighted index generally representative of intermediate-term
government bonds, investment grade corporate debt securities and mortgage-backed
securities. The Lehman Brothers Intermediate Term Government/Corporate Bond
Index figures do not reflect any fees or expenses. Investors cannot invest
directly in this Index.
The Lehman Brothers Intermediate Term Government/Corporate Bond Index is an
unmanaged index comprised of U.S. Treasury issues, publicly issued debt of U.S.
Government agencies, corporate debt guaranteed by the U.S. Government and all
publicly issued, fixed-rate, nonconvertible investment-grade dollar-denominated,
SEC-registered corporate debt. The Lehman Brothers Intermediate Term
Government/Corporate Bond Index figures do not reflect any fees or expenses.
Investors cannot invest directly in this Index.
Effective October 1, 2001 the Fund has changed its benchmark from the Lehman
Brothers Long-Term Government/Corporate Bond Index to the Lehman Brothers
Aggregate Bond Index as of October 1, 2000. Due to the Fund's change in
investment objectives and policies effective October 1, 2000, the Lehman
Brothers Aggregate Bond Index provides a more appropriate benchmark for periods
after October 1, 2000.
30-DAY YIELD AS OF MAY 31, 2000: %
CURRENT YIELD INFORMATION: For current yield information please call
1-800-392-CORE (2673).
-17-
<PAGE> 21
WESTCORE COLORADO TAX-EXEMPT FUND
CALENDAR YEAR TOTAL RETURNS AS OF 12/31(%)
--------------------------------------------------------------------------------
[bar chart goes here]
<TABLE>
<CAPTION>
-------- -------- -------- -------- -------- -------- -------- --------
1992 1993 1994 1995 1996 1997 1998 1999
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
8.08 9.89 (3.24) 13.03 4.29 7.35 5.59
-------- -------- -------- -------- -------- -------- -------- --------
</TABLE>
YEAR-TO-DATE RETURN for the period ended June 30, 2000 was %.
-----
<TABLE>
<S> <C> <C> <C> <C> <C>
BEST QUARTER: Q1 '95 5.18% Worst Quarter: Q1 '94 (3.64)%
</TABLE>
THE FUND'S AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
1 YEAR 5 YEARS SINCE INCEPTION
(JUNE 1, 1991)
<S> <C> <C> <C>
WESTCORE COLORADO TAX-EXEMPT FUND % % %
LEHMAN BROTHERS 10-YEAR TAX-EXEMPT % % %
BOND INDEX
</TABLE>
The Lehman Brothers 10-Year Tax-Exempt Bond Index is an unmanaged index that
tracks the performance of municipal bonds with remaining maturities of 10 years
or less. The Lehman Brothers 10-Year Tax-Exempt Bond Index figures do not
reflect any fees or expenses. Investors cannot invest directly in this Index.
30-Day Tax-
30-Day Yield as Equivalent Yield
of May 31, 2000 as of May 31, 2000*
--------------- ------------------
30-DAY YIELDS AS OF MAY 31, 2000: % %
CURRENT YIELD INFORMATION: For current yield information please call
1-800-392-CORE (2673).
* Tax-Equivalent Yield is based upon the combined state and federal tax rate
assumptions of 31.42% (assuming a 28% federal tax rate and a 4.75% Colorado tax
rate).
-18-
<PAGE> 22
FEES AND EXPENSES OF THE FUNDS
This table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
------------------------- ----------------------------------------------------------------------------------------------
EQUITY GROWTH FUNDS
------------------------- ----------------------------------------------------------------------------------------------
Westcore Westcore Westcore Westcore Westcore Westcore Westcore
MIDCO Growth Growth and International Small-Cap Micro-Cap Select International
Fund Income Fund Frontier Fund Growth Fund Fund Fund Select Fund
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Shareholders Fees (fees None None None None None
paid directly from your
investment)
------------------------------------------------------------------------------------------------------------------------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
------------------------------------------------------------------------------------------------------------------------
Management Fees (1) 0.65% 0.65% 1.20% 1.00% 0.65%
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
Distribution (12b-1) Fees None None None None None
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
Other Expenses (1) 0.54% 1.10% 2.70% 1.05% 0.93%
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
Total Annual Fund 1.19% 1.75% 3.90% 2.05% 1.58%
Operating Expenses
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
Fee Waiver and Expense (0.04)% (0.60)% (2.40)% (0.75)% (0.43)%
Reimbursement (1)
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
Net Annual Fund 1.15% 1.15% 1.50% 1.30% 1.15%
Operating Expenses (1)
------------------------- -------------- ------------ ------------- ----------- -------------- ----------- -------------
</TABLE>
(1) The Funds' Adviser and Administrators have contractually agreed to waive a
portion of the investment advisory and/or administration fees and/or to
reimburse other expenses for the MIDCO Growth, Growth and Income, International
Frontier, Small-Cap Growth, Micro-Cap, Select, International Select, Blue Chip,
Mid-Cap Opportunity, Small-Cap Opportunity, International Small-Cap Value,
Flexible, Plus Bond and Colorado Tax-Exempt Funds until at least May 31, 2001,
so that Net Annual Fund Operating Expenses will be no more than 1.15%, 1.15%,
1.50%, 1.30%, ______%, 1.15%, ______%, 1.15%, 1.25%, 1.30%, ______%, 0.95%,
0.85% and 0.65% for each Fund, respectively, for the current fiscal year. You
will be notified if these waivers and/or reimbursements are discontinued after
that date resulting in a material change in the expense ratio.
-19-
<PAGE> 23
<TABLE>
<CAPTION>
----------------------------------------------------------------------- ---------------------------------------------
EQUITY VALUE FUNDS BOND FUNDS
----------------------------------------------------------------------- ---------------------------------------------
Westcore Blue Westcore Mid-Cap Westcore Westcore Westcore Westcore Plus Westcore
Chip Fund Opportunity Fund Small-Cap International Flexible Income Bond Fund Colorado
Opportunity Fund Small-Cap Value Fund Tax-Exempt Fund
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
None None None None None None
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
0.65% 0.75% 1.00% 0.45% 0.45% 0.50%
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
None None None None None None
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
0.60% 4.58% 0.63% 0.77% 0.56% 0.59%
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
1.25% 5.33% 1.63% 1.22% 1.01% 1.09%
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
(0.10)% (4.08)% (0.33)% (0.27)% (0.16)% (0.44)%
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
1.15% 1.25% 1.30% 0.95% 0.85% 0.65%
-------------------- ---------------- ---------------- ---------------- --------------- ------------- ---------------
</TABLE>
EXAMPLE
This example is intended to help you compare the cost of investing in the Funds
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Funds for the time periods
indicated and then redeem all of your shares at the end of those periods and
that Net Annual Operating Expenses for one year and Gross Annual Operating
Expenses for additional years set forth in the table on pages 19 and 20 are
incurred. The example also assumes that your investment has a 5% return each
year and that the Funds' operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
<TABLE>
<CAPTION>
---------------------- ------------------------------------------------------------------------------------------------------------
EQUITY GROWTH FUNDS
---------------------- ------------------------------------------------------------------------------------------------------------
Westcore Westcore Westcore Westcore Westcore Westcore Westcore
MIDCO Growth Growth and International Small-Cap Micro-Cap Fund Select Fund International
Fund Income Fund Frontier Fund Growth Fund Select
---------------------- --------------- -------------- --------------- --------------- --------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
One Year $ 117 $ 117 $ 153 $ 132 $ 117
---------------------- --------------- -------------- --------------- --------------- --------------- --------------- -------------
Three Years 378 551 1,189 642 499
---------------------- --------------- -------------- --------------- --------------- --------------- --------------- -------------
Five Years 654 948 2,003 1,103 860
---------------------- --------------- -------------- --------------- --------------- --------------- --------------- -------------
Ten Years 1,442 2,060 4,117 2,376 1,876
---------------------- --------------- -------------- --------------- --------------- --------------- --------------- -------------
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------- ----------------------------------------------
EQUITY VALUE FUNDS BOND FUNDS
-------------------------------------------------------------------- ----------------------------------------------
Westcore Blue Westcore Mid-Cap Westcore Westcore Westcore Westcore Plus Westcore
Chip Fund Opportunity Fund Small-Cap International Flexible Income Bond Fund Colorado
Opportunity Fund Small-Cap Value Fund Tax-Exempt Fund
------------------ ---------------- ---------------- --------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
$ 117 $ 127 $ 132 $ 97 $ 87 $ 66
------------------ ---------------- ---------------- --------------- --------------- -------------- ---------------
396 1,591 514 387 321 347
------------------ ---------------- ---------------- --------------- --------------- -------------- ---------------
686 2,644 886 670 558 601
------------------ ---------------- ---------------- --------------- --------------- -------------- ---------------
1,510 5,245 1,930 1,476 1,235 1,327
------------------ ---------------- ---------------- --------------- --------------- -------------- ---------------
</TABLE>
-20-
<PAGE> 24
TYPES OF INVESTMENT RISK
The principal risks of investing in each Fund are described previously in
this prospectus. The following list provides more detail about some of those
risks, along with information on additional types of risks that may apply to the
Funds. Risks associated with particular types of investments each Fund makes are
described in this section and in the Statement of Additional Information
referred to on the back page.
GENERAL RISKS OF INVESTING IN EACH OF THE FUNDS
CREDIT RISK - Bond Funds and, to the extent they invest in fixed-income
securities, Equity Funds
The risk that an issuer will be unable to make principal and interest
payments when due is known as "credit risk." U.S. government securities are
generally considered to be the safest type of investment in terms of credit
risk. Tax-Exempt 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.
Securities rated below investment grade are particularly subject to credit
risk. These securities are predominantly speculative and are commonly referred
to as "junk bonds." To the extent a Fund purchases or holds convertible or other
securities that are below investment grade, a greater risk exists as to the
timely repayment of the principal of, and the timely payment of interest or
dividends on, such securities.
Ratings published by rating agencies 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.
INTEREST RATE RISK - Bond Funds and, to the extent they invest in fixed-income
securities, Equity Funds
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.
Changes in interest rates may also extend or shorten the duration of certain
types of instruments, such as asset-backed securities, thereby affecting their
value and the return on your investment. Zero coupon securities, including
stripped securities in which the Bond Funds (other than the Colorado Tax-Exempt
Fund) may invest are subject to greater interest-rate risk than many of the more
typical fixed-income securities.
A bond fund's average dollar-weighted maturity is a measure of how the fund
will react to interest-rate changes. 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.
LIQUIDITY RISK - ALL FUNDS
Certain securities may be difficult or impossible to sell at the time and price
that the Fund would like. A Fund may have to lower the price, sell other
securities instead or forego an investment opportunity, any of which could have
a negative effect on fund management or performance. This risk applies, for
example, to variable
-21-
<PAGE> 25
and floating rate demand notes; variable amount demand securities and restricted
securities that the Funds may purchase; short-term funding agreements that each
Fund may purchase; and the futures contracts in which each Fund (other than the
Colorado Tax-Exempt Fund) may engage. Illiquid securities also include
repurchase agreements, securities loans and time deposits with
notice/termination dates of greater than seven days, certain municipal leases
and certain securities subject to trading restrictions because they are not
registered under the Securities Act of 1933. The Funds may purchase equity
securities that are restricted as to resale, issued by issuers who have
outstanding, publicly-traded equity securities of the same class ("private
investment in public equity" or "pipes"). The pipes may contain provisions that
the issuer will pay specified financial penalties to the holder if the issuer
does not publicly register the pipes within a specified period of time, but
there is no assurance that the pipes will be publicly registered.
There may be no active secondary market for illiquid securities. Each Fund may
invest up to 15% of its net assets at the time of purchase, in securities that
are illiquid. A domestically traded security that is not registered under the
Securities Act of 1933 will not be considered illiquid if the Adviser determines
that an adequate investment trading market exists for that security. However,
there can be no assurance that a liquid market will exist for any security at a
particular time. Because illiquid and restricted securities may be difficult to
sell at an acceptable price, they may be subject to greater volatility and may
result in a loss to a Fund.
MANAGEMENT RISK - ALL FUNDS
A strategy that the Adviser uses may fail to produce the intended results.
The particular securities and types of securities a Fund holds may underperform
other securities and types of securities. There can be no assurance a Fund will
achieve its investment objective. Certain policies of each Fund, which may not
be changed without a shareholder vote, are described in the Statement of
Additional Information.
MARKET RISK - ALL FUNDS
The value of the securities in which a Fund invests may go up or down in
response to the prospects of individual companies and/or general economic
conditions. Price changes may be temporary or last for extended periods.
Each Fund's performance results may reflect periods of above average
performance attributable to its investment in certain securities during the
initial public offering, the performance of a limited number of the securities
in the Fund, or other non-recurring factors. It is possible that the performance
may not be repeated in the future.
OTHER TYPES OF INVESTMENTS - ALL FUNDS
This prospectus describes each Fund's principal investment strategies, and
the types of securities in which each Fund principally invests. Each Fund may,
from time to time, make other types of investments and pursue other investment
strategies in support of its overall investment goal. These supplemental
investment strategies - and the risk involved - are described in detail in the
Statement of Additional Information, which is referred to on the back cover of
this prospectus.
-22-
<PAGE> 26
PORTFOLIO TURNOVER RISKS - ALL EQUITY FUNDS, BUT PREDOMINANTLY MIDCO GROWTH
FUND, SMALL-CAP GROWTH FUND, MICRO-CAP FUND, SELECT FUND, INTERNATIONAL SELECT
FUND, MID-CAP OPPORTUNITY FUND AND SMALL-CAP OPPORTUNITY FUND
The Adviser will not consider the portfolio turnover rate a limiting factor
in making investment decisions for a Fund. A high rate of portfolio turnover
(100% or more) involves correspondingly greater expenses, which must be borne by
a Fund and its shareholders. It may result in higher short-term capital gains
taxable to shareholders. These gains are taxable at higher rates than long-term
capital gains. Frequent trading could also mean higher brokerage commissions and
other transaction costs, which could reduce the Fund's return. See "Financial
Highlights" for the Funds' historical portfolio turnover rates.
The Westcore MIDCO Growth Fund, Small-Cap Growth Fund, Select Fund,
Mid-Cap Opportunity Fund and Small-Cap Opportunity Fund, each had a portfolio
turnover rate over 100% in the year ended May 31, 2000. The Adviser anticipates
that the Westcore Micro-Cap and International Select Fund may have a high
portfolio turnover during the current fiscal year.
TEMPORARY DEFENSIVE POSITIONS - ALL FUNDS
Each Fund may, from time to time, take temporary defensive positions that
are inconsistent with its principal investment strategies in attempting to
respond to adverse market, economic, political or other conditions. Such
investments include various short-term instruments. If any Fund takes a
temporary position at the wrong time, the position would have an adverse impact
on that Fund's performance. The Fund may not achieve its investment objective.
The Funds reserve the right to invest all of their assets in temporary defensive
positions.
ADDITIONAL RISKS THAT APPLY TO PARTICULAR INVESTMENTS
ASSET-BACKED SECURITIES - 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 falling interest
rates, the rate of prepayment tends to increase, and 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 may be 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.
-23-
<PAGE> 27
CASH POSITION - ALL FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND
When a Fund's portfolio manager believes that market conditions are
unfavorable for profitable investing, or when he is otherwise unable to locate
attractive investment opportunities, a Fund's cash or similar investments may
increase. In other words, each Fund does not always stay fully invested in
stocks or the bonds which constitute its principal investments.
Cash or similar investments generally are a residual - they represent
the assets that remain after the portfolio manager has committed available
assets to desirable investment opportunities. However, the portfolio manager may
also temporarily increase the Fund's cash position to protect its assets or
maintain liquidity. When the Fund's investments in cash or similar investments
increase, it may not participate in market advances or declines to the same
extent that it would if the Fund remained more fully invested in its principal
investments.
CONVERTIBLE SECURITIES - ALL FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND
These Funds may invest in convertible securities, including bonds and
preferred stocks, which 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 specified price.
DERIVATIVE RISK - ALL FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND, BUT
PREDOMINANTLY INTERNATIONAL FRONTIER, INTERNATIONAL SELECT AND INTERNATIONAL
SMALL-CAP VALUE FUNDS
The term derivative covers a wide number of investments, but in general it
refers to any financial instrument whose value is derived, at least in part,
from the price of another security or a specified index, asset or rate. Some
derivatives may be more sensitive to or otherwise not react in tandem with
interest rate changes or market moves, and some may be susceptible to changes in
yields or values due to their structure or contract terms. Loss may result from
a Fund's investments in options, futures, swaps, structured securities and other
derivative instruments which may be leveraged. A Fund may use derivatives to:
increase yield; hedge against a decline in principal value; invest with greater
efficiency and lower cost than is possible through direct investment; adjust the
Fund's duration; or provide daily liquidity.
Hedging is the use of one investment to offset the effects of another
investment. To the extent that a derivative is used as a hedge against an
opposite position that the Fund also holds, a loss generated by the derivative
should be substantially offset by gains on the hedged investment, and vice
versa. While hedging can reduce or eliminate losses, it can also reduce or
eliminate gains. Hedging also involves correlation risk - the risk that changes
in the value of a hedging instrument may not match those of the asset being
hedged.
To the extent that a derivative is not used as a hedge, a Fund is directly
exposed to the risks of that derivative. Gains or losses from speculative
positions in a derivative may be substantially greater than the derivative's
original cost.
-24-
<PAGE> 28
EXTENSION RISKS - BOND FUNDS
This is the risk that an issuer will exercise its right to pay principal on
an obligation held by a Fund (such as a mortgage- or asset-backed security)
later than expected. This may happen when there is a rise in interest rates.
These events may lengthen the duration and potentially reduce the value of these
securities.
FOREIGN CURRENCY EXCHANGE TRANSACTIONS - ALL FUNDS OTHER THAN THE COLORADO
TAX-EXEMPT FUND, BUT PREDOMINANTLY INTERNATIONAL FRONTIER, INTERNATIONAL SELECT
AND INTERNATIONAL SMALL-CAP VALUE FUNDS
These Funds may buy and sell securities and pay and receive amounts
denominated in currencies other than the U.S. dollar, and may enter into
currency exchange transactions from time to time. A Fund will purchase or sell
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 a forward currency exchange contract, 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. Forward currency exchange transactions 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 a Fund's portfolio
securities or in foreign exchange rates or prevent loss if the prices of these
securities should decline. In addition, 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.
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.
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.
-25-
<PAGE> 29
FOREIGN SECURITIES RISKS - ALL FUNDS OTHER THAN THE COLORADO TAX-EXEMPT FUND,
BUT PREDOMINANTLY INTERNATIONAL FRONTIER, INTERNATIONAL SELECT AND INTERNATIONAL
SMALL-CAP VALUE FUNDS
Foreign securities are subject to special risks not typically associated
with domestic securities. The following are common examples of these special
risks. The extent of these risks, however, varies from time to time and from
country to country.
o less government regulation
o less public information
o less economic, political and social stability
o less security registration requirements
o less security settlement procedures and regulations
o an adverse change in diplomatic relations between the U.S. and another
country
o the imposition of withholding taxes on dividend income
o the seizure or nationalization of foreign holdings
o the establishment of exchange controls
o freezes on the convertibility of currency
o the adoption of other governmental restrictions adversely affecting
investment in foreign securities
Investments in debt securities of foreign governments involve the risk that
foreign governments may default on their obligations or may otherwise not
respect the integrity of their debt.
Emerging markets are generally countries located in the Asia/Pacific region,
Eastern Europe, Latin and South America and Africa. The securities traded within
these markets are typically of companies with less liquidity and potentially
greater price volatility. These countries may have less developed securities
settlement procedures, which may delay or prevent security settlement,
especially during market disruptions. As a result of these and other risks,
including greater social, economic and political uncertainties, investments in
these countries may present a greater risk to a Fund.
Investment in foreign securities also involves higher costs than investment
in U.S. securities, including higher transaction and custody costs as well as
the imposition of additional taxes by foreign governments.
Each of the Funds may invest in foreign currency denominated securities. A
Fund which invests in foreign currency denominated securities will also be
subject to the risk of negative foreign currency rate fluctuations. A change in
the exchange rate between U.S. dollars and foreign currency may reduce the value
of an investment made in a security denominated in that foreign currency. The
International Frontier Fund may hedge against foreign currency risk, and the
other Funds may do so on unsettled trades, but none of the funds are required to
do so.
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. Up to 25% of the
domestic Equity Funds' 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 ADRs.
-26-
<PAGE> 30
INITIAL PUBLIC OFFERINGS - ALL FUNDS OTHER THAN THE COLORADO TAX-EXEMPT FUND,
BUT PREDOMINANTLY ALL EQUITY FUNDS
Each of these Funds may invest a portion of its assets in securities of
companies offering shares in IPOs. Because IPO shares frequently are volatile in
price, the Funds may hold IPO shares for a very short period of time. This may
increase the turnover of the Funds' portfolio and may lead to increased expenses
to the Funds, such as commissions and transaction costs. By selling shares, a
Fund may realize taxable gains it will subsequently distribute to shareholders.
In addition, the market for IPO shares can be speculative and/or inactive for
extended periods of time. There is no assurance that a Fund will be able to
obtain allocations of IPO shares.
The limited number of shares available for trading in some IPOs may make it
more difficult for the Fund to buy or sell significant amounts of shares without
an unfavorable impact on prevailing prices. Investors in IPO shares can be
affected by substantial dilution in the value of their shares, by sales of
additional shares and by concentration of control in existing management and
principal shareholders.
The Funds' investments in IPO shares may include the securities of
unseasoned companies (companies with less than three years of continuous
operations), which presents risks considerably greater than common stocks of
more established companies. These companies may have limited operating histories
and their prospects for profitability may be uncertain. These companies may be
involved in new and evolving businesses and may be vulnerable to competition and
changes in technology, markets and economic conditions. They may be more
dependent on key managers and third parties and may have limited product lines.
MORTGAGE-RELATED SECURITIES - FLEXIBLE INCOME AND PLUS BOND FUNDS
The Westcore Flexible Income and Plus Bond Funds may invest in
mortgage-backed securities (including collateralized mortgage obligations) that
represent pools of mortgage loans assembled for sale to investors by various
governmental agencies and government-related organizations, such as the
Government National Mortgage Association, the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation. Mortgage-backed
securities provide a monthly payment consisting of interest and principal
payments. Additional payments may be made out of unscheduled repayments of
principal resulting from the sale of the underlying residential property,
refinancing or foreclosure, net of fees or costs that may be incurred.
Prepayments of principal on mortgage-backed securities may tend to increase due
to refinancing of mortgages as interest rates decline. To the extent that the
Fund purchases mortgage-backed securities at a premium, mortgage foreclosures
and prepayments of principal by mortgagors (which may be made at any time
without penalty) may result in some loss of the Fund's principal investment to
the extent of the premium paid. The yield of a Fund that invests in
mortgage-backed securities may be affected by the Fund's need to reinvest
prepayments at higher or lower rates than the original investment.
Other mortgage-backed securities are issued by private companies, generally
originators of and investors in mortgage loans, including savings associations,
mortgage bankers, commercial banks, investment bankers and special-purpose
entities. These private mortgage-backed securities may be supported by U.S.
Government mortgage-backed securities or some form of non-government credit
enhancement. Mortgage-backed securities may be affected by prepayments of
principal on the underlying loans, which generally increase as interest rates
decline; as a result, when interest rates decline, holders of these securities
normally do not benefit from appreciation in market value to the same extent as
holders of other non-callable debt securities. Further, an issuer of an
obligation may exercise its right to pay principal on the obligation later
-27-
<PAGE> 31
than expected. This is more likely to happen when interest rates rise. These
events may lengthen the duration and reduce the value of these obligations. In
addition, like other debt securities, the values of mortgage-related securities,
including government-related mortgage pools, generally will fluctuate in
response to market interest rates.
OTHER INVESTMENT COMPANIES - ALL FUNDS
The Funds may invest their cash balances, within the limits permitted by the
Investment Company Act of 1940 (1940 Act), in other investment companies that
invest in high quality, short-term debt securities or in a manner consistent
with the Fund's investment objective. A pro rata portion of the other investment
companies' expenses will be borne by the Fund's shareholders.
PREPAYMENT RISK - BOND FUNDS
This is the risk that an issuer will exercise its right to pay principal on
an obligation held by a Fund (such as a mortgage- or asset-backed security)
earlier than expected. This may happen when there is a decline in interest
rates. These events may make a Fund unable to recoup its initial investment and
may result in reduced yields.
REITS - ALL FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND
The Funds may invest in securities issued by equity and mortgage REITs,
which are real estate investment trusts. Equity REITs invest directly in real
property. Mortgage REITs invest in mortgages on real property.
REITs may be subject to certain risks associated with the direct ownership
of real estate, including declines in the value of real estate, overbuilding and
increased competition, increases in property taxes and operating expenses, and
variations in rental income. Generally, increases in interest rates will
decrease the value of high-yielding securities and increase the costs of
obtaining financing, which could decrease the value of these investments. In
addition, equity REITs may be affected by changes in the value of the underlying
property owned by the trusts, while mortgage REITs may be affected by the
quality of credit extended. REITs are also heavily dependent on cash flow and
are subject to the risk that borrowers may default.
REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS - ALL 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 because of 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.
-28-
<PAGE> 32
SECURITIES LENDING - ALL FUNDS, OTHER THAN THE 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 (including the value of the collateral for
the loan).
SMALL-CAP STOCK RISK - INTERNATIONAL FRONTIER FUND, SMALL-CAP GROWTH FUND,
MICRO-CAP FUND, SMALL-CAP OPPORTUNITY AND INTERNATIONAL SMALL-CAP VALUE FUND
Smaller capitalization stocks involve greater risks than those associated
with larger, more established companies. Small company stocks may be subject to
more abrupt or erratic price movements, for reasons including that the stocks
are traded in lower volume and that the issuers are more sensitive to changing
conditions and have less certain growth prospects. Also, there are fewer market
makers for these stocks and wider spreads between quoted bid and asked prices in
the over-the-counter market for these stocks. Small-cap stocks tend to be less
liquid, particularly during periods of market disruption. There normally is less
publicly available information concerning these securities. Small companies in
which the Funds may invest may have limited product lines, markets or financial
resources, or may be dependent on a small management group. In particular,
investments in unseasoned companies present risks considerably greater than
investments in more established companies.
In addition, the Micro-Cap Fund's investments in unseasoned companies
present risks considerably greater that investments in more established
companies. Further, the securities in which the Fund invests will often be
traded only in the over-the-counter market or on a regional securities exchange,
may be listed only in the quotation service commonly known as the "pink sheets,"
and may not be traded every day or in the volume typical of trading on a
national securities exchange. They may be subject to wide fluctuations in market
value. The trading market for any given security may be sufficiently thin as to
make it difficult for the Fund to dispose of a substantial block of such
securities. The disposition by the Fund of portfolio securirties to meet
redemptions or otherwise may require the Fund to sell these securities at a
discount from market prices or during periods when, in the Adviser's judgement,
such disposition is not desirable or to make many small sales over a lengthy
period of time.
TAX-EXEMPT OBLIGATIONS - COLORADO TAX-EXEMPT FUND
Tax-exempt obligations in which the Westcore Colorado Tax-Exempt Fund
invests include: (i) "general obligation" securities that are secured by the
issuer's full faith, credit and taxing power; (ii) revenue securities that 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 that are normally issued by special purpose public
authorities; and (iv) private activity bonds (such as bonds issued by industrial
development authorities) that 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 tax-exempt 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 Fund and the Adviser rely on these opinions
and will not review the bases for them.
-29-
<PAGE> 33
The Fund concentrates its investments in Colorado obligations. If Colorado
or any of its political subdivisions were to suffer serious financial
difficulties that might jeopardize the ability to pay its obligations, the value
of the Fund could be adversely affected.
TAX RISK - COLORADO TAX-EXEMPT FUND
This Fund may be more adversely impacted by changes in tax rates and
policies than the other Funds. Because interest income on municipal obligations
is normally not subject to regular federal income taxation, the attractiveness
of municipal obligations in relation to other investment alternatives is
affected by changes in federal income tax rates applicable to, or the continuing
federal income tax-exempt status of, such interest income. Any proposed or
actual changes in such rates or exempt status, therefore, can significantly
affect the demand for and supply, liquidity and marketability of municipal
obligations, which, in turn, could affect a Fund's ability to acquire and
dispose of municipal obligations at desirable yield and price levels.
U.S. GOVERNMENT OBLIGATIONS - ALL FUNDS
The Funds 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.
YEAR 2000 RISKS - ALL FUNDS
Over the past several years, the Adviser and the Funds' other major service
providers expended considerable time and money in addressing the computer and
technology issues associated with the transition to the Year 2000. As a result
of those efforts, the Funds did not experience any material disruptions in their
operations as a result of the transition to the 21st century. The Adviser and
the Funds' other major service providers are continuing to monitor the Year 2000
or Y2K issue, however, and there can be no assurances that there will be no
adverse impact to the Funds as a result of future computer-related Y2K
difficulties.
-30-
<PAGE> 34
WESTCORE FUNDS SPECTRUM
The spectrum below shows the Adviser's 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 with other mutual funds or types of investments.
<TABLE>
<CAPTION>
FUNDS CONSERVATIVE MODERATE AGGRESSIVE
--------------------------------------------------------------------------------
<S> <C> <C> <C>
Westcore Micro-Cap Fund ________
Westcore Small-Cap Growth Fund ________
Westcore Select Fund ________
Westcore International Select Fund ________
Westcore International Frontier
Fund ________
Westcore Small-Cap Opportunity Fund ________
Westcore International Small-Cap
Value Fund ________
Westcore MIDCO Growth Fund ________
Westcore Mid-Cap Opportunity Fund ________
Westcore Growth and Income Fund ________
Westcore Blue Chip Fund ________
Westcore Flexible Income Fund ________
Westcore Plus Bond Fund ________
Westcore Colorado Tax-Exempt Fund ________
</TABLE>
-31-
<PAGE> 35
HOW TO INVEST AND OBTAIN INFORMATION
HOW TO CONTACT WESTCORE FUNDS
<TABLE>
<S> <C>
ONLINE www.westcore.com:
[COMPUTER GRAPHIC]
WESTCORE TRANS@CTION CENTER
24 hours a day, seven days a week
o Access account information
o Place automatic transactions
----------------------------------------------- ---------------------------------------------------------------------------
BY TELEPHONE 1-800-392-CORE (2673):
[TELEPHONE GRAPHIC]
WESTCORE INVESTOR SERVICES
Weekdays: 7 a.m. to 6 p.m. mountain time
-----------------------------------
WESTCORE AUTOMATED SERVICE
LINE 24 hours a day, seven
days a week
o Access account information
o Place automatic transactions
o Order duplicate statements, tax forms or additional checkbooks for the
BlackRock Money Market Portfolio
----------------------------------------------- ---------------------------------------------------------------------------
BY REGULAR MAIL Westcore Funds
[LETTER GRAPHIC] P.O. Box 8319
Boston, MA 02266-8319
----------------------------------------------- ---------------------------------------------------------------------------
BY EXPRESS, CERTIFIED OR REGISTERED MAIL Westcore Funds
[PLANE GRAPHIC] C/O BFDS
66 Brooks Drive
Braintree, MA 02184
----------------------------------------------- ---------------------------------------------------------------------------
IN PERSON Westcore Funds
[PERSON GRAPHIC] 370 17th Street, Suite 3100
Denver, CO 80202
----------------------------------------------- ---------------------------------------------------------------------------
</TABLE>
HOW TO PURCHASE, EXCHANGE AND REDEEM
This section explains how to purchase, exchange and redeem your Westcore shares.
It also explains various services and features offered in connection with your
account. Please call us at 1-800-392-CORE (2673) if you have any questions or to
obtain a New Account Application.
-32-
<PAGE> 36
PURCHASING SHARES
You may purchase additional shares through any of the options below or in person
at the location listed on page 32. In addition, if you are an existing
shareholder, you may open a new account with identical registration and account
options in another fund offered by this prospectus by any of these methods.
<TABLE>
<S> <C>
BY MAIL OPENING A NEW ACCOUNT
[LETTER GRAPHIC] Read this prospectus.
Send a completed application with your check and mail to appropriate address.
ADDING TO YOUR EXISTING ACCOUNT
Complete the tear-off investment slip from your last statement and mail with
your check to the appropriate address.
Or, send your check and a written request following instructions on page 37
and mail to the appropriate address.
----------------------------------------------------- -----------------------------------------------------------------------------
BY TELEPHONE* If you are an existing shareholder, you may purchase additional shares by
[TELEPHONE GRAPHIC] telephone.
Call 1-800-392-CORE (2673) to speak with an Investor Service Representative
from 7 a.m. to 6 p.m. mountain time or use the 24-hour Westcore Automated
Service Line.
----------------------------------------------------- -----------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
BY ONLINE ACCESS* If you are an existing shareholder, you may purchase additional shares online.
[COMPUTER GRAPHIC]
Access the 24-hour Westcore Trans@ction Center located at www.westcore.com.
----------------------------------------------------- -----------------------------------------------------------------------------
BY AUTOMATIC Complete the Automatic Investment Plan Section on your application to have
INVESTMENT PLAN money automatically withdrawn from your bank account monthly, quarterly or
[CALENDAR GRAPHIC] annually.
The minimum automatic investment must be the equivalent of at least $50 per
month.
To add this option to your account, please call 1-800-392-CORE (2673) or
access www.westcore.com for the appropriate form.
----------------------------------------------------- -----------------------------------------------------------------------------
BY WIRE You may purchase Westcore shares by wire transfer from your bank account to
[WIRE GRAPHIC] your Westcore account. There is a $1,000 minimum for purchases by wire.
To place a purchase by wire, please call 1-800-392-CORE (2673) to speak with
an Investor Service Representative from 7 a.m. to 6 p.m. mountain time.
WIRE TO:
State Street Bank
ABA #011000028
DDA #99046344
ATTN: Custody and Shareholder Services
Fund Name
Your Account Number
----------------------------------------------------- -----------------------------------------------------------------------------
</TABLE>
-33-
<PAGE> 37
* For more information on automatic telephone and online transactions, please
see "Additional Information on Telephone and Online Service" on page 36.
IMPORTANT NOTES ON PURCHASING SHARES:
o When you purchase shares, your request will be processed at the next net
asset value (NAV) calculated after your order is received and accepted.
o Please make your check payable to Westcore Funds in U.S. dollars drawn on a
U.S. bank.
o Cash, credit card, third-party checks or checks drawn on foreign banks will
not be accepted for purchases.
o If you are purchasing shares in a retirement account,** please indicate
whether the purchase is a rollover or a current or prior-year contribution.
o After receipt of your order by wire, telephone or online, your bank account
will be debited the next business day for wire transfers and the second
business day for electronic fund transfers.
o If a check does not clear your bank, Westcore reserves the right to cancel
the purchase.
o If Westcore is unable to debit your predesignated bank account on the day of
purchase, they may make additional attempts or cancel the purchase.
o Westcore reserves the right to reject any order.
o If your purchase is cancelled, you will be responsible for any losses or
fees imposed by your bank and losses that may be incurred as a result of any
decline in the value of the cancelled purchase. Westcore (or their agents)
have the authority to redeem shares in your account(s) to cover any losses
due to fluctuations in share price. Any profit on such cancellation will
accrue to Westcore.
INVESTMENT MINIMUMS
<TABLE>
<CAPTION>
Amount
------
<S> <C>
TO OPEN A NEW REGULAR ACCOUNT* $2,500
--------------------------------------------------------------------------- --------------------
TO OPEN A NEW RETIREMENT** OR UGMA/UTMA ACCOUNT* $1,000
--------------------------------------------------------------------------- --------------------
TO OPEN AN AUTOMATIC INVESTMENT PLAN ACCOUNT $1,000
--------------------------------------------------------------------------- --------------------
AUTOMATIC INVESTMENTS* Equivalent to $100
per month
--------------------------------------------------------------------------- --------------------
TO ADD TO ANY TYPE OF ACCOUNT $100
--------------------------------------------------------------------------- --------------------
</TABLE>
*Accounts and Automatic Investment Plans established before October 1, 2000 are
entitled to reduced investment minimums: $1,000 for new regular accounts; $250
for new retirement or UGMA/UTMA accounts; and automatic investments equivalent
to $50 per month.
**A description of the retirement accounts available for investment in the
Westcore Funds may be found in the Statement of Additional Information for the
Funds. Please see the back cover of this prospectus for the telephone number,
mailing address and e-mail address where you can obtain a free copy of the
Statement of Additional Information.
EXCHANGING SHARES
You may exchange your Westcore shares for shares of other Westcore Funds offered
in this prospectus or the BlackRock Money Market Portfolio* through any of the
options below. You may also place an exchange in person at the location listed
on page 32. In addition, if you are an existing shareholder, you may exchange
into a new account copying your existing account registration and options by any
of these methods.
* BlackRock Money Market Portfolio is a no-load money market fund advised by
BlackRock Advisors, Inc., sub-advised by BlackRock Institutional Management
Corporation and distributed by BlackRock Distributors, Inc.
-34-
<PAGE> 38
<TABLE>
<CAPTION>
<S> <C>
BY MAIL Send a written request following instructions on page 37 and mail to the
[MAIL GRAPHIC] appropriate address.
--------------------------------------------- ----------------------------------------------------------------------------------
BY TELEPHONE* Call 1-800-392-CORE (2673) to speak with an Investor Service Representative from
[TELEPHONE GRAPHIC] 7 a.m. to 6 p.m. mountain time or use the 24-hour Westcore Automated Service
Line.
--------------------------------------------- ----------------------------------------------------------------------------------
BY ONLINE ACCESS* Access the 24-hour Westcore Trans@ction Center located at WWW.WESTCORE.COM.
[COMPUTER GRAPHIC]
--------------------------------------------- ----------------------------------------------------------------------------------
AUTOMATICALLY Call 1-800-392-CORE (2673) to receive instructions for automatically
[CALENDAR GRAPHIC] exchanging shares between funds on a monthly, quarterly or annual basis.
--------------------------------------------- ----------------------------------------------------------------------------------
</TABLE>
* For more information on automatic telephone and online transactions, please
see "Additional Information on Telephone and Online Service" on page 36.
IMPORTANT NOTES ON EXCHANGING SHARES:
o Exchanges must meet the minimum investment requirements described on page 34.
o Exchanges between accounts will be accepted only if registrations are
identical.
o If the shares you are exchanging are held in certificate form, the certificate
must be returned with or before your exchange request.
o Please be sure to read the prospectus for the Fund into which you are
exchanging.
o An exchange represents the sale of shares from one fund and the purchase of
shares of another fund. This may produce a taxable gain or loss in your
non-tax-deferred account.
EXCHANGE LIMITS
You may make four exchanges out of each Westcore Fund during a calendar
year (exclusive of Systematic Exchange Agreement). At this time, there is no
limit on the number of exchanges permitted out of the BlackRock Money Market
Portfolio. Exchanges in excess of this limit are considered excessive trading
and may be subject to an exchange fee or may result in termination of the
exchange privilege or the right to make future purchases of Fund shares.
Accounts under common ownership or control will be counted together for purposes
of the four exchange limit. We also reserve the right to delay delivery of your
redemption proceeds up to seven days, or to honor certain redemptions with
securities, rather than cash, as described in the Statement of Additional
Information. The Funds reserve the right to reject any purchase order (including
exchanges) from any investor we believe has a history of abusive trading or
whose trading, in our judgment, has been or may be disruptive to a fund. The
Funds may modify or terminate the exchange privilege at any time.
-35-
<PAGE> 39
REDEEMING SHARES
You may redeem your Westcore shares by any of the options below or in person at
the location listed on page 32.
<TABLE>
<S> <C>
BY MAIL Send a written request following instructions on page 37 and mail to the
[LETTER GRAPHIC] appropriate address.
-------------------------------------------- ----------------------------------------------------------------------------------
BY TELEPHONE* If you are an existing shareholder, you may redeem your shares by telephone.
[TELEPHONE GRAPHIC]
Call 1-800-392-CORE (2673) to speak with an Investor Service Representative
from 7 a.m. to 6 p.m. mountain time or use the 24-hour Westcore Automated
Service Line.
-------------------------------------------- ----------------------------------------------------------------------------------
BY ONLINE ACCESS* If you are an existing shareholder, you may redeem your shares online.
[COMPUTER GRAPHIC]
Access the 24-hour Westcore Trans@ction Center located at www.westcore.com.
-------------------------------------------- ----------------------------------------------------------------------------------
BY SYSTEMATIC WITHDRAWAL PLAN You may redeem shares automatically (in any multiple of $50) monthly, quarterly
[CALENDAR GRAPHIC] or annually.
A systematic withdrawal plan may be established if the shares in your Fund are
worth at least $10,000.
To add this option to your account, please call 1-800-392-CORE (2673) or access
www.westcore.com for the appropriate form.
-------------------------------------------- ----------------------------------------------------------------------------------
BY WIRE You may redeem Westcore shares by wire transfer from your Westcore account to
[WIRE GRAPHIC] your bank account.
There is a $1,000 minimum and you must have established bank instructions to place
wire redemptions.
To arrange a wire redemption, please call 1-800-392-CORE (2673) to speak with an
Investor Service Representative from 7 a.m. to 6 p.m. mountain time.
To add bank instructions to your account, please call 1-800-392-CORE (2673) or
access www.westcore.com for the appropriate form.
-------------------------------------------- ----------------------------------------------------------------------------------
</TABLE>
* For more information on automatic telephone and online transactions, please
see "Additional Information on Telephone and Online Service" on page 36.
IMPORTANT NOTES ON REDEEMING SHARES:
o You may redeem your Westcore shares on any business day that the New York
Stock Exchange is open.
o Generally, redemption proceeds will be sent by check to the shareholders'
address of record within seven days after receipt of a valid redemption
request.
o Generally, a wire transfer will be sent directly into your designated bank
account the next business day after receipt of your order, and an electronic
funds transfer will be sent the second business day after receipt of your
order.
o If the shares you are redeeming are held in certificate form, you must return
the certificate with or before your redemption request.
o If the shares you are redeeming were purchased by check, telephone, computer
or through the Automatic Investment Plan, Westcore may delay the mailing of
your redemption check for up to 15 days from the day of purchase to allow the
purchase to clear.
ADDITIONAL INFORMATION ON TELEPHONE AND ONLINE SERVICE
o All shareholders (except for certain accounts opened through Service
Organizations and certain retirement accounts) are automatically granted
automatic telephone and online transaction privileges unless they decline
them explicitly on their account application or in writing to Westcore
Funds.
o Shareholders can follow the instructions provided at the Westcore Automated
Service Line and Westcore Trans@ction Center to access these service using a
personal identification number.
o Automatic telephone and online purchases and redemptions are completed by
electronic funds transfer from your bank account to your Westcore Account.
(Wire transfer is not available for automatic telephone or online
transactions.) To establish this privilege, please complete the "Bank
Instructions"
-36-
<PAGE> 40
section of your account application. You may also call 1-800-392-CORE (2673)
or access www.westcore.com for the appropriate form.
o Automatic telephone and online redemptions are not available for IRA,
business or fiduciary accounts. In addition, automatic telephone and online
exchanges are not available for business or fiduciary accounts.
o There is a $25,000 daily maximum for each account for each separate type of
automatic telephone and online transaction (purchases, exchange-in,
exchange-out and redemptions).
o It may be difficult to reach the Funds by telephone or online during periods
of unusual market activity. If this happens, you may transact on your
account by mail as described in this prospectus.
o The Funds or their agents may, in case of emergency, temporarily suspend
telephone and online transactions and other shareholder services.
SECURITY ISSUES
Westcore Funds has designed procedures to enhance security, including the
use of 128-bit encryption through the Westcore Trans@ction Center, testing the
identity of the shareholder placing the order and sending prompt written
confirmation of transactions. However, shareholders may give up some level of
security by choosing to transact by telephone or online rather than by mail.
Westcore Funds has designed procedures to confirm that telephone and online
transaction requests are genuine. Westcore Funds and their agents will not be
responsible for any losses resulting from unauthorized telephone or online
transactions when these procedures are followed and Westcore has a reasonable
belief that the transaction is genuine.
GENERAL ACCOUNT POLICIES
Westcore Funds may modify or terminate account policies, services and
features, but, subject to the Funds' right to limit account activity or redeem
involuntarily as described below, will not materially modify or terminate them
without giving shareholders 60 days' written notice. The Funds reserve the right
to modify the general account policies from time to time or to waive them in
whole or in part for certain types of accounts.
WRITTEN INSTRUCTIONS
To process transactions in writing, your request should be sent to Westcore
Funds, P.O. Box 8319, Boston, MA 02266-8319 and must include the following
information:
o The name of the Fund(s).
o The account number(s).
o The amount of money or number of shares.
o The name(s) on the account.
o The signature(s) of all registered account owners (signature guaranteed, if
applicable).
o Your daytime telephone number.
-37-
<PAGE> 41
SIGNATURE GUARANTEE
A signature guarantee assures that a signature is genuine. The signature
guarantee protects shareholders from unauthorized transfers. A signature
guarantee is not the same as a notarized signature. You can obtain a signature
guarantee from a bank or trust company, credit union, broker, dealer, securities
exchange or association, clearing agency or savings association.
The guarantee must be an ink stamp or medallion that states "Signature(s)
Guaranteed" and must be signed in the name of the guarantor by an authorized
person with that person's title and the date. Westcore Funds may reject a
signature guarantee if the guarantor is not a member of or participant in a
signature guarantee program. Call your financial institution to see if they have
the ability to guarantee a signature.
Shareholders living abroad may acknowledge their signatures at an overseas
branch of a U.S. bank, member firm of a stock exchange or any foreign bank
having a branch office in the U.S.
To protect your accounts from fraud, the following transactions will require
a signature guarantee:
o Transferring ownership of an account.
o Redeeming more than $25,000 from your account.
o Redeeming by check payable to someone other than the account owner(s).
o Redeeming by check mailed to an address other than the address of record.
o Redemption check mailed to an address that has been changed within the last 30
days of the redemption request without a signature guarantee.
The Funds reserve the right to require a signature guarantee under other
circumstances or to reject or delay a redemption on certain legal grounds.
REDEMPTION OF LOW BALANCE ACCOUNTS
If your account balance falls below the required minimums presented on page
34, a letter will be sent advising you to either bring the value of the shares
held in the account up to the minimum or establish an automatic investment that
is the equivalent of at least $50 per month. If action is not taken within 90
days of the notice, the shares held in the account will be redeemed and the
proceeds will be sent by check to your address of record. We reserve the right
to increase the investment minimums.
LIMIT ON ACCOUNT ACTIVITY
Because excessive account transactions can disrupt management of the Funds
and increase the Funds' cost for all shareholders, Westcore reserves the right
to refuse a share purchase and/or revoke an investor's exchange privilege at any
time.
INVOLUNTARY REDEMPTIONS
We reserve the right to close an account if the shareholder is deemed to
engage in activities that are illegal or otherwise believed to be detrimental to
the Fund.
ADDRESS CHANGES
To change the address on your account, call 1-800-392-CORE (2673) or send a
written request signed by all account owners. Include the name of the Fund, the
account number(s), the name(s) on the account and
-38-
<PAGE> 42
both the old address and new address. Certain options may be suspended for 30
days following an address change unless a signature guarantee is provided.
REGISTRATION CHANGES
To change the name on an account, the shares are generally transferred to a
new account. In some cases, legal documentation may be required. Certain
registration changes may have tax implications. Please contact your tax adviser.
For more information call 1-800-392-CORE (2673).
SHARE CERTIFICATES
The Funds will issue share certificates upon written request only. Share
certificates will not be issued until the shares have been held for at least 15
days and will not be issued for accounts that do not meet the minimum
requirements.
QUARTERLY CONSOLIDATED STATEMENTS AND SHAREHOLDER REPORTS
Westcore Funds will send you a consolidated statement quarterly and, with
the exception of automatic investment plan transactions and dividend
reinvestment transactions, a confirmation after every transaction that affects
your share balance or your account registration. A statement with tax
information regarding the tax status of income dividends and capital gain
distributions will be mailed to you by January 31 of each year and filed with
the Internal Revenue Service.
Each year, we will send you an annual and a semi-annual report. The annual
report includes audited financial statements and a list of portfolio securities
as of the fiscal year end. The semi-annual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You will also receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your investments in Westcore Funds. Duplicate
mailings of Fund materials to shareholders who reside at the same address may be
eliminated.
To reduce expenses and demonstrate respect for the environment, we will
deliver a single copy of the Funds' financial reports and prospectuses to
multiple investors with the same mailing address. Shareholders who desire
individual copies of such reports or prospectuses should call 1-800-392-2673
(CORE) or write to us at Westcore Funds, P.O. Box 8319, Boston, MA 02266-8319.
PRICE OF FUND SHARES
All purchases, redemptions and exchanges will be processed at the net asset
value (NAV) next calculated after your request is received in good order by the
transfer agent or certain authorized broker-dealers, other institutions or
designated intermediaries 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
(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 transfer
agent or certain authorized broker-dealers or designated intermediaries 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 business
day. To be in good order, your request must include your account number and must
state the Fund shares you wish to purchase, redeem or exchange.
-39-
<PAGE> 43
In the case of participants in certain employee benefit plans investing in
certain Funds and certain other investors, purchase and redemption orders will
be processed at the NAV next determined after the Service Organization (as
defined below) acting on their behalf receives the purchase or redemption order.
Westcore has authorized certain broker-dealers and other institutions to
accept on its behalf purchase and redemption orders made through a mutual fund
supermarket. Such authorized institutions may designate other intermediaries to
accept purchase and redemption orders on behalf of Westcore.
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, when 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 remaining
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 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 requires. Service Organizations may
impose charges, restrictions, transaction procedures 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.
DISTRIBUTIONS AND TAXES
DISTRIBUTIONS
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 on the ex-dividend date.
DISTRIBUTION SCHEDULE
<TABLE>
<CAPTION>
--------------------------------------------------- -------------------------- -------------------------------------
INCOME DIVIDENDS CAPITAL GAINS
--------------------------------------------------- -------------------------- -------------------------------------
<S> <C> <C>
Westcore Growth and Income Fund Generally declared and Generally declared and
Westcore Blue Chip Fund paid quarterly paid in December
Westcore Mid-Cap Opportunity Fund
Westcore Small-Cap Opportunity Fund
--------------------------------------------------- -------------------------- -------------------------------------
Westcore MIDCO Growth Fund Generally declared and Generally declared and
Westcore International Frontier Fund paid annually paid in December
Westcore Small-Cap Growth Fund
Westcore Micro-Cap Fund
Westcore Select
Westcore International Select Fund
Westcore International Small-Cap Value Fund
--------------------------------------------------- -------------------------- -------------------------------------
Westcore Flexible Income Fund Declared and Generally declared and
Westcore Plus Bond Fund paid monthly paid in December
Westcore Colorado Tax-Exempt Fund
--------------------------------------------------- -------------------------- -------------------------------------
</TABLE>
-40-
<PAGE> 44
When you open an account, all dividends and capital gains will be
automatically reinvested in the distributing Fund unless you specify on your
Account Application that you want to receive your distributions in cash or
reinvest them in another Fund. Income dividends and capital gain distributions
will be reinvested without a sales charge at the net asset value on the
ex-dividend date. You may change your distribution option at any time by writing
or calling 1-800-392-CORE (2673).
TAXES
FEDERAL TAXES
Each Fund contemplates declaring as dividends each year all or substantially
all of its taxable income, including its net capital gain (the excess of
long-term capital gain over short-term capital loss). Distributions attributable
to the net capital gain of a Fund will be taxable to you as long-term capital
gain, regardless of how long you have held your shares. Other Fund distributions
(other than exempt-interest dividends, discussed below) will generally be
taxable as ordinary income. You will be subject to income tax on Fund
distributions regardless whether they are paid in cash or reinvested in
additional shares. You will be notified annually of the tax status of
distributions to you.
You should note that if you purchase shares just before a distribution, the
purchase price will reflect the amount of the upcoming distribution. You will
incur taxes on the entire amount of the distribution received, even though, as
an economic matter, you did not participate in these gains and the distribution
simply constitutes a return of capital. This is known as "buying into a
dividend." It is generally not to your advantage to purchase shares just before
a distribution.
You will recognize taxable gain or loss on a sale, exchange or redemption of
your shares, including an exchange for shares of another Fund, based on the
difference between your tax basis in the shares and the amount you receive for
them. (To aid in computing your tax basis, you generally should retain your
account statements for the periods during which you held shares.)
Any loss realized on shares held for six months or less will be treated as a
long-term capital loss to the extent of any capital gain dividends that were
received on the shares. Additionally, any loss realized on a sale or redemption
of shares of a Fund may be disallowed under "wash sale" rules to the extent the
shares disposed of are replaced with other shares of a Fund within a period of
61 days beginning 30 days after the shares are disposed of, such as pursuant to
a dividend reinvestment in shares of a Fund. If disallowed, the loss will be
reflected in an adjustment to the basis of the shares acquired.
The one major exception to these tax principles is that distributions on,
and sales, exchanges and redemptions of, shares held in an IRA (or other
tax-qualified plan) will not be currently taxable.
A Fund's dividends that are paid to its corporate shareholders and are
attributable to qualifying dividends the Fund receives from U.S. domestic
corporations may be eligible, in the hands of the corporate
-41-
<PAGE> 45
shareholders, for the corporate dividends-received deduction, subject to certain
holding period requirements and debt financing limitations.
The Westcore Colorado Tax-Exempt Fund anticipates that substantially all of
its income dividends will be "exempt interest dividends," which are exempt from
federal income taxes. However, some dividends will be taxable, such as dividends
that are attributable to gains on bonds that are acquired at a "market
discount," and distributions of short- and long-term capital gains.
Interest on indebtedness incurred by a shareholder to purchase or carry
shares of the Westcore Colorado Tax-Exempt Fund generally will not be deductible
for federal income tax purposes.
You should note that a portion of the exempt-interest dividends paid by the
Westcore Colorado Tax-Exempt Fund may constitute an item of tax preference for
purposes of determining federal alternative minimum tax liability.
Exempt-interest dividends will also be considered along with other adjusted
gross income in determining whether any Social Security or railroad retirement
payments received by you are subject to federal income taxes.
If you receive an exempt-interest dividend with respect to any share and the
share is held by you for six months or less, any loss on the sale or exchange of
the share will be disallowed to the extent of such dividend amount. It is
expected that the Westcore International Frontier, Westcore International Select
and Westcore International Small-Cap Value Funds will be subject to foreign
withholding taxes with respect to dividends or interest received from sources in
foreign countries. The Westcore International Frontier, Westcore International
Select and Westcore International Small-Cap Value Funds may make an election to
treat a proportionate amount of such taxes as constituting a distribution to
each shareholder, which would allow each shareholder either (1) to credit such
proportionate amount of taxes against U.S. federal income tax liability or (2)
to take such amount as an itemized deduction.
The foregoing is only a summary of certain tax considerations under current
law, which may be subject to change in the future. Shareholders who are
nonresident aliens, foreign trusts or estates, or foreign corporations or
partnerships may be subject to different United States federal income tax
treatment. You should consult your tax adviser for further information regarding
federal, state, local and/or foreign tax consequences relevant to your specific
situation.
COLORADO STATE TAXES
Because the Westcore Colorado Tax-Exempt Fund intends to invest
substantially all of its assets in tax-exempt obligations of the state of
Colorado or its political subdivisions, shareholders who are subject to Colorado
state income tax will generally not be subject to such tax on dividends paid by
the Fund to the extent that the dividends are attributable to interest income of
the Fund. However, to the extent dividends are not attributable to
exempt-interest income, such as distributions of short- or long-term capital
gain, they will not be exempt from Colorado income tax (except to the limited
extent that Colorado may exempt all investment income from state income tax).
There are no municipal income taxes in Colorado. Moreover, because shares of
the Westcore Funds are intangibles, they are not subject to Colorado property
tax.
-42-
<PAGE> 46
STATE AND LOCAL TAXES
Shareholders may also be subject to state and local taxes on distributions
and redemptions. State income taxes may not apply, however, to the portions of
each Fund's distributions, if any, that are attributable to interest on Federal
Securities or interest on securities of the particular state or localities
within the state. Shareholders should consult their tax advisers regarding the
tax status of distributions in their state and locality.
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 SAI contains information about the Board of
Trustees.
INVESTMENT ADVISER
Denver Investment Advisors LLC, with principal offices at 1225 17th Street,
26th Floor, Denver, Colorado 80202, serves as the investment adviser to the
Funds. The Adviser was organized in 1994. It is owned by the principal officers
and employees of its predecessor firm. As of May 31, 2000, it had approximately
$_____ billion in assets under active management, including $511 million for
eleven investment company portfolios.
Denver Investment Advisors provides a continuous investment program for the
Funds, including investment research and management. The Adviser makes
investment decisions for the Funds and places orders for all purchases and sales
of the Funds' portfolio securities.
MANAGEMENT EXPENSES
For the fiscal year ended May 31, 2000, each Fund paid the Adviser an
advisory fee. The fees are set forth below and are expressed as an annual
percentage of a Fund's average daily net assets.
<TABLE>
<CAPTION>
FEE SCHEDULE EFFECTIVE ADVISORY FEES
--------------------------------------------------------- ------------------------------
<S> <C>
Westcore MIDCO Growth Fund
--------------------------------------------------------- ------------------------------
Westcore Growth and Income Fund
--------------------------------------------------------- ------------------------------
Westcore International Frontier Fund*
--------------------------------------------------------- ------------------------------
Westcore Small-Cap Growth Fund*
--------------------------------------------------------- ------------------------------
Westcore Micro-Cap Fund*
--------------------------------------------------------- ------------------------------
Westcore Select Fund
--------------------------------------------------------- ------------------------------
Westcore International Select Fund*
--------------------------------------------------------- ------------------------------
Westcore Blue Chip Fund
--------------------------------------------------------- ------------------------------
Westcore Mid-Cap Opportunity Fund
--------------------------------------------------------- ------------------------------
Westcore Small-Cap Opportunity Fund
--------------------------------------------------------- ------------------------------
Westcore International Small-Cap Value Fund*
--------------------------------------------------------- ------------------------------
Westcore Flexible Income Fund
--------------------------------------------------------- ------------------------------
Westcore Plus Bond Fund
--------------------------------------------------------- ------------------------------
Westcore Colorado Tax-Exempt Fund
--------------------------------------------------------- ------------------------------
</TABLE>
-43-
<PAGE> 47
*The International Frontier Fund, Small-Cap Growth Fund, Micro-Cap Fund, Select
Fund, International Select Fund and International Small-Cap Value Fund have
operated for less than a full fiscal year. The fees stated represent the maximum
advisory fees.
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 (August 1, 1986). Mr. Anderson has been a portfolio
manager with Denver Investment Advisors and its predecessor, Denver Investment
Advisors, Inc., since 1975. Mr. Anderson works with other securities analysts of
the Adviser who from time to time purchase and sell specific securities under
his supervision.
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. Mr. Schulhof works with other securities
analysts of the Adviser who from time to time purchase and sell specific
securities under his supervision.
MICHAEL W. GERDING, CFA, a Vice President of Denver Investment Advisors, has
been primarily responsible for managing international portfolios and has been
primarily responsibility for the day-to-day management of Westcore International
Frontier Fund since its inception (December 15, 1999) and of Westcore
International Select Fund since its inception (________________). Prior to
joining Denver Investment Advisors in 1999, he was senior-vice president of
investments for Founders Asset Management LLC where he served as the lead
portfolio manager for Founders Passport Fund since its inception in 1993 and for
Founders Worldwide Growth Fund since 1990. He also served as portfolio manager
or co-portfolio manager for Founders International Equity Fund from its
inception in 1995 until 1997. Mr. Gerding also served as a portfolio manager and
research analyst with NCNB Texas from 1985 to 1990.
JOHN N. KARNS, a Vice President of Denver Investment Advisors, has been
primarily responsible for managing the portfolios of small-cap and large-cap
institutional clients as well as managing Denver Investment Advisors' IPO
investments. Mr. Karns has had primary responsibility for the day-to-day
management of Westcore Small-Cap Growth Fund since its inception (October 1,
1999). Prior to joining Denver Investment Advisors in 1998, Mr. Karns worked as
a vice president and co-portfolio manager at Salomon Smith Barney for three
years and in institutional research for one year.
__________________________, has been primarily responsible for the day-to-day
management of Westcore Micro-Cap Fund since its inception (_______________).
__________________________, has been primarily responsible for the day-to-day
management of Westcore International Small-Cap Value Fund since its inception
(__________________).
GERALD W. PETERSON, CFA, a Vice President of Denver Investment Advisors, has
been primarily responsible for analyzing a diverse set of industry sectors for
the MIDCO style of investing. Upon becoming responsible for the day-to-day
management for Westcore Select Fund at its inception (October 1, 1999), he
expanded his focus to include all industry sectors. Prior to joining Denver
Investment Advisors in 1982, Mr. Petersen served eight years as assistant vice
president and portfolio manager at National Investment Services of America and
six years as an investment officer at CNA Financial.
CHARLOTTE PETERSEN, CFA, a Vice President of Denver Investment Advisors, has
been primarily responsible for the day-to-day management of Westcore Blue Chip
Fund since April 12, 2000, having been
-44-
<PAGE> 48
co-manager since January 18, 2000. Ms. Petersen's 14 years of research and
portfolio management experience include working with both value and growth
styles. She has also been primarily responsible for managing portfolios of large
institutional clients for Denver Investment Advisors since 1993.
CHRISTIANNA WOOD, CFA, a Vice President and Director of Value Strategies
with Denver Investment Advisors, has been primarily responsible for the
day-to-day management of Westcore Mid-Cap Opportunity Fund since its inception
and Westcore Small-Cap Opportunity Fund since April 12, 2000. Ms. Wood has been
a portfolio manager of small- to mid-cap companies for over 17 years, and has
been with Denver Investment Advisors since 1996.
JEROME R. POWERS, CFA, a Vice President of Denver Investment Advisors, has
been primarily responsible for the day-to-day management of Westcore Flexible
Income and Plus Bond Funds since October 1, 1997. He has been with the Adviser
since 1997 and has been active in the management of fixed-income securities for
18 years.
THOMAS B. STEVENS, CFA, a Vice President of Denver Investment Advisors, has
been primarily responsible for the day-to-day management of the Westcore
Colorado Tax-Exempt Fund since May 28, 1999. Mr. Stevens has 29 years'
experience in the institutional bond market and has been with the Adviser since
1986.
CO-ADMINISTRATORS
ALPS Mutual Fund Services, Inc. and Denver Investment Advisors serve as
co-administrators to the Funds and receive fees in such capacity. 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. Pursuant to another agreement, ALPS
responds to certain shareholder inquiries and transaction requests received via
telephone.
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 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 a Fund or its shareholders.
-45-
<PAGE> 49
FINANCIAL HIGHLIGHTS
The financial highlights tables on the following pages are intended to help
you understand each Fund's financial performance for the past 5 years or, if
shorter, the period of the Fund's operations. Certain information reflects
financial results for a single Fund share. The total returns in the table
represent the rate that an investor would have earned or lost on an investment
in each Fund (assuming reinvestment of all dividends and distributions). This
information has been audited by _____________, whose report, along with the
Funds' financial statements, are included in the Annual Report, which is
available upon request. Westcore Micro-Cap, International Select and
International Small-Cap Value Funds are not included, since they have not been
in operation as of the end of a fiscal year.
-46-
<PAGE> 50
WESTCORE MIDCO GROWTH FUND
<TABLE>
<CAPTION>
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 20.54 $ 20.92 $ 22.90 $ 17.12
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.23) (0.17) (0.15) (0.08)
Net realized and unrealized
gain/(loss) on investments 2.22 3.03 1.19 6.58
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total income/(loss) from
investment operations 1.99 2.86 1.04 6.50
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
DISTRIBUTIONS
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Dividends from net investment
income 0.00 0.00 0.00 0.00
Distributions from net realized
gain on investments (2.50) (3.24) (3.02) (0.72)
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total distributions (2.50) (3.24) (3.02) (0.72)
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Net asset value, end of period $ 20.03 $ 20.54 $ 20.92 $ 22.90
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total return 11.87% 15.10% 5.27% 38.62%
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $277,924 $565,293 $590,008 $656,490
Ratio of expenses to average
net assets 1.15% 1.13% 1.14% 1.08%
Ratio of expenses to average
net assets without fee waivers 1.19% 1.13% 1.14% 1.10%
Ratio of net income/(loss) to
average net assets (0.63)% (0.71)% (0.70)% (0.42)%
Ratio of net investment
income/(loss) to average net (0.68)% (0.71)% (0.71)% (0.44)%
assets without fee waivers
Portfolio turnover rate(1) 116.46% 75.79% 60.78% 62.83%
----------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
</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, 2000, were
$___________ and $____________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-47-
<PAGE> 51
Financial Highlights
WESTCORE GROWTH AND INCOME FUND(1)
<TABLE>
<CAPTION>
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
FOR THE YEAR ENDED MAY 31,* 2000 1999(3) 1998 1997 1996
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 13.74 $ 13.03 $ 12.32 $ 10.50
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) 0.00(4) 0.01 0.07 0.15
Net realized and unrealized
gain/(loss) on investments 0.66 2.54 2.19 2.57
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total income/(loss) from
investment operations 0.66 2.55 2.26 2.72
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
DISTRIBUTIONS
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Dividends from net investment
income (0.01) (0.07) (0.11) (0.24)
Distributions from net realized
gain on investments (2.09) (1.77) (1.44) (0.66)
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total distributions (2.10) (1.84) (1.55) (0.90)
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Net asset value, end of period $ 12.30 $ 13.74 $ 13.03 $ 12.32
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total return 6.25% 20.74% 19.71% 27.25%
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $12,789 $15,160 $20,725 $25,387
Ratio of expenses to average net assets 1.15% 1.15% 1.15% 1.22%
Ratio of expenses to average net assets
without fee waivers 1.75% 1.71% 1.56% 1.51%
Ratio of net income/(loss) to
average net assets 0.02% 0.40% 0.75% 1.34%
Ratio of net investment
income/(loss) to average net
assets without fee waivers (0.58)% (0.16)% 0.33% 1.05%
Portfolio turnover rate(2) 72.59% 41.40% 39.80% 88.31%
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
</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) 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, 2000, were
$__________ and $__________, respectively.
(3) Per share amounts calculated based on the average shares outstanding during
the period.
(4) Less than $.005 per share.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-48-
<PAGE> 52
Financial Highlights
WESTCORE INTERNATIONAL FRONTIER FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000
-------------------------------------------------- ---------------
<S> <C>
Net asset value
beginning of the period
-------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized
gain/(loss)
-------------------------------------------------- ---------------
Total income/(loss) from
investment operations
-------------------------------------------------- ---------------
DISTRIBUTIONS
-------------------------------------------------- ---------------
Dividends from net investment
income
Distributions from net realized
gain on investments
-------------------------------------------------- ---------------
Total distributions
-------------------------------------------------- ---------------
Net asset value, end of period
Total return
-------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)
Ratio of expenses to average
net assets
Ratio of expenses to average
net assets without fee waivers
Ratio of net income/(loss) to
average net assets
Ratio of net investment
income/(loss) to average net
assets without fee waivers
Portfolio turnover rate(1)
-------------------------------------------------- ---------------
</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, 2000, were
$__________ and $___________ respectively.
* For the period December 15, 1999 (inception of offering) to May 31, 2000.
-49-
<PAGE> 53
WESTCORE SMALL-CAP GROWTH FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000
-------------------------------------------------- ---------------
<S> <C>
Net asset value
Beginning of the period
-------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized
gain/(loss)
-------------------------------------------------- ---------------
Total income/(loss) from
investment operations
-------------------------------------------------- ---------------
DISTRIBUTIONS
-------------------------------------------------- ---------------
Dividends from net investment
income
Distributions from net realized
gain on investments
-------------------------------------------------- ---------------
Total distributions
-------------------------------------------------- ---------------
Net asset value, end of period
Total return
-------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)
Ratio of expenses to average
net assets
Ratio of expenses to average
net assets without fee waivers
Ratio of net income/(loss) to
average net assets
Ratio of net investment
income/(loss) to average net
assets without fee waivers
Portfolio turnover rate(1)
-------------------------------------------------- ---------------
</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, 2000, were
$__________ and $___________ respectively.
* For the period October 1, 1999 (inception of offering) to May 31, 2000.
-50-
<PAGE> 54
WESTCORE SELECT FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000
-------------------------------------------------- ---------------
<S> <C>
Net asset value
Beginning of the period
-------------------------------------------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized
gain/(loss)
-------------------------------------------------- ---------------
Total income/(loss) from
investment operations
-------------------------------------------------- ---------------
DISTRIBUTIONS
-------------------------------------------------- ---------------
Dividends from net investment
income
Distributions from net realized
gain on investments
-------------------------------------------------- ---------------
Total distributions
-------------------------------------------------- ---------------
Net asset value, end of period
Total return
-------------------------------------------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands)
Ratio of expenses to average
net assets
Ratio of expenses to average
net assets without fee waivers
Ratio of net income/(loss) to
average net assets
Ratio of net investment
income/(loss) to average net
assets without fee waivers
Portfolio turnover rate(1)
-------------------------------------------------- ---------------
</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, 2000, were
$__________ and $___________ respectively.
* For the period October 1, 1999 (inception of offering) to May 31, 2000.
-51-
<PAGE> 55
WESTCORE BLUE CHIP FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 18.81 $ 18.15 $ 17.41 $ 14.70
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized 0.04 0.13 0.19 0.25
gain/(loss) on investments 1.07 4.66 3.65 4.03
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total income/(loss) from
investment operations 1.11 4.79 3.84 4.28
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
DISTRIBUTIONS
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Dividends from net investment
income (0.07) (0.14) (0.22) (0.27)
Distributions from net realized
gain on investments (2.62) (3.99) (2.88) (1.30)
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Total distributions (2.69) (4.13) (3.10) (1.57)
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
Net asset value, end of period $ 17.23 $ 18.81 $ 18.15 $ 17.41
Total return 7.42% 29.53% 24.28% 30.48%
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $ 69,354 $72,477 $66,450 $68,286
Ratio of expenses to average
net assets 1.15% 1.15% 1.15% 1.10%
Ratio of expenses to average
net assets without fee waivers 1.25% 1.23% 1.21% 1.25%
Ratio of net income/(loss) to
average net assets 0.19% 0.60% 1.02% 1.52%
Ratio of net investment
income/(loss) to average net 0.09% 0.52% 0.97% 1.38%
assets without fee waivers
Portfolio turnover rate (1) 73.39% 48.50% 43.47% 65.11%
-------------------------------------------- ---------------- ----------------- ---------------- ----------------- ----------------
</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, 2000, were
$___________ and $______________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-52-
<PAGE> 56
Financial Highlights
WESTCORE MID-CAP OPPORTUNITY FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31, 2000 1999*
-------------------------------------------------- --------------- ----------------
<S> <C> <C>
Net asset value
beginning of the period $10.00
-------------------------------------------------- --------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss) (0.01)
Net realized and unrealized
gain/(loss) 1.06
-------------------------------------------------- --------------- ----------------
Total income/(loss) from
investment operations 1.05
-------------------------------------------------- --------------- ----------------
DISTRIBUTIONS
-------------------------------------------------- --------------- ----------------
Dividends from net investment
income 0.00
Distributions from net realized
gain on investments 0.00
-------------------------------------------------- --------------- ----------------
Total distributions 0.00
-------------------------------------------------- --------------- ----------------
Net asset value, end of period $11.05
Total return 10.50%
-------------------------------------------------- --------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $2,585
Ratio of expenses to average
net assets 1.25%**
Ratio of expenses to average
net assets without fee waivers 5.33%**
Ratio of net income/(loss) to
average net assets (0.11%)**
Ratio of net investment
income/(loss) to average net (4.19%)**
assets without fee waivers
Portfolio turnover rate(1) 71.65%
-------------------------------------------------- --------------- ----------------
</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, 2000, were
$__________ and $___________ respectively.
* For the period October 1, 1998 (inception of offering) to May 28, 1999.
** Annualized.
-53-
<PAGE> 57
Financial Highlights
WESTCORE SMALL-CAP OPPORTUNITY FUND
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 26.71 $ 23.87 $ 21.35 $ 15.95
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized 0.08 0.01 0.03 0.04
gain/(loss) on investments (5.35) 6.83 3.37 5.86
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
Total income/(loss) from
investment operations (5.27) 6.84 3.40 5.90
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
DISTRIBUTIONS
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
Dividends from net investment
income (0.05) (0.03) (0.02) (0.06)
Distributions from net realized
gain on investments (1.21) (3.97) (0.86) (0.44)
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
Total distributions (1.26) (4.00) (0.88) (0.50)
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
Net asset value, end of period $ 20.18 $ 26.71 $ 23.87 $ 21.35
Total return (19.72%) 30.40% 16.28% 37.49%
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $88,635 $ 61,069 $35,962 $23,951
Ratio of expenses to average
net assets 1.30% 1.30% 1.30% 1.30%
Ratio of expenses to average
net assets without fee waivers 1.63% 1.66% 1.69% 2.20%
Ratio of net income/(loss) to
average net assets 0.37% 0.03% 0.11% 0.24%
Ratio of net investment
income/(loss) to average net 0.04% (0.33%) (0.28%) (0.67%)
assets without fee waivers
Portfolio turnover rate(1) 82.47% 78.48% 77.73% 47.83%
------------------------------------------ ---------------- ----------------- ---------------- ----------------- ----------------
</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, 2000, were
$_____________ and $__________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-54-
<PAGE> 58
Financial Highlights
WESTCORE FLEXIBLE INCOME FUND(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 10.36 $ 9.67 $ 9.59 $ 9.87
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized 0.57 0.60 0.62 0.61
gain/(loss) on investments (0.43) 0.96 0.26 (0.27)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total income/(loss) from
investment operations 0.14 1.56 0.88 0.34
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
DISTRIBUTIONS
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Dividends from net investment
income (0.57) (0.60) (0.63) (0.62)
Distributions from net realized
gain on investments (0.06) (0.27) (0.17) 0.00
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total distributions (0.63) (0.87) (0.80) (0.62)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Net asset value, end of period $ 9.87 $ 10.36 $9.67 $9.59
Total return 1.21% 16.63% 9.40% 3.41%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $21,789 $18,466 $20,160 $25,070
Ratio of expenses to average
net assets 0.95% 0.95% 0.95% 0.90%
Ratio of expenses to average
net assets without fee waivers 1.22% 1.23% 1.15% 1.07%
Ratio of net income/(loss) to
average net assets 5.47% 5.87% 6.37% 6.07%
Ratio of net investment
income/(loss) to average net 5.21% 5.58% 6.18% 5.90%
assets without fee waivers
Portfolio turnover rate(2) 15.97% 11.05% 27.76% 33.10%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
</TABLE>
(1) The Westcore Long-Term Bond Fund is the former name of the Westcore Flexible
Income Fund. The Fund's name was changed as of October 1, 2000 to reflect a
different investment objective and different investment policies. Prior to
October 1, 2000, the Fund's investment objective was to seek a long-term total
rate of return by investing primarily in investment grade bonds. As of October
1, 2000, the Fund's investment objective was revised to seek a long-term total
rate of return, consistent with preservation of capital. Past performance is not
intended to be indicative or representative of future performance.
(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 period ended May 31, 2000, were
$___________ and $___________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-55-
<PAGE> 59
Financial Highlights
WESTCORE PLUS BOND FUND(1)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $ 10.51 $ 10.23 $ 10.10 $ 10.27
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized 0.61 0.61 0.60 0.60
gain/(loss) on investments (0.24) 0.28 0.13 (0.17)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total income/(loss) from
investment operations 0.37 0.89 0.73 0.43
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
DISTRIBUTIONS
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Dividends from net investment
income (0.61) (0.61) (0.60) (0.60)
Distributions from net realized
gain on investments 0.00 0.00 0.00 0.00
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total distributions (0.61) (0.61) (0.60) (0.60)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Net asset value, end of period $ 10.27 $ 10.51 $ 10.23 $ 10.10
Total return 3.54% 8.88% 7.43% 4.26%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $ 41,155 $ 50,159 $63,169 $83,039
Ratio of expenses to average
net assets 0.85% 0.85% 0.85% 0.81%
Ratio of expenses to average
net assets without fee waivers 1.01% 0.98% 0.97% 0.92%
Ratio of net income/(loss) to
average net assets 5.72% 5.77% 5.81% 5.78%
Ratio of net investment
income/(loss) to average net 5.57% 5.65% 5.68% 5.67%
assets without fee waivers
Portfolio turnover rate(2) 24.68% 23.45% 27.47% 71.97%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
</TABLE>
(1) The Westcore Intermediate Term Bond Fund is the former name of the Westcore
Plus Bond Fund. The Fund's name was changed as of October 1, 2000 to reflect a
different investment objective and different investment policies. Prior to
October 1, 2000, the Fund's investment objective was to seek current income with
less volatility of principal than funds with longer maturities by investing
primarily in investment grade bonds. As of October 1, 2000, the Fund's
investment objective was revised to seek a long-term total rate of return,
consistent with preservation of capital, by investing primarily in investment
grade bonds of varying maturities. Past performance is not intended to be
indicative or representative of future performance.
(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 period ended May 31, 2000, were
$____________ and $_____________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-56-
<PAGE> 60
Financial Highlights
WESTCORE COLORADO TAX-EXEMPT FUND
<TABLE>
<CAPTION>
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
FOR THE YEAR ENDED MAY 31,* 2000 1999 1998 1997 1996
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value
beginning of the period $11.06 $10.78 $10.61 $10.70
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income/(loss)
Net realized and unrealized 0.47 0.50 0.50 0.52
gain/(loss) on investments (0.05) 0.28 0.17 (0.10)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total income/(loss) from
investment operations 0.42 0.78 0.67 0.42
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
DISTRIBUTIONS
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Dividends from net investment
income (0.47) (0.50) (0.50) (0.51)
Distributions from net realized
gain on investments 0.00 0.00 0.00 0.00
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Total distributions (0.47) (0.50) (0.50) (0.51)
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
Net asset value, end of period $11.01 $11.06 $10.78 $10.61
Total return 3.80% 7.32% 6.46% 3.97%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in
thousands) $45,506 $31,501 $21,348 $13,992
Ratio of expenses to average
net assets 0.53% 0.50% 0.50% 0.44%
Ratio of expenses to average
net assets without fee waivers 1.09% 1.17% 1.21% 1.43%
Ratio of net income/(loss) to
average net assets 4.21% 4.54% 4.73% 4.87%
Ratio of net investment
income/(loss) to average net 3.65% 3.87% 4.02% 3.88%
assets without fee waivers
Portfolio turnover rate(1) 12.12% 24.94% 30.78% 10.23%
---------------------------------------------- ---------------- ----------------- ---------------- ----------------- ---------------
</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, 2000, were
$________________ and $_________________, respectively.
*Year ended May 30 for 1997, Year ended May 29 for 1998 and Year ended May 28
for 1999.
-57-
<PAGE> 61
Appendix
APPENDIX I
PRIOR PERFORMANCE OF INVESTMENT ADVISER FOR GROWTH AND INCOME FUND
On January 1, 1996, the name of Westcore's "Equity Income Fund" was
changed to "Growth and Income Fund." The name change reflected a change to a
growth and income investment objective and changes to investment policies of
the Fund. This section provides performance information for the Investment
Adviser's growth and income-investing composite.
The table on page A-2 includes historical performance data of the
Investment Adviser for the only actual discretionary accounts managed by the
Investment Adviser during the periods indicated that had investment
objectives, policies, strategies and risks substantially similar to those of
the Westcore Growth and Income Fund. For the periods prior to October 1,
1995, the performance reflects that of a non-fee paying commingled account.
For the period from October 1, 1995, through June 30, 1997, performance
reflects that of the Growth and Income Fund. Subsequent to June 30, 1997,
the performance also includes that of separately managed account(s) advised
by the Investment Adviser. The Investment Adviser's Growth and Income
performance has been restated to reflect certain expenses, as set forth in
footnote 2 to the table.
The data is provided to illustrate the past performance of the Adviser
in managing substantially similar accounts as measured against a specified
market index and does not represent the performance of the Westcore Growth
and Income Fund. Investors should not consider this performance data as an
indication of future performance of the Westcore Growth and Income Fund or
of the Investment Adviser. Share prices and investment returns will
fluctuate reflecting market conditions, as well as changes in
company-specific fundamentals of portfolio securities. All returns presented
were calculated on a total return basis and include all dividends and
interest, accrued income and realized and unrealized gains and losses. All
returns reflect the deduction of custodial fees, if any, and brokerage
commissions and execution costs paid by the account, without provision for
federal or state income taxes. The performance presentation is not audited.
The commingled account and separately managed accounts whose
performance is reflected on the following page was not subject to the same
types of expenses to which the Westcore Growth and Income Fund is subject
nor to the diversification requirements, specific tax restrictions and
investment limitations imposed on the Westcore Growth and Income Fund by the
Investment Company Act or Subchapter M of the Internal Revenue Code.
Consequently, the performance results for the commingled account and
separately managed accounts could have been adversely affected if the
accounts had been regulated as an investment company under the federal
securities laws.
The Investment Adviser's advisory fee schedule for growth and income
investing is .65% of assets. Additional information concerning fees charged
for investment services offered by the Investment Adviser is contained in
Part II of the Investment Adviser's Form ADV, which is on file with the
Securities and Exchange Commission and is available upon request.
A-1
<PAGE> 62
Appendix
INVESTMENT ADVISER'S GROWTH AND INCOME PERFORMANCE
<TABLE>
<CAPTION>
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Westcore Growth and Assets Included in
Income Fund Investment Adviser's Adviser's Growth and
(formerly Westcore Growth and Income Income Performance(1) Standard & Poor's 500
Year(1) Equity Income Fund)(2) Performance(2) ($ thousands) Index(3)
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
1990 (2.80)% (3.67)% $42,455 (3.05)%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1991 31.21% 42.51% $58,368 30.46%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1992 4.96% 12.09% $63,106 7.63%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1993 11.33% 16.55% $72,620 10.08%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1994 (8.39%) (4.29)% $69,021 1.32%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1995 22.45% 29.53% $25,125 37.58%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1996 23.25% 22.85% $20,294 26.00%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1997 27.25% 27.84% $41,203 33.36%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1998 6.63% 8.74% $42,000 28.58%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1999 11.99% 10.28% $47,097 12.38%
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
2000 % % %
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Compounded Annual Return
For 5 Years Ended
June 30, 2000 % % -- %
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Compounded Annual Return
For 10 Years Ended
June 30, 1999 % % -- %
-------------------------- -------------------------- ------------------------- -------------------------- -------------------------
</TABLE>
(1) All periods are ended December 31 (and assets are provided at that date)
except 2000 figures are for period ended (and assets at) June 30, 2000, and
are not annualized.
A-2
<PAGE> 63
(2) Annual total return is presented for each year ended December 31 except for
period ended June 30, 2000, and compounded annual return is presented for
each period, net of expenses. The performance of the Westcore Growth and
Income Fund reflects voluntary fee waivers and/or expense reimbursements by
the adviser and administrators of the Westcore Growth and Income Fund. These
waivers and/or reimbursements may be modified or terminated. The Investment
Adviser's Growth and Income performance has been restated so that each
year's expenses reflect total expenses (before waivers) that were applicable
to the Westcore Growth and Income Fund for the fiscal year ended immediately
following that year.
(3) Annual total return is presented for each year ended December 31 except for
period ended June 30, 2000, and compounded annual return is presented for
each period. The S&P 500 Index is an unmanaged Index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the U.S. stock market. The Index
reflects the investment of income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses
of investing.
A-3
<PAGE> 64
PRIOR PERFORMANCE OF INVESTMENT ADVISER FOR WESTCORE PLUS BOND FUND
On October 1, 2000, the name of Westcore's "Intermediate-Term Bond
Fund" was changed to "Plus Bond Fund." The name change reflected changes to
the investment objective and investment policies of the Fund. This section
provides performance information for the Investment Adviser's Core Plus Bond
investing composite.
The table on page A-5 includes historical performance data of the
Investment Adviser for the only actual discretionary accounts managed by the
Investment Adviser during the periods indicated that had investment
objectives, policies, strategies and risks substantially similar to those of
the Westcore Plus Bond Fund. The Investment Adviser's Core Plus Bond
performance has been restated to reflect certain expenses, as set forth in
footnote 2 to the table.
The data is provided to illustrate the past performance of the Adviser
in managing substantially similar accounts as measured against a specified
market index and does not represent the performance of the Westcore Plus
Bond Fund. Investors should not consider this performance data as an
indication of future performance of the Westcore Plus Bond Fund or of the
Investment Adviser. Share prices and investment returns will fluctuate
reflecting market conditions, as well as changes in company-specific
fundamentals of portfolio securities. All returns presented were calculated
on a total return basis and include all dividends and interest, accrued
income and realized and unrealized gains and losses. All returns reflect the
deduction of custodial fees, if any, and brokerage commissions and execution
costs paid by the account, without provision for federal or state income
taxes. The performance presentation is not audited.
The separately managed accounts whose performance is reflected on the
following page was not subject to the same types of expenses to which the
Westcore Plus Bond Fund is subject nor to the diversification requirements,
specific tax restrictions and investment limitations imposed on the Westcore
Plus Bond Fund by the Investment Company Act or Subchapter M of the Internal
Revenue Code. Consequently, the performance results for the separately
managed accounts could have been adversely affected if the accounts had been
regulated as an investment company under the federal securities laws.
The Investment Adviser's advisory fee schedule for Core Plus Bond
investing is 0.45% of assets. Additional information concerning fees charged
for investment services offered by the Investment Adviser is contained in
Part II of the Investment Adviser's Form ADV, which is on file with the
Securities and Exchange Commission and is available upon request.
A-4
<PAGE> 65
INVESTMENT ADVISER'S CORE PLUS BOND PERFORMANCE
<TABLE>
<CAPTION>
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Westcore Plus Bond Fund Assets Included in
(formerly Westcore Investment Adviser's Adviser's Core Plus
Intermediate-Term Bond Core Plus Bond Bond Performance(1) Lehman Brothers
Year(1) Fund)(2) Performance(2) ($ thousands) Aggregate Bond Index(3)
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
<S> <C> <C> <C> <C>
1992 7.14% 8.98% $50,673 7.40%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1993 9.87% 12.45% $64,698 9.75%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1994 (3.38%) (4.22)% $61,736 (2.92%)
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1995 15.01% 20.67% $74,266 18.48%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1996 3.79% 4.34% $86,959 3.61%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1997 8.25% 10.46% $155,886 9.67%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1998 6.47% 8.62% $177,037 8.67%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
1999 0.40% (0.22%) $249,790 (0.83)%
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
2000 Not yet available Not yet available Not yet available Not yet available
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Compounded Annual Return
For 5 Years Ended Not yet available Not yet available Not yet available Not yet available
June 30, 2000
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
Compounded Annual Return
For 8 Years Ended Not yet available Not yet available Not yet available Not yet available
June 30, 2000
------------------------- -------------------------- ------------------------- -------------------------- -------------------------
</TABLE>
(1) All periods are ended December 31 (and assets are provided at that date)
except 2000 figures are for period ended (and assets at) June 30, 2000, and
are not annualized.
(2) Annual total return is presented for each year ended December 31 except for
period ended June 30, 2000, and compounded annual return is presented for
each period, net of expenses. The performance of the Westcore Plus Bond Fund
reflects voluntary fee waivers and/or expense reimbursements by the
A-5
<PAGE> 66
adviser and administrators of the Westcore Plus Bond Fund. These waivers
and/or reimbursements may be modified or terminated. The Investment
Adviser's Core Plus Bond performance has been restated so that each year's
expenses reflect total expenses (before waivers) that were applicable to the
Westcore Plus Bond Fund for the fiscal year ended immediately following that
year.
(3) Annual total return is presented for each year ended December 31 except for
period ended June 30, 2000, and compounded annual return is presented for
each period. The Lehman Brothers Aggregate Bond Index is an unmanaged index
generally representative of intermediate-term government bonds, investment
grade corporate debt securities and mortgage-backed securities. The Index
reflects the investment of income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses
or investing.
A-6
<PAGE> 67
Appendix
APPENDIX II
BOND RATING CATEGORIES
MOODY'S INVESTORS SERVICE, INC.
<TABLE>
<CAPTION>
BOND RATING EXPLANATION
----------- -----------
<S> <C>
AAA Highest quality, smallest degree of 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; may be
in default.
Con Bonds for which the security depends upon
completion of some act; rated conditionally.
</TABLE>
B-1
<PAGE> 68
Appendix
STANDARD & POOR'S RATINGS GROUP, DIVISION OF MCGRAW HILL
<TABLE>
<CAPTION>
BOND RATING EXPLANATION
----------- -----------
<S> <C>
AAA Highest rating; extremely strong capacity to
pay interest and repay principal.
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, the issuer's capacity to meet required
CC, C interest and principal payments.
BB - lowest degree of speculation, C - highest
degree of speculation. Quality and protective
characteristics outweighed by large
uncertainties or major risk exposure to
adverse conditions.
D In default.
</TABLE>
B-2
<PAGE> 69
[BACK COVER]
WHERE TO FIND MORE INFORMATION
More Fund information is available to you upon request and without charge:
ANNUAL AND SEMI-ANNUAL REPORT
The Annual and Semi-Annual Reports provide additional information about the
Funds' investments, performance and portfolio holdings. The Annual Report also
contains a discussion of the market conditions and investment strategies that
significantly affected the Funds' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI includes additional information about the Funds' investment policies,
organization and management. It is legally part of this prospectus (it is
incorporated by reference).
Investors can get free copies of the Funds' Annual Report, Semi-Annual Report or
SAI. They may also request other information about the Funds and make
shareholder inquiries.
WRITE TO: Westcore Funds
370 17th Street
Suite 3100
Denver, CO 80202
BY PHONE: 1-800-392-CORE (2673)
E-MAIL: www.westcore.com
Information about the Funds (including the Funds' SAI) can be reviewed and
copied at the Securities and Exchange Commission's Public Reference Room in
Washington, DC. Information about the operation of the Public Reference Room may
be obtained by calling the SEC at 1-202-942-8090. Reports and other information
about the Funds are available on the EDGAR Database on the SEC's Internet site
at www.sec.gov. Copies of this information may be obtained, upon payment of a
duplicating fee, by electronic request at [email protected] or by writing the
Public Reference Section of the SEC, Washington, DC 20549-0102.
The Westcore Funds Investment Company Act File No. is 811-3373
Funds distributed by ALPS Mutual Funds Services, Inc., member NASD.
WC110
512566
B-3
<PAGE> 70
WESTCORE TRUST
Statement of Additional Information
for
Westcore MIDCO Growth Fund
Westcore Blue Chip Fund
Westcore Growth and Income Fund
Westcore Small-Cap Opportunity Fund
Westcore Mid-Cap Opportunity Fund
Westcore Small-Cap Growth Fund
Westcore Select Fund
Westcore International Frontier Fund
Westcore International Select Fund
Westcore Micro-Cap Fund
Westcore International Small-Cap Value Fund
Westcore Flexible Income Fund
Westcore Plus Bond Fund
Westcore Colorado Tax-Exempt Fund
October 1, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE TRUST................................................................................................. 2
INVESTMENT OBJECTIVES AND POLICIES........................................................................ 3
NET ASSET VALUE........................................................................................... 33
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION............................................................ 34
DESCRIPTION OF SHARES..................................................................................... 37
ADDITIONAL INFORMATION CONCERNING TAXES................................................................... 38
MANAGEMENT OF THE FUNDS................................................................................... 40
CUSTODIAN AND TRANSFER AGENT.............................................................................. 50
EXPENSES.................................................................................................. 50
AUDITORS AND FINANCIAL STATEMENTS......................................................................... 51
COUNSEL................................................................................................... 51
CODES OF ETHICS........................................................................................... 51
ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS........................................................ 51
MISCELLANEOUS............................................................................................. 58
APPENDIX A................................................................................................ A-1
APPENDIX B................................................................................................ B-1
</TABLE>
1
<PAGE> 71
This Statement of Additional Information is meant to be read in conjunction
with the Funds' Prospectus dated October 1, 2000, as the same is revised from
time to time, and is incorporated by reference in its entirety into the
Prospectus for the particular Fund. 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. Copies of the
Funds' Prospectus dated October 1, 2000, may be obtained by calling
1-800-392-CORE (2673) or by writing ALPS Mutual Funds Services, Inc. at 370
Seventeenth Street, Suite 3100, Denver, Colorado 80202. The Financial Statements
and Independent Accountants Report thereon in this SAI are incorporated by
reference from the Funds' Annual Report, which may be obtained by writing the
address above or calling the toll-free number above. No other part of the Annual
Report is incorporated herein by reference. Capitalized terms used but not
defined herein have the same meanings as in the Prospectus.
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.
On January 1, 1996, the name of Westcore's "Equity Income Fund" was changed to
"Growth and Income Fund." On October 1, 2000, the names of Westcore's
"Intermediate-Term Bond Fund" and "Long-Term Bond Fund" were changed to "Plus
Bond Fund" and "Flexible Income Fund", respectively. Each name change reflected
a change to the investment objective and changes to investment policies of each
Fund.
The Trust is authorized to issue separate classes of shares representing
interests in separate investment portfolios. This Statement of Additional
Information pertains to the Westcore MIDCO Growth Fund, Westcore Blue Chip Fund,
Westcore Growth and Income Fund, Westcore Small-Cap Opportunity Fund, Westcore
Mid-Cap Opportunity Fund, Westcore Small-Cap Growth Fund, Westcore Select Fund,
Westcore International Frontier Fund, Westcore International Select Fund,
Westcore Micro-Cap Fund, Westcore International Small-Cap Value Fund, Westcore
Flexible Income Fund, Westcore Plus Bond Fund and Westcore Colorado Tax-Exempt
Fund (each, a "Fund" and collectively, the "Funds"). The Westcore MIDCO Growth
Fund, Westcore Blue Chip Fund, Westcore Growth and Income Fund, Westcore Mid-Cap
Opportunity Fund, Westcore Small-Cap Opportunity Fund, Westcore Small-Cap Growth
Fund, Westcore Select Fund, Westcore International Frontier Fund, Westcore
International Select Fund, Westcore Micro-Cap Fund and Westcore International
Small-Cap Value Fund are sometimes referred to as the "Westcore Equity Funds."
The Westcore Flexible Income Fund, Westcore Plus Bond Fund and Westcore Colorado
Tax-Exempt Fund are sometimes referred to as the "Westcore Bond Funds." For
information concerning any investment portfolios offered by the Trust, contact
ALPS Mutual Fund Services, Inc. ("ALPS") at 370 Seventeenth Street, Suite 3100,
Denver, Colorado 80202 or call 1-800-392-CORE (2673).
2
<PAGE> 72
INVESTMENT OBJECTIVES AND POLICIES
The Trust is an open-end, management investment company. The Funds (other
than the Westcore Select, International Select, Micro-Cap and Colorado
Tax-Exempt Funds, which are non-diversified) are diversified portfolios of the
Trust.
The Prospectuses for the Funds describe the Funds' investment objectives.
The following information supplements and should be read in conjunction with the
description of the investment objective and principal strategies for each Fund
in the Prospectuses.
Portfolio Transactions
Denver Investment Advisors LLC ("Denver Investment Advisors" or the
"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.
The portfolio turnover rates for the MIDCO Growth Fund, Small-Cap Growth
Fund, Select Fund, Mid-Cap Opportunity Fund and Small-Cap Opportunity Fund for
the fiscal year ended May 31, 2000 are primarily attributable to the timing of
redemptions and the price volatility experienced within many industries over the
past year, especially within the technology industry. It is anticipated that the
Micro-Cap Fund and International Select Fund will experience high portfolio
turnover rates as these are "non-diversified" Funds which may require additional
portfolio transactions to meet their investment objectives, especially if the
Funds continue to experience significant price volatility across many
industries. It is anticipated that the Flexible Income Fund and Plus Bond Fund
will experience higher than normal turnover rates during the current fiscal
year as the Funds adjust their holdings to comply with their new investment
objectives and policies.
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, 2000, May 28, 1999 and May 29, 1998, the Funds paid the following
amounts in brokerage commissions:
3
<PAGE> 73
Brokerage Commissions Paid
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
MAY 30, 2000 MAY 28, 1999 MAY 29, 1998
------------- ------------ ------------
<S> <C> <C>
Westcore MIDCO Growth Fund $ 944,694 $ 793,591
Westcore Blue Chip Fund 99,420 74,156
Westcore Growth and Income Fund 24,139 14,776
Westcore Small-Cap Opportunity Fund 288,092 113,825
Westcore Mid-Cap Opportunity Fund 6,468 N/A
---------- ----------
Westcore Small-Cap Growth Fund
Westcore Select Fund
Westcore International Frontier Fund
Aggregate Commissions $1,362,813 $ 996,348
========== ==========
</TABLE>
For the same periods the Westcore Flexible Income Fund, Westcore Plus Bond
Fund and Westcore Colorado Tax-Exempt Fund did not pay any brokerage
commissions. During the fiscal years ended May 31, 2000, May 28, 1999 and May
29, 1998, 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 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 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
4
<PAGE> 74
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, 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 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 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, 2000,
the Westcore Mid-Cap Opportunity Fund and the Westcore Plus 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
May 31, 2000, the Westcore Mid-Cap Opportunity Fund's aggregate holdings of
securities of Lehman Brothers Holdings Inc. was $________. As of May 31, 2000,
the Westcore Plus Bond Fund's aggregate holdings of securities of Merrill Lynch
& Co. Inc. was $________.
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 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 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 Westcore Colorado Tax-Exempt Fund will not purchase securities
during the existence of any underwriting group or related selling group of which
ALPS, the 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.
5
<PAGE> 75
Investment decisions for each Fund are made independently from those for
the other Funds and investment companies and accounts advised or managed by the
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 Investors Service, Inc ("Moody's") and Standard & Poor's Ratings Group
("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 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.
Debt Securities
The Westcore Plus Bond Fund and Westcore Flexible Income Fund invest at
least 65% of their respective total assets in a broad range of debt securities
during normal market conditions.
Tax-Exempt Obligations (Westcore Bond Funds)
Tax-Exempt 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
6
<PAGE> 76
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
"Tax-Exempt Obligations" only if the interest paid thereon is exempt from
regular federal income tax and, for the Westcore 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 Tax-Exempt Obligations held by the Westcore 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 Westcore Colorado Tax-Exempt Fund will invest most of its
assets, under normal circumstances, in intermediate-term Tax-Exempt Obligations,
the Fund may also invest 25% or more of its net assets in industrial development
bonds, 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. To the extent
that the Fund's assets are concentrated in these types of Tax-Exempt 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.
Within the types of Tax-Exempt 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 Tax-Exempt Obligations and are generally valued at par or less
than par in the open market.
There are variations in the quality of Tax-Exempt Obligations both within a
particular classification and between classifications, and the yields on
Tax-Exempt 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.
7
<PAGE> 77
Payment on Tax-Exempt 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
Tax-Exempt Obligations.
Certain investments of the Funds are subject to the federal alternative
minimum tax. These securities are not considered to be Tax-Exempt Obligations
for purposes of the Fund's policy to invest at least 80% of assets in Tax-Exempt
Obligations.
Stand-By Commitments (Westcore Colorado Tax-Exempt Fund)
The Fund may acquire stand-by commitments with respect to Tax-Exempt
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 Tax-Exempt
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 Tax-Exempt 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 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 Tax-Exempt
Obligations that are subject to the commitment. In evaluating the
creditworthiness of the issuer of a stand-by commitment, the 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 Tax-Exempt 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.
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Special Considerations Regarding Investments in Colorado Obligations (Westcore
Colorado Tax-Exempt Fund)
The concentration of the Westcore 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.
Economic Factors. Based on data published by the State of Colorado, Office
of State Planning and Budgeting as presented in the Colorado Economic
Perspective, State Revenue and Economic Projections through FY 2003-04, dated
June 20, 1999 and on similar data from earlier year reports (the "Economic
Report"), nearly 54% of non-agricultural employment in Colorado in 1998 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 15.7% and 10.1%, respectively, of non-agricultural employment in
the State in 1998. The Office of Planning and Budgeting projects similar
concentrations for calendar years 1999 and 2000.
According to the Economic Report, the Colorado unemployment rate rose
slightly from 3.3% in 1997 to 3.8% in 1998. The unemployment rate is expected to
remain at a low 3.3% during 1999. Total retail sales increased by 6.4% during
calendar year 1998. Colorado continued to surpass the non-agricultural
employment growth rate of the U.S., with a 3.6% rate of growth for Colorado in
1998, as compared with 2.5% for the nation as a whole. Employment growth is
expected to remain healthy, although to slow slightly to 3.1% in the year 2000.
Income rose 8.2% in Colorado during 1998, as compared with an increase of
5.8% for the nation as a whole.
Restrictions of Appropriation and Revenues. The State Constitution requires
that expenditures for any fiscal year not exceed revenues for such fiscal year.
By statute, the amount of 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
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General Fund. For fiscal years 1994 and thereafter, the Unappropriated Reserve
requirement is 4% of total appropriations from the General Fund. 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 1998-99 ending General
Fund reserve will be $645.8 million, which is $457.6 million over the statutory
four percent reserve requirement. The 1997-1998 fiscal year ending General Fund
balance was $901.0 million, or $724.0 million over the statutory four percent
reserve requirement. Based on the Economic Report estimates, the fiscal year
1999-00 ending General Fund reserve is expected to be approximately $454.7
million, or $255.1 million over the statutory reserve requirement.
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 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, the 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
were fiscal year 1992 spending and 1991 property taxes collected in 1992. The
bases for spending and revenue limits for each subsequent fiscal years are
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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 taxes, 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 deals 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. Recently, the Colorado Supreme Court ruled that Notes
to be issued by the state the repayment of which was subject to legislative
appropriation must be approved by the voters under the Amendment. The Court
distinguished these Notes from lease-purchase agreements. 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 an enterprise. Additional
litigation in the "enterprise" arena may be filed in the future to clarify these
issues. The Colorado Supreme Court also has decided that 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 1997, general fund
revenues (adjusted for cash funds that are exempt from the Amendment) were
$5,348.0 million and program revenues (cash funds) were $2,087.2 million, for
revenues totaling $7,435.2 million. During calendar year 1996, population and
inflation grew at rates of 3.5% and 2.0%, respectively, for a combined total
limit of 5.5%. Accordingly, under the Amendment, increases in State expenditures
during the 1997-98 fiscal year could not exceed $6,872.0 million and the actual
1997-98 general fund and program revenues of $7,435.2 million were over the
limit. In November, 1998, the voters defeated a proposition to permit the State
to keep and spend a portion of the surplus, thus the excess of $563.2 million
was refunded to Colorado taxpayers. The estimated limitation for fiscal year
1998-99 is 5.3% over the revenue limit for the 1998-99 fiscal year; accordingly,
1998-99 fiscal year revenues cannot exceed an estimate of $7,236.2 million.
Fiscal year 1998-99 revenues are estimated to be $528.8 million over the
limitation which means that there will likely be another refund.
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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.
Because of the significant anticipated surpluses, many permanent tax
reductions were passed by the General Assembly in early 1999 and signed into law
by the Governor. In total, taxes were permanently reduced by $237.8 million in
fiscal year 2000-01, the first full year of the majority of the tax cuts. The
largest tax cut was a reduction in the income tax rate to 4.75%, effective
January 1, 1999 (previously Colorado's income tax rate was 5.0%). Even given
these tax cuts, the Office of State Planning and Budgeting expects Colorado to
exceed its revenue limit by $686.3 million in fiscal year 1998-99 and expects
the surplus to reach $1,035.6 million by fiscal year 2003-04.
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
Fund ending balances at June 20 of approximately $320.4 million in fiscal year
1994, $408.0 million for fiscal year 1995, $368.5 million for fiscal year 1996
and $514.1 million for fiscal year 1997, and $645.8 million for fiscal year
1998.
For fiscal year 1997-98, the following tax categories generated the
following percentages of the State's $5,401.2 million total revenues (accrual
basis): individual income taxes represented 56% of gross fiscal year 1997-98
receipts; sales, use, and other excise taxes represented 30.0% of gross fiscal
year 1997-98 receipts; and corporate income taxes represented 4.9% of gross
fiscal year 1997-98 receipts. For fiscal year 1998-99, General Fund revenues of
approximately $5,766.4 million and appropriations of approximately $5,850.3
million are projected. The percentages of General Fund revenue generated by type
of tax for fiscal year 1999-00 are not expected to be significantly different
from fiscal year 1998 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. The State
has submitted to the voters of the State at the
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November 2, 1999 election a question of issuing $1,700,000,000 of revenue
anticipation notes. The proceeds of the notes are to be used for highway
purposes.
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.
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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. 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 ("Fannie Mae"), General Services
Administration, Central Bank for Cooperatives, Federal Home Loan Mortgage
Corporation ("Freddie Mac"), 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 Fannie Mae,
are supported by the discretionary authority of the U.S. Government to purchase
the agency's obligations; still others, such as those of the Freddie Mac, 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 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, negotiable certificates of
deposit and non-negotiable time deposits, including instruments issued or
supported by the credit of U.S. or foreign banks. Although the Funds will invest
in obligations of foreign banks or foreign branches of U.S. banks only where the
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 in the obligations of foreign
banks and foreign branches of U.S. banks will not exceed 20% and 25%,
respectively, of each Fund's 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
Adviser at the time of purchase to be of comparable quality.
Each Fund may invest in short-term funding agreements. A funding agreement
is a contract between an issuer and a purchaser that obligates the issuer to pay
a guaranteed rate of
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interest on a principal sum deposited by the purchaser. Funding agreements will
also guarantee the return of principal and may guarantee a stream of payments
over time. A funding agreement may have either a fixed rate or variable interest
rate that is based on an index and guaranteed for a set time period. The Funds
intend to invest only in funding agreements which have a put feature which may
be exercised on seven days' notice.
For the Westcore 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 Westcore 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 Adviser,
suitable tax-exempt obligations are unavailable. There is no percentage
limitation on the amount of assets which may be held uninvested by the Westcore
Colorado Tax-Exempt Fund.
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. The 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 Tax-Exempt 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 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
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."
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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.
A Fund will enter into repurchase agreements only with financial
institutions deemed to be creditworthy by the Adviser. 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.
Reverse Repurchase Agreements (All Westcore Funds)
Each Fund may borrow 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.
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 of counterparty default and
possible loss of collateral held by the counterparty. In addition, 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 (All Westcore Funds other than the Colorado Tax-Exempt
Fund)
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. Risk of loss upon default by the borrower is
significantly greater because lower-rated securities are generally unsecured and
are often subordinated to other creditors of the issuer, and because the issuers
frequently have high levels of indebtedness and are more sensitive to adverse
economic conditions, such as recessions, individual corporate developments and
increasing interest rates, than are investment grade issuers. As a result, the
market price of such securities, and the net asset value of a Fund's shares, may
be particularly volatile. 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 because of changes in the
issuer's creditworthiness; (e) the adverse impact that legislation restricting
lower-rated securities may have on their market; (f) the operation of mandatory
sinking fund or call/redemption provisions during periods of declining interest
rates whereby the Fund may be required to reinvest premature redemption proceeds
in lower yielding portfolio securities; and (g) the creditworthiness of issuers
of such securities. During an economic downturn or substantial period of rising
interest rates, highly leveraged issuers may experience financial stress which
would adversely affect their ability to service their principal and interest
obligations, to meet projected business goals and to obtain additional
financing. An economic downturn could also disrupt the market for lower-rated
bonds generally and adversely affect the value of outstanding bonds and the
ability of issuers to repay principal and interest. If the issuer of a
lower-rated debt obligation held by the Fund defaulted, the Fund could incur
additional expenses to seek recovery. 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 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 Adviser
decides this is appropriate.
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Securities Lending (All Westcore Funds other than the Colorado Tax-Exempt Fund,
Westcore Small-Cap Growth Fund, Westcore Select Fund, Westcore International
Frontier Fund, Westcore Micro-Cap Fund, Westcore International Select and
Westcore International Small-Cap Value Fund)
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 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. Cash collateral
also may be invested in privately-placed interests in a trust or other entity,
which may be affiliated, which invests solely in the instruments permitted for
investment of cash collateral. Such investments are further described under the
caption "Securities Issued by Other Investment Companies; Other Entities
Investing in Money Market Instruments." 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.
Collateral for such securities loans may include cash, securities of the
U.S. Government, its agencies or instrumentalities or an irrevocable letter of
credit issued by a bank which meets the investment standards of a Fund and whose
securities are eligible for purchase under the objectives, policies and
limitations of the Fund.
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
seven days, certain municipal leases and certain securities that are not
registered under the securities laws. Securities that are not registered under
the Securities Act of 1933, as amended, but that may be purchased by
institutional buyers under Rule 144A are subject to this limitation unless the
Adviser under the supervision of the Board determines that a liquid trading
market exists. 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.
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, as amended, for resales of certain securities to qualified
institutional buyers. The Adviser believes that the market for
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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 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 (All Westcore 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.
Asset-Backed Securities (Westcore Bond Funds, other than the Westcore 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.
Asset-backed securities are 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.
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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 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 (Westcore Bond Funds, other than the Westcore
Colorado Tax-Exempt Fund)
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.
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The Funds may purchase mortgage-related securities that are secured by
entities such as Government National Mortgage Association ("GNMA"), Fannie Mae,
Freddie Mac, 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 Fannie Mae guaranteed Mortgage
Pass-Through Certificates which are solely the obligations of Fannie Mae, 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. Fannie Mae
is a government-sponsored organization owned entirely by private stockholders.
Fannie Mae guaranteed Mortgage Pass-Through Certificates are guaranteed as to
timely payment of principal and interest by Fannie Mae. Mortgage-related
securities include Freddie Mac Mortgage Participation Certificates (also known
as "PCs"). Freddie Mac 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 Mac PCs are not guaranteed and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Mac
PCs entitle the holder to timely payment of interest, which is guaranteed by the
Freddie Mac. Freddie Mac guarantees either ultimate collection or timely payment
of all principal payments on the underlying mortgage loans. When Freddie Mac
does not guarantee timely payment of principal, Freddie Mac 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 Fund 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 Funds' 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
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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,
Fannie Mae and Freddie Mac, 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 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.
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Options (All Westcore Funds, other than the Westcore Colorado Tax-Exempt Fund)
Each Fund, other than the Westcore 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 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 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% of its net assets 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.
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
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technique of a Fund. If the 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-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.
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
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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 (All Westcore Funds, other than the Westcore
Colorado Tax-Exempt Fund)
These Funds may invest to 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 futures contracts are: (1) options and futures may fail as
hedging techniques when 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 because of unanticipated market movements
are potentially unlimited; and (4) gains and losses on investments in options
and futures depend on the Adviser's ability to correctly predict the direction
of securities prices, interest rates and other economic factors.
For a detailed description of futures contracts and related options, see
Appendix B to this Statement of Additional Information.
Foreign Securities (All Westcore Funds, other than the Westcore Colorado
Tax-Exempt Fund)
Each Fund may invest in 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
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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. Up to 25% of the
MIDCO Growth, Growth and Income, Blue Chip, Mid-Cap Opportunity, Small-Cap
Growth, Select, Small-Cap Opportunity and Micro-Cap Funds' 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 ADRs.
Developing countries may impose restrictions on a Fund's ability to
repatriate investment income or capital. Even if there is no outright
restriction on repatriation of investment income or capital, the mechanics of
repatriation may affect certain aspects of the operations of the Fund.
Some of the currencies in emerging markets have experienced devaluations
relative to the U.S. dollar, and major adjustments have been made periodically
in certain of such currencies. Certain developing countries face serious
exchange constraints.
Lastly, governments of some developing countries exercise substantial
influence over many aspects of the private sector. In some countries, the
government owns or controls many companies, including the largest in the
country. As such, government actions in the future could have a significant
impact on economic conditions in developing countries in these regions, which
could affect private sector companies, a Fund and the value of its securities.
Furthermore, certain developing countries are among the largest debtors to
commercial banks and foreign governments. Trading in debt obligations issued or
guaranteed by such governments or their agencies and instrumentalities involves
a high degree of risk.
Foreign Currency Exchange Transactions (All Westcore Funds, other than the
Westcore Colorado Tax-Exempt Fund)
These Funds may buy and sell securities and receive amounts denominated in
currencies other than the U.S. dollar, and 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
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contracts. Under a forward currency exchange contract, 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. Forward currency exchange transactions 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 a Fund's portfolio
securities or in foreign exchange rates or prevent loss if the prices of these
securities should decline. In addition, 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.
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.
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 delivery occurs. Because a Fund is required to hold and maintain
in a segregated account until the settlement date cash, U.S. Government
securities or liquid assets, in an amount sufficient to
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meet the purchase price, the Fund's 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.
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; Other Entities Investing in
Money Market Instruments (All Westcore Funds)
Securities issued by other investment companies may be acquired by the
Funds within the limits prescribed by the 1940 Act. The Funds also may invest in
privately-placed interests in a trust or other entity, which may be affiliated,
which invests solely in high quality, short-term, U.S. dollar denominated money
market instruments of U.S. and foreign issuers. The Westcore 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 per share on the amortized cost or penny-rounding method.
When a Fund
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invests in another investment company or in another type of entity as described
above, it pays its 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.
Derivative Instruments (All Westcore Funds)
Each Fund may purchase certain "derivative" instruments. 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 (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.
Temporary Defensive Position
The Westcore Equity and Bond Funds may, from time to time, take temporary
defensive positions that are inconsistent with their principal investment
strategies in attempting to respond to adverse market, economic, political, or
other conditions as follows:
The Westcore Equity Funds 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 1940 Act) and dollar denominated debt obligations of foreign issuers
including foreign corporations and governments and Tax-Exempt Obligations. 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.
The Westcore Bond Funds 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.
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The Westcore Colorado Tax-Exempt Fund may invest in short-term taxable
money market instruments, securities issued by other investment companies that
invest in taxable or tax-exempt money market instruments and U.S. government
obligations.
Equity and Equity-Related Securities in Plus Bond and Flexible Income Funds
The Westcore Flexible Income and Plus Bond Funds may invest in obligations
convertible into common stock and may acquire common stocks, warrants or other
rights to buy shares.
Real Estate Investment Trusts (REITs) (All Westcore Funds other than Westcore
Colorado Tax-Exempt Fund
The Funds other than the Westcore Colorado Tax-Exempt Fund may invest in
REITs directly and/or in debt securities issued by REITs, as further described
in the Prospectuses.
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 Westcore Colorado Tax-Exempt Fund.)
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<PAGE> 100
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 Westcore Equity or Westcore Bond Funds (other than the Colorado
Tax Exempt Fund, Select Fund, International Select Fund and Micro-Cap Fund) 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.
The Colorado Tax Exempt Fund, Select Fund, International Select Fund and
Micro-Cap Fund may not:
1. 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.
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<PAGE> 101
None of the Westcore Equity or Westcore Bond Funds may:
1. 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.
2. 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.
3. 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.
4. 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.
For purposes of limitation No. 1 above, "total assets" includes the
value of the collateral for the securities loans.
The Westcore 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 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.
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<PAGE> 102
4. 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.
5. 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.
If a percentage limitation or other statistical requirement is met at the
time a Fund makes an investment, a later change in the percentage because of a
change in the value of the Fund's portfolio securities generally will not
constitute a violation.
NET ASSET VALUE
The net asset value per share of each Fund is calculated as set forth in
the Prospectuses 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. 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.
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<PAGE> 103
London closing quotes for exchange rates are used to convert foreign
security values into U.S. dollars. Forward foreign currency exchange contracts
are valued based on the closing prices of the foreign currency contract rates in
the London foreign exchange markets on a daily basis as provided by a reliable
pricing vendor.
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 which 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.
Shares of all Westcore Funds may be exchanged for shares of all other
Westcore Funds.
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 Fund's 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
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<PAGE> 104
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 - All Westcore Funds
Individual Retirement Accounts. The Trust has available a plan (the
"Traditional 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 a
Traditional IRA for his or her nonworking spouse under age 70 1/2. Distribution
of an individual's Traditional IRA assets (and earnings thereon) before the
individual attains age 59 1/2 will (with certain exceptions) result in an
additional 10% tax on the amount included in the individual's gross income.
Earnings on amounts contributed to the Traditional IRA are not subject to
federal income tax until distributed.
The Trust also has available a Roth Individual Retirement Account (the
"Roth IRA") for retirement saving for use by individuals with compensation for
services rendered. A single individual with adjusted gross income of up to
$110,000 may contribute to a Roth IRA (for married couples filing jointly, the
adjusted gross income limit is $160,000), and contributions may be made even
after the Roth IRA owner has attained age 70 1/2, as long as the account owner
has earned income. Contributions to a Roth IRA are not deductible. Earnings on
amounts contributed to a Roth IRA, however, are not subject to federal income
tax when distributed if the distribution is a "qualified distribution" (i.e.,
the Roth IRA has been held for at least five years beginning with the first tax
year for which a contribution was made to any Roth IRA of the account owner and
the distribution is due to the account owner's attainment of age 59 1/2,
disability or death, or for qualified first-time homebuyer expenses). A
non-qualified distribution of an individual's Roth IRA assets (and the earnings
thereon) will subject the earnings to federal income tax and will (with certain
exceptions) result in an additional 10% tax on the amount included in the
individual's gross income.
The Trust permits certain employers (including self-employed individuals)
to make contributions to employees' Traditional IRAs if the employer establishes
a Simplified Employee Pension ("SEP") plan and/or a Salary Reduction SEP
("SARSEP"). Although SARSEPs may not be established after 1996, employers may
continue to make contributions to SARSEPs established before January 1, 1997,
under the pre-1997 federal tax law. A SEP permits an employer to make
discretionary contributions to all of its employees' Traditional IRAs (employees
who have not met certain eligibility criteria may be excluded) equal to a
uniform percentage of each employees' compensation (subject to certain limits).
If an employer (including a self-employed individual) established a SARSEP
before January 1, 1997, employees
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<PAGE> 105
may defer a percentage of their compensation -- pre-tax -- to Traditional 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
Traditional IRA. For example, contributions to an employee's Traditional 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.
The Trust also has available a plan (the "Education IRA") for use by
individuals who wish to use shares of the Funds as a funding medium to save for
a child's qualified higher-education expenses. An Education IRA is actually an
educational savings account and not a retirement account. An individual who
meets certain income limitations may make nondeductible contributions to an
Education IRA on behalf of any child who is under age 18. However, the aggregate
of all contributions to all Education IRAs for each child is limited to $500 per
year. Contributions to the Education IRA grow tax-free. Withdrawals are not
subject to federal income tax if used for qualified higher-education expenses
such as room, board and tuition, and if the child's qualified higher-education
expenses for the year are at least as great as the amount of the withdrawals for
that year. Distribution of the earnings in the Education IRA which are not used
for qualified higher-education expenses will (with certain exceptions) result in
an additional 10% tax on the amount includible in gross income. Any balance
remaining in the Education IRA when the child attains age 30 must generally be
distributed to the child and will be includible in the child's gross income.
Savings Incentive Match Plan for Employees of Small Employers. The Trust
also has available a simplified tax-favored retirement plan for employees of
small employers (a "SIMPLE IRA Plan"). If an employer establishes a SIMPLE IRA
Plan, contributions under the Plan are made to eligible employees' SIMPLE
individual retirement accounts ("SIMPLE IRAs"). Each eligible employee may
choose to defer a percentage of his or her pre-tax compensation to the
employee's SIMPLE IRA. The employer must generally make an annual matching
contribution to the SIMPLE IRA of each eligible employee equal to the employee's
salary reduction contributions, up to a limit of 3 percent of the employee's
compensation. Alternatively, the employer may make an annual non-discretionary
contribution to the SIMPLE IRA of each eligible employee equal to 2 percent of
each employee's compensation. As with contributions to an employee's IRA
pursuant to a SEP and/or SARSEP, the Code provides tax benefits for
contributions by an employer, pursuant to a SIMPLE IRA Plan, to an employee's
SIMPLE IRA. For example, contributions to an employee's SIMPLE IRA are
deductible (subject to certain limits) and the contributions and earnings
thereon are not taxed until distributed.
In the SIMPLE IRA Plan and the Traditional, Roth and Education IRAs,
distributions of net investment income and capital gains will be automatically
reinvested.
The foregoing brief descriptions are not complete or definitive
explanations of the SIMPLE IRA Plan, the Education IRA or the Traditional or
Roth IRA available for investment in the Funds. Any person who wishes to
establish a retirement plan account may do so by contacting an Investor Service
Representative at 1-800-392-CORE (2673). The complete Plan documents and
applications will be provided to existing or prospective shareholders upon
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<PAGE> 106
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. Currently, there are fourteen classes
of shares authorized.
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 of a particular Fund, 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 contracts and the election of trustees may be
effectively acted upon by shareholders of the Trust voting without regard to
particular Funds.
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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. Furthermore, 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. 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.
The trustees' decision to liquidate a portfolio may result from various
factors which lead the trustees to believe that such action would be advisable.
For example, there may be poor market conditions, the Fund may be unable to
attract or retain sufficient investments or unforeseen expenses may hinder the
Fund's ability to provide competitive returns. Liquidation of a portfolio could
have negative tax consequences for a shareholder.
ADDITIONAL INFORMATION CONCERNING TAXES
Each Fund intends to qualify as a regulated investment company under
Subchapter M of the Internal Revenue Code, and to distribute out all, or
substantially all, of its income to shareholders each year, so that the Fund
itself generally will be relieved of federal income and excise taxes. If a Fund
were to fail to so qualify: (1) the Fund would be taxed at regular corporate
rates without any deduction for distributions to shareholders; and (2)
shareholders would be taxed as if they received ordinary dividends, although
corporate
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<PAGE> 108
shareholders could be eligible for the dividends received deduction. Moreover,
if a Fund were to fail to make sufficient distributions in a year, the Fund
would be subject to corporate income taxes and/or excise taxes in respect of the
shortfall or, if the shortfall is large enough, the Fund could be disqualified
as a regulated investment company.
A 4% nondeductible excise tax is imposed on regulated investment companies
that fail to distribute with respect to each calendar year at least 98% of their
ordinary taxable income for the calendar year and capital gain net income
(excess of capital gains over capital losses) for the one year period ending
October 31 of such calendar year and 100% of any such amounts that were not
distributed in the prior year. 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.
Dividends declared in October, November or December of any year that are
payable to shareholders of record on a specified date in such months will be
deemed to have been received by shareholders and paid by a Fund on December 31
of such year if such dividends are actually paid during January of the following
year.
For the Colorado Tax-Exempt Fund to pay tax-exempt dividends for any
taxable year, at least 50% of the aggregate value of the Fund's assets at the
close of each quarter of the Fund's taxable year must consist of exempt-interest
obligations.
An investment in the Colorado Tax-Exempt Fund is not intended to constitute
a balanced investment program. Shares of the Colorado Tax-Exempt 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 individual
retirement accounts because such plans and accounts are generally tax-exempt
and, therefore, not only would the shareholder not gain any benefit from the
Fund's dividends being tax-exempt, but such dividends would be ultimately
taxable to the beneficiaries when distributed. In addition, the Colorado
Tax-Exempt 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 use" is defined under U.S. Treasury
Regulations to include a non-exempt person who (i) regularly uses a part of such
facilities in his or her 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, (ii) occupies more
than 5% of the usable area of such facilities or (iii) are persons 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.
The tax principles applicable to transactions in financial instruments and
futures contacts and options that may be engaged in by a Fund, and investments
in passive foreign investment companies ("PFICs"), are complex and, in some
cases, uncertain. Such transactions and investments may cause a Fund to
recognize taxable income prior to the receipt of cash, thereby requiring the
Fund to liquidate other positions, or to borrow money, so as to make sufficient
distributions to shareholders to avoid corporate-level tax. Moreover, some or
all of the taxable income recognized may be ordinary income or short-term
capital gain, so that the
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<PAGE> 109
distributions may be taxable to shareholders as ordinary income. In addition, in
the case of any shares of a PFIC in which a Fund invests, the Fund may be liable
for corporate-level tax on any ultimate gain or distributions on the shares if
the Fund fails to make an election to recognize income annually during the
period of its ownership of the shares.
The Funds will be required in certain cases to withhold and remit to the
United States treasury 31% of the taxable dividends or gross sale proceeds paid
to any shareholder who (i) has failed to provide a correct tax identification
number, (ii) is subject to back-up withholding by the Internal Revenue Service
for failure to properly include on his or her return payments of taxable
interest or dividends, or (iii) has failed to certify to the Funds that he or
she is not subject to back-up withholding when required to do so or that he or
she is an "exempt recipient."
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:
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name, Age and Address the Trust Other Affiliations
--------------------- --------- ------------------
<S> <C> <C>
JACK D. HENDERSON, 73(1) Chairman, Trustee Attorney, Jack D. Henderson, Self-Employed
1600 Broadway Attorney-at-Law since 1995; prior thereto partner of
Suite 1410 the law firm of Clanahan, Tanner, Downing &
Denver, Colorado 80202 Knowlton, P.C., Denver, Colorado from April 1989
through October 1995; Trustee of Pacifica Funds Trust
through August 1996; prior thereto self-employed
Pacific America Fund attorney since 1952.
McNEIL S. FISKE, 67 Trustee Chairman of the Board, MacCourt Products (plastics
P.O. Box 6154 manufacturer); Director, Scientific Software
Littleton, Colorado 80121 Corporation through December 31, 1994.
JAMES B. O'BOYLE, 72 Trustee Business Consultant.
6115 West Mansfield
Avenue, #239
Denver, Colorado 80235
</TABLE>
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<PAGE> 110
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name, Age and Address the Trust Other Affiliations
--------------------- --------- ------------------
<S> <C> <C>
ROBERT L. STAMP, 68 Trustee Prior to April 1995, Vice President of Finance,
6855 So. Depew Street Treasurer and Assistant Secretary, The Gates
Littleton, Colorado 80123 Corporation (rubber company); Vice President, The
Gates Rubber Company; Trustee of Pacific American
Fund through September 1994.
LYMAN E. SEELY, 82 Trustee Director of OECO since May 1983; Director of McCall
14795 Northeast Oil and Chemical Co. since 1983; Director of Great
Lawnview Circle Western Chemical Co. since 1983.
Aurora, Oregon 97002
KENNETH V. PENLAND, 58 President Chairman and Chief Executive Officer, Denver
Denver Investment Investment Advisors LLC (and its predecessor) since
Advisors LLC March 1983; Chairman, Blue Chip Value Fund.
1225 17th Street-26th Fl.
Denver, Colorado 80202
JASPER R. FRONTZ, 31 Treasurer Treasurer, Blue Chip Value Fund, Inc. since November
Denver Investment 1997; Director of Mutual Fund Administration, Denver
Advisors LLC Investment Advisors LLC since June 1997; Fund
1225 17th Street-26th Fl. Controller, ALPS Mutual Funds Services, Inc. from
Denver, Colorado 80202 September 1995 through June 1997; Senior Accountant,
Deloitte & Touche LLP from September 1991 through
August 1995.
LISA A. BRUCKERT, 27 Assistant Treasurer Fund Controller, ALPS Mutual Fund Services, Inc.
ALPS Mutual Funds since December 1998; Secretary, Stonebridge Funds
Services, Inc. Trust, since February, 1999; Senior Associate,
370 17th Street PricewaterhouseCoopers LLP from October 1994 to
Suite 3100 November 1998.
Denver, Colorado 80202
</TABLE>
41
<PAGE> 111
<TABLE>
<CAPTION>
Principal Occupations
Position with During Past 5 Years and
Name, Age and Address the Trust Other Affiliations
--------------------- --------- ------------------
<S> <C> <C>
W. BRUCE McCONNEL, III, 57 Secretary Partner of the law firm of Drinker Biddle & Reath
Drinker Biddle & Reath LLP LLP, Philadelphia, Pennsylvania.
One Logan Square
18th & Cherry Streets
Philadelphia, Pennsylvania
19103-6996
</TABLE>
----------
(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 and
Board Committee 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, 2000:
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS AGGREGATE
NAME OF PERSON/ COMPENSATION FROM ACCRUED AS PART OF COMPENSATION FROM THE
POSITION THE TRUST FUND EXPENSES FUND COMPLEX*
-------- --------- ------------- -------------
<S> <C> <C> <C>
JACK D. HENDERSON, $ $0 $
Chairman
McNEIL S. FISKE, $** $0 $
Trustee
JAMES B. O'BOYLE, $ $0 $
Trustee
ROBERT L. STAMP, $** $0 $
Trustee
LYMAN E. SEELY, $ $0 $
Trustee
</TABLE>
* Fund Complex includes funds with a common investment adviser or an adviser
which is an affiliated person. There are currently fourteen Westcore Funds
in the Fund Complex.
42
<PAGE> 112
** All of this amount has been deferred at the election of Messrs. Fiske and
Stamp. The total amount of deferred compensation (including interest)
accrued for Mr. Fiske and Mr. Stamp during the fiscal year ended May 31,
2000 is $_____ and $_____, respectively.
Each trustee is entitled to participate in the Trust's Deferred
Compensation Plan (the "Plan"). Under the Plan, a trustee may elect to have his
deferred fees treated as if they had been invested by the Trust at a money
market fund rate of return or at a rate based on the performance of Trust shares
and the amount paid to the trustees under the Plan will be determined based upon
the performance of such investments. Deferral of trustees' fees will not
obligate the Trust to retain the services of any trustee or obligate a portfolio
to any level of compensation to the trustee. The Trust may invest in underlying
securities without shareholder approval.
Denver Investment Advisors, of which Mr. Penland, President of the Trust,
is a member, and Mr. Frontz, Treasurer of the Trust, is Director of Mutual Fund
Administration, receives compensation as Adviser and co-administrator. ALPS
Mutual Funds Services, Inc., of which Ms. Bruckert is an employee, receives
compensation as co-administrator, bookkeeping and pricing agent, and shareholder
telephone servicing agent to the Trust and serves as distributor to the Trust.
Drinker Biddle & Reath LLP, 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 __% of the outstanding shares of the
Westcore MIDCO Growth Fund, ____% of the outstanding shares of the Westcore
Growth and Income Fund, __% of the outstanding shares of the Westcore Mid-Cap
Opportunity Fund, __% of the outstanding shares of the Westcore Flexible Income
Fund and __% of the outstanding shares of the Westcore Colorado Tax-Exempt Fund
as of September __, 2000. The trustees and officers of the Trust, as a group,
owned less than __% of the outstanding shares of the Westcore Blue Chip Fund,
Westcore Small-Cap Opportunity Fund, Westcore International Frontier Fund,
Westcore Small-Cap Growth Fund, Westcore Select Fund and Westcore Plus Bond Fund
as of September __, 2000.
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. Thus, the risk
of a shareholder's incurring financial loss on
43
<PAGE> 113
account of shareholder liability is limited to circumstances in which the Trust
itself would be unable to meet 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 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 Prospectuses, 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.
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:
44
<PAGE> 114
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
May 31, 2000 May 28, 1999 May 29, 1998
------------------------ ------------------------ ------------------------
Advisory Waiver of Advisory Waiver of Advisory Waiver of
Fund Name Fees Fees Fees Fees Fees Fees
--------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Westcore MIDCO Growth Fund $2,591,504 $ 196,466 $4,107,999 $ 0
-------- --------- ---------- ---------- ---------- ----------
Westcore Blue Chip Fund 383,666 63,138 378,391 48,681
-------- --------- ---------- ---------- ---------- ----------
Westcore Growth and Income 12,126 74,637 21,739 87,613
Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore Small-Cap 585,241 269,418 311,243 162,526
Opportunity Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore 0 12,726 N/A N/A
Mid-Cap
Opportunity Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore Small-Cap Growth
Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore Select Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore International
Frontier Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore Flexible Income 44,194 50,699 33,851 45,959
Fund
-------- --------- ---------- ---------- ---------- ----------
Westcore Plus Bond Fund 140,793 63,751 178,738 60,690
-------- --------- ---------- ---------- ---------- ----------
Westcore Colorado 0 194,101 0 129,855
Tax-Exempt Fund
-------- --------- ---------- ---------- ---------- ----------
</TABLE>
For the fiscal year ended May 31, 2000, the Investment Adviser reimbursed
additional expenses for the Westcore Mid-Cap Opportunity Fund in the amount of
$_____.
Denver Investment Advisors also performs investment advisory services for
the Blue Chip Value Fund, Inc., a closed-end investment company portfolio.
Investment decisions for each account managed by Denver Investment Advisors,
including the Funds, are made
45
<PAGE> 115
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 Westcore MIDCO Growth Fund, Westcore
Growth and Income Fund, Westcore Blue Chip Fund, Westcore Small-Cap Opportunity
Fund, Westcore Flexible Income Fund, Westcore Plus Bond Fund and Westcore
Colorado Tax-Exempt Fund became effective on October 1, 1995, and the current
Advisory Agreement for the Westcore Mid-Cap Opportunity Fund became effective on
October 1, 1998. The current Advisory Agreements for the Small-Cap Growth and
Select Funds became effective on October 1, 1999. The current Advisory Agreement
for the International Frontier Fund became effective on December 15, 1999. The
current Advisory Agreement for the International Select Fund became effective on
October 1, 2000. The current Advisory Agreement for the Micro-Cap and
International Small-Cap Value Funds became effective on __________. Each
Advisory Agreement is effective for its first two years and thereafter will
continue in effect 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 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 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.
46
<PAGE> 116
Distributor
ALPS (the "Distributor"), with principal offices at 370 Seventeenth Street,
Suite 3100, Denver, Colorado 80202, acts as the distributor of the Funds' shares
pursuant to a Distribution Agreement with the Trust. 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 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, 2000, May 28,
1999 and May 29, 1998, ALPS received $0, $0, and $0, respectively, in
underwriting commissions with respect to all the investment portfolios offered
by the Trust.
Administrators, Bookkeeping and Pricing Agent
Pursuant to an Administrative Agreement, ALPS and Denver Investment
Advisors serve as co-administrators to the Funds (the "Administrators"), and
have agreed to pay all expenses they incur in connection with their
administrative activities. 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. Under the Administrative 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 for a loss resulting from willful misfeasance, bad faith or
gross negligence on the part of the Administrators in the performance of their
duties and obligations under the agreement. 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 with respect to the Westcore MIDCO Growth Fund, Westcore Growth
and Income Fund, Westcore Blue Chip Fund, Westcore Mid-Cap Opportunity Fund,
Westcore Small-Cap Opportunity Fund, Westcore International Frontier Fund,
Westcore Small-Cap Growth Fund, Westcore Select Fund, Westcore International
Select Fund, Westcore Micro-Cap Fund, Westcore International Small-Cap Value
Fund, Westcore Flexible Income Fund, Westcore Plus Bond Fund and Westcore
Colorado Tax-Exempt Fund. The Administrators have contractually agreed to waive
fees as set forth in the prospectus and may voluntarily waive all or any portion
of their administration fees from time to time. 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
47
<PAGE> 117
resulting from willful misfeasance, bad faith or negligence on the part of ALPS
in the performance of its duties under the Agreement.
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 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 a Fund or its shareholders.
The following table summarizes the administration fees paid by the Funds
and any administration fee waivers for the last three fiscal years:
48
<PAGE> 118
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
May 31, 2000 May 28, 1999 May 29, 1998
---------------------------- --------------------------- --------------------------
Administration Waiver of Administration Waiver of Administration Waiver of
Fund Name Fees Fees Fees Fees Fees Fees
--------- -------------- --------- -------------- --------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Westcore MIDCO Growth Fund $1,271,967 $ 14,788 $1,896,000 $ 0
-------------- --------- ---------- ---------- ---------- ----------
Westcore Blue Chip Fund 201,532 4,685 193,253 3,857
-------------- --------- ---------- ---------- ---------- ----------
Westcore Growth and Income 34,523 5,522 43,501 6,969
Fund
-------------- --------- ---------- ---------- ---------- ----------
Westcore Small-Cap 242,098 14,300 132,961 9,175
Opportunity Fund
-------------- --------- ---------- ---------- ---------- ----------
Mid-Cap Opportunity Fund 0 5,089 N/A N/A
-------------- --------- ---------- ---------- ---------- ----------
Westcore Small-Cap Growth
Fund
-------------- --------- ---------- ---------- ---------- ----------
Westcore Select Fund
-------------- --------- ---------- ---------- ---------- ----------
Westcore International
Frontier Fund
-------------- --------- ---------- ---------- ---------- ----------
Westcore Flexible Income 58,403 4,859 48,481 4,725
Fund
-------------- --------- ---------- ---------- ---------- ----------
Westcore Plus Bond Fund 130,268 6,095 153,392 6,227
-------------- --------- ---------- ---------- ---------- ----------
Westcore Colorado 92,805 23,655 33,180 44,733
Tax-Exempt Fund
-------------- --------- ---------- ---------- ---------- ----------
</TABLE>
In addition to the services it provides as distributor, co-administrator
and bookkeeping and pricing agent, ALPS has agreed, pursuant to a separate
Telephone and Service Agreement for each of the funds to receive and accept
orders for the purchase, redemption and transfer of shares and deliver the
appropriate documentation thereof to the transfer agent. Under
49
<PAGE> 119
the Telephone and Service 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 misfeasance, bad faith or negligence on the part of ALPS in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement. The Trust will pay ALPS a monthly
fee at the annual rate of $15,000 per year during the term of the agreement. In
addition, the Trust will pay ALPS a monthly fee at the annual rate of $2.00 for
each shareholder account that is open during the immediately preceding month.
The Trust will also pay ALPS a fee of $2.50 for each telephone call received by
ALPS from a shareholder or prospective shareholder in connection with services
rendered by ALPS pursuant to the agreement. Finally, the Trust will reimburse
ALPS for out of pocket expenses, including but not limited to postage, forms,
telephone, microfilm and microfiche.
ALPS was paid $15,000 in fees under the Telephone and Service Agreement for
the fiscal year ended May 29, 1998, $82,674 for the fiscal year ended May 28,
1999 and $_______ for the fiscal year ended May 31, 2000.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York (the "Custodian"), with principal offices at One Wall
Street, New York, New York 10286, 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. BNY Western Trust Company served as custodian to the Trust from
December 1, 1997 until September 30, 1999. Prior to December 1, 1997, Wells
Fargo Bank, N.A. served as custodian to the Trust.
State Street Bank and Trust Company ("State Street"), P.O. Box 1713,
Boston, Massachusetts, serves as Transfer Agent for each of the funds. 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 account statements,
confirmations, and dividend and distribution notices; 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
50
<PAGE> 120
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 AND FINANCIAL STATEMENTS
________________, with principal offices at ___________________________,
serves as independent auditors for the Funds. The Fund's Annual Report to
Shareholders for the fiscal year ended May 31, 2000 has been filed with the SEC.
The financial statements and notes thereto in such Annual Report (the "Financial
Statements") are incorporated by reference into this Statement of Additional
Information. The Financial Statements and Independent Accountants Report
thereon, in such Annual Reports have been incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
COUNSEL
Drinker Biddle & Reath LLP (of which Mr. McConnel, Secretary of the Trust,
is a partner), One Logan Square, 18th and Cherry Streets, Philadelphia,
Pennsylvania 19103-6996, serves as counsel to the Trust and will pass upon
certain legal matters relating to the Funds.
CODES OF ETHICS
Westcore and Denver Investment Advisors have adopted codes of ethics
pursuant to Rule 17j-1 under the 1940 Act that permit investment personnel
subject to their particular codes of ethics to invest in securities, including
securities that may be purchased or held by the Funds, for their own accounts.
The codes of ethics are on public file with, and available from, the Securities
and Exchange Commission's Public Reference Room in Washington, D.C.
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 newsletters, advertisements and
other publications which may include comparisons of a Fund's performance with
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. Performance
information is generally available by calling ALPS at 1-800-392-CORE (2673).
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.
Because performance will fluctuate, you cannot necessarily compare
51
<PAGE> 121
an investment in Fund shares with bank deposits, savings accounts and similar
investment alternatives that often provide an agreed or guaranteed fixed yield
for a stated period of time.
Yield Calculations - Westcore Bond Funds
The funds yield shows the rate of income a Fund earns on its investments as
a percentage of its share price. It 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. 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
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 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.
52
<PAGE> 122
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), 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, 2000 were as follows:
<TABLE>
<CAPTION>
30-Day Yield 30-Day Yield
Fund (before fee waivers) (after fee waivers)
---- -------------------- -------------------
<S> <C> <C>
Westcore Flexible Income Fund % %
Westcore Plus Bond Fund % %
Westcore Colorado Tax-Exempt Fund % %
</TABLE>
"Tax-Equivalent" Yield Calculations - Westcore Colorado Tax-Exempt Fund
The Fund's "tax-equivalent" yield shows the level of the taxable yield
needed to produce an after-tax yield equivalent to the Fund's tax-free yield.
The Fund's tax-equivalent
53
<PAGE> 123
yield will always be higher than its yield. It is calculated 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, 2000 (after fee waivers) were %
and %, respectively, and before fee waivers were % and %, respectively.
Tax-Equivalent Yield is based upon the effective combined state and federal
tax rate assumptions of 31.42% (assuming a 28% federal tax rate and a 4.75%
Colorado tax rate) for the Westcore Colorado Tax-Exempt Fund.
Total Return Calculations
The average annual total return represents the average annual percentage
change in the value of an investment in a Fund over a specified measuring
period. 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.
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 $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
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 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. It is computed 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:
54
<PAGE> 124
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, 2000, for the five year period ended May
31, 2000 and for the periods since commencement of the Funds' respective
operations were as follows:
<TABLE>
<CAPTION>
Year Five Ten Years Since Inception
Ended Years Ended Ended to
May 31, May 31, May 31, May 31,
Fund 2000 2000 2000 2000
---- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Westcore MIDCO Growth Fund(1)
---- ---- ---- ----
Westcore Blue Chip Fund(2)
---- ---- ---- ----
Westcore Growth and Income Fund(2)(6)
---- ---- ---- ----
Westcore Small-Cap Opportunity Fund(3)
---- ---- ---- ----
Westcore Mid-Cap
Opportunity Fund(5)
---- ---- ---- ----
Westcore Small-Cap Growth Fund(9)
---- ---- ---- ----
Westcore Select Fund(9)
---- ---- ---- ----
Westcore International Frontier Fund(10)
---- ---- ---- ----
Westcore Flexible Income Fund(2)(7)
---- ---- ---- ----
Westcore Plus Bond Fund(2)(8)
---- ---- ---- ----
Westcore Colorado Tax-Exempt Fund(4)
---- ---- ---- ----
</TABLE>
55
<PAGE> 125
----------
(1) Commenced Operations on August 1, 1986.
(2) Commenced Operations on June 1, 1988.
(3) Commenced Operations on December 28, 1993.
(4) Commenced Operations on June 1, 1991.
(5) Commenced Operations on October 1, 1998.
(6) The Westcore 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.
(7) The Westcore Flexible Income Fund was formerly known as the Long-Term Bond
Fund. The Fund's name was changed on October 1, 2000 to reflect a different
objective and policies. Prior to October 1, 2000, the Fund's objective was
to seek long-term total rate of return by investing primarily in investment
grade bonds. On October, 1, 2000, the Fund's objective was revised to seek
long-term total rate of return, consistent with preservation of capital.
Past performance is not intended to be indicative or representative of
future performance.
(8) The Westcore Plus Bond Fund was formerly known as the Intermediate-Term
Bond Fund. The Fund's name was changed on October, 1, 2000 to reflect a
different objective and policies. Prior to October 1, 2000, the Fund's
objective was to seek current income with less volatility of principal than
funds with longer maturities by investing primarily in investment grade
bonds. On October 1, 2000, the Fund's objective was revised to seek
long-term total rate of return consistent with preservation of capital, by
investing primarily in investment grade bonds of varying maturities.
(9) Commenced Operations on October 1, 1999
(10) Commenced Operations on December 15, 1999
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
56
<PAGE> 126
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 materials may also
refer to or describe the types of clients the Adviser advises, and describe the
Adviser's method of operation, internal work environment, procedure and
philosophy. 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 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. From time to time, the materials may include contests or promotions
which may include the award of Fund shares as prizes, and a waiver of certain
minimum amount requirements to open an account.
57
<PAGE> 127
MISCELLANEOUS
As used in this Statement of Additional Information, 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 September __, 2000, the following shareholders owned more than 5% or
more of the outstanding shares of the Funds. In addition, any shareholder listed
below owning 25% or more of the outstanding shares of a Fund may, for certain
purposes, be deemed to control that Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders:
WESTCORE MIDCO GROWTH FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
% $
</TABLE>
WESTCORE GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
</TABLE>
WESTCORE BLUE CHIP FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
% $
</TABLE>
58
<PAGE> 128
WESTCORE MID-CAP OPPORTUNITY FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
</TABLE>
WESTCORE SMALL-CAP OPPORTUNITY FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
</TABLE>
WESTCORE FLEXIBLE INCOME FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
</TABLE>
WESTCORE PLUS BOND FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
% $
% $
</TABLE>
WESTCORE COLORADO TAX-EXEMPT FUND
<TABLE>
<CAPTION>
Name and Address of Shareholder % of Fund Held Share Balance Asset Balance
------------------------------- -------------- ------------- -------------
<S> <C> <C> <C>
% $
% $
</TABLE>
----------
* All above-listed shares of the Westcore MIDCO Growth Fund, Westcore Blue
Chip Fund, Westcore Growth and Income Fund, Westcore Small-Cap Opportunity Fund,
Westcore Mid-Cap Opportunity Fund, Westcore Flexible Income Fund, Westcore Plus
Bond Fund and Westcore Colorado Tax-Exempt Fund were owned of record by the
owners named above, except to the Trust's knowledge where also owned
beneficially as indicated above.
59
<PAGE> 129
APPENDIX A
COMMERCIAL PAPER RATINGS
A Standard & Poor's commercial paper rating is a current opinion of the
creditworthiness of an obligor with respect to financial obligations having an
original maturity of no more than 365 days. The following summarizes the rating
categories used by Standard and Poor's for commercial paper:
"A-1" - Obligations are rated in the highest category indicating that the
obligor's capacity to meet its financial commitment on the obligation is strong.
Within this category, certain obligations are designated with a plus sign (+).
This indicates that the obligor's capacity to meet its financial commitment on
these obligations is extremely strong.
"A-2" - Obligations are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than obligations in higher
rating categories. However, the obligor's capacity to meet its financial
commitment on the obligation is satisfactory.
"A-3" - Obligations exhibit adequate protection parameters. However,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity of the obligor to meet its financial commitment on the
obligation.
"B" - Obligations are regarded as having significant speculative
characteristics. The obligor currently has the capacity to meet its financial
commitment on the obligation; however, it faces major ongoing uncertainties
which could lead to the obligor's inadequate capacity to meet its financial
commitment on the obligation.
"C" - Obligations are currently vulnerable to nonpayment and are dependent
upon favorable business, financial, and economic conditions for the obligor to
meet its financial commitment on the obligation.
"D" - Obligations are in payment default. The "D" rating category is used
when payments on an obligation are not made on the date due even if the
applicable grace period has not expired, unless Standard & Poor's believes that
such payments will be made during such grace period. The "D" rating will be used
upon the filing of a bankruptcy petition or the taking of a similar action if
payments on an obligation are jeopardized.
LOCAL CURRENCY AND FOREIGN CURRENCY RISKS
Country risk considerations are a standard part of Standard & Poor's
analysis for credit ratings on any issuer or issue. Currency of repayment is a
key factor in this analysis. An
A-1
<PAGE> 130
obligor's capacity to repay foreign obligations may be lower than its capacity
to repay obligations in its local currency due to the sovereign government's own
relatively lower capacity to repay external versus domestic debt. These
sovereign risk considerations are incorporated in the debt ratings assigned to
specific issues. Foreign currency issuer ratings are also distinguished from
local currency issuer ratings to identify those instances where sovereign risks
make them different for the same issuer.
Moody's commercial paper ratings are opinions of the ability of issuers to
repay punctually senior debt obligations not having an original maturity in
excess of one year, unless explicitly noted. The following summarizes the rating
categories used by Moody's for commercial paper:
"Prime-1" - Issuers (or supporting institutions) have a superior ability
for repayment of senior short-term debt obligations. Prime-1 repayment ability
will often be evidenced by many of the following characteristics: leading market
positions in well-established industries; high rates of return on funds
employed; conservative capitalization structure with moderate reliance on debt
and ample asset protection; broad margins in earnings 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" - Issuers (or supporting institutions) have a strong ability for
repayment of senior short-term debt 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, may be more subject to variation.
Capitalization characteristics, while still appropriate, may be more affected by
external conditions. Ample alternate liquidity is maintained.
"Prime-3" - Issuers (or supporting institutions) have an acceptable ability
for repayment of senior short-term debt obligations. The effect of industry
characteristics and market compositions may be more pronounced. Variability in
earnings and profitability may result in changes in the level of debt protection
measurements and may require relatively high financial leverage. Adequate
alternate liquidity is maintained.
"Not Prime" - Issuers do not fall within any of the Prime rating
categories.
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 the 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.
A-2
<PAGE> 131
"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 issues as to 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 insure against disruption in debt service. Operating factors
and market access may be subject to a high degree of variation.
"D-5" - Issuer failed to meet scheduled principal and/or interest payments.
Fitch IBCA short-term ratings apply to debt obligations that have time
horizons of less than 12 months for most obligations, or up to three years for
U.S. public finance securities. The following summarizes the rating categories
used by Fitch IBCA for short-term obligations:
"F1" - Securities possess the highest credit quality. This designation
indicates the best capacity for timely payment of financial commitments and may
have an added "+" to denote any exceptionally strong credit feature.
"F2" - Securities possess good credit quality. This designation indicates a
satisfactory capacity for timely payment of financial commitments, but the
margin of safety is not as great as in the case of the higher ratings.
"F3" - Securities possess fair credit quality. This designation indicates
that the capacity for timely payment of financial commitments is adequate;
however, near-term adverse changes could result in a reduction to non-investment
grade.
"B" - Securities possess speculative credit quality. This designation
indicates uncertain capacity for timely payment of financial commitments, plus
vulnerability to near-term adverse changes in financial and economic conditions.
"C" - Securities possess high default risk. This designation indicates a
capacity for meeting financial commitments which is highly uncertain and solely
reliant upon a sustained, favorable business and economic environment.
"D" - Securities are in actual or imminent payment default.
A-3
<PAGE> 132
Thomson Financial BankWatch short-term ratings assess the likelihood of an
untimely payment of principal and interest of debt instruments with original
maturities of one year or less. The following summarizes the ratings used by
Thomson Financial BankWatch:
"TBW-1" - This designation represents Thomson Financial BankWatch's highest
category and indicates a very high likelihood that principal and interest will
be paid on a timely basis.
"TBW-2" - This designation represents Thomson Financial BankWatch's
second-highest category and indicates that while the degree of safety regarding
timely repayment 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 Thomson Financial BankWatch's lowest
investment-grade category and indicates that while the obligation is more
susceptible to adverse developments (both internal and external) than those with
higher ratings, the capacity to service principal and interest in a timely
fashion is considered adequate.
"TBW-4" - This designation represents Thomson Financial BankWatch's lowest
rating category and indicates that the obligation is regarded as non-investment
grade and therefore speculative.
CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS
The following summarizes the ratings used by Standard & Poor's for
corporate and municipal debt:
"AAA" - An obligation rated "AAA" has the highest rating assigned by
Standard & Poor's. The obligor's capacity to meet its financial commitment on
the obligation is extremely strong.
"AA" - An obligation rated "AA" differs from the highest rated obligations
only in small degree. The obligor's capacity to meet its financial commitment on
the obligation is very strong.
"A" - An obligation rated "A" is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions than obligations in
higher-rated categories. However, the obligor's capacity to meet its financial
commitment on the obligation is still strong.
"BBB" - An obligation rated "BBB" exhibits adequate protection parameters.
However, adverse economic conditions or changing circumstances are more likely
to lead to a weakened capacity of the obligor to meet its financial commitment
on the obligation.
A-4
<PAGE> 133
Obligations rated "BB," "B," "CCC," "CC" and "C" are regarded as having
significant speculative characteristics. "BB" indicates the least degree of
speculation and "C" the highest. While such obligations will likely have some
quality and protective characteristics, these may be outweighed by large
uncertainties or major exposures to adverse conditions.
"BB" - An obligation rated "BB" is less vulnerable to nonpayment than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial or economic conditions which could lead to the
obligor's inadequate capacity to meet its financial commitment on the
obligation.
"B" - An obligation rated "B" is more vulnerable to nonpayment than
obligations rated "BB", but the obligor currently has the capacity to meet its
financial commitment on the obligation. Adverse business, financial or economic
conditions will likely impair the obligor's capacity or willingness to meet its
financial commitment on the obligation.
"CCC" - An obligation rated "CCC" is currently vulnerable to nonpayment,
and is dependent upon favorable business, financial and economic conditions for
the obligor to meet its financial commitment on the obligation. In the event of
adverse business, financial, or economic conditions, the obligor is not likely
to have the capacity to meet its financial commitment on the obligation.
"CC" - An obligation rated "CC" is currently highly vulnerable to
nonpayment.
"C" - The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed or similar action taken, but payments on this obligation
are being continued.
"D" - An obligation rated "D" is in payment default. The "D" rating
category is used when payments on an obligation are not made on the date due
even if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition or the taking
of a similar action if payments on an obligation 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.
"c" - The 'c' subscript is used to provide additional information to
investors that the bank may terminate its obligation to purchase tendered bonds
if the long-term credit rating of the issuer is below an investment-grade level
and/or the issuer's bonds are deemed taxable.
p - The letter 'p' indicates that the rating is provisional. A provisional
rating assumes the successful completion of the project financed by the debt
being rated and indicates that payment of debt service requirements is largely
or entirely dependent upon the successful, timely completion of the project.
This rating, however, while addressing credit quality subsequent to completion
of the project, makes no comment on the likelihood of or the risk of
A-5
<PAGE> 134
default upon failure of such completion. The investor should exercise his own
judgment with respect to such likelihood and risk.
* - Continuance of the ratings is contingent upon Standard & Poor's receipt
of an executed copy of the escrow agreement or closing documentation confirming
investments and cash flows.
"r" - The 'r' highlights derivative, hybrid, and certain other obligations
that Standard & Poor's believes may experience high volatility or high
variability in expected returns as a result of noncredit risks. Examples of such
obligations are securities with principal or interest return indexed to
equities, commodities, or currencies; certain swaps and options; and
interest-only and principal-only mortgage securities. The absence of an 'r'
symbol should not be taken as an indication that an obligation will exhibit no
volatility or variability in total return.
N.R. Indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular obligation as a matter of policy. Debt obligations of
issuers outside the United States and its territories are rated on the same
basis as domestic corporate and municipal issues. The ratings measure the
creditworthiness of the obligor but do not take into account currency exchange
and related uncertainties.
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 risk appear somewhat larger than the "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 are considered as medium-grade obligations, (i.e., they are
neither highly protected nor poorly secured). Interest payments and principal
security appear adequate for the present but certain protective elements may be
lacking or may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact have
speculative characteristics as well.
A-6
<PAGE> 135
"Ba," "B," "Caa," "Ca" and "C" - Bonds that possess one of these ratings
provide questionable protection of interest and principal ("Ba" indicates
speculative elements; "B" indicates a general lack of characteristics of
desirable investment; "Caa" indicates 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 operating 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.
Note: Moody's applies numerical modifiers 1, 2, and 3 in each generic
rating classification from "Aa" through "Caa". The modifier 1 indicates that the
obligation ranks in the higher end of its generic rating category; the modifier
2 indicates a mid-range ranking; and the modifier 3 indicates a ranking in 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 to be 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 in periods of greater 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. This is the lowest
investment grade category.
"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.
A-7
<PAGE> 136
The following summarizes the ratings used by Fitch IBCA for corporate and
municipal bonds:
"AAA" - Bonds considered to be investment grade and of the highest credit
quality. These ratings denote the lowest expectation of credit risk and are
assigned only in case of exceptionally strong capacity for timely payment of
financial commitments. This capacity is highly unlikely to be adversely affected
by foreseeable events.
"AA" - Bonds considered to be investment grade and of very high credit
quality. These ratings denote a very low expectation of credit risk and indicate
very strong capacity for timely payment of financial commitments. This capacity
is not significantly vulnerable to foreseeable events.
"A" - Bonds considered to be investment grade and of high credit quality.
These ratings denote a low expectation of credit risk and indicate strong
capacity for timely payment of financial commitments. This capacity may,
nevertheless, be more vulnerable to changes in circumstances or in economic
conditions than is the case for higher ratings.
"BBB" - Bonds considered to be investment grade and of good credit quality.
These ratings denote that there is currently a low expectation of credit risk.
The capacity for timely payment of financial commitments is considered adequate,
but adverse changes in circumstances and in economic conditions are more likely
to impair this capacity. This is the lowest investment grade category.
"BB" - Bonds considered to be speculative. These ratings indicate that
there is a possibility of credit risk developing, particularly as the result of
adverse economic change over time; however, business or financial alternatives
may be available to allow financial commitments to be met. Securities rated in
this category are not investment grade.
"B" - Bonds are considered highly speculative. These ratings indicate that
significant credit risk is present, but a limited margin of safety remains.
Financial commitments are currently being met; however, capacity for continued
payment is contingent upon a sustained, favorable business and economic
environment.
"CCC", "CC" and "C" - Bonds have high default risk. Default is a real
possibility, and capacity for meeting financial commitments is solely reliant
upon sustained, favorable business or economic developments. "CC" ratings
indicate that default of some kind appears probable, and "C" ratings signal
imminent default.
"DDD," "DD" and "D" - Bonds are in default. The ratings of obligations in
this category are based on their prospects for achieving partial or full
recovery in a reorganization or liquidation of the obligor. While expected
recovery values are highly speculative and cannot be estimated with any
precision, the following serve as general guidelines. "DDD" obligations have the
highest potential for recovery, around 90%-100% of outstanding amounts and
accrued
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interest. "DD" indicates potential recoveries in the range of 50%-90%, and "D"
the lowest recovery potential, i.e., below 50%.
Entities rated in this category have defaulted on some or all of their
obligations. Entities rated "DDD" have the highest prospect for resumption of
performance or continued operation with or without a formal reorganization
process. Entities rated "DD" and "D" are generally undergoing a formal
reorganization or liquidation process; those rated "DD" are likely to satisfy a
higher portion of their outstanding obligations, while entities rated "D" have a
poor prospect for repaying all obligations.
To provide more detailed indications of credit quality, the Fitch IBCA
ratings from and including "AA" to "CCC" may be modified by the addition of a
plus (+) or minus (-) sign to denote relative standing within these major rating
categories.
`NR' indicates the Fitch IBCA does not rate the issuer or issue in
question.
`Withdrawn': A rating is withdrawn when Fitch IBCA deems the amount of
information available to be inadequate for rating purposes, or when an
obligation matures, is called, or refinanced.
RatingAlert: Ratings are placed on RatingAlert to notify investors that
there is a reasonable probability of a rating change and the likely direction of
such change. These are designated as "Positive", indicating a potential upgrade,
"Negative", for a potential downgrade, or "Evolving", if ratings may be raised,
lowered or maintained. RatingAlert is typically resolved over a relatively short
period.
Thomson Financial 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 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 the lowest investment-grade category
and indicates an acceptable capacity to repay principal and interest. Issues
rated "BBB" are more
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vulnerable to adverse developments (both internal and external) than obligations
with higher ratings.
"BB," - A rating of BB suggests that the likelihood of default is
considerably less than for lower-rated issues, although there are significant
uncertainties that could affect the ability to adequately service debt
obligations.
"B" - Issues rated B show a higher degree of uncertainty and therefore
greater likelihood of default than higher-rated issues. Adverse developments
could negatively affect the payment of interest and principal on a timely basis.
"CCC" - Issues rated CCC clearly have a high likelihood of default, with
little capacity to address further adverse changes in financial circumstances.
"CC" - This rating is applied to issues that are subordinate to other
obligations rated CCC and are afforded less protection in the event of
bankruptcy or reorganization.
"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 note rating reflects the liquidity factors and market
access risks unique to notes due in three years or less. The following
summarizes the ratings used by Standard & Poor's for municipal notes:
"SP-1" - The issuers of these municipal notes exhibit a strong capacity to
pay principal and interest. Those issues determined to possess a very strong
capacity to pay debt service are given a plus (+) designation.
"SP-2" - The issuers of these municipal notes exhibit satisfactory capacity
to pay principal and interest, with some vulnerability to adverse financial and
economic changes over the term of the notes.
"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:
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"MIG-1"/"VMIG-1" - This designation denotes best quality. There is present
strong protection by established cash flows, superior liquidity support or
demonstrated broad-based access to the market for refinancing.
"MIG-2"/"VMIG-2" - This designation denotes high quality. Margins of
protection are ample although not so large as in the preceding group.
"MIG-3"/"VMIG-3" - This designation denotes 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" - This designation denotes adequate quality. Protection
commonly regarded as required of an investment security is present and although
not distinctly or predominantly speculative, there is specific risk.
"SG" - This designation denotes speculative quality. Debt instruments in
this category lack margins of protection.
Fitch IBCA and Duff & Phelps use the short-term ratings described under
Commercial Paper Ratings for municipal notes.
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APPENDIX B
As stated in the Prospectuses, all Westcore Funds, other than the Westcore
Colorado Tax-Exempt Fund 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
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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.
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.
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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.
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
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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
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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.
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
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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 Treatment.
Accounting for futures contracts and options will be in accordance with
generally accepted accounting principles.
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PART C - OTHER INFORMATION
Item 23. Exhibits
(a) (1) 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.
(2) 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.
(b) Registrant's Amended and Restated Code of Regulations is
incorporated by reference to Exhibit 2(a) to Post-Effective
Amendment No. 45.
(c) (1) Specimen copy of share certificate for Class A Shares
is incorporated herein by reference to Exhibit 4 of
Post Effective Amendment No. 7.
(2) Specimen copy of form of share certificate is
incorporated herein by reference to Exhibit 4(b) to
Post-Effective Amendment No. 34.
(d) (1) 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 herein by reference to Exhibit
5(b) to Post-Effective Amendment No. 44.
(2) Addendum No. 1 to Amended and Restated Advisory
Agreement relating to the Mid-Cap Opportunity Fund is
incorporated herein by reference to Exhibit (d)(2) to
Post-Effective Amendment No. 49.
(3) Addendum No. 2 to Amended and Restated Advisory
Agreement relating to the Small-Cap Growth Fund is
filed herewith.
(4) Addendum No. 3 to Amended and Restated Advisory
Agreement relating to the Select Fund is filed
herewith.
(5) Addendum No. 4 to Amended and Restated Advisory
Agreement relating to the International Frontier Fund
(formerly the International Equity Fund) is filed
herewith.
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(6) Form of Addendum No. 5 to Amended and Restated
Advisory Agreement relating to the International
Select Fund is filed herewith.
(7) Form of Addendum No. 6 to Amended and Restated
Advisory Agreement relating to the International
Small-Cap Value Fund is filed herewith.
(8) Form of Addendum No. 7 to Amended and Restated
Advisory Agreement relating to the Micro-Cap Fund is
filed herewith.
(e) (1) Amended and Restated Distribution Agreement dated as
of October 1, 1997 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 6(a) to Post-Effective Amendment
No. 46.
(i) Amendment No. 1 to Amended and Restated
Distribution Agreement relating to the
Mid-Cap Opportunity Fund is incorporated
herein by reference to Exhibit (e)(1)(i) to
Post-Effective Amendment No. 49.
(ii) Amendment No. 2 to Amended and Restated
Distribution Agreement relating to the
Small-Cap Growth Fund is filed herewith.
(iii) Amendment No. 3 to Amended and Restated
Distribution Agreement relating to the
Select Fund is filed herewith.
(iv) Amendment No. 4 to Amended and Restated
Distribution Agreement relating to the
International Frontier Fund (formerly the
International Equity Fund) is filed
herewith.
(v) Form of Amendment No. 5 to Amended and
Restated Distribution Agreement relating to
the International Select Fund is filed
herewith.
(vi) Form of Amendment No. 6 to Amended and
Restated Distribution Agreement relating to
the International Small-Cap Value Fund is
filed herewith.
(vii) Form of Amendment No. 7 to Amended and
Restated Distribution Agreement relating to
the Micro-Cap Fund is filed herewith.
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(2) Form of Broker/Dealer Selling Agreement is
incorporated herein by reference to Exhibit No. 6(c)
to Post-Effective Amendment No. 14.
(3) Form of Bank Agreement is incorporated herein by
reference to Exhibit No. 6(d) to Post-Effective
Amendment No. 14.
(f) Westcore Trust Deferred Compensation Plan (as Amended and
Restated Effective June 22, 1998) is incorporated herein by
reference to Exhibit 7(a) to Post-Effective Amendment No. 47.
(g) (1) Custody Agreement between Westcore Trust and Bank of
New York ("BONY") is filed herewith.
(2) Amendment No. 1 to Custody Agreement relating to the
International Frontier Fund is filed herewith.
(3) Form of Amendment No. 2 to the Custody Agreement
relating to the International Select Fund is filed
herewith.
(4) Form of Amendment No. 3 to the Custody Agreement
relating to the International Small-Cap Value Fund is
filed herewith.
(5) Form of Amendment No. 4 to the Custody Agreement
relating to the Micro-Cap Fund is filed herewith.
(6) Foreign Custody Manager Agreement between Westcore
Trust and BONY is filed herewith.
(h) (1) 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 incorporated herein by reference
to Exhibit 9(a) of Post-Effective Amendment No. 45.
(i) Amendment No. 1 to Administration Agreement
relating to the Mid-Cap Opportunity Fund is
incorporated herein by reference to Exhibit
h(1)(i) to Post-Effective Amendment No. 49.
(ii) Amendment No. 2 to Administration Agreement
relating to the Small-Cap Growth Fund is
filed herewith.
(iii) Amendment No. 3 to Administration Agreement
relating to the Select Fund is filed
herewith.
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(iv) Amendment No. 4 to Administration Agreement
relating to the International Frontier Fund
(formerly the International Equity Fund) is
filed herewith.
(v) Form of Amendment No. 5 to Administration
Agreement relating to the International
Select Fund is filed herewith.
(vi) Form of Amendment No. 6 to Administration
Agreement relating to the International
Small-Cap Value Fund is filed herewith.
(vii) Form of Amendment No. 7 to Administration
Agreement relating to the Micro-Cap Fund is
filed herewith.
(2) 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 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.
(iii) Revised Fee Schedule to Transfer Agency
Agreement dated as of August 3, 1998 is
incorporated herein by reference to Exhibit
9(b)(iii) to Post-Effective Amendment No.
48.
(iv) Amendment No. 3 to Amended and Restated
Transfer Agency Agreement relating to the
Mid-Cap Opportunity Fund is incorporated
herein by reference to Exhibit 2(iv) to
Post-Effective Amendment No. 49.
(v) Amendment No. 4 to Amended and Restated
Transfer Agency and Service Agreement
between Westcore Trust and State Street Bank
and Trust Company with respect to
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the Small-Cap Growth, Select and
International Frontier Funds is filed
herewith.
(vi) Form of Amendment No. 5 to Amended and
Restated Transfer Agency and Service
Agreement relating to the International
Select Fund is filed herewith.
(vii) Form of Amendment No. 6 to Amended and
Restated Transfer Agency and Service
Agreement relating to the International
Small-Cap Value Fund is filed herewith.
(viii) Form of Amendment No. 7 to Amended and
Restated Transfer Agency and Service
Agreement relating to the Micro-Cap Fund is
filed herewith.
(3) Amended and Restated Bookkeeping and Pricing
Agreement dated June 1, 1998 between Registrant and
ALPS Mutual Funds Services, Inc. relating to
Registrant's 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 is incorporated
herein by reference to Exhibit 9(c) to Post-Effective
Amendment No. 47.
(i) Amendment No. 1 to Amended and Restated
Bookkeeping and Pricing Agreement relating
to the Mid-Cap Opportunity Fund is
incorporated herein by reference to Exhibit
3(i) to Post-Effective amendment No. 49.
(ii) Amendment No. 2 to Amended and Restated
Bookkeeping and Pricing Agreement relating
to the Small-Cap Growth Fund is filed
herewith.
(iii) Amendment No. 3 to Amended and Restated
Bookkeeping and Pricing Agreement relating
to the Select Fund is filed herewith.
(iv) Amendment No. 4 to Amended and Restated
Bookkeeping and Pricing Agreement relating
to the International Frontier Fund (formerly
the International Equity Fund) is filed
herewith.
(v) Form of Amendment No. 5 to Amended and
Restated Bookkeeping and Pricing Agreement
relating to the International Select Fund is
filed herewith.
(vi) Form of Amendment No. 6 to Amended and
Restated Bookkeeping and Pricing Agreement
relating to the
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International Small-Cap Value Fund is filed
herewith.
(vii) Form of Amendment No. 7 to Amended and
Restated Bookkeeping and Pricing Agreement
relating to the Micro-Cap Fund is filed
herewith.
(4) 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.
(5) (i) Operating Agreement dated as of November 27,
1995 between Charles Schwab & Co., Inc. and
Westcore Trust 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
incorporated herein by reference to Exhibit
9(e) to Post-Effective Amendment No. 45.
(a) Order Placement Procedures
Amendment to the Operating
Agreement between Charles Schwab &
Co., Inc. and Westcore Trust dated
as of December 1, 1997 relating to
the Cash Reserve Fund, Colorado
Tax-Exempt Fund, Growth and Income
Fund, Intermediate-Term Bond Fund,
Long-Term Bond Fund, MIDCO Growth
Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated
herein by reference to Exhibit
9(e)(a) to Post-Effective Amendment
No. 47.
(b) Charles Schwab & Company, Inc. Side
Letter Agreement to Order Placement
Procedures Amendment dated as of
December 22, 1997 among Westcore
Trust, Denver Investment Advisors
LLC and Boston Financial Data
Services, Inc. relating to the Cash
Reserve Fund, Colorado Tax-Exempt
Fund, Growth and Income Fund,
Intermediate-Term Bond Fund,
Long-Term Bond Fund, MIDCO Growth
Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated
herein by reference to Exhibit
9(e)(b) to Post-Effective Amendment
No 47.
(c) Amendment to Operating Agreement
dated as of October 1, 1998 between
Charles Schwab & Co. and Westcore
Trust, relating to the Cash Reserve
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Fund, Colorado Tax-Exempt Fund,
Growth and Income Fund,
Intermediate-Term Bond Fund,
Long-Term Bond Fund, MIDCO Growth
Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated
herein by reference to Exhibit
h(5)(c) to Post-Effective Amendment
No. 49.
(d) Side Letter to Amendment to
Operating Agreement among Westcore
Trust, Charles Schwab & Co., and
Denver Investment Advisors ("DIA")
dated as of October 1, 1998,
relating to the Cash Reserve Fund,
Colorado Tax-Exempt Fund, Growth
and Income Fund, Intermediate-Term
Bond Fund, Long-Term Bond Fund,
MIDCO Growth Fund, Blue Chip Fund
and Small-Cap Opportunity Fund is
incorporated herein by reference to
Exhibit h(5)(i)(d) to
Post-Effective Amendment No. 49.
(e) Amendment to Operating Agreement
effective as of January, 1999,
relating to the Cash Reserve Fund,
Colorado Tax-Exempt Fund, Growth
and Income Fund, Intermediate-Term
Bond Fund, Long-Term Bond Fund,
MIDCO Growth Fund, Blue Chip Fund
and Small-Cap Opportunity Fund is
incorporated herein by reference to
Exhibit h(5)(i)(e) to
Post-Effective Amendment No. 49.
(ii) Institutional Services Agreement dated as of
November 27, 1995 between Charles Schwab &
Co. and Westcore Trust 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
incorporated herein by reference to Exhibit
9(e) to Post-Effective Amendment No. 45.
(iii) Retail Services 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 incorporated
herein by reference to Exhibit 9(e) to
Post-Effective Amendment No. 45.
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(a) Amendment to Services Agreement
dated as of July 1, 1998 among
Westcore Trust, Denver Investment
Advisors LLC and Charles Schwab &
Co. relating to the Cash Reserve
Fund, Colorado Tax-Exempt Fund,
Growth and Income Fund,
Intermediate-Term Bond Fund,
Long-Term Bond Fund, MIDCO Growth
Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated
herein by reference to Exhibit
9(e)(iii)(c) to Post-Effective
Amendment No. 47.
(iv) Side Letter dated as of March 5, 1996 among
ALPS Mutual Funds Services, Inc., Denver
Investment Advisors LLC, State Street Bank &
Trust Company and Westcore Trust 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 incorporated herein by reference to
Exhibit 9(e) to Post-Effective Amendment No.
45.
(v) Retirement Plan Order Processing Amendment
dated as of February 15, 1996 to the
Operating Agreement among Charles Schwab &
Co., Inc., the Charles Schwab Company and
Westcore Trust 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
incorporated herein by reference to Exhibit
9(e) to Post-Effective Amendment No. 45.
(vi) Confidentiality Agreement dated as of March
26, 1996 between Charles Schwab & Co., Inc.
and Denver Investment Advisors LLC 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 incorporated
herein by reference to Exhibit 9(e) to
Post-Effective Amendment No. 45.
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(vii) Transaction Charges Amendment to Services
Agreement dated as of July 1, 1997 is
incorporated herein by reference to Exhibit
9(e) to Post-Effective Amendment No. 46.
(viii) Amendment to Services Agreement dated as of
October 1, 1998 among Westcore Trust, Schwab
and Denver Investment Advisors is
incorporated herein by reference to Exhibit
h(5)(viii) to Post-Effective Amendment No.
49.
(6) (i) DST FAN WEB Services Agreement dated as of
August 1, 1997 among DST Systems, Inc.,
Westcore Trust and Denver Investment
Advisors LLC is incorporated herein by
reference to Exhibit 9(f) to Post-Effective
Amendment No. 46.
(ii) Indemnification Agreement dated as of August
1, 1997 between Denver Investment Advisors
LLC and Westcore Trust is incorporated
herein by reference to Exhibit 9(f) to
Post-Effective Amendment No. 46.
(7) (i) Shareholder Service Agreement dated as of
July 1, 1996 between Wells Fargo Bank, N.A.
and Westcore Trust is incorporated herein by
reference to Exhibit 9(g) to Post-Effective
Amendment No. 46.
(ii) Addition of Parties dated as of August 2,
1999 to Shareholder Services Agreement among
Wells Fargo Bank, N.A., Westcore Trust, ALPS
Mutual Funds Services, Inc. and Denver
Investment Advisers LLC is incorporated
herein by reference to Exhibit (h)(7)(ii) to
Post-Effective Amendment No. 50.
(8) Agency Trading Agreement dated as of May 19, 1997
among Bank of Oklahoma, N.A., its affiliate Alliance
Trust Company, N.A. and Westcore Trust is
incorporated herein by reference to Exhibit 9(h) to
Post-Effective Amendment No. 46.
(9) (i) Shareholder Service Agreement dated as of
November 22, 1996 among First Trust
Corporation, Denver Investment Advisors LLC
and Westcore Trust is incorporated herein by
reference to Exhibit 9(i) to Post-Effective
Amendment No. 46.
(ii) Side letter to Shareholder Services
Agreement dated as of September 25, 1998
among Westcore Trust, DIA, and Firstrust is
incorporated herein by reference to Exhibit
h(10) to Post-Effective Amendment No. 49.
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(10) Agency Trading Agreement dated as of July 15, 1997
among Westcore Trust, ALPS Mutual Funds Services,
Inc., Boston Financial Data Services, Inc. and
Financial Administrative Services Corporation
relating to the Colorado Tax-Exempt Fund, Growth and
Income Fund, Intermediate-Term Bond Fund, Long-Term
Bond Fund, MIDCO Growth Fund, Blue Chip Fund and
Small-Cap Opportunity Fund is incorporated herein by
reference to Exhibit 9(j) to Post-Effective Amendment
No. 47.
(11) Agency Trading Agreement dated as of January 2, 1998
among Westcore Trust, ALPS Mutual Funds Services,
Inc., Boston Financial Data Services, Inc. and
Wachovia Operational Services Corporation relating to
the Colorado Tax-Exempt Fund, Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund,
MIDCO Growth Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated herein by reference
to Exhibit 9(k) to Post-Effective Amendment No. 47.
(12) (i) Securities Lending Agency Client Agreement
dated as of March 27, 1998 between Westcore
Trust and PaineWebber Incorporated relating
to the Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond
Fund, MIDCO Growth Fund, Blue Chip Fund and
Small-Cap Opportunity Fund is incorporated
herein by reference to Exhibit 9(l) to
Post-Effective Amendment No. 47.
(ii) Amendment dated April 1, 1999 to Securities
Lending Agency Client Agreement dated as of
March 27, 1998 between Westcore Trust and
PaineWebber Incorporated is incorporated
herein by reference to Exhibit (h)(12)(ii)
to Post-Effective Amendment No. 50.
(13) Service Agreement dated as of November 10, 1997 among
Westcore Trust, ALPS Mutual Funds Services, Inc.,
Denver Investment Advisors LLC and PaineWebber
Incorporated relating to the Colorado Tax-Exempt
Fund, Growth and Income Fund, Intermediate-Term Bond
Fund, Long-Term Bond Fund, MIDCO Growth Fund, Blue
Chip Fund and Small-Cap Opportunity Fund is
incorporated herein by reference to Exhibit 9(m) to
Post-Effective Amendment No. 47.
(14) (i) Omnibus Account Services Agreement dated as
of February 26, 1998 among Westcore Trust,
Denver Investment Advisors LLC and National
Investors Services Corp. relating to the
Colorado Tax-Exempt Fund, Growth and Income
Fund, Intermediate-Term Bond Fund, Long-Term
Bond Fund, MIDCO Growth Fund, Blue Chip Fund
and
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Small-Cap Opportunity Fund is incorporated
herein by reference to Exhibit 9(n) to
Post-Effective Amendment No. 47.
(ii) Side Letter to Omnibus Account Services
Agreement dated as of February 26, 1998
among Westcore Trust, National Investor
Services Corp. and DIA is incorporated
herein by reference to Exhibit h(16) to
Post-Effective Amendment No. 49.
(15) Side Letter appointing Smith Barney Inc. as Agent
dated as of October 6, 1997 between Westcore Trust
and Smith Barney Inc. relating to the Colorado
Tax-Exempt Fund, Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund,
MIDCO Growth Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated herein by reference
to Exhibit 9(o) to Post-Effective Amendment No. 47.
(16) Telephone and Service Agreement dated as of August 3,
1998 between Westcore Trust and ALPS Mutual Funds
Services, Inc. relating to the Colorado Tax-Exempt
Fund, Growth and Income Fund, Intermediate-Term Bond
Fund, Long-Term Bond Fund, MIDCO Growth Fund, Blue
Chip Fund and Small-Cap Opportunity Fund is
incorporated herein by reference to Exhibit 9(p) to
Post-Effective Amendment No. 48.
(17) Agency Trading Agreement dated as of August 3, 1998
between Westcore Trust, Denver Investment Advisors
LLC, ALPS Mutual Funds Services, Inc., Boston
Financial Data Services, Inc. and American Century
Retirement Plan Services, Inc. relating to the
Colorado Tax-Exempt Fund, Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond Fund,
MIDCO Growth Fund, Blue Chip Fund and Small-Cap
Opportunity Fund is incorporated herein by reference
to Exhibit 9(q) to Post-Effective Amendment No. 48.
(18) (i) Agency Trading Agreement dated as of August
21, 1998 between Westcore Trust, Janney
Montgomery Scott, Inc., ALPS Mutual Funds
Services, Inc. and Boston Financial Data
Services, Inc. relating to the Colorado
Tax-Exempt Fund, Growth and Income Fund,
Intermediate-Term Bond Fund, Long-Term Bond
Fund, MIDCO Growth Fund, Blue Chip Fund and
Small-Cap Opportunity Fund is incorporated
herein by reference to Exhibit 9(r) to
Post-Effective Amendment No. 48.
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(ii) Side Letter to Agency Trading Agreement
dated August 21, 1998 between Westcore Trust
and Janney Montgomery Scott, Inc. ("JMS")
and dated as of September 25, 1998 among
Westcore Trust, JMS, BFDS and ALPS, is
incorporated herein by reference to Exhibit
h(21) to post-Effective Amendment No. 49.
(19) Agency Trading Agreement dated as of September 1,
1998 among Westcore, DIA, and Fidelity Investment
Institutional Operations Company, Inc. is
incorporated herein by reference to Exhibit h(22) to
Post-Effective Amendment No. 49.
(20) No Transaction Fee Mutual Fund Offering/Retail
Shareholder Services Agreement dated as of October 1,
1998 among Westcore Trust, ALPS and E-Trade is
incorporated herein by reference to Exhibit h(23) to
Post-Effective Amendment No. 49.
(21) Agency Trading Agreement dated as of September 3,
1999 among Westcore Trust, Denver Investment Advisors
LLC, ALPS Mutual Funds Services, Inc., Boston
Financial Data Services, Inc. and Mid-Atlantic
Capital Corporation is filed herewith.
(22) Form of Fee Waiver Letter Agreement among Westcore
Trust, ALPS Mutual Funds Services, Inc. and Denver
Investment Advisors LLC is filed herewith.
(i) Opinion of counsel that shares are validly issued, fully paid
and non-assessable is incorporated herein by reference to
Post-Effective Amendment No. 50.
(j) (1) Consent of Drinker Biddle & Reath LLP is filed
herewith.
(2) Consent of Independent Auditors to be filed by
Amendment.
(k) None.
(l) Conversion Agreement between Westcore Trust and Denver
Investment Advisors LLC relating to the Mid-Cap Opportunity
Fund is incorporated herein by reference to Exhibit 13(a) to
Post-Effective Amendment No. 48.
(m) None.
(n) None.
(o) None.
(p) (1) Code of Ethics of Westcore Trust is filed herewith.
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(2) Code of Ethics of Denver Investment Advisors LLC is
filed herewith.
(q) Powers of Attorney and Certificate of Secretary certifying
resolution authorizing signature by powers of attorney are
filed herewith under Rule 485(b) under the Securities Act of
1933.
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Item 24. 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 companies. (See "Management of the Fund - Directors and
Officers" in Part B hereof.)
Item 25. 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
permitted by law and the Registrant's Declaration of Trust as in effect on the
date of such Plan.
The trustees are indemnified by Denver Investment Advisors LLC
generally against damages arising out of or resulting from use of the Internet
financial access network ("FAN") made available by DST Systems, Inc. The FAN is
a computer and software system which provides an interface between the Internet
and public data network service providers and the Registrant's transfer agent
for the purposes of communication shareholder data and information and/or
transaction requests.
Indemnification of Registrant's trustees, officers and
controlling persons against any and all claims, demands, liabilities and
expenses arising from dissemination of untrue material fact or omission of such
material fact by ALPS is provided for in Section 1.10 of the Amended and
Restated Distribution Agreement incorporated herein by reference as Exhibit
(e)(1).
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Indemnification of Registrant's trustees, officers, employees,
agents and controlling persons against any and all losses, claims, damages,
liabilities and expenses arising out of negligence or willful misconduct by
Wells Fargo Bank N.A. ("Wells"), violation by Wells of applicable law, breach by
Wells of material provisions of the Agreement, and breach by Wells of a
representation, warranty or covenant in the Agreement is provided for in Section
15(a) of the Shareholder Service Agreement incorporated herein by reference as
Exhibit (h)(7)(i).
Indemnification of Registrant's trustees, officers, employees,
agents and certain affiliates against any loss, cost, damage, expense and
liability arising from any actual negligent act, omission, intentional
misconduct, material breach of agreement, failure to timely and properly
transmit orders and instructions and cancellation or correction of orders by
Bank of Oklahoma ("BOK"), or discrepancies in balances maintained by BOK is
provided for in Section 12(a) of the Agency Trading Agreement incorporated
herein by reference as Exhibit (h)(8).
Indemnification of Registrant's officers, directors, partners,
trustees, members, shareholders, employees and agents by Financial
Administrative Services Corporation ("FASCorp") against any loss, cost, damage,
expense, liability or claim including, without limitations, reasonable legal
fees and other out-of-pocket costs of defending against any loss, cost, damage,
expense, liability or claim, relating to any actual negligent act or omission,
act of intentional misconduct, material breach of any representations,
warranties and covenants, failure to timely and properly transmit orders and
instructions, cancellation or subsequent correction of any orders and
instructions or discrepancies between Participant and Plan balances maintained
by FASCorp and the balances maintained by Registrant is provided for in Section
12(a) of the Agency Trading Agreement incorporated herein by reference as
Exhibit (h)(10).
Indemnification of Registrant's officers, directors, partners,
trustees, members, shareholders, employees and agents against any loss, cost,
damage, expense, liability or claim by Wachovia Operational Services Corporation
arising out of any actual negligent act, omission, act of intentional
misconduct, material breach of any of the representations, warranties,
covenants, failure to timely and properly transmit orders and instructions,
cancellation or subsequent corrections of any orders and instructions
transmitted, or discrepancies in balances maintained by Wachovia and account
balances maintained by the Trust is provided for in Section 12(a) of the Agency
Trading Agreement incorporated herein by reference as Exhibit (h)(11).
Indemnification of Registrant's directors, trustees, officers,
members, shareholders, employees, agents and each person, if any, who controls
them within the meaning of the Securities Act against losses, claims, damages,
liabilities or expenses to which any one of them may become subject insofar as
those losses, claims, damages, liabilities or expenses or actions in respect
thereof, arising out of or are based upon American Century Retirement Plan
Services, Inc.'s ("Services") negligence, bad faith, or willful misconduct in
performing its obligations under its agreement with the Trust, any breach by
Services of any material provision of the Agreement or any breach by Services of
a representation, warranty or covenant made in the Agreement is provided for in
section 12(a) of the Agency Trading Agreement incorporated herein by reference
as Exhibit (h)(17).
Indemnification of Registrant's officers, directors, partners,
trustees, members, shareholders, employees and agents ("Indemnitees") against
any loss, cost, damage, expense, liability or claim including, without
limitations, reasonable legal fees and other out-of-pocket costs of defending
against any such loss, cost, damage, expense, liability or claim, suffered by
all or any of such Indemnitees to the extent arising out of, or relating to, any
actual negligent act or omission by Janney Montgomery Scott, Inc. ("JMS") under
its agreement with the Trust; a material breach of any of the representations,
warranties and covenants; failure to timely and properly transmit orders and
instructions; cancellation or subsequent correction of any orders and
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instructions transmitted or discrepancies between Participant and Plan
maintained by JMS and account balances maintained by the Trust due to errors
caused by JMS, is provided for in Section 12 of the Agency Trading Agreement
incorporated herein by reference as Exhibit (h)(18)(i).
Indemnification of Registrant's officers, directors, partners,
trustees, member, employees, agents and affiliates ("Indemnitees") against any
and all claims, demands, liabilities and expenses including, without
limitations, reasonable legal fees arising out of, or relating to, (i) any
untrue statement or omission, or alleged untrue statement or omission, of
material fact that E-Trade or its employees make concerning the Fund that is
inconsistent with the Fund's current prospectus, statement of additional
information, periodic reports to shareholders or any other material the Fund
Parties have provided in writing to E-Trade, (ii) any breach by E-Trade of any
representation, warranty or provision contained herein, or (iii) any willful
misconduct or negligence by E-Trade in the performance of, or failure to
perform, its obligations under this Agreement, except to the extent that such
claims, liabilities or expenses are caused by Fund Parties' breach of this
Agreement or willful misconduct or negligence in the performance, or failure to
perform, their respective obligations under this Agreement, is provided for in
Section 4 of the No Transaction Fee Mutual Fund Offering/Retail Shareholder
Services Agreement, incorporated herein by reference as Exhibit (h)(20).
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 (e)(i). 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 by reference in Exhibit (h)(3). 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 (a)(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
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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.
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.
Indemnification of the Fund Company and its trustees, officers
and shareholders against any loss, cost, damage, expense, liability or claim
including, without limitations, reasonable legal fees and other out-of-pocket
costs of defending against any such loss arising out of any negligence or
omission by Mid-Atlantic Capital Corporation ("MACC") is provided for in section
12 of the Agency Trading Agreement filed herewith as Exhibit (h)(21).
Section 9.6 of the Registrant's Amended and Restated
Declaration of Trust dated November 19, 1987, incorporated herein by reference
as Exhibit (a)(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.
Item 26. 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
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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.
DENVER INVESTMENT ADVISORS LLC
<TABLE>
<CAPTION>
================================= =========================== ================================ ===================
Position
With Other
Denver Investment Business Type of
Name Advisors LLC Connections Business
--------------------------------- --------------------------- -------------------------------- -------------------
<S> <C> <C> <C>
Todger Anderson Executive President of Blue Chip Value Investment Company
Manager/President Fund, Inc.*
--------------------------------- --------------------------- -------------------------------- -------------------
Kenneth V. Penland Executive Manager/Chairman Chairman of the Board of Blue Investment Company
Chip Value Fund, Inc.*
--------------------------------- --------------------------- -------------------------------- -------------------
Charlotte Petersen Vice President Vice President of Blue Chip Investment Company
Value Fund, Inc.*
================================= =========================== ================================ ===================
</TABLE>
* The address of the Blue Chip Value Fund, Inc., is 370 Seventeenth Street,
Suite 3100, Denver, Colorado 80202.
Item 27. Principal Underwriter
(a) ALPS Mutual Funds Services, Inc. acts as the distributor for
the Registrant and the following investment companies:
Financial Investors Trust, Firsthand Funds Trust, Holland
Balance Fund Trust, Stonebridge Funds Trust, First Funds
Trust, Midcap SPDR Trust, Select Sector SPDR Trust, Nasdaq-100
Trust, SPDR Trust, and DIAMONDS Trust.
(b) To the best of Registrant's knowledge, the directors and
executive officers of ALPS Mutual Funds Services, Inc., are as
follows:
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices with Offices with
Business Address* ALPS Registrant
----------------- ------------- -------------
<S> <C> <C>
W. Robert Alexander Chairman of the Board None
and Secretary
Arthur J. Lucey President None
Russell Burk General Counsel None
Thomas A. Carter Chief Financial Officer None
Edmund Burke Executive Vice President None
</TABLE>
C-18
<PAGE> 164
<TABLE>
<S> <C> <C>
Jeremy May Vice-President None
Robert Szydlowski Vice President None
Chris Woessner Director None
Rick Pederson Director None
John Hannon Director None
</TABLE>
* The principal business address for each of the above directors and
executive officers is 370 Seventeenth Street, Suite 3100, Denver, Colorado
80202.
(c) None.
Item 28. Location of Accounts and Records
(a) 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),
Intermediate-Term Bond Fund), Mid-Cap Opportunity Fund,
Small-Cap Growth Fund, Select Fund and International Frontier
Fund (formerly the International Equity Fund).
(b) ALPS Mutual Funds Services, Inc., 370 Seventeenth Street,
Suite 3100, Denver, Colorado 80202 (records relating to its
functions as distributor, administrator and bookkeeping and
pricing agent for each of Registrant's investment portfolios).
(c) 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).
(d) Drinker Biddle & Reath LLP, One Logan Square, 18th & Cherry
Streets, Philadelphia, PA 19103-6996 (Registrant's Declaration
of Trust, Code of Regulations and Minute Books).
(e) The Bank of New York, One Wall Street, New York, NY 10286
(records relating to its functions as custodian for each of
the Registrant's investment portfolios).
Item 29. Management Services
None.
Item 30. Undertakings
None.
C-19
<PAGE> 165
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant 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 18th day of July, 2000.
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:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
*/s/ Jack D. Henderson
-----------------------
Jack D. Henderson Chairman of the
Board of Trustees July 18, 2000
*/s/ McNeil S. Fiske
-----------------------
McNeil S. Fiske Trustee July 18, 2000
*/s/ James B. O'Boyle
-----------------------
James B. O'Boyle Trustee July 18, 2000
*/s/ Robert L. Stamp
-----------------------
Robert L. Stamp Trustee July 18, 2000
*/s/ Lyman Seely
-----------------------
Lyman Seely Trustee July 18, 2000
/s/ Kenneth V. Penland President (Principal
----------------------- Executive Officer) July 18, 2000
Kenneth V. Penland
*/s/ Jasper Frontz
-----------------------
Jasper Frontz Treasurer (Principal July 18, 2000
Financial Officer and
Chief Accounting Officer)
</TABLE>
*By: /s/ Kenneth V. Penland
----------------------
Kenneth V. Penland
Attorney-in-fact
<PAGE> 166
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Item
------ ----
<S> <C>
(d)(3) Addendum No. 2 to Amended and Restated Advisory Agreement with
respect to the Small-Cap Growth Fund
(d)(4) Addendum No. 3 to Amended and Restated Advisory Agreement with
respect to the Select Fund
(d)(5) Addendum No. 4 to Amended and Restated Advisory Agreement with
respect to the International Frontier Fund (formerly the
International Equity Fund)
(d)(6) Form of Addendum No. 5 to Amended and Restated Advisory
Agreement with respect to the International Select Fund
(d)(7) Form of Addendum No. 6 to Amended and Restated Advisory
Agreement with respect to the International Small-Cap Value Fund
(d)(8) Form of Addendum No. 7 to Amended and Restated Advisory
Agreement with respect to the Micro-Cap Fund
(e)(1)(ii) Amendment No. 2 to Amended and Restated Distribution Agreement
with respect to the Small-Cap Growth Fund
(e)(1)(iii) Amendment No. 3 to Amended and Restated Distribution Agreement
with respect to the Select Fund
(e)(1)(iv) Amendment No. 4 to Amended and Restated Distribution Agreement
with respect to the International Frontier Fund (formerly the
International Equity Fund)
(e)(1)(v) Form of Addendum No. 5 to Amended and Restated Distribution
Agreement with respect to the International Select Fund
(e)(1)(vi) Form of Addendum No. 6 to Amended and Restated Distribution
Agreement with respect to the International Small-Cap Value Fund
(e)(1)(vii) Form of Addendum No. 7 to Amended and Restated Distribution
Agreement with respect to the Micro-Cap Fund
(g)(1) Custody Agreement between Westcore Trust and The Bank of New
York
(g)(2) Amendment No. 1 to Custody Agreement with respect to the
International Frontier Fund
</TABLE>
<PAGE> 167
<TABLE>
<S> <C>
(g)(3) Form of Amendment No. 2 to Custody Agreement with respect to the
International Select Fund
(g)(4) Form of Amendment No. 3 to Custody Agreement with respect to the
International Small-Cap Value Fund
(g)(5) Form of Amendment No. 4 to Custody Agreement with respect to the
Micro-Cap Fund
(g)(6) Foreign Custody Manager Agreement between Westcore Trust and The
Bank of New York
(h)(1)(ii) Amendment No. 2 to Administration Agreement with respect to the
Small-Cap Growth Fund
(h)(1)(iii) Amendment No. 3 to Administration Agreement with respect to the
Select Fund
(h)(1)(iv) Amendment No. 4 to Administration Agreement with respect to the
International Frontier Fund (formerly the International Equity
Fund)
(h)(1)(v) Form of Amendment No. 5 to Administration Agreement with respect
to the International Select Fund
(h)(1)(vi) Form of Amendment No. 6 to Administration Agreement with respect
to the International Small-Cap Value Fund
(h)(1)(vii) Form of Amendment No. 7 to Administration Agreement with respect
to the Micro-Cap Fund
(h)(2)(v) Amendment No. 4 to Amended and Restated Transfer Agency and
Service Agreement between Westcore Trust and State Street Bank
and Trust Company with respect to the Small-Cap Growth, Select
and International Frontier Funds
(h)(2)(vi) Form of Amendment No. 5 to Amended and Restated Transfer Agency
and Service Agreement with respect to the International Select
Fund
(h)(2)(vii) Form of Amendment No. 6 to Amended and Restated Transfer Agency
and Service Agreement with respect to the International
Small-Cap Value Fund
(h)(2)(viii) Form of Amendment No. 7 to Amended and Restated Transfer Agency
and Service Agreement with respect to the Micro-Cap Fund
(h)(3)(ii) Amendment No. 2 to Amended and Restated Bookkeeping and Pricing
Agreement with respect to the Small-Cap Growth Fund
</TABLE>
-2-
<PAGE> 168
<TABLE>
<S> <C>
(h)(3)(iii) Amendment No. 3 to Amended and Restated Bookkeeping and Pricing
Agreement with respect to the Select Fund
(h)(3)(iv) Amendment No. 4 to Amended and Restated Bookkeeping and Pricing
Agreement with respect to the International Frontier Fund
(formerly the International Equity Fund)
(h)(3)(v) Form of Amendment No. 5 to Amended and Restated Bookkeeping and
Pricing Agreement with respect to the International Select Fund
(h)(3)(vi) Form of Amendment No. 6 to Amended and Restated Bookkeeping and
Pricing Agreement with respect to the International Small-Cap
Value Fund
(h)(3)(vii) Amendment No. 7 to Amended and Restated Bookkeeping and Pricing
Agreement with respect to the Micro-Cap Fund
(h)(21) Agency Trading Agreement dated as of September 3, 1999 among
Westcore Trust, Denver Investment Advisors LLC, ALPS Mutual
Funds Services, Inc., Boston Financial Data Services, Inc. and
Mid-Atlantic Capital Corporation
(h)(22) Form of Fee Waiver Letter Agreement among Westcore Trust, ALPS
Mutual Funds Services, Inc. and Denver Investment Advisors LLC
(j)(1) Consent of Drinker Biddle & Reath LLP
(p)(1) Code of Ethics of Westcore Trust
(p)(2) Code of Ethics of Denver Investment Advisors LLC
(q) Powers of Attorney and Certificate of Secretary
</TABLE>
-3-
