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FINANCIAL INVESTORS TRUST DECEMBER 10, 1998
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202-5631
For additional information, call (800) 298-3442
PRIME MONEY MARKET FUND - CLASS I
This Prospectus describes the Prime Money Market Fund (the "Fund"), a
diversified money market fund. The Fund seeks to provide investors with as
high a level of current income as is consistent with the preservation of capital
and liquidity by investing in a defined group of short-term, U.S. dollar
denominated money market instruments. The Fund is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less and seeks to
maintain its net asset value per share at $1.00 for purposes of purchases and
redemptions.
This Prospectus offers exclusively Class I shares of the Fund. Class I
shares of the Fund are sold generally to municipal investors, including
municipalities, counties and state agencies, as well as other institutional
investors such as broker/dealers, corporations, investment advisers, credit
unions, banks, insurance companies and other financial institutions and high net
worth individuals that meet the $1,000,000 minimum investment threshold for this
class of shares. The Fund also offers Class II shares - see "Other Information
- - Capitalization".
The Fund is sponsored and distributed by ALPS Mutual Funds Services, Inc.
("ALPS" or the "Administrator" or "Distributor") and is advised by GE Investment
Management Incorporated ("GEIM" or the "Adviser").
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY OR INSURER AND THEY MAY INVOLVE INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This Prospectus sets forth concisely the information you should consider
before investing in the Fund. Please read this Prospectus and keep it for
future reference. Additional information about the Fund is contained in a
Statement of Additional Information (the "Statement of Additional Information")
which has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by writing to or calling the Trust at the
address and telephone number listed above. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated herein by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE. AN INVESTMENT IN THE FUND IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
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TABLE OF CONTENTS
PAGE
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EXPENSE SUMMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
FUND OPERATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
SUITABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
MANAGEMENT OF THE FUND . . . . . . . . . . . . . . . . . . . . . . . . . . .7
HOW TO INVEST IN THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . .8
HOW TO REDEEM SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
INVESTMENT INSTRUMENTS, TRANSACTIONS AND RISKS . . . . . . . . . . . . . . 11
OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
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EXPENSE SUMMARY
The summary below shows shareholder transaction expenses imposed by the
Fund and annual Fund operating expenses based on anticipated operating expenses
of the Fund. A hypothetical example based on the summary is also shown.
"Shareholder Transaction Expenses" are charges you pay when buying or selling
shares of the Fund whereas "Annual Fund Operating Expenses" are paid out of the
Fund's assets and include fees for portfolio management, fund administration and
other services.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on
Purchases of Fund Shares None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
Annual Fund Operating Expenses (as a percentage of average net assets)
The Management Fees described in the table below are based upon the
anticipated operating expenses of the Fund. Management Fees may be higher to the
extent the Fund's average net assets exceed $500 million. Please read the
following Annual Fund Operating Expenses summary and accompanying footnotes
carefully before investing.
Management Fees (1) 0.04%
12b-1 Fees None
All Other Expenses(2)
(Net of Fee Waivers and Reimbursements) 0.16%
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Total Fund Operating Expenses
(Net of Fee Waivers and Reimbursements)(2) 0.20%
-----
-----
(1) The Fund is obligated to pay management fees to GEIM at the maximum
annual rate of 0.08% of the Fund's average net assets. Under its Investment
Advisory Agreement with the Fund, GEIM is entitled to receive management fees of
0.04% on the first $500 million of average net assets of the Fund, 0.06% on the
next $500 million and 0.08% on average net assets in excess of $1 billion.
(2) The amount for "All Other Expenses" includes administration fees
payable to the Administrator calculated daily and payable monthly, at an annual
rate of the greater of $360,000 or 0.16% of average daily net assets of the
Fund up to $500 million, 0.14% of average daily net assets of the Fund in excess
of $500 million up to $1 billion and 0.12% of average daily net assets of the
Fund in excess of $1 billion. The Administrator has stated that it will
voluntarily waive a portion of the administration fees otherwise payable by the
Fund, as well as voluntarily assume a portion of the Fund expenses, to the
extent necessary for Class I of the Fund to maintain a total expense ratio of
not more than 0.20% of average net assets. Without this voluntary fee waiver
and assumption of expenses, and assuming payment of the maximum management and
administration fees, All Other Expenses and Total Fund Operating Expenses would
be 0.81% and 0.85%, respectively, of the average net assets of Class I of the
Fund. The Administrator reserves the right to modify or terminate the fee
waiver and assumption of expenses at any time.
THE FOLLOWING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. THE EXPENSES SET FORTH ABOVE AND THE EXAMPLE SET FORTH BELOW REFLECT
THE NON-IMPOSITION OF CERTAIN FEES AND EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
EXAMPLE:
Based upon the above summary of expenses and assuming a 5% annual return,
redemption at the end of each time period and the reinvestment of all dividends
and distributions, you would pay the following expenses on a $1,000,000
investment in Class I of the Fund:
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1 YEAR $2,048
3 YEARS $6,443
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OTHER INFORMATION
The Expense Summary and Example are intended to help you understand the
expenses you would bear either directly (as with the Shareholder Transaction
Expenses) or indirectly (as with the Annual Fund Operating Expenses) as a Fund
shareholder. As stated above, the Fund does not impose any sales-related
charges in connection with purchases of its shares, although certain service
institutions may charge their clients fees in connection with purchases and
sales for the accounts of their clients. These fees are in addition to the
expenses shown in the Expense Summary and Example. For a more complete
description of the Fund's operating expenses, see "Management of the Fund" in
this Prospectus and the Statement of Additional Information.
FUND OPERATIONS
INVESTMENT OBJECTIVE
The Adviser will use its best efforts to achieve the investment objective
of the Fund as described below, although the achievement of the investment
objective, of course, cannot be assured. You should not consider the Fund, by
itself, to be a complete investment program. The Fund is a diversified,
open-end management investment company.
The investment objective of the Fund is to seek as high a level of current
income as is consistent with the preservation of capital and liquidity. In
seeking its objective, the Fund's investments include, but are not limited to,
the following U.S. dollar denominated, short-term money market instruments: (1)
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("Government Securities"); (2) debt obligations of
corporations, banks, savings and loan institutions, insurance companies and
mortgage bankers; (3) commercial paper and notes, including those with floating
or variable rates of interest; (4) debt obligations of U.S. branches of foreign
banks; (5) repurchase agreements; (6) asset-backed or mortgage-related
securities; (7) stripped Government Securities; and (8) zero coupon bonds.
INVESTMENT POLICIES
The Fund limits its portfolio investments to securities that the Trust's
Board of Trustees determines present minimal credit risk and that are "Eligible
Securities" at the time of acquisition by the Fund. "Eligible Securities" as
used in this Prospectus means securities rated by the requisite "nationally
recognized statistical rating organization" ("NRSRO") in one of the two highest
short-term rating categories, consisting of issuers that have received these
ratings with respect to other short-term debt securities and comparable unrated
securities. "Requisite NRSROs" means (1) any two NRSROs that have issued
ratings with respect to a security or class of debt obligations of an issuer or
(2) one NRSRO, if only one NRSRO has issued such a rating at the time that the
Fund acquires the security. Currently, six organizations are NRSROs: S&P,
Moody's, Fitch Investors Service, Inc., Duff and Phelps, Inc., IBCA Limited and
its affiliate, IBCA, Inc., and Thomson BankWatch, Inc. A discussion of the
ratings categories is contained in the Appendix to the Statement of Additional
Information. By limiting its investments to Eligible Securities, the Fund may
not achieve as high a level of current income as a fund investing in lower-rated
securities.
The Fund may not invest more than 5% of its total assets in the securities
of any one issuer, except for Government Securities and except to the extent
permitted under rules adopted by the SEC under the Investment Company Act of
1940, as amended ("1940 Act"). In addition, the Fund may not invest more than
5% of its total assets in Eligible Securities that have not received the highest
rating from the Requisite NRSROs and comparable unrated securities ("Second Tier
Securities"), and may not invest more than the greater of $1,000,000 or 1% of
its total assets in the Second Tier Securities of any one issuer. The Fund may
invest more than 5% (but not more than 25%) of the then-current value of the
Fund's total assets in the securities of a single issuer for a period of up to
three business days, so long as (1) the securities either are rated by the
Requisite NRSROs in the highest short-term rating category or are securities of
issuers that have received such ratings with respect to other short-term debt
securities or are comparable unrated securities and (2) the Fund does not make
more than one such investment at any one time. Determinations of comparable
quality for purchases of unrated securities are made by GEIM in accordance with
procedures established by the Board of Trustees. The Fund invests only in
instruments that have (or, pursuant to regulations adopted by the SEC, are
deemed to have) remaining maturities of 13 months or less at the date of
purchase (except securities subject to repurchase agreements), determined in
accordance with a rule promulgated by the SEC. The Fund will maintain a
dollar-weighted average portfolio maturity of 90 days or less. The assets of
the Fund are valued on the basis of amortized cost, as described below under
"Determination of Net Asset Value."
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The Fund, in addition to investing as described above, may hold Rule 144A
Securities. In addition, the Fund may engage in the following types of
investment techniques and strategies: entering into reverse repurchase
agreements, entering into securities transactions on a when-issued or
delayed-delivery basis and lending portfolio securities. These other
instruments, investment techniques and strategies have risks and special
considerations associated with them that are described below under "Investment
Instruments, Transactions, Strategies and Risks."
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions which reflect
self-imposed standards as well as federal regulatory limitations. These
limitations are designed to minimize certain risks associated with investing in
specified types of securities or engaging in certain transactions. These
investment restrictions and those identified as fundamental in the Statement of
Additional Information may be changed only by a vote of a majority of the Fund's
outstanding shares.
The Fund may not:
1) Borrow money, except that the Fund may enter into reverse repurchase
agreements, and except that the Fund may borrow from banks for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests and cash payments of dividends and distributions that might otherwise
require the untimely disposition of securities, in an amount not to exceed
33-1/3% of the value of the Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing is made. Whenever borrowings, including reverse repurchase
agreements, of 5% or more of the Fund's total assets are outstanding, the Fund
will not make any additional investments.
2) Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending portfolio securities in an amount not
to exceed 30% of the Fund's assets taken at market value, (c) entering into
repurchase agreements, and (d) entering into variable rate demand notes.
3) Purchase securities (other than Government Securities) of any issuer
if, as a result of the purchase, more than 5% of the Fund's total assets would
be invested in the securities of the issuer. All securities of a foreign
government and its agencies will be treated as a single issuer for purposes of
this restriction.
4) Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the outstanding securities of any class of issuer, except that
this limitation is not applicable to the Fund's investments in Government
Securities. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction.
5) Invest more than 25% of the value of its total assets in securities of
issuers in any one industry, except that the Fund may invest more than 25% of
the value of its total assets in securities issued by domestic banks. For
purposes of this restriction, the term "industry" will be deemed to include (a)
the government of any country other than the U.S., but not the U.S. Government
and (b) all supranational organizations.
If a percentage limitation on investments by the Fund stated above or in
the Statement of Additional Information is adhered to at the time of an
investment, a later increase or decrease in percentage resulting from changes in
asset values will not be deemed to violate the limitation except in the case of
the limitations on borrowing and illiquid investments. The Fund is not required
to sell a security if its rating is reduced or discontinued after purchase, but
the Fund may consider doing so.
It is the intention of the Fund, unless otherwise indicated, that with
respect to the Fund's policies that are the result of the application of law,
the Fund will take advantage of the flexibility provided by rules or
interpretations of the SEC currently in existence or promulgated in the future
or changes to such laws.
DETERMINATION OF NET ASSET VALUE
The value of the Fund's shares is referred to as "net asset value". Net
asset value per share of each Class for purposes of pricing purchases and
redemptions is calculated by adding the value of each Class' proportionate share
of all securities and other assets, subtracting its proportionate share of
liabilities, and dividing the result by the number of outstanding shares of each
Class. Within each Class, the expenses are allocated proportionately based on
the net assets of each Class, except class-specific expenses which are allocated
directly to the respective Class. Net asset value is
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determined as of 5:00 p.m. Eastern Time on each day the New York Federal Reserve
and the New York Stock Exchange are open for business. Currently, either the
New York Federal Reserve or the New York Stock Exchange is closed on New Years
Day, Martin Luther King Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Veterans' Day, Thanksgiving Day and
Christmas Day. A "Business Day" is any day on which the New York Federal
Reserve and the New York Stock Exchange are open for business.
The Board of Trustees has established procedures designed to maintain a
stable net asset value of $1.00 per share, to the extent reasonably possible.
The Board of Trustees has approved and adopted procedures under Rule 2a-7 under
the Investment Company Act of 1940, as amended, which was enacted by the SEC
with the intent of stabilizing money market funds at $1.00 per share. Under the
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security. Rule 2a-7 also provides that the Fund must also do a
"mark-to-market" analysis, where it is determined the degree to which any
variations may exist between the amortized pricing method and the actual market
price of the securities in the Fund. In the event the Board determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Board will take such corrective
action as it regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity.
Rule 2a-7 also requires the Fund to maintain a dollar weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities of 13 months or less and invest only in securities determined by the
Trust's Board of Trustees to be "eligible securities" and that present minimal
credit risks. The Board of Trustees or its delegate reviews the portfolio
securities monthly and at regularly scheduled quarterly Board of Trustees
meetings. There can be no assurance that at all times the $1.00 price per share
can be maintained. See the Statement of Additional Information for more
details.
DIVIDENDS AND DISTRIBUTIONS
The Fund's net income is declared daily as a dividend at the close of
business on the day of declaration. Your shares begin earning dividends on the
day you purchase them, and continue to earn dividends through and including the
day before you redeem them. See "How to Invest in the Fund". The Fund pays
dividends not later than five business days after the end of each month in the
form of additional shares of the Fund, unless you elect prior to the date of
distribution to receive payment in cash. Reinvested dividends and distributions
receive the same tax treatment as those paid in cash. If you redeem all of your
shares in the Fund, the Fund will pay your dividends in cash not later than five
business days after the redemption.
SUITABILITY
The Fund is designed as an economical and convenient professionally managed
investment vehicle for institutional investors and high net worth individuals
with cash balances or cash reserves who seek as high a level of current income
as is consistent with the preservation of capital and liquidity. The Fund is
designed to meet the specific cash management needs of institutional investors
such as Municipal Investors, broker/dealers, corporations, investments advisers,
credit unions, banks, insurance companies and other institutional investors.
"Municipal Investors" include any State, county, municipality, school district,
special district or political subdivision in the United States. The Fund may
also be suitable for institutions seeking an investment vehicle for daily cash
sweep or liquidity purposes on behalf of their clients.
Legislation in each state sets forth guidelines and limitations with
respect to investments by Municipal Investors located within the state. In
addition, Municipal Investors may be subject to local laws or have their own
guidelines and policies prescribing acceptable investments for cash management
purposes. Each Municipal Investor planning to invest in the Fund must
independently verify that the Fund meets all of the criteria of investment
policies and guidelines applicable to such Municipal Investor.
Future statutory or regulatory changes, as well as future judicial or
administrative decisions and interpretations of present and future statutes and
regulations could prevent a Municipal Investor from continuing its investment in
the Fund. Each Municipal Investor should therefore remain aware of any changes
in the applicable regulation of permitted investments.
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The Fund offers the advantages of purchasing power efficiencies and
diversification of risk. Generally, in purchasing debt instruments from
dealers, the percentage difference between the bid and asked price tends to
decrease as the size of the transaction increases. The Fund also offers
investors the opportunity to participate in a portfolio of money market
instruments which is more diversified in terms of issues and maturities than a
portfolio a single investor may otherwise be able to invest in.
Investment in the Fund relieves the investor of money management and
administrative burdens usually associated with the direct purchase and sale of
money market instruments. These include the selection of the portfolio
investments; surveying the market for the best terms at which to buy and sell;
scheduling and monitoring maturities and reinvestments; receipt, delivery and
safekeeping of securities; and portfolio recordkeeping.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
The Adviser, GEIM, is a wholly-owned subsidiary of General Electric Company
("GE"). The principal address of the Adviser is 3003 Summer Street, Stamford, CT
06905.
Through GEIM and General Electric Investment Corporation ("GEIC"), an
affiliated company of GEIM, wholly owned by GE, and their predecessors, GE has
more than 70 years of investment management experience. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets as of June 30, 1998 of approximately $69 billion, of
which approximately $1.7 billion was invested in money market funds regulated
under Rule 2a-7.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to
provide a continuous investment program for the Fund, including investment
research and management with respect to the assets of the Fund. GEIM is
entitled to receive management fees of 0.04% on the first $500 million of
average net assets of the Fund, 0.06% on the next $500 million and 0.08% on
average net assets in excess of $1 billion.
ADMINISTRATOR, TRANSFER AGENT, BOOKKEEPING AND PRICING AGENT
ALPS serves as the Fund's Administrator. As Administrator, ALPS has agreed
to: assist in maintaining the Fund's office; furnish the Fund with clerical and
certain other services; compile data for and prepare notices and semi-annual
reports to the Securities and Exchange Commission; prepare filings with state
securities commissions; coordinate Federal and state tax returns; monitor the
Fund's expense accruals; monitor compliance with the Fund's investment policies
and limitations; and generally assist in the Fund's operations. ALPS is
entitled to receive a fee from the Fund for its administrative services computed
daily and payable monthly, at the annual rate of the greater of $360,000 or
0.16% of average daily net assets of the Fund up to $500 million, 0.14% of
average daily net assets of the Fund in excess of $500 million up to $1 billion
and 0.12% of average daily net assets of the Fund in excess of $1 billion. ALPS
has stated that it will voluntarily waive a portion of the administration fees
otherwise payable by the Fund, as well as voluntarily assume a portion of the
Fund expenses, to the extent necessary for Class I of the Fund to maintain a
total expense ratio of not more than 0.20% of the average net assets of the
Fund. ALPS reserves the right to modify or terminate the fee waiver and
assumption of expenses at any time. ALPS and GEIM may also pay third parties
from time to time for rendering services to the Fund and/or shareholders.
In addition to its role as Administrator, ALPS serves as the Fund's
Transfer Agent. ALPS also serves as the Fund's Bookkeeping and Pricing Agent.
In this capacity, ALPS has agreed to maintain the financial accounts and records
of the Fund and to compute the net asset value and certain other financial
information relating to the Fund.
CUSTODIAN
State Street Bank and Trust Company of Connecticut, N.A., located at 750
Main Street, Suite 1114, Hartford, Connecticut 06103, serves as Custodian for
the Fund.
SUB-CUSTODIAN
State Street Bank and Trust Company, located at P.O. Box 1978, Boston,
Massachusetts 02015, serves as Sub-Custodian for the Fund.
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HOW TO INVEST IN THE FUND
Shares in the Fund are distributed on a continuous basis by ALPS, the
Fund's Sponsor and Distributor. ALPS has its principal office at 370 Seventeenth
Street, Suite 3100, Denver, Colorado 80202 and may be reached at (800) 298-3442.
GENERAL PROCEDURES
You may purchase Fund shares through ALPS, the Fund's Transfer Agent.
Investors shall pay for their purchase of Fund shares by using the Federal
Reserve Wire System. Shares of the Fund may be purchased at the net asset value
next determined after an order is received and accepted. The Fund does not
impose any sales-related charges in connection with purchases of shares. The
Fund may discontinue offering its shares in any state without notice to
shareholders.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. The application should be forwarded to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, Colorado 80202
Purchases by telephone or facsimile can be made after an account has been
established by the Transfer Agent as described below. The Trust reserves the
right to reject any purchase order. Third-party checks will not be accepted.
Check payments must be in U.S. dollars. Please include Fund name and account
number on all checks.
PURCHASE PRICE
Your purchase of Fund shares will be effected at the net asset value next
determined after the Fund receives your purchase order in proper form and
payment in the form of Federal Funds. If your order is accompanied by Federal
Funds, or is converted into Federal Funds by 5:00 p.m. Eastern Time on a
Business Day, it will be executed on that day. If the Fund receives your order
and payment in the form of Federal Funds after 5:00 p.m. Eastern Time on a
Business Day, your order will be processed the next Business Day.
TELEPHONE AND FACSIMILE PURCHASES
You can purchase Fund shares by telephone or facsimile once you have
established your account with the Fund and selected facsimile and/or telephone
privileges on your Account Application. In order to qualify for dividends on
the day of purchase, telephone or facsimile orders must be placed and Federal
Funds must be in the Fund's custody account by 5:00 p.m. Eastern Time on
Business Days. If Federal Funds arrive in the Fund's custody account after the
stated deadline the account will be credited the next Business Day.
MINIMUM INVESTMENT AND ACCOUNT BALANCES
The minimum initial investment for Class I is $1,000,000 and additional
investments may be made in any amount. The minimum purchase requirements do not
apply to reinvested dividends. If an account balance in Class I falls below
$200,000 due to redemptions or exchanges, the account may be closed and the
proceeds wired to the bank account of record, or a check will be issued and sent
to the party of record. An investor will be given 30 days notice that the
account will be closed unless an additional investment is made to increase the
account balance to the $200,000 minimum.
STATEMENTS AND REPORTS
The Trust will send you a statement of your account after every transaction
that affects your share balance or your account registration. A statement with
tax information and an annual statement will be mailed to you by January 31 of
each year, and also will be filed with the IRS. At least twice a year, you will
receive financial statements in the form of Annual and Semi-Annual Reports of
the Fund.
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HOW TO REDEEM SHARES
GENERAL PROCEDURES
Shareholders may redeem all or any part of the value of their account(s) on
any Business Day. You may redeem by mail, telephone or facsimile if you have
established that capability with the Fund. Redemption orders are processed at
the net asset value per share next determined after the Fund receives your
order. If the Fund receives your redemption order before 1:00 p.m. Eastern Time
on a Business Day, the Fund will generally pay for your redeemed shares on that
day. Otherwise, the Fund will generally pay for your redeemed shares on the
next Business Day. The Fund reserves the right to pay for redeemed shares
within seven days after receiving your redemption order if, in the judgment of
the Adviser, an earlier payment could adversely affect the Fund.
REGULAR REDEMPTION
You may redeem shares by sending a written request to Financial Investors
Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You must sign a
redemption request. (All individuals with authority on the account must
co-sign.) Your written redemption request must:
(i) state the number of shares to be redeemed;
(ii) identify your shareholder account number; and
(iii) provide your tax identification number.
Each signature must be guaranteed by either a bank that is a member of the
FDIC, a trust company or a member firm of a national securities exchange or
other eligible guarantor institution. The Fund will not accept guarantees from
notaries public. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received
until the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the
same bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
TELEPHONE AND FACSIMILE REDEMPTION
You may redeem shares by telephone or facsimile. Shareholders must check
the appropriate box on the Account Application to activate facsimile and/or
telephone redemption privileges. Shares may be redeemed by telephoning the Fund
at (800) 298-3442 (or sending a facsimile transmission to the Fund at (303)
825-2575 and giving the account name, account number, Personal Identification
Number (PIN#), name of Fund and amount of redemption. Proceeds from redemptions
will be wired directly to your account at a commercial bank within the United
States.
In order to arrange for facsimile and/or telephone redemptions after you
have opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "Regular Redemption". The request must be signed by you and each
other shareholder of the account involved, with the signatures guaranteed as
described above. The Trust may modify or terminate procedures for redeeming
shares by telephone but will not materially change or terminate it without
giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or
facsimile redemptions may be difficult to complete. If you are unable to
contact the Fund by telephone or facsimile, you may redeem your shares by mail
as described above under "Regular Redemption".
By electing the facsimile and/or telephone redemption option, you may be
giving up a measure of security which you might have had if you were to redeem
in writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine.
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Accordingly, you, as a result of this policy, may bear the risk of fraudulent
telephone or facsimile redemption transactions.
GENERAL REDEMPTION INFORMATION
Except for the presence of certain exceptional circumstances as described
in the Investment Company Act of 1940, the Fund will pay for redeemed shares by
mail within seven days after the Fund receives your order and supporting
documents in proper form (except as provided by the rules of the Securities and
Exchange Commission). Where payment is to be made by wire via the Federal
Reserve Wire System, the Fund will wire redemption proceeds on the same day
after receiving your redemption order, provided it is made before 1:00 P.M.
Eastern Time on a Business Day.
There is no charge for share redemptions. The Fund may redeem an account
that has a balance of less than the minimum account balance (see "Minimum
Investment and Account Balances" above) if the shareholder does not increase the
amount of the account to at least the minimum account balance upon 30 days'
notice.
Please direct questions concerning the proper form for redemption requests
to the Fund at (800) 298-3442.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
You may sell your Fund shares and buy shares of the U.S. Treasury Money
Market Fund or the U.S. Government Money Market Fund, additional investment
portfolios of the Trust, in exchange by written request. There are no fees or
commissions for exchanging Fund shares. If you have established the privilege
on your Account Application, you may also initiate exchanges by telephone or
facsimile. Exchange requests should be directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may
have tax consequences, so you should consult your tax adviser for further
information. The investment portfolio must be registered for sale in your state
and must meet the investment criteria for your institution and the investor must
meet the minimum investment requirements. See "Suitability" in that Fund's
prospectus. Prior to requesting an exchange of Fund shares you should call the
Fund at (800) 298-3442. You should read the current prospectus before
investing. Each Fund has its own minimum balance requirements which must be
adhered to.
During periods of significant economic or market change, telephone or
facsimile exchanges may be difficult to complete. If you are unable to contact
the Fund by telephone or facsimile, you may also mail the exchange request to
the Fund at the address listed under "Regular Redemption". Neither the Trust
nor ALPS will be responsible for the authenticity of exchange instructions
received by telephone or facsimile except as set forth under "How to Redeem
Shares - Telephone and Facsimile Redemption".
The Trust can provide you with information concerning certain limitations
on the exchange privilege, including those related to frequency. The Trust may
modify or terminate the exchange privilege but will not materially change or
terminate it without giving shareholders 60 days' written notice.
TAXES
While municipal investors are generally exempt from Federal income taxes,
each investor should independently ascertain its tax status. With respect to
investors who are not exempt from Federal income taxes, dividends derived from
net investment income and short term capital gains are taxable as ordinary
income distributions and are taxable when paid, whether investors receive
distributions in cash or reinvest them in additional shares, except that
distributions declared in December and paid in January are taxable as if paid on
December 31. The Fund will send to non-exempt investors an IRS Form 1099-DIV
showing their taxable distributions for the past calendar year.
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). This qualification will
relieve the Fund of liability for Federal income taxes to the extent its
earnings are distributed in accordance with the Code and it meets other
requirements for qualification as set forth in the Code.
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The information above is only a summary of some of the federal tax
consequences generally affecting the Fund and its shareholders, and no attempt
has been made to discuss individual tax consequences. In addition to Federal
taxes, investors may be subject to state or local taxes on their investment.
Investors should consult their tax advisor to determine whether the Fund is
suitable to their particular tax situation.
When investors sign their account application, they will be asked to
certify that their social security or taxpayer identification number is correct
and that they are not subject to 31% backup withholding for failing to report
income to the IRS. If investors violate IRS regulations, the IRS can require the
Fund to withhold 31% of taxable distributions and redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders within each
calendar year as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived
from earned interest, it is anticipated that all dividends paid by the Fund will
be taxable as ordinary income to those shareholders who are not exempt from
Federal income taxes, and that no part of any distribution will be eligible for
the dividends received deduction for corporations.
INVESTMENT INSTRUMENTS, TRANSACTIONS AND RISKS
The following paragraphs provide a brief description of the securities in
which the Fund may invest and the transactions the Fund may make. The Fund is
not limited by this discussion, however, and may purchase other types of
securities and may enter into other types of transactions if they are consistent
with the Fund's investment objective and policies.
BANKERS' ACCEPTANCES purchased by the Fund are negotiable obligations of a
bank to pay a draft which has been drawn on it by a customer. These obligations
are backed by large banks and also usually are backed by goods in international
trade.
CERTIFICATES OF DEPOSIT purchased by the Fund are negotiable certificates
that represent a commercial bank's obligations to repay funds deposited with it
and earn rates of interest over given periods.
COMMERCIAL PAPER purchased by the Fund are short-term obligations issued by
banks, broker-dealers, corporations and other entities for purposes such as
financing their current operations.
CORPORATE OBLIGATIONS purchased by the Fund are bonds and notes issued by
corporations and other business organizations to finance their credit needs.
DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell obligations on a
when-issued or delayed-delivery basis, with payment and delivery taking place at
a future date. The market value of obligations purchased in this way may change
before the delivery date, which could affect the market value of the Fund's
assets. Ordinarily, the Fund will not earn interest on obligations until they
are delivered.
FOREIGN BANK OBLIGATIONS. The Fund limits its investments in foreign bank
obligations to United States dollar denominated obligations of United States
branches of foreign banks which at the time of investment (i) have more than $10
Billion, or the equivalent in other currencies, in total assets; and (ii) in the
opinion of the Fund's investment adviser, are of an investment quality
comparable to obligations of United States banks which may be purchased by the
Fund and present minimal credit risk.
ILLIQUID INVESTMENTS. It is the policy of the Fund that illiquid
securities (including repurchase agreements of more than seven days' duration
and variable and floating rate demand and master demand notes not requiring
receipt of the principal note amount within seven days' notice) may not
constitute, at the time of purchase or at any time, more than 10% of the value
of the total net assets of the Fund. Illiquid securities include (a) securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market, (b) participation interests in loans
that are not subject to puts and (c) repurchase agreements not terminable within
seven days. See "Repurchase and Reverse Repurchase Agreements" below.
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<PAGE>
Securities that have legal or contractual restrictions on resale but have a
readily available market are not deemed illiquid for purposes of this
limitation. Consequently, investments in restricted securities eligible for
resale pursuant to Rule 144A of the Securities Act of 1933 which have been
determined to be liquid by the Fund's Board of Trustees based upon the trading
markets for the securities will not be included for purposes of this limitation.
Rule 144A permits certain qualified institutional buyers, such as the Funds, to
trade in privately placed securities even though such securities are not
registered under the 1933 Act. The Adviser, under the supervision of the Board
of Trustees, will consider whether securities purchased under Rule 144A are
illiquid and thus subject to each Fund's restriction of investing no more than
10% of its assets in illiquid securities. A determination of whether a Rule
144A security is liquid or not is a question of fact. In making this
determination the Adviser will consider the trading markets for the specific
security taking into account the unregistered nature of a Rule 144A security.
In addition, the Adviser could consider the (1) frequency of trades and quotes,
(2) number of dealers and potential purchasers, (3) dealer undertakings to make
a market, and (4) the nature of the security and of marketplace trades(e.g., the
time needed to dispose of the security, the method of soliciting offers and the
mechanics of transfer). The liquidity of Rule 144A securities would be
monitored and, if as a result of changed conditions, it is determined that a
Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities
would be reviewed to determine what, if any, steps are required to assure that
the Fund does not invest more than 10% of its assets in illiquid securities.
Investing in 144A securities could have the effect of increasing the amount of a
Fund's assets invested in illiquid securities if qualified institutional buyers
are unwilling to purchase such securities.
MONEY MARKET refers to the marketplace where short-term, high grade debt
obligations are traded, including U.S. government obligations, commercial paper,
certificates of deposit, bankers' acceptances, time deposits and short-term
corporate obligations. Money market instruments may carry fixed rates of return
or have variable or floating interest rates.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. Under the terms of a typical
repurchase agreement, which is deemed a loan for purposes of the 1940 Act, the
Fund would acquire an underlying obligation for a relatively short period
(usually from one to seven days) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period.
The Fund may also engage in reverse repurchase agreements, subject to its
investment restrictions. A reverse repurchase agreement, which is considered a
borrowing by the Fund, involves a sale by the Fund of securities that it holds
concurrently with an agreement by the Fund to repurchase the same securities at
an agreed upon price and date. The Fund will use the proceeds of reverse
repurchase agreements to provide liquidity to meet redemption requests and cash
payments of dividends and distributions when the sale of the Fund's securities
is considered to be disadvantageous. Cash, Government Securities or other
liquid assets equal in value to the Fund's obligations with respect to reverse
repurchase agreements are segregated and maintained with the Fund's custodian or
designated sub-custodian.
SECURITIES LENDING. The Fund is authorized to lend its portfolio
securities to well-known and recognized U.S. and foreign brokers, dealers and
banks. These loans, if and when made, may not exceed 30% of the Fund's total
assets (including the market value of the collateral received). The Fund's
loans of securities will be at least 100% collateralized by cash, letters of
credit or Government Securities. The Fund will retain the right to all interest
and dividends payable with respect to the loaned securities. When the Fund
lends portfolio securities it charges interest at reasonable rates and retains
the ability to terminate the loan at any time. Cash or instruments
collateralizing the Fund's loans of securities are segregated and maintained at
all times with the Fund's custodian or designated sub-custodian in an amount at
least equal to the current market value of the loaned securities. In lending
securities, the Fund is subject to risks, which, like those associated with
other extensions of credit, include possible loss of rights in the collateral
should the borrower fail financially.
TIME DEPOSITS purchased by the Fund are non-negotiable deposits in a
banking institution earning a specified interest rate over a given period of
time. Fixed time deposits may be withdrawn on demand by the investor, but may
be subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation.
U.S. GOVERNMENT OBLIGATIONS are debt obligations issued or guaranteed by
the U.S. Treasury of by an agency or instrumentality of the U.S. government.
Not all U.S. government obligations are backed by the full faith and credit of
the United States. For example, obligations issued by the Federal Farm Credit
Bank or by the Federal National Mortgage Association are supported by the
agency's right to borrow money from the U.S. Treasury under certain
12
<PAGE>
circumstances. Obligations issued by the Federal Home Loan Bank are supported
only by the credit of the agency. There is no guarantee that the government
will support these types of obligations, and therefore they involve more risk
than other government obligations.
U.S. TREASURY OBLIGATIONS are obligations issued by the United States and
backed by its full faith and credit.
VARIABLE AND FLOATING RATE INSTRUMENTS that the Fund will invest in include
notes purchased directly from issuers, bear variable or floating interest rates
and may carry rights that permit holders to demand full payment from the issuers
or certain financial intermediaries. Floating rate securities have interest
rates that change whenever there is a change in a designated market-based
interest rate, while variable rate instruments provide for a specified periodic
adjustment in the interest rate. These formulas are designed to result in a
market value for the instrument that approximate its par value. When
determining the maturity of a variable or floating rate instrument, the Fund may
look to the date the demand feature can be exercised, or to the date the
interest rate is readjusted, rather than to the final maturity of the
instrument.
OTHER INFORMATION
CAPITALIZATION
Financial Investors Trust was organized as a Delaware business trust on
November 30, 1993 and currently consists of six separately managed portfolios.
The Board of Trustees may establish additional portfolios in the future. The
capitalization of the Funds consists solely of an unlimited number of shares of
beneficial interest with no par value. When issued, shares of the Funds are
fully paid, non-assessable and freely transferable.
This Prospectus offers exclusively Class I shares of the Fund. Class I
shares of the Fund are sold generally to municipal investors, including
municipalities, counties and state agencies, as well as other institutional
investors such as broker/dealers, corporations, investment advisers, credit
unions, banks, insurance companies and other financial institutions and high net
worth individuals that meet the $1,000,000 minimum investment threshold for this
class of shares. When issued, shares of the Trust are fully paid and
non-assessable.
Class II shares are designed for individuals and other investors who seek
mutual fund investment convenience plus a lower investment minimum. Class I and
Class II are identical in all respects with the exception that Class I shares
have a higher investment minimum and do not impose any 12b-1 fees.
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of a series of the Trust but only to
the extent of the shareholder's investment in such series. However, the Trust
Instrument disclaims liability of the shareholders, Trustees or Officers of the
Trust for acts or obligations of the Trust, which are binding only on the assets
and property of each series of the Trust and requires that notice of the
disclaimer be given in each contract or obligations entered into or executed by
the Trust or the Trustees. The risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which the
Trust itself would be unable to meet its obligations and should be considered
remote and is limited to the amount of the shareholder's investment in the Fund.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Trust
Instrument, they may be entitled to vote. All shares of the Trust have equal
voting rights and will be voted in the aggregate and not by class or series,
except where voting by class or series is required by law or where the matter
involved affects only one class or series. The Trust is not required to hold
regular annual meetings of the Fund's shareholders and does not intend to do so.
Shareholders of the Fund may vote separately on items which affect only the
Fund.
The Trust Instrument provides that the holders of not less than two-thirds
of the outstanding shares of the Trust may remove a person serving as Trustee
either by declaration in writing or at a meeting called for such purpose. The
Trustees are required to call a meeting of shareholders for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust or the Fund.
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Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of
a majority of the outstanding shares" of the Fund (or the Trust) means the vote
of the lesser of: (1) 67% of the shares of the Fund (or the Trust) present at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy: or (2) more than 50% of the outstanding shares of the Fund.
PERFORMANCE INFORMATION
From time to time, each class of the Fund may quote its "yield" and "total
return" in advertisements or in communications to shareholders. Both
performance figures are based on historical earnings and are not intended to
indicate future performance. The "yield" quoted in advertisements refers to the
income generated by an investment in the Fund over a specified seven-day period.
This income is then "annualized". That is, the amount of income generated by
the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of the
assumed reinvestment.
Quotations of average annual total return for each class of the Fund, if
and when quoted, will be expressed in terms of the average annual compounded
rate of return of a hypothetical investment in the Fund over periods of 1, 5 and
10 years (up to the life of that Fund), reflect the deduction of a proportional
share of Fund expenses (on an annual basis), and assume that all dividends and
distributions are reinvested when paid.
The yield and total return of each class of the Fund are calculated
separately due to separate expense structures as indicated in the "Expense
Summary"; the yield and total return of Class II will be lower than that of
Class I because of the additional 12b-1 fees to which Class II shareholders are
subject.
Additionally, the performance of each class of the Fund may be compared in
advertisements or in reports to shareholders to those of other mutual funds with
similar investment objectives and to other relevant indices or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the Funds' yields
may be compared to the IBC/DONOGHUE'S MONEY FUND AVERAGE, which is an average
compiled by IBC/DONOGHUE'S MONEY FUND REPORT. In addition, yields may be
compared to the average yields reported by the BANK RATE MONITOR for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan statistical areas.
Yield data as reported in national financial publications, including MONEY
MAGAZINE, FORBES, BARRON'S, THE WALL STREET JOURNAL and THE NEW YORK TIMES, or
in publications of a local or regional nature, may also be used in comparing the
yields of the Fund.
Since yields fluctuate, you cannot necessarily use yield data to compare an
investment in the Funds' shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed yield
for a stated period of time. Yield is generally a function of the kind and
quality of the instruments held in a portfolio, portfolio maturity, operating
expenses and market conditions. Any fees charged by service institutions
directly to their customer accounts in connection with investments in shares of
the Fund will not be included in the Fund's calculations of yield or total
return.
INQUIRIES
Please write or call the Trust at the address or telephone number listed on
the cover of this Prospectus with any inquiries you may have regarding the Fund
or any other investment portfolios of the Trust that are not offered by this
Prospectus.
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NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
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FINANCIAL INVESTORS TRUST DECEMBER 10 , 1998
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202-5631
For additional information, call (800) 298-3442
PRIME MONEY MARKET FUND - CLASS II
This Prospectus describes the Prime Money Market Fund (the "Fund"), a
diversified money market fund. The Fund seeks to provide investors with as
high a level of current income as is consistent with the preservation of capital
and liquidity by investing in a defined group of short-term, U.S. dollar
denominated money market instruments. The Fund is required to maintain a
dollar-weighted average portfolio maturity of 90 days or less and seeks to
maintain its net asset value per share at $1.00 for purposes of purchases and
redemptions.
This Prospectus offers exclusively Class II shares of the Fund. Class II
shares are designed for individuals and other investors who seek mutual fund
investment convenience. The Fund also offers Class I shares - see "Other
Information - Capitalization".
The Fund is sponsored and distributed by ALPS Mutual Funds Services, Inc.
("ALPS" or the "Administrator" or "Distributor") and is advised by GE Investment
Management Incorporated ("GEIM" or the "Adviser").
SHARES IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK, AND ARE NOT INSURED BY THE FDIC, THE FEDERAL RESERVE
BOARD, OR ANY OTHER AGENCY OR INSURER AND THEY MAY INVOLVE INVESTMENT RISKS
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
This Prospectus sets forth concisely the information you should consider
before investing in the Fund. Please read this Prospectus and keep it for
future reference. Additional information about the Fund is contained in a
Statement of Additional Information (the "Statement of Additional Information")
which has been filed with the Securities and Exchange Commission ("SEC") and is
available upon request without charge by writing to or calling the Trust at the
address and telephone number listed above. The Statement of Additional
Information bears the same date as this Prospectus and is incorporated herein by
reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE. AN INVESTMENT IN THE FUND IS
NEITHER INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN
BE NO ASSURANCE THAT THE FUND WILL BE ABLE TO MAINTAIN A STABLE NET ASSET
VALUE OF $1.00 PER SHARE.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
EXPENSE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
FUND OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SUITABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
MANAGEMENT OF THE FUND. . . . . . . . . . . . . . . . . . . . . . . . . . 7
HOW TO INVEST IN THE FUND . . . . . . . . . . . . . . . . . . . . . . . . 8
HOW TO REDEEM SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . .10
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
INVESTMENT INSTRUMENTS, TRANSACTIONS AND RISKS. . . . . . . . . . . . . .11
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
</TABLE>
2
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EXPENSE SUMMARY
The summary below shows shareholder transaction expenses imposed by the
Fund and annual Fund operating expenses based on anticipated operating expenses
of the Fund. A hypothetical example based on the summary is also shown.
"Shareholder Transaction Expenses" are charges you pay when buying or selling
shares of the Fund whereas "Annual Fund Operating Expenses" are paid out of the
Fund's assets and include fees for portfolio management, fund administration and
other services.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Load on
Purchases of Fund Shares None
Deferred Sales Load None
Redemption Fees None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
The Management Fees described in the table below are based upon the
anticipated operating expenses of the Fund. Management Fees may be higher to the
extent the Fund's average net assets exceed $500 million. Please read the
following Annual Fund Operating Expenses summary and accompanying footnotes
carefully before investing.
Management Fees(1) 0.04%
12b-1 Fees (2) 0.25%
All Other Expenses(3)
(Net of Fee Waivers and Reimbursements) 0.16%
-----
Total Fund Operating Expenses
(Net of Fee Waivers and Reimbursements)(2) 0.45%
-----
-----
(1) The Fund is obligated to pay management fees to GEIM at the maximum
annual rate of 0.08% of the Fund's average net assets. Under its Investment
Advisory Agreement with the Fund, GEIM is entitled to receive management fees of
0.04% on the first $500 million of average net assets of the Fund, 0.06% on the
next $500 million and 0.08% on average net assets in excess of $1 billion.
(2) 12b-1 fees are paid by Class II of the Fund to ALPS for services and
expenses in connection with distribution. Long-term shareholders of Class II
may pay more than the economic equivalent of the maximum 8.50% front-end charge
permitted by the National Association of Securities Dealers, Inc. ("NASD") due
to 12b-1 fees applicable to Class II shares.
(3) The amount for "All Other Expenses" includes administration fees
payable to the Administrator calculated daily and payable monthly, at an annual
rate of the greater of $360,000 or 0.16% of average daily net assets of the Fund
up to $500 million, 0.14% of average daily net assets of the Fund in excess of
$500 million up to $1 billion and 0.12% of average daily net assets of the Fund
in excess of $1 billion. The Administrator has stated that it will voluntarily
waive a portion of the administration fees otherwise payable by the Fund, as
well as voluntarily assume a portion of the Fund expenses, to the extent
necessary for Class II of the Fund to maintain a total expense ratio of not more
than 0.45% of average net assets. Without this voluntary fee waiver and
assumption of expenses, and assuming payment of the maximum management and
administration fees, All Other Expenses and Total Fund Operating Expenses would
be 0.81% and 1.10%, respectively, of the average net assets of Class II of the
Fund. The Administrator reserves the right to modify or terminate the fee
waiver and assumption of expenses at any time.
3
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THE FOLLOWING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES. THE EXPENSES SET FORTH ABOVE AND THE EXAMPLE SET FORTH BELOW REFLECT
THE NON-IMPOSITION OF CERTAIN FEES AND EXPENSES. ACTUAL EXPENSES MAY BE GREATER
OR LESS THAN THOSE SHOWN.
EXAMPLE:
Based upon the above summary of expenses and assuming a 5% annual return,
redemption at the end of each time period and the reinvestment of all dividends
and distributions, you would pay the following expenses on a $25,000 investment
in Class II of the Fund:
<TABLE>
<S> <C>
1 YEAR $115
3 YEARS $361
</TABLE>
OTHER INFORMATION
The Expense Summary and Example are intended to help you understand the
expenses you would bear either directly (as with the Shareholder Transaction
Expenses) or indirectly (as with the Annual Fund Operating Expenses) as a Fund
shareholder. As stated above, the Fund does not impose any sales-related
charges in connection with purchases of its shares, although certain service
institutions may charge their clients fees in connection with purchases and
sales for the accounts of their clients. These fees are in addition to the
expenses shown in the Expense Summary and Example. For a more complete
description of the Fund's operating expenses, see "Management of the Fund" in
this Prospectus and the Statement of Additional Information.
FUND OPERATIONS
INVESTMENT OBJECTIVE
The Adviser will use its best efforts to achieve the investment objective
of the Fund as described below, although the achievement of the investment
objective, of course, cannot be assured. You should not consider the Fund, by
itself, to be a complete investment program. The Fund is a diversified,
open-end management investment company.
The investment objective of the Fund is to seek as high a level of current
income as is consistent with the preservation of capital and liquidity. In
seeking its objective, the Fund's investments include, but are not limited to,
the following U.S. dollar denominated, short-term money market instruments: (1)
securities issued or guaranteed by the U.S. Government, its agencies and
instrumentalities ("Government Securities"); (2) debt obligations of
corporations, banks, savings and loan institutions, insurance companies and
mortgage bankers; (3) commercial paper and notes, including those with floating
or variable rates of interest; (4) debt obligations of U.S. branches of foreign
banks; (5) repurchase agreements; (6) asset-backed or mortgage-related
securities; (7) stripped Government Securities; and (8) zero coupon bonds.
INVESTMENT POLICIES
The Fund limits its portfolio investments to securities that the Trust's
Board of Trustees determines present minimal credit risk and that are "Eligible
Securities" at the time of acquisition by the Fund. "Eligible Securities" as
used in this Prospectus means securities rated by the requisite "nationally
recognized statistical rating organization" ("NRSRO") in one of the two highest
short-term rating categories, consisting of issuers that have received these
ratings with respect to other short-term debt securities and comparable unrated
securities. "Requisite NRSROs" means (1) any two NRSROs that have issued
ratings with respect to a security or class of debt obligations of an issuer or
(2) one NRSRO, if only one NRSRO has issued such a rating at the time that the
Fund acquires the security. Currently, six organizations are NRSROs: S&P,
Moody's, Fitch Investors Service, Inc., Duff and Phelps, Inc., IBCA Limited and
its affiliate, IBCA, Inc., and Thomson Bank Watch, Inc. A discussion of the
ratings categories is contained in the Appendix to the Statement of Additional
Information. By limiting its investments to Eligible Securities, the Fund may
not achieve as high a level of current income as a fund investing in lower-rated
securities.
The Fund may not invest more than 5% of its total assets in the securities
of any one issuer, except for Government Securities and except to the extent
permitted under rules adopted by the SEC under the Investment Company Act of
1940, as amended ("1940 Act"). In addition, the Fund may not invest more than
5% of its total assets in Eligible Securities that have not received the highest
rating from the Requisite NRSROs and comparable unrated
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securities ("Second Tier Securities"), and may not invest more than the greater
of $1,000,000 or 1% of its total assets in the Second Tier Securities of any one
issuer. The Fund may invest more than 5% (but not more than 25%) of the
then-current value of the Fund's total assets in the securities of a single
issuer for a period of up to three business days, so long as (1) the securities
either are rated by the Requisite NRSROs in the highest short-term rating
category or are securities of issuers that have received such ratings with
respect to other short-term debt securities or are comparable unrated securities
and (2) the Fund does not make more than one such investment at any one time.
Determinations of comparable quality for purchases of unrated securities are
made by GEIM in accordance with procedures established by the Board of Trustees.
The Fund invests only in instruments that have (or, pursuant to regulations
adopted by the SEC, are deemed to have) remaining maturities of 13 months or
less at the date of purchase (except securities subject to repurchase
agreements), determined in accordance with a rule promulgated by the SEC. The
Fund will maintain a dollar-weighted average portfolio maturity of 90 days or
less. The assets of the Fund are valued on the basis of amortized cost, as
described below under "Determination of Net Asset Value".
The Fund, in addition to investing as described above, may hold Rule 144A
Securities. In addition, the Fund may engage in the following types of
investment techniques and strategies: entering into reverse repurchase
agreements, entering into securities transactions on a when-issued or
delayed-delivery basis and lending portfolio securities. These other
instruments, investment techniques and strategies have risks and special
considerations associated with them that are described below under "Investment
Instruments, Transactions, Strategies and Risks".
INVESTMENT RESTRICTIONS
The Fund is subject to a number of investment restrictions which reflect
self-imposed standards as well as federal regulatory limitations. These
limitations are designed to minimize certain risks associated with investing in
specified types of securities or engaging in certain transactions. These
investment restrictions and those identified as fundamental in the Statement of
Additional Information may be changed only by a vote of a majority of the Fund's
outstanding shares.
The Fund may not:
1) Borrow money, except that the Fund may enter into reverse repurchase
agreements, and except that the Fund may borrow from banks for temporary or
emergency (not leveraging) purposes, including the meeting of redemption
requests and cash payments of dividends and distributions that might otherwise
require the untimely disposition of securities, in an amount not to exceed
33-1/3% of the value of the Fund's total assets (including the amount borrowed)
valued at market less liabilities (not including the amount borrowed) at the
time the borrowing is made. Whenever borrowings, including reverse repurchase
agreements, of 5% or more of the Fund's total assets are outstanding, the Fund
will not make any additional investments.
2) Lend its assets or money to other persons, except through (a)
purchasing debt obligations, (b) lending portfolio securities in an amount not
to exceed 30% of the Fund's assets taken at market value, (c) entering into
repurchase agreements, and (d) entering into variable rate demand notes.
3) Purchase securities (other than Government Securities) of any issuer
if, as a result of the purchase, more than 5% of the Fund's total assets would
be invested in the securities of the issuer. All securities of a foreign
government and its agencies will be treated as a single issuer for purposes of
this restriction.
4) Purchase more than 10% of the voting securities of any one issuer, or
more than 10% of the outstanding securities of any class of issuer, except that
this limitation is not applicable to the Fund's investments in Government
Securities. All securities of a foreign government and its agencies will be
treated as a single issuer for purposes of this restriction.
5) Invest more than 25% of the value of its total assets in securities of
issuers in any one industry, except that the Fund may invest more than 25% of
the value of its total assets in securities issued by domestic banks. For
purposes of this restriction, the term "industry" will be deemed to include (a)
the government of any country other than the U.S., but not the U.S. Government
and (b) all supranational organizations.
If a percentage limitation on investments by the Fund stated above or in
the Statement of Additional Information is adhered to at the time of an
investment, a later increase or decrease in percentage resulting from changes in
asset values will not be deemed to violate the limitation except in the case of
the limitations on borrowing and illiquid investments. The Fund is not required
to sell a security if its rating is reduced or discontinued after purchase, but
the Fund may consider doing so.
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It is the intention of the Fund, unless otherwise indicated, that with
respect to the Fund's policies that are the result of the application of law,
the Fund will take advantage of the flexibility provided by rules or
interpretations of the SEC currently in existence or promulgated in the future
or changes to such laws.
DETERMINATION OF NET ASSET VALUE
The value of the Fund's shares is referred to as "net asset value". Net
asset value per share of each Class for purposes of pricing purchases and
redemptions is calculated by adding the value of each Class' proportionate share
of all securities and other assets, subtracting its proportionate share of
liabilities, and dividing the result by the number of outstanding shares of each
Class. Within each Class, the expenses are allocated proportionately based on
the net assets of each Class, except class-specific expenses which are allocated
directly to the respective Class. Net asset value is determined as of 5:00 p.m.
Eastern Time on each day the New York Federal Reserve and the New York Stock
Exchange are open for business. Currently, either the New York Federal Reserve
or the New York Stock Exchange is closed on New Years Day, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans' Day, Thanksgiving Day and Christmas Day. A
"Business Day" is any day on which the New York Federal Reserve and the New York
Stock Exchange are open for business.
The Board of Trustees has established procedures designed to maintain a
stable net asset value of $1.00 per share, to the extent reasonably possible.
The Board of Trustees has approved and adopted procedures under Rule 2a-7 under
the Investment Company Act of 1940, as amended, which was enacted by the SEC
with the intent of stabilizing money market funds at $1.00 per share. Under the
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security. Rule 2a-7 also provides that the Fund must also do a
"mark-to-market" analysis, where it is determined the degree to which any
variations may exist between the amortized pricing method and the actual market
price of the securities in the Fund. In the event the Board determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Board will take such corrective
action as it regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity.
Rule 2a-7 also requires the Fund to maintain a dollar weighted average
portfolio maturity of 90 days or less, purchase securities having remaining
maturities of 13 months or less and invest only in securities determined by the
Trust's Board of Trustees to be "eligible securities" and that present minimal
credit risks. The Board of Trustees or its delegate reviews the portfolio
securities monthly and at regularly scheduled quarterly Board of Trustees
meetings. There can be no assurance that at all times the $1.00 price per share
can be maintained. See the Statement of Additional Information for more
details.
DIVIDENDS AND DISTRIBUTIONS
The Fund's net income is declared daily as a dividend at the close of
business on the day of declaration. Your shares begin earning dividends on the
day you purchase them, and continue to earn dividends through and including the
day before you redeem them. See "How to Invest in the Fund". The Fund pays
dividends not later than five business days after the end of each month in the
form of additional shares of the Fund, unless you elect prior to the date of
distribution to receive payment in cash. Reinvested dividends and distributions
receive the same tax treatment as those paid in cash. If you redeem all of your
shares in the Fund, the Fund will pay your dividends in cash not later than five
business days after the redemption.
SUITABILITY
The Fund is designed as an economical and convenient professionally managed
investment vehicle for institutional investors and individuals with cash
balances or cash reserves who seek as high a level of current income as is
consistent with the preservation of capital and liquidity. The Fund is designed
to meet the specific cash management needs of individual investors and
institutional investors such as Municipal Investors, broker/dealers,
corporations, investments advisers, credit unions, banks, insurance companies
and other institutional investors. "Municipal Investors" include any State,
county, municipality, school district, special district or political subdivision
in the United States. The Fund may also be suitable for institutions seeking an
investment vehicle for daily cash sweep or liquidity purposes on behalf of their
clients.
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Legislation in each state sets forth guidelines and limitations with
respect to investments by Municipal Investors located within the state. In
addition, Municipal Investors may be subject to local laws or have their own
guidelines and policies prescribing acceptable investments for cash management
purposes. Each Municipal Investor planning to invest in the Fund must
independently verify that the Fund meets all of the criteria of investment
policies and guidelines applicable to such Municipal Investor.
Future statutory or regulatory changes, as well as future judicial or
administrative decisions and interpretations of present and future statutes and
regulations could prevent a Municipal Investor from continuing its investment in
the Fund. Each Municipal Investor should therefore remain aware of any changes
in the applicable regulation of permitted investments.
The Fund offers the advantages of purchasing power efficiencies and
diversification of risk. Generally, in purchasing debt instruments from
dealers, the percentage difference between the bid and asked price tends to
decrease as the size of the transaction increases. The Fund also offers
investors the opportunity to participate in a portfolio of money market
instruments which is more diversified in terms of issues and maturities than a
portfolio a single investor may otherwise be able to invest in.
Investment in the Fund relieves the investor of money management and
administrative burdens usually associated with the direct purchase and sale of
money market instruments. These include the selection of the portfolio
investments; surveying the market for the best terms at which to buy and sell;
scheduling and monitoring maturities and reinvestments; receipt, delivery and
safekeeping of securities; and portfolio recordkeeping.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER
The Adviser, GEIM, is a wholly-owned subsidiary of General Electric Company
("GE"). The principal address of the Adviser is 3003 Summer Street, Stamford, CT
06905.
Through GEIM and General Electric Investment Corporation ("GEIC"), an
affiliated company of GEIM, wholly owned by GE, and their predecessors, GE has
more than 70 years of investment management experience. GEIM and GEIC
collectively provide investment management services to various institutional
accounts with total assets as of June 30, 1998 of approximately $69 billion, of
which approximately $1.7 billion was invested in money market funds regulated
under Rule 2a-7.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to
provide a continuous investment program for the Fund, including investment
research and management with respect to the assets of the Fund. GEIM is
entitled to receive management fees of 0.04% on the first $500 million of
average net assets of the Fund, 0.06% on the next $500 million and 0.08% on
average net assets in excess of $1 billion.
ADMINISTRATOR, TRANSFER AGENT, BOOKKEEPING AND PRICING AGENT
ALPS serves as the Fund's Administrator. As Administrator, ALPS has agreed
to: assist in maintaining the Fund's office; furnish the Fund with clerical and
certain other services; compile data for and prepare notices and semi-annual
reports to the Securities and Exchange Commission; prepare filings with state
securities commissions; coordinate Federal and state tax returns; monitor the
Fund's expense accruals; monitor compliance with the Fund's investment policies
and limitations; and generally assist in the Fund's operations. ALPS is
entitled to receive a fee from the Fund for its administrative services computed
daily and payable monthly, at the annual rate of the greater of $360,000 or
0.16% of average daily net assets of the Fund up to $500 million, 0.14% of
average daily net assets of the Fund in excess of $500 million up to $1 billion
and 0.12% of average daily net assets of the Fund in excess of $1 billion. ALPS
has stated that it will voluntarily waive a portion of the administration fees
otherwise payable by the Fund, as well as voluntarily assume a portion of the
Fund expenses, to the extent necessary for Class II of the Fund to maintain a
total expense ratio of not more than 0.45% of the average net assets of the
Fund. ALPS reserves the right to modify or terminate the fee waiver and
assumption of expenses at any time. ALPS and GEIM may also pay third parties
from time to time for rendering services to the Fund and/or shareholders.
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In addition to its role as Administrator, ALPS serves as the Fund's
Transfer Agent. ALPS also serves as the Fund's Bookkeeping and Pricing Agent.
In this capacity, ALPS has agreed to maintain the financial accounts and records
of the Fund and to compute the net asset value and certain other financial
information relating to the Fund.
CUSTODIAN
State Street Bank and Trust Company of Connecticut, N.A., located at 750
Main Street, Suite 1114, Hartford, Connecticut 06103, serves as Custodian for
the Fund.
SUB-CUSTODIAN
State Street Bank and Trust Company, located at P.O. Box 1978, Boston,
Massachusetts 02015, serves as Sub-Custodian for the Fund.
HOW TO INVEST IN THE FUND
Shares in the Fund are distributed on a continuous basis by ALPS, the
Fund's Sponsor and Distributor. ALPS has its principal office at 370 Seventeenth
Street, Suite 3100, Denver, Colorado 80202 and may be reached at (800) 298-3442.
GENERAL PROCEDURES
You may purchase Fund shares through ALPS, the Fund's Transfer Agent.
Investors shall pay for their purchase of Fund shares by using the Federal
Reserve Wire System. Shares of the Fund may be purchased at the net asset value
next determined after an order is received and accepted. The Fund does not
impose any sales-related charges in connection with purchases of shares. The
Fund may discontinue offering its shares in any state without notice to
shareholders.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. The application should be forwarded to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, Colorado 80202
Purchases by telephone or facsimile can be made after an account has been
established by the Transfer Agent as described below. The Trust reserves the
right to reject any purchase order. Third-party checks will not be accepted.
Check payments must be in U.S. dollars. Please include Fund name and account
number on all checks.
PURCHASE PRICE
Your purchase of Fund shares will be effected at the net asset value next
determined after the Fund receives your purchase order in proper form and
payment in the form of Federal Funds. If your order is accompanied by Federal
Funds, or is converted into Federal Funds by 5:00 p.m. Eastern Time on a
Business Day, it will be executed on that day. If the Fund receives your order
and payment in the form of Federal Funds after 5:00 p.m. Eastern Time on a
Business Day, your order will be processed the next Business Day.
TELEPHONE AND FACSIMILE PURCHASES
You can purchase Fund shares by telephone or facsimile once you have
established your account with the Fund and selected facsimile and/or telephone
privileges on your Account Application. In order to qualify for dividends on
the day of purchase, telephone or facsimile orders must be placed and Federal
Funds must be in the Fund's custody account by 5:00 p.m. Eastern Time on
Business Days. If Federal Funds arrive in the Fund's custody account after the
stated deadline, the account will be credited the next Business Day.
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MINIMUM INVESTMENT AND ACCOUNT BALANCES
The minimum initial investment for Class II is $25,000 and additional
investments may be made in any amount. The minimum purchase requirements do not
apply to reinvested dividends. If an account balance in Class II falls below
$5,000 due to redemptions or exchanges, the account may be closed and the
proceeds wired to the bank account of record, or a check will be issued and sent
to the party of record. An investor will be given 30 days notice that the
account will be closed unless an additional investment is made to increase the
account balance to the $5,000 minimum.
STATEMENTS AND REPORTS
The Trust will send you a statement of your account after every transaction
that affects your share balance or your account registration. A statement with
tax information and an annual statement will be mailed to you by January 31 of
each year, and also will be filed with the IRS. At least twice a year, you will
receive financial statements in the form of Annual and Semi-Annual Reports of
the Fund.
HOW TO REDEEM SHARES
GENERAL PROCEDURES
Shareholders may redeem all or any part of the value of their account(s) on
any Business Day . You may redeem by mail, telephone or facsimile if you have
established that capability with the Fund. Redemption orders are processed at
the net asset value per share next determined after the Fund receives your
order. If the Fund receives your redemption order before 1:00 p.m. Eastern Time
on a Business Day, the Fund will generally pay for your redeemed shares on that
day. Otherwise, the Fund will generally pay for your redeemed shares on the
next Business Day. The Fund reserves the right to pay for redeemed shares
within seven days after receiving your redemption order if, in the judgment of
the Adviser, an earlier payment could adversely affect the Fund.
REGULAR REDEMPTION
You may redeem shares by sending a written request to Financial Investors
Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You must sign a redemption
request. (All individuals with authority on the account must co-sign.)
Your written redemption request must:
(i) state the number of shares to be redeemed;
(ii) identify your shareholder account number; and
(iii) provide your tax identification number.
Each signature must be guaranteed by either a bank that is a member of the
FDIC, a trust company or a member firm of a national securities exchange or
other eligible guarantor institution. The Fund will not accept guarantees from
notaries public. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received until
the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the
same bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
TELEPHONE AND FACSIMILE REDEMPTION
You may redeem shares by telephone or facsimile. Shareholders must check
the appropriate box on the Account Application to activate facsimile and/or
telephone redemption privileges. Shares may be redeemed by telephoning the Fund
at (800) 298-3442 (or sending a facsimile transmission to the Fund at (303)
825-2575 and giving the account name, account number, Personal Identification
Number (PIN#), name of Fund and amount of redemption. Proceeds from redemptions
will be wired directly to your account at a commercial bank within the United
States.
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In order to arrange for facsimile and/or telephone redemptions after you
have opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "Regular Redemption". The request must be signed by you and each
other shareholder of the account involved, with the signatures guaranteed as
described above. The Trust may modify or terminate procedures for redeeming
shares by telephone but will not materially change or terminate it without
giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or
facsimile redemptions may be difficult to complete. If you are unable to contact
the Fund by telephone or facsimile, you may redeem your shares by mail as
described above under "Regular Redemption".
By electing the facsimile and/or telephone redemption option, you may be
giving up a measure of security which you might have had if you were to redeem
in writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone or facsimile
redemption transactions.
GENERAL REDEMPTION INFORMATION
Except for the presence of certain exceptional circumstances as described
in the Investment Company Act of 1940, the Fund will pay for redeemed shares by
mail within seven days after the Fund receives your order and supporting
documents in proper form (except as provided by the rules of the Securities and
Exchange Commission). Where payment is to be made by wire via the Federal
Reserve Wire System, the Fund will wire redemption proceeds on the same day
after receiving your redemption order, provided it is made before 1:00 P.M.
Eastern Time on a Business Day.
There is no charge for share redemptions. The Fund may redeem an account
that has a balance of less than the minimum account balance (see "Minimum
Investment and Account Balances" above) if the shareholder does not increase the
amount of the account to at least the minimum account balance upon 30 days'
notice.
Please direct questions concerning the proper form for redemption requests
to the Fund at (800) 298-3442.
SHAREHOLDER SERVICES
EXCHANGE PRIVILEGE
You may sell your Fund shares and buy shares of the U.S. Treasury Money
Market Fund or the U.S. Government Money Market Fund, additional investment
portfolios of the Trust, in exchange by written request. There are no fees or
commissions for exchanging Fund shares. If you have established the privilege
on your Account Application, you may also initiate exchanges by telephone or
facsimile. Exchange requests should be directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may
have tax consequences, so you should consult your tax adviser for further
information. The investment portfolio must be registered for sale in your state
and must meet the investment criteria for your institution and the investor must
meet the minimum investment requirements. See "Suitability" in that Fund's
prospectus. Prior to requesting an exchange of Fund shares you should call the
Fund at (800) 298-3442. You should read the current prospectus before
investing. Each Fund has its own minimum balance requirements which must be
adhered to.
During periods of significant economic or market change, telephone or
facsimile exchanges may be difficult to complete. If you are unable to contact
the Fund by telephone or facsimile, you may also mail the exchange request to
the Fund at the address listed under "Regular Redemption". Neither the Trust
nor ALPS will be responsible for the authenticity of exchange instructions
received by telephone or facsimile except as set forth under "How to Redeem
Shares - Telephone and Facsimile Redemption".
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The Trust can provide you with information concerning certain limitations
on the exchange privilege, including those related to frequency. The Trust may
modify or terminate the exchange privilege but will not materially change or
terminate it without giving shareholders 60 days' written notice.
TAXES
While municipal investors are generally exempt from Federal income taxes,
each investor should independently ascertain its tax status. With respect to
investors who are not exempt from Federal income taxes, dividends derived from
net investment income and short term capital gains are taxable as ordinary
income distributions and are taxable when paid, whether investors receive
distributions in cash or reinvest them in additional shares, except that
distributions declared in December and paid in January are taxable as if paid on
December 31. The Fund will send to non-exempt investors an IRS Form 1099-DIV
showing their taxable distributions for the past calendar year.
The Fund intends to qualify as a "regulated investment company" under the
Internal Revenue Code of 1986, as amended (the "Code"). This qualification will
relieve the Fund of liability for Federal income taxes to the extent its
earnings are distributed in accordance with the Code and it meets other
requirements for qualification as set forth in the Code.
The information above is only a summary of some of the federal tax
consequences generally affecting the Fund and its shareholders, and no attempt
has been made to discuss individual tax consequences. In addition to Federal
taxes, investors may be subject to state or local taxes on their investment.
Investors should consult their tax advisor to determine whether the Fund is
suitable to their particular tax situation.
When investors sign their account application, they will be asked to
certify that their social security or taxpayer identification number is correct
and that they are not subject to 31% backup withholding for failing to report
income to the IRS. If investors violate IRS regulations, the IRS can require
the Fund to withhold 31% of taxable distributions and redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders within each
calendar year as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived
from earned interest, it is anticipated that all dividends paid by the Fund will
be taxable as ordinary income to those shareholders who are not exempt from
Federal income taxes, and that no part of any distribution will be eligible for
the dividends received deduction for corporations.
INVESTMENT INSTRUMENTS, TRANSACTIONS AND RISKS
The following paragraphs provide a brief description of the securities in
which the Fund may invest and the transactions the Fund may make. The Fund is
not limited by this discussion, however, and may purchase other types of
securities and may enter into other types of transactions if they are consistent
with the Fund's investment objective and policies.
BANKERS' ACCEPTANCES purchased by the Fund are negotiable obligations of a
bank to pay a draft which has been drawn on it by a customer. These obligations
are backed by large banks and also usually are backed by goods in international
trade.
CERTIFICATES OF DEPOSIT purchased by the Fund are negotiable certificates
that represent a commercial bank's obligations to repay funds deposited with it
and earn rates of interest over given periods.
COMMERCIAL PAPER purchased by the Fund are short-term obligations issued by
banks, broker-dealers, corporations and other entities for purposes such as
financing their current operations.
CORPORATE OBLIGATIONS purchased by the Fund are bonds and notes issued by
corporations and other business organizations to finance their credit needs.
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DELAYED-DELIVERY TRANSACTIONS. The Fund may buy and sell obligations on a
when-issued or delayed-delivery basis, with payment and delivery taking place at
a future date. The market value of obligations purchased in this way may change
before the delivery date, which could affect the market value of the Fund's
assets. Ordinarily, the Fund will not earn interest on obligations until they
are delivered.
FOREIGN BANK OBLIGATIONS. The Fund limits its investments in foreign bank
obligations to United States dollar denominated obligations of United States
branches of foreign banks which at the time of investment (i) have more than $10
Billion, or the equivalent in other currencies, in total assets; and (ii) in
the opinion of the Fund's investment adviser, are of an investment quality
comparable to obligations of United States banks which may be purchased by the
Fund and present minimal credit risk.
ILLIQUID INVESTMENTS. It is the policy of the Fund that illiquid
securities (including repurchase agreements of more than seven days' duration
and variable and floating rate demand and master demand notes not requiring
receipt of the principal note amount within seven days' notice) may not
constitute, at the time of purchase or at any time, more than 10% of the value
of the total net assets of the Fund. Illiquid securities include (a) securities
that are illiquid by virtue of legal or contractual restrictions on resale or
the absence of a readily available market, (b) participation interests in loans
that are not subject to puts and (c) repurchase agreements not terminable within
seven days. See "Repurchase and Reverse Repurchase Agreements" below.
Securities that have legal or contractual restrictions on resale but have a
readily available market are not deemed illiquid for purposes of this
limitation. Consequently, investments in restricted securities eligible for
resale pursuant to Rule 144A of the Securities Act of 1933 which have been
determined to be liquid by the Fund's Board of Trustees based upon the trading
markets for the securities will not be included for purposes of this limitation.
Rule 144A permits certain qualified institutional buyers, such as the Funds, to
trade in privately placed securities even though such securities are not
registered under the 1933 Act. The Adviser, under the supervision of the Board
of Trustees, will consider whether securities purchased under Rule 144A are
illiquid and thus subject to each Fund's restriction of investing no more than
10% of its assets in illiquid securities. A determination of whether a Rule
144A security is liquid or not is a question of fact. In making this
determination the Adviser will consider the trading markets for the specific
security taking into account the unregistered nature of a Rule 144A security.
In addition, the Adviser could consider the (1) frequency of trades and quotes,
(2) number of dealers and potential purchasers, (3) dealer undertakings to make
a market, and (4) the nature of the security and of marketplace trades (e.g.,
the time needed to dispose of the security, the method of soliciting offers and
the mechanics of transfer). The liquidity of Rule 144A securities would be
monitored and, if as a result of changed conditions, it is determined that a
Rule 144A security is no longer liquid, a Fund's holdings of illiquid securities
would be reviewed to determine what, if any, steps are required to assure that
the Fund does not invest more than 10% of its assets in illiquid securities.
Investing in 144A securities could have the effect of increasing the amount of a
Fund's assets invested in illiquid securities if qualified institutional buyers
are unwilling to purchase such securities.
MONEY MARKET refers to the marketplace where short-term, high grade debt
obligations are traded, including U.S. government obligations, commercial paper,
certificates of deposit, bankers' acceptances, time deposits and short-term
corporate obligations. Money market instruments may carry fixed rates of return
or have variable or floating interest rates.
REPURCHASE AND REVERSE REPURCHASE AGREEMENTS. Under the terms of a typical
repurchase agreement, which is deemed a loan for purposes of the 1940 Act, the
Fund would acquire an underlying obligation for a relatively short period
(usually from one to seven days) subject to an obligation of the seller to
repurchase, and the Fund to resell, the obligation at an agreed-upon price and
time, thereby determining the yield during the Fund's holding period. This
arrangement results in a fixed rate of return that is not subject to market
fluctuations during the Fund's holding period.
The Fund may also engage in reverse repurchase agreements, subject to its
investment restrictions. A reverse repurchase agreement, which is considered a
borrowing by the Fund, involves a sale by the Fund of securities that it holds
concurrently with an agreement by the Fund to repurchase the same securities at
an agreed upon price and date. The Fund will use the proceeds of reverse
repurchase agreements to provide liquidity to meet redemption requests and cash
payments of dividends and distributions when the sale of the Fund's securities
is considered to be disadvantageous. Cash, Government Securities or other
liquid assets equal in value to the Fund's obligations with respect to reverse
repurchase agreements are segregated and maintained with the Fund's custodian or
designated sub-custodian.
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<PAGE>
SECURITIES LENDING. The Fund is authorized to lend its portfolio
securities to well-known and recognized U.S. and foreign brokers, dealers and
banks. These loans, if and when made, may not exceed 30% of the Fund's total
assets (including the market value of the collateral received). The Fund's
loans of securities will be at least 100% collateralized by cash, letters of
credit or Government Securities. The Fund will retain the right to all interest
and dividends payable with respect to the loaned securities. When the Fund
lends portfolio securities it charges interest at reasonable rates and retains
the ability to terminate the loan at any time. Cash or instruments
collateralizing the Fund's loans of securities are segregated and maintained at
all times with the Fund's custodian or designated sub-custodian in an amount at
least equal to the current market value of the loaned securities. In lending
securities, the Fund is subject to risks, which, like those associated with
other extensions of credit, include possible loss of rights in the collateral
should the borrower fail financially.
TIME DEPOSITS purchased by the Fund are non-negotiable deposits in a
banking institution earning a specified interest rate over a given period of
time. Fixed time deposits may be withdrawn on demand by the investor, but may
be subject to early withdrawal penalties which vary depending upon market
conditions and the remaining maturity of the obligation.
U.S. GOVERNMENT OBLIGATIONS are debt obligations issued or guaranteed by
the U.S. Treasury of by an agency or instrumentality of the U.S. government.
Not all U.S. government obligations are backed by the full faith and credit of
the United States. For example, obligations issued by the Federal Farm Credit
Bank or by the Federal National Mortgage Association are supported by the
agency's right to borrow money from the U.S. Treasury under certain
circumstances. Obligations issued by the Federal Home Loan Bank are supported
only by the credit of the agency. There is no guarantee that the government
will support these types of obligations, and therefore they involve more risk
than other government obligations.
U.S. TREASURY OBLIGATIONS are obligations issued by the United States and
backed by its full faith and credit.
VARIABLE AND FLOATING RATE INSTRUMENTS that the Fund will invest in include
notes purchased directly from issuers, bear variable or floating interest rates
and may carry rights that permit holders to demand full payment from the issuers
or certain financial intermediaries. Floating rate securities have interest
rates that change whenever there is a change in a designated market-based
interest rate, while variable rate instruments provide for a specified periodic
adjustment in the interest rate. These formulas are designed to result in a
market value for the instrument that approximate its par value. When
determining the maturity of a variable or floating rate instrument, the Fund may
look to the date the demand feature can be exercised, or to the date the
interest rate is readjusted, rather than to the final maturity of the
instrument.
OTHER INFORMATION
DISTRIBUTION PLAN
The Trustees have adopted a Distribution Plan on behalf of Class II of the
Fund pursuant to Rule 12b-1 (the "Rule") under the 1940 Act. The Distribution
Plan provides for payment of a fee to ALPS at the annual rate of up to .25% of
the average net assets of Class II for distribution-related services. These
services include, but are not limited to the following: formulation and
implementation of marketing and promotional activities, such as mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
preparation, printing and distribution of sales literature; preparation,
printing and distribution of prospectuses of the Prime Fund and reports to
recipients other than existing shareholders of the Prime Fund; obtaining such
information, analysis and reports with respect to marketing and promotional
activities as ALPS may, from time to time, deem advisable; making payments to
securities dealers and others engaged in the sales of Class II Shares of the
Prime Fund; and providing training, marketing and support to such dealers and
others with respect to the sale of Class II Shares of the Prime Fund. The
Distribution Fee is an expense of Class II in addition to the Management Fee,
and Administration Fee, and will reduce the net income and total return of that
Class.
CAPITALIZATION
Financial Investors Trust was organized as a Delaware business trust on
November 30, 1993 and currently consists of six separately managed portfolios.
The Board of Trustees may establish additional portfolios in the future. The
capitalization of the Funds consists solely of an unlimited number of shares of
beneficial interest with no par value. When issued, shares of the Funds are
fully paid, non-assessable and freely transferable.
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<PAGE>
This Prospectus offers exclusively Class II shares of the Fund. Class II
shares are designed for individuals and other investors who seek mutual fund
investment convenience. When issued, shares of the Trust are fully paid and
non-assessable.
Class I shares of the Fund are sold generally to municipal investors,
including municipalities, counties and state agencies, as well as other
institutional investors such as broker/dealers, corporations, investment
advisers, credit unions, banks, insurance companies and other financial
institutions and high net worth individuals that meet the $1,000,000 minimum
investment threshold for this class of shares. Class I and Class II are
identical in all respects with the exception that Class I shares have a higher
investment minimum and do not impose any 12b-1 fees.
Under Delaware law, shareholders could, under certain circumstances, be
held personally liable for the obligations of a series of the Trust but only to
the extent of the shareholder's investment in such series. However, the Trust
Instrument disclaims liability of the shareholders, Trustees or Officers of the
Trust for acts or obligations of the Trust, which are binding only on the assets
and property of each series of the Trust and requires that notice of the
disclaimer be given in each contract or obligations entered into or executed by
the Trust or the Trustees. The risk of a shareholder incurring financial loss
on account of shareholder liability is limited to circumstances in which the
Trust itself would be unable to meet its obligations and should be considered
remote and is limited to the amount of the shareholder's investment in the Fund.
VOTING
Shareholders have the right to vote in the election of Trustees and on any
and all matters on which, by law or under the provisions of the Trust
Instrument, they may be entitled to vote. All shares of the Trust have equal
voting rights and will be voted in the aggregate and not by class or series,
except where voting by class or series is required by law or where the matter
involved affects only one class or series. The Trust is not required to hold
regular annual meetings of the Fund's shareholders and does not intend to do so.
Shareholders of the Fund may vote separately on items which affect only the
Fund.
The Trust Instrument provides that the holders of not less than two-thirds
of the outstanding shares of the Trust may remove a person serving as Trustee
either by declaration in writing or at a meeting called for such purpose. The
Trustees are required to call a meeting of shareholders for the purpose of
considering the removal of a person serving as Trustee if requested in writing
to do so by the holders of not less than 10% of the outstanding shares of the
Trust or the Fund.
Shares entitle their holders to one vote per share (with proportionate
voting for fractional shares). As used in this Prospectus, the phrase "vote of
a majority of the outstanding shares" of the Fund (or the Trust) means the vote
of the lesser of: (1) 67% of the shares of the Fund (or the Trust) present at a
meeting if the holders of more than 50% of the outstanding shares are present in
person or by proxy: or (2) more than 50% of the outstanding shares of the Fund.
PERFORMANCE INFORMATION
From time to time, each class of the Fund may quote its "yield" and "total
return" in advertisements or in communications to shareholders. Both
performance figures are based on historical earnings and are not intended to
indicate future performance. The "yield" quoted in advertisements refers to the
income generated by an investment in the Fund over a specified seven-day period.
This income is then "annualized". That is, the amount of income generated by
the investment during that week is assumed to be generated each week over a
52-week period and is shown as a percentage of the investment. The "effective
yield" is calculated similarly but, when annualized, the income earned by an
investment in the Fund is assumed to be reinvested. The "effective yield" will
be slightly higher than the "yield" because of the compounding effect of the
assumed reinvestment.
Quotations of average annual total return for each class of the Fund, if
and when quoted, will be expressed in terms of the average annual compounded
rate of return of a hypothetical investment in the Fund over periods of 1, 5 and
10 years (up to the life of that Fund), reflect the deduction of a proportional
share of Fund expenses (on an annual basis), and assume that all dividends and
distributions are reinvested when paid.
The yield and total return of each class of the Fund are calculated
separately due to separate expense structures as indicated in the "Expense
Summary"; the yield and total return of Class II will be lower than that of
Class I because of 12b-1 fees to which Class II shareholders are subject.
14
<PAGE>
Additionally, the performance of each class of the Fund may be compared in
advertisements or in reports to shareholders to those of other mutual funds with
similar investment objectives and to other relevant indices or to rankings
prepared by independent services or other financial or industry publications
that monitor the performance of mutual funds. For example, the Funds' yields may
be compared to the IBC/DONOGHUE'S MONEY FUND AVERAGE, which is an average
compiled by IBC/DONOGHUE'S MONEY FUND REPORT. In addition, yields may be
compared to the average yields reported by the Bank Rate Monitor for money
market deposit accounts offered by the 50 leading banks and thrift institutions
in the top five standard metropolitan statistical areas.
Yield data as reported in national financial publications, including MONEY
MAGAZINE, FORBES, BARRON'S, THE WALL STREET JOURNAL and THE NEW YORK TIMES, or
in publications of a local or regional nature, may also be used in comparing the
yields of the Fund.
Since yields fluctuate, you cannot necessarily use yield data to compare an
investment in the Funds' shares with bank deposits, savings accounts and similar
investment alternatives which often provide an agreed or guaranteed fixed yield
for a stated period of time. Yield is generally a function of the kind and
quality of the instruments held in a portfolio, portfolio maturity, operating
expenses and market conditions. Any fees charged by service institutions
directly to their customer accounts in connection with investments in shares of
the Fund will not be included in the Fund's calculations of yield or total
return.
INQUIRIES
Please write or call the Trust at the address or telephone number listed on
the cover of this Prospectus with any inquiries you may have regarding the Fund
or any other investment portfolios of the Trust that are not offered by this
Prospectus.
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<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, OR IN THE FUND'S STATEMENT OF
ADDITIONAL INFORMATION INCORPORATED HEREIN BY REFERENCE, IN CONNECTION WITH THE
OFFERING MADE BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST
OR ITS DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING BY THE
TRUST OR BY THE DISTRIBUTOR IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT
LAWFULLY BE MADE.
16
<PAGE>
FINANCIAL INVESTORS TRUST
U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
PRIME MONEY MARKET FUND (CLASSES I AND II)
370 Seventeenth Street, Suite 3100
Denver, Colorado 80202
August 28, 1998
General Information: (800) 298-3442
STATEMENT OF ADDITIONAL INFORMATION
Financial Investors Trust (the "Trust") is an open-end, diversified
management investment company with multiple investment portfolios, including the
U.S. Treasury Money Market Fund (the "Treasury Fund"), the U.S. Government Money
Market Fund (the "Government Fund"), the Prime Money Market Fund (the "Prime
Fund"), the Aristata Equity Fund, the Aristata Quality Bond Fund, and the
Aristata Colorado Quality Tax-Exempt Fund (collectively, the "Funds"). This
Statement of Additional Information ("SAI") describes the shares of three Funds
managed by GE Investment Management Incorporated.
THE TREASURY FUND seeks to provide investors with as high a level of
current income as is consistent with preservation of capital and liquidity by
investing exclusively in U.S. Treasury bills, notes and other direct obligations
of the U.S. Treasury and repurchase agreements fully collateralized by direct
U.S. Treasury obligations. The Fund is required to maintain a dollar-weighted
average portfolio maturity of 90 days or less and seeks to maintain its net
asset value per share at $1.00 for purposes of purchases and redemptions.
THE GOVERNMENT FUND seeks to provide investors with as high a level of
current income as is consistent with the preservation of capital and liquidity
by investing exclusively in obligations of the U.S. Government, its agencies and
instrumentalities and repurchase agreements fully collateralized by such
obligations. The Fund is required to maintain a dollar-weighted average
portfolio maturity of 90 days or less and seeks to maintain its net asset value
per share at $1.00 for purposes of purchases and redemptions.
THE PRIME FUND seeks to provide investors with as high a level of current
income as is consistent with the preservation of capital and liquidity by
investing in a defined group of short-term, U.S. dollar denominated money market
instruments. The Fund is required to maintain a dollar-weighted average
portfolio maturity of 90 days or less and seeks to maintain its net asset value
per share at $1.00 for purposes of purchases and redemptions.
Shares of the Funds are offered for sale by ALPS Mutual Funds Services,
Inc., the Sponsor and Distributor, as an investment vehicle for institutional
and high net worth investors.
This Statement of Additional Information is not a prospectus and is only
authorized for distribution when preceded or accompanied by the Funds'
Prospectuses dated August 28, 1998. This Statement of Additional Information
contains additional and more detailed information than that set forth in each
Prospectus and should be read in conjunction with the Prospectuses, additional
copies of which may be obtained without charge from the Trust.
1
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Calculation of Yields and Performance Information. . . . . . . . . . . . .12
Determination of Net Asset Value . . . . . . . . . . . . . . . . . . . . .13
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . . . . . . .14
Exchange Privilege . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Redemptions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Federal Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .15
Shares of Beneficial Interest. . . . . . . . . . . . . . . . . . . . . . .17
Distribution Plan. . . . . . . . . . . . . . . . . . . . . . . . . . . . .18
Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Custodian and Sub-Custodian. . . . . . . . . . . . . . . . . . . . . . . .19
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .19
</TABLE>
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INVESTMENT RESTRICTIONS
The Funds observe the following fundamental investment restrictions which
can be changed only when permitted by law and approved by a majority of a Fund's
outstanding voting securities. A "majority of a Fund's outstanding voting
securities" means the lesser of (i) 67% of the shares represented at a meeting
at which more than 50% of the outstanding shares are represented in person or by
proxies or (ii) more than 50% of the outstanding shares.
The Funds may not:
(1) purchase securities on margin or purchase real estate or interests
therein, commodities or commodity contracts, or make loans, and except that the
Funds may purchase or hold short-term debt securities and enter into repurchase
agreements with respect to its portfolio securities as described in the
Prospectus. For this purpose, repurchase agreements are considered loans;
(2) invest more than 5% of the current value of the total assets of a
Fund in the securities of any one issuer, other than obligations of the United
States Government or its agencies or instrumentalities, and repurchase
agreements fully collateralized by direct obligations of the U.S. Government;
(3) purchase the securities of issuers conducting their principal
business activity in the same industry if, immediately after the purchase and as
a result thereof, the value of the investments of a Fund in that industry would
exceed 25% of the current value of the total assets of the Fund, except that
there is no limitation with respect to investments in obligations of the United
States Government, its agencies or instrumentalities and that the Prime Fund may
invest more than 25% of the value of its total assets in securities issued by
domestic banks;
(4) engage in the underwriting of securities of other issuers, except
to the extent that a Fund may be deemed to be an underwriter in selling, as part
of an offering registered under the Securities Act of 1933, as amended,
securities which it has acquired; or participate on a joint or joint-and-several
basis in any securities trading account. The "bunching" of orders with other
accounts under the management of the Adviser to save commissions or to average
prices among them is not deemed to result in a securities trading account;
(5) effect a short sale of any security, or issue senior securities
except as permitted in paragraph (6). For purpose of this restriction, the
purchase and sale of financial futures contracts and related options does not
constitute the issuance of a senior security;
(6) issue senior securities or otherwise borrow money, except that
each Fund may borrow from banks as a temporary measure for emergency purposes
where such borrowings would not exceed 10% (33 1/3% for the Prime Fund) of a
Fund's total assets (including the amount borrowed) taken at market value; or
pledge, mortgage or hypothecate its assets, except to secure indebtedness
permitted by this paragraph and then only if such pledging, mortgaging or
hypothecating does not exceed 10% (33 1/3% for the Prime Fund) of the Fund's
total assets taken at market value;
(7) invest more than 10% of the total assets of a Fund in the
securities of other investment companies, subject to the limitations of
Section 12(d)(1) of the 1940 Act;
(8) invest in any security, including repurchase agreements maturing
in over seven days without a liquidation feature or other illiquid investments
which are subject to legal or contractual delays on resale or which are not
readily marketable, if as a result more than 10% of the market value of a Fund's
assets would be so invested;
(9) purchase interests in oil, gas, or other mineral exploration
programs of real estate and real estate mortgage loans except as provided in the
Prospectus;
(10) have dealings on behalf of a Fund with Officers and Trustees of
the Fund, except for the purchase or sale of securities on an agency or
commission basis, or make loans to any officers, directors or employees of the
Fund; and
(11) purchase equity securities or other securities convertible into
equity securities.
There will be no violation of any investment restriction if that
restriction is complied with at the time the relevant action is taken
notwithstanding a later change in the market value of an investment, in the net
or total assets of a Fund, in the securities rating of the investment, or any
other later change.
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<PAGE>
INVESTMENT INSTRUMENTS
The following information supplements the discussion of the investment
objectives and policies of the Funds in each Fund's Prospectus.
U.S. TREASURY OBLIGATIONS. Each Fund may invest, and the Treasury Fund
invests exclusively, in direct obligations of the United States Treasury which
have remaining maturities of 13 months or less and related repurchase
agreements. The United States Treasury issues various types of marketable
securities consisting of bills, notes, bonds and other debt securities. They
are direct obligations of the United States Government and differ primarily in
the length of their maturity. Treasury bills, the most frequently issued
marketable United States Government security, have a maturity of up to one year
and are issued on a discount basis.
U.S. GOVERNMENT AGENCIES. The Government Fund and the Prime Fund may
invest in obligations issued or guaranteed by the United States Government or
its agencies or instrumentalities which have remaining maturities not exceeding
thirteen months. Agencies and instrumentalities which issue or guarantee debt
securities and which have been established or sponsored by the United States
Government include the Banks for Cooperatives, the Export-Import Bank, the
Federal Farm Credit System, the Federal Home Loan Banks, the Federal Home Loan
Mortgage Corporation, the Federal Intermediate Credit Banks, the Federal Land
Banks, the Federal National Mortgage Association and the Student Loan Marketing
Association. United States Government agency and instrumentality obligations
include master notes issued by these entities but do not include obligations of
the World Bank, The Inter-American Development Bank or the Asian Development
Bank.
ASSET-BACKED SECURITIES (Prime Fund). Asset-backed securities purchased
by the Fund may include pools of mortgages, loans, receivables or other assets.
Payment of principal and interest may be largely dependent upon the cash flows
generated by the assets backing the securities. Asset-backed securities involve
certain risks that are not posed by mortgage-related securities, resulting
mainly from the fact that asset-backed securities do not usually contain the
complete benefit of a security interest in the related collateral. For example,
credit card receivables generally are unsecured and the debtors are entitled to
the protection of a number of state and Federal consumer credit laws, some of
which may reduce the ability to obtain full payment. In the case of automobile
receivables, due to various legal and economic factors, proceeds from
repossessed collateral may not always be sufficient to support payments on these
securities. The risks associated with asset-backed securities are often reduced
by the addition of credit enhancements such as a letter of credit from a bank,
excess collateral or a third-party guarantee. However, the extent of the credit
enhancement may differ amongst securities and generally only applies to a
fraction of the securities' value. With respect to asset-backed securities
arising from secured debt (such as automobile receivables), there is a risk that
parties other than the originator and servicer of the loan may acquire a
security interest superior to that of the securities holders.
BANK OBLIGATIONS (Prime Fund). These obligations include negotiable
certificates of deposit, bankers' acceptances and fixed time deposits and other
obligations issued or supported by banks. The Funds' policy on concentration in
bank obligations and a description of the banks the obligations of which the
Fund may purchase are set forth in the Fund's prospectus. A certificate of
deposit is a short-term, interest-bearing negotiable certificate issued by a
commercial bank against funds deposited in the bank. A bankers' acceptance is a
short-term draft drawn on a commercial bank by a borrower, usually in connection
with an international commercial transaction. The borrower is liable for
payment as is the bank, which unconditionally guarantees to pay the draft at its
face amount on the maturity date. Fixed time deposits are obligations of
foreign branches of United States banks or foreign banks which are payable on a
stated maturity date and bear a fixed rate of interest. Although fixed time
deposits do not have a market, there are no contractual restrictions on the
right to transfer a beneficial interest in the deposit to a third party.
COMMERCIAL PAPER (Prime Fund). Commercial paper includes short-term
unsecured promissory notes, variable rate demand notes and variable rate master
demand notes issued by domestic and foreign bank holding companies,
corporations, financial institutions and government agencies and
instrumentalities (but only in the case of taxable securities). All commercial
paper purchased by the Fund is, at the time of investment, required to be rated
(or issued by an issuer with a similar security rated) in the highest short-term
rating category by two or more Nationally Recognized Statistical Ratings
Organizations ("NRSROs"), or the only NRSRO rating the security, or if unrated,
determined to be of comparable credit quality by the Adviser. Because variable
rate master demand notes are direct lending arrangements between the lender and
the borrower, it is not generally contemplated that they will be traded. There
is no secondary market for variable rate master demand notes, although they are
redeemable, and thus immediately repayable by the borrower, at principal amount,
plus accrued interest, at any time.
4
<PAGE>
CORPORATE DEBT SECURITIES (Prime Fund). Investments in these securities
are limited to non-convertible corporate debt securities such as bonds and
debentures which have thirteen months or less remaining to maturity and which
are rated "A" or better by Standard & Poor's and "A" or better by Moody's and of
comparable high quality ratings by other NRSROs that have rated such securities.
The rating "P-1" is the highest commercial paper rating assigned by
Moody's and the ratings "A-1" and "A-1+" are the highest commercial paper
ratings assigned by Standard & Poor's. Debt securities rated"Aa" or better by
Moody's or "AA" or better by Standard & Poor's are generally regarded as
high-grade obligations. Those rated "Aaa" by Moody's or "AAA" by Standard &
Poor's are judged to be of the highest quality and exhibit an extremely strong
ability to pay interest and repay principal. Those rated "Aa" by Moody's or
"AA" by Standard & Poor's are judged to be of high quality by all standards and
differ from higher rated issues only in a small degree with respect to their
ability to pay interest and repay principal. Those rated "A" by Moody's and
Standard &Poor's possess many favorable attributes and are to be considered as
upper medium grade obligations, although they may be more susceptible to the
adverse effects of changes in circumstances and economic conditions than debt in
higher rated categories.
After purchase by the Fund, a security may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require a sale of such security by the Fund. However, if the
security is downgraded to a level below that permitted for money market funds
under Rule 2a-7 of the Investment Company Act of 1940, as amended (the "1940
Act"), the Fund's adviser must report such event to the Board of Trustees as
soon as possible to permit the Board to reassess the security promptly to
determine whether it may be retained as an eligible investment for the Fund. To
the extent the ratings given by a NRSRO may change as a result of changes in
such organizations or their rating systems, the Fund will attempt to use
comparable ratings as standards for investments in accordance with the
investment policies contained in the Fund's Prospectus and in this SAI.
LOANS OF PORTFOLIO SECURITIES (Prime Fund). The Fund may lend its
portfolio securities to brokers, dealers and financial institutions, provided:
(1) the loan is secured continuously by collateral consisting of U.S. Government
securities or cash or letters of credit maintained on a daily mark-to-market
basis in an amount at least equal to the current market value of the securities
loaned; (2) the Fund may at any time call the loan and obtain the return of the
securities loaned within five business days; (3) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities loaned will not at any time exceed 30% of the total
assets of the Fund.
The Fund will earn income for lending its securities because cash
collateral pursuant to these loans will be invested in short-term money market
instruments. In connection with lending securities, the Fund may pay reasonable
finders, administrative and custodial fees. Loans of securities involve a risk
that the borrower may fail to return the securities or may fail to provide
additional collateral.
MORTGAGE-RELATED SECURITIES. The Government Fund and the Prime Fund may,
consistent with their respective investment objective and policies, invest in
mortgage-related securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities.
Mortgage-related securities, for purposes of the Fund's Prospectus and
this SAI, represent pools of mortgage loans assembled for sale to investors by
various governmental agencies such as the Government National Mortgage
Association and government-related organizations such as the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, as well as
by nongovernmental issuers such as commercial banks, savings and loan
institutions, mortgage bankers, and private mortgage insurance companies.
Although certain mortgage-related securities are guaranteed by a third party or
otherwise similarly secured, the market value of the security, which may
fluctuate, is not so secured. If the Fund purchases a mortgage-related security
at a premium, that portion may be lost if there is a decline in the market value
of the security whether resulting from changes in interest rates or prepayments
in the underlying mortgage collateral. To an even greater extent than other
interest-bearing securities, the prices of such securities may be extremely
sensitive to, and 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 since in periods of declining
interest rates the mortgages underlying the securities are prone to prepayment.
For this and other reasons, a mortgage-related security's stated maturity may be
shortened by unscheduled prepayments on the underlying mortgages and, therefore,
it is not possible to predict accurately the security's return to the Fund.
Lower than estimated prepayments from an increase in interest rates might alter
the expected average life of such securities and increase volatility. In
addition, regular payments received in respect of mortgage-related securities
include both interest and principal. No assurance can be given as to the return
a Fund will receive when these amounts are reinvested.
5
<PAGE>
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 created
by the Government National Mortgage Association ("GNMA") include GNMA Mortgage
Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as
to the timely payment of principal and interest 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. Government to make payments under its guarantee. Mortgage-related
securities issued by the Federal National Mortgage Association ("FNMA") include
FNMA Guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes")
which are solely the obligations of the FNMA and are not backed by or
entitled to the full faith and credit of the United States. The FNMA is a
government-sponsored organization owned entirely by private stock-holders.
Fannie Maes are guaranteed as to timely payment of the principal and interest by
FNMA. Mortgage-related securities issued by the Federal Home Loan Mortgage
Corporation ("FHLMC") include FHLMC Mortgage Participation Certificates (also
known as ("Freddie Macs" or "PCs"). The FHLMC is a corporate instrumentality of
the United States, created pursuant to an Act of Congress, which is owned
entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed by the
United States or by any Federal Home Loan Banks and do not constitute a debt or
obligation of the United States or of any Federal Home Loan Bank. Freddie Macs
entitle the holder to timely payment of interest, which is guaranteed by the
FHLMC. The FHLMC currently guarantees timely payment of interest and either
timely payment of principal or eventual payment of principal, depending upon the
date of issue. When the FHLMC does not guarantee timely payment of principal,
FHLMC may remit the amount due on account of its guarantee of ultimate payment
of principal at any time after default on an underlying mortgage, but in no
event later than one year after it becomes payable.
REPURCHASE AGREEMENTS. Each Fund may invest in securities pursuant to
repurchase agreements, whereby the seller agrees to repurchase such securities
at the Fund's cost plus interest within a specified time (generally one day).
The securities underlying the repurchase agreements will consist exclusively of
U.S. Government obligations in which the Funds are otherwise permitted to
invest. While repurchase agreements involve certain risks not associated with
direct investments in the underlying securities, the Funds will follow
procedures designed to minimize such risks. These procedures include effecting
repurchase transactions only with large, well-capitalized banks and registered
broker-dealers having creditworthiness determined by the Adviser to be
substantially equivalent to that of issuers of debt securities rated investment
grade. In addition, the Funds' repurchase agreements will provide that the
value of the collateral underlying the repurchase agreement will always be at
least equal to the repurchase price, including any accrued interest earned on
the repurchase agreement, and that the Funds' custodian will take possession of
such collateral. In the event of a default or bankruptcy by the seller, the
Funds will seek to liquidate such collateral. However, the exercise of the
Funds' right to liquidate such collateral could involve certain costs or delays
and, to the extent that proceeds from any sale upon a default of the obligation
to repurchase were less than the repurchase price, a Fund could suffer a loss.
Repurchase agreements are considered to be loans by an investment company under
the Investment Company Act of 1940 (the "1940 Act"). There is no limit on the
amount of the Funds' net assets that may be subject to repurchase agreements
having a maturity of, or a liquidation feature permitting termination within a
period of, seven days or less. The Funds do not presently intend to enter into
repurchase agreements which will cause more than 10% of a Fund's net assets to
be subject to repurchase agreements having a maturity beyond seven days.
REVERSE REPURCHASE AGREEMENTS (Prime Fund). The Fund may borrow funds
by selling portfolio securities to financial institutions such as banks and
broker/dealers and agreeing to repurchase them at a mutually specified date and
price ("reverse repurchase agreements"). Reverse repurchase agreements involve
the risk that the market value of the securities sold by the Fund may decline
below the repurchase price. The Fund will pay interest on amounts obtained
pursuant to a reverse repurchase agreement. While reverse repurchase agreements
are outstanding, the Fund will maintain in a segregated account cash, or other
liquid assets (as determined by the Board) of an amount at least equal to the
market value of the securities, plus accrued interest, subject to the agreement.
STRIPPED GOVERNMENT SECURITIES. Stripped securities are created by
separating the income and principal components of a debt instrument and selling
them separately. The Fund may purchase U.S. Treasury STRIPS (Separate Trading
of Registered Interest and Principal of Securities) that are created when the
coupon payments and the principal payment are stripped from an outstanding
Treasury bond by the Federal Reserve Bank. Bonds issued by the Resolution
Funding Corporation (REFCORP) can also be stripped in this fashion. REFCORP
STRIPS are eligible investments for the Fund.
The Fund may also purchase privately stripped government securities,
which are created when a dealer deposits a Treasury security or federal agency
security with a custodian for safekeeping and then sells the coupon payments and
principal payments that will be generated by this security. Proprietary
receipts, such as Certificates of Accrual on
6
<PAGE>
Treasury Securities (CATS), Treasury Investment Growth Receipts (TIGRs), and
generic Treasury Receipts (TRs), are stripped U.S. Treasury securities that are
separated into their component parts through trusts created by their broker
sponsors. Bonds issued by the Financing Corporation (FICO) can also be stripped
in this fashion.
Because of the SEC's views on privately stripped government securities,
the Fund must evaluate them as it would non-government securities pursuant to
regulatory guidelines applicable to all money market funds. Accordingly, the
Fund currently intends to purchase only those privately stripped government
securities that have either received the highest rating from two NRSROs (or one,
if only one has rated the security), or, if unrated, been judged to be of
equivalent quality by GEIM.
VARIABLE AND FLOATING RATE DEMAND OBLIGATIONS (VRDOS/FRDOS) are
obligations that bear variable or floating interest rates and carry rights that
permit holders to demand payment of the unpaid principal balance plus accrued
interest from the issuers or certain financial intermediaries. Floating rate
securities have interest rates that change whenever there is a change in a
designated base rate while variable rate instruments provide for a specified
periodic adjustment in the interest rate. These formulas are designed to result
in a market value for the VRDO or FRDO that approximates its par value.
A demand instrument with a conditional demand feature must have received
both a short-term and a long-term high quality rating, or, if unrated, have been
determined to be of comparable quality pursuant to procedures adopted by the
Trustees. A demand instrument with an unconditional demand feature may be
acquired solely in reliance upon a short-term high quality rating or, if
unrated, upon a finding of comparable short-term quality pursuant to procedures
to be adopted by the Trustees.
The Prime Fund may invest in fixed-rate bonds that are subject to third
party puts and in participation interests in such bonds held by a bank in trust
or otherwise. These bonds and participation interests have tender options or
demand features that permit the Fund to tender (or put) its bonds to an
institution at periodic intervals and to receive the principal amount thereof.
The Fund considers variable rate instruments structured in this way
(Participating VRDOs) to be essentially equivalent to other VRDOs it purchases.
The Prime Fund may invest in variable or floating rate instruments that
ultimately mature in more than 397 days, if the Fund acquires a right to sell
the instruments that meets certain requirements set forth in Rule 2a-7. A
variable rate instrument (including instruments subject to a demand feature)
that matures in 397 days or less may be deemed to have a maturity equal to the
earlier of the period remaining until the next readjustment of the interest rate
or the date on which principal can be recovered on demand. A variable rate
instrument that matures in greater than 397 days but that is subject to a demand
feature that is 397 days or less may be deemed to have a maturity equal to the
longer of the period remaining until the next readjustment of the interest rate
or the period remaining until the principal amount can be recovered through
demand. A floating rate instrument that matures in more than 397 days but that
is subject to a demand feature may be deemed to have a maturity equal to the
period remaining until the principal amount may be recovered through demand. A
floating rate instrument that matures in 397 days or less shall be deemed to
have a maturity of one day.
The Government Fund and the Prime Fund may invest in variable and
floating rate instruments of the U.S. Government, and its agencies and
instrumentalities, with remaining maturities of 397 days or more provided that
they are deemed to have a maturity of less than 397 days as defined in
accordance with the rules of the SEC. A variable rate instrument that matures
in 397 days or more may be deemed to have a maturity equal to the period
remaining until the next readjustment of the interest rate.
WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES (Prime Fund). The Fund may
purchase securities on a when-issued or delayed-delivery basis. For example,
delivery of and payment for these securities can take place a month or more
after the date of the transaction. The securities so purchased are subject to
market fluctuation during this period and no income accrues to the Fund until
settlement takes place. To facilitate such acquisitions, the Fund will maintain
with the custodian a separate account with a segregated portfolio of liquid
securities in an amount at least equal to such commitments. On the delivery
dates for such transactions, the Fund will meet its obligations from maturities
or sales of the securities held in the separate account and/or from cash flow.
While the Fund normally enters into these transactions with the intention of
actually receiving or delivering the securities, it may sell these securities
before the settlement date or enter into new commitments to extend the delivery
date into the future, if the Adviser considers such action advisable as a matter
of investment strategy. Such securities have the effect of leverage on a Fund
and may contribute to volatility of the Fund's net asset value.
7
<PAGE>
ZERO COUPON SECURITIES. The Funds may invest in zero coupon securities.
Zero Coupon Bonds purchased by the Fund do not make regular interest payments;
instead they are sold at a deep discount from their face value and are redeemed
at face value when they mature. Because zero coupon bonds do not pay current
income, their prices can be very volatile when interest rates change. In
calculating its daily dividend, the Fund takes into account as income a portion
of the difference between a zero coupon bond's purchase price and its face
value. The market prices of zero coupon securities generally are more volatile
than the market prices of securities that pay interest periodically and are more
sensitive to changes in interest rates than non-zero coupon securities having
similar maturities and credit qualities.
MANAGEMENT
TRUSTEES AND OFFICERS
The principal occupations for the past five years of the Trustees and
executive officers of the Trust are listed below. The address of each, unless
otherwise indicated, is 370 Seventeenth Street, Suite 3100, Denver, Colorado
80202. Trustees deemed to be "interested persons" of the Trust for purposes of
the Investment Company Act of 1940, as amended, are indicated by an asterisk.
All of the Trustees were elected at a Special Meeting of shareholders held
March 21, 1997.
NAME (AGE) PRINCIPAL OCCUPATION**
- --------------------------------------------------------------------------------
W. Robert Alexander* (70) Mr. Alexander , a member of the Board of Trustees
Trustee, Chairman and since December 1993, is the Chief Executive
President Officer of ALPS Mutual Funds Services, Inc. which
provides administration and distribution services
for proprietary mutual fund complexes. Prior to
co-founding ALPS, Mr. Alexander was Vice Chairman
of First Interstate Bank of Denver, responsible
for Trust, Private Banking, Retail Banking, Cash
Management Services and Marketing. Mr. Alexander
is currently a member of the Board of Trustees of
the Colorado Trust, Colorado's largest foundation
as well as a Trustee of the Hunter and Hughes
Trusts. Because of his affiliation with ALPS, Mr.
Alexander is considered an "interested" Trustee of
Financial Investors Trust.
Mary K. Anstine (57) President/Chief Executive Officer, HealthONE,
Trustee Denver, CO; Former Executive Vice President, First
Interstate Bank of Denver. Ms. Anstine is
currently a Director of the Trust Bank of
Colorado, Trustee of the Denver Area Council of
the Boy Scouts of America, a Director of the
Junior Achievement Board and the Colorado Uplift
Board, and a member of the Advisory Boards for the
Girl Scouts Mile Hi Council and the Hospice of
Metro Denver. Formerly, Ms. Anstine served as a
Director of ALPS from October 1995 to December
1996; Director of HealthONE; a member of the
American Bankers Association Trust Executive
Committee; and Director of the Center for Dispute
Resolution.
Edwin B. Crowder (67) Mr. Crowder currently operates a marketing concern
Trustee with operations in the U.S. and Latin America. He
has previously engaged in business pursuits in the
restaurant, oil and gas drilling, and real estate
development industries. Mr. Crowder is a former
Director of Athletics and head football coach at
the University of Colorado.
John R. Moran, Jr. (68) Mr. Moran is President of The Colorado Trust, a
Trustee private foundation serving the health and hospital
community in the State of Colorado. An attorney,
Mr. Moran was formerly a partner with the firm of
Kutak Rock & Campbell in Denver, Colorado and a
member of the Colorado House of Representatives.
Currently, Mr. Moran is a member of the Board of
Directors and Treasurer of Grantmakers in Health;
a Director of the Conference of Southwest
Foundations; A member of the Treasurer's Office
Investment Advisory Committee for the University
of Colorado; a Trustee of the Robert J. Kutak
Foundation; Director of the Colorado Wildlife
Heritage Foundation; and a member of the Alumni
Council of the University of Denver College of
Law.
** Except as otherwise indicated, each individual has held the office shown or
other offices in the same company for the last five years.
8
<PAGE>
The following table contains relevant information concerning the Executive
Officers of the Trust.
NAME PRINCIPAL OCCUPATION** SINCE
- --------------------------------------------------------------------------------
H. David Lansdowne President and CEO of Tempest, Isenhart, January 1998
Vice President (51) Chafee, Lansdowne and Associates.
Robert Alder Executive Vice President of Tempest, January 1998
Vice President (56) Isenhart, Chafee, Lansdowne and
Associates.
William Paston, Product Development Manager of ALPS February 1994
Vice President and Mutual Funds Services, Inc. Prior to
Treasurer (42) joining ALPS, Mr. Paston was an
associate with Lipper Analytical
Services, coordinating that firm's
marketing effort in the banking
industry.
James V. Hyatt, Mr. Hyatt is General Counsel of April 1998
Secretary (47) ALPSMutual Funds Services, Inc., the
Administrator and Distributor.
Prior to joining ALPS, Mr. Hyatt
served as Senior Legal Counsel for
FMR Corp. and Counsel to Fidelity
Management Trust Company.
Jeremy May Mr. May is Director of Mutual Fund October 1997
Assistant Operations at ALPS Mutual Funds
Treasurer (28) Services, Inc., the Administrator
and Distributor. Prior to joining
ALPS, Mr. May was an auditor with
Deloitte & Touche LLP in their Denver
office.
- --------------------
** Except as otherwise indicated, each individual has held the office shown or
other offices in the same company for the last five years.
Effective after the April 21, 1998 meeting of the Board, non-interested
Trustees of the Trust receive from the Trust an annual fee in the amount of $
4,000 and $500 for attending each Board meeting. Prior to this meeting, the
non-interested Trustees received no annual fee and $1,000 for attending each
Board meeting. The Trustees are reimbursed for all reasonable out-of-pocket
expenses relating to attendance at meetings.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Pension Or Aggregate
Retirement Estimated Compensation
Aggregate Benefits Annual From The Trust
Compensation Accrued As Benefits and Fund
From the Part of Fund Upon Complex Paid
Trust Expenses Retirement to Trustees
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mary K. Anstine,
Trustee $4,000(1) $0 $0 $4,000
- --------------------------------------------------------------------------------
Edwin B. Crowder,
Trustee $4,000(1) $0 $0 $4,000
- --------------------------------------------------------------------------------
John R. Moran, Jr.,
Trustee $4,000(1) $0 $0 $4,000
- --------------------------------------------------------------------------------
</TABLE>
(1) Member of the Audit Committee.
As of the date of this Statement of Additional Information the Trustees and
officers of the Trust as a group owned less than 1% of the outstanding shares of
the Trust.
9
<PAGE>
INVESTMENT ADVISER. The Trust retains GE Investment Management
Incorporated, (the "Adviser") as investment adviser for each Fund.
Each Advisory Contract provides that the Adviser will manage the portfolio
of each Fund and will furnish to each Fund investment guidance and policy
direction in connection therewith. The Adviser has agreed to provide to the
Trust, among other things, information relating to money market portfolio
composition, credit conditions and average maturity of the portfolio of each
Fund. Pursuant to each Advisory Contract, the Adviser also furnishes to the
Trust's Board of Trustees periodic reports on the investment performance of the
Funds.
SPONSOR AND DISTRIBUTOR. Shares of the Funds are offered on a continuous
basis through ALPS Mutual Funds Services, Inc., ("ALPS"), the Distributor,
pursuant to the Distribution Contract. The Distributor is not obligated to sell
any specific amount of shares.
ADMINISTRATOR. Pursuant to the Administrative Services Contract, ALPS: (i)
provides administrative services reasonably necessary for the operation of the
Funds (other than those services which are provided by the Adviser pursuant to
each Advisory Contract); (ii) provides the Funds with office space and office
facilities reasonably necessary for the operation of the Funds; and (iii)
employs or associates with itself such persons as it believes appropriate to
assist it in performing its obligations under the Administrative Services
Contract.
FEES AND EXPENSES
As compensation for advisory, management and administrative services, the
Adviser and ALPS ("the Administrator") are paid a monthly fee at the following
annual rates:
TREASURY FUND:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PORTION OF AVERAGE DAILY VALUE
OF NET ASSETS OF THE FUND ADVISORY ADMINISTRATIVE(1) TOTAL
Not exceeding $500 million 0.05% 0.26% 0.31%
In excess of $500 million but
not exceeding $1 billion 0.075% 0.24% 0.315%
In excess of $1 billion but not
exceeding $1.5 billion 0.10% 0.22% 0.32%
In excess of %1.5 billion 0.15% 0.22% 0.37%
GOVERNMENT AND PRIME FUNDS:
<CAPTION>
<S> <C> <C> <C>
PORTION OF AVERAGE DAILY VALUE
OF NET ASSETS OF THE FUND ADVISORY ADMINISTRATIVE(1) TOTAL
Not exceeding $500 million 0.04% 0.16% 0.20%
In excess of $500 million but
not exceeding $1 billion 0.06% 0.14% 0.20%
In excess of $1 billion 0.08% 0.12% 0.20%
</TABLE>
(1) Subject to a minimum monthly fee of $50,000 for the Treasury Fund and
$30,000 for the Government and Prime Funds.
At a meeting held on January 20, 1997, the Trustees approved new Advisory
Contracts with the Adviser on behalf of the Treasury and Government Funds. The
new Advisory Contracts were submitted to shareholders of each respective Fund
for their consideration pursuant to a Proxy Statement dated March 3, 1997, and
subsequently approved by a majority of the shareholders of each respective Fund
at a Special Meeting held on March 21, 1997. Effective March 24, 1997, the
Adviser assumed the role of Adviser to each Fund. During the period March 24,
1997 through April 30, 1997, the Adviser earned $8,799 and $3,542 in advisory
fees from the Treasury and Government Funds, respectively. During the fiscal
year ended April 30, 1998, the Adviser earned $78,117 and $52,818 in advisory
fees from the Treasury and Government Funds, respectively.
10
<PAGE>
From the inception of each Fund through March 23, 1997, FGIC Advisors, Inc.
("FGIC") served as the Investment Adviser to the Treasury and Government Funds.
During the fiscal year ended April 30, 1996 and the period May 1, 1996 to March
23, 1997, FGIC earned the following advisory fees (the Prime Fund had not
commenced operations as of March 23, 1997):
<TABLE>
<CAPTION>
Period Ended Year Ended
March 23, 1997 April 30, 1996
-------------- --------------
<S> <C> <C>
U.S. Treasury Money Market Fund
Advisory fees earned $739,988 $742,238
Advisory fees waived $(739,988) $(742,238)
U.S. Government Money Market Fund
Advisory fees earned $110,066 $136,073
Advisory fees waived $(110,066) $(85,725)
(1) The Treasury Fund and the Government Funds commenced operations on
May 25, 1994 and June 7, 1994, respectively.
The Administrative fees earned by the Administrator under the
Administrative Services Agreement for the last three fiscal periods were as
follows (the Prime Fund had not commenced operations as of April 30, 1998):
<CAPTION>
Fiscal Period Ended April 30,
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
U.S. Treasury Money Market Fund
Administrative fees earned $665,343 $750,000 $750,000
Administrative fees waived $(349,614) $(75,890) $(190,288)
U.S. Government Money Market Fund
Administrative fees earned $294,083 $92,781 $76,135
Administrative fees waived $(143,513) $(3,949) $0
</TABLE>
The Administrator has stated that it will voluntarily waive a portion of
the administrative fees otherwise payable by each Fund, as well as voluntarily
assume a portion of each Fund's expenses, to the extent necessary to maintain a
total expense ratio of not more than .33%, .20%, .20% and .45% of the average
net assets of the Treasury Fund, Government Fund, Prime Fund Class I and Prime
Fund Class II, respectively. The Administrator reserves the right to modify or
terminate the fee waiver and assumption of expenses at any time.
Except for the expenses paid by the Adviser under the Advisory Contract and
the Administrator under the Administrative Services Contract, each Fund bears
all costs of its operations. Expenses attributable to the Funds are charged
against the assets of each Fund, respectively.
The Advisory Contract, Distribution Contract and Administrative Services
Contract will continue in effect with respect to each Fund from year to year
provided such continuance is approved annually (i) by the holders of a majority
of the outstanding voting securities of a Fund or by the Trust's Trustees; and
(ii) by a majority of the Trustees who are not parties to such contracts or
"interested persons" (as defined under the 1940 Act) of any such party. Each
contract may be terminated with respect to a Fund at any time, without payment
of any penalty, by a vote of a majority of the outstanding voting securities of
the Fund (as defined in the Investment Company Act of 1940) or by a vote of a
majority of the Trustees. The Advisory Contract, Administrative Services
Contract and the Distribution Contract shall terminate automatically in the
event of their assignment (as defined in the 1940 Act).
The Trust incurs administration expenses based on the terms of the
Administrative Services Agreement. In the absence of certain fee waivers and
reimbursements, administration fees borne by the Funds might not be in
proportion to relative Fund assets.
11
<PAGE>
CALCULATION OF YIELDS AND PERFORMANCE INFORMATION
Each Fund may, from time to time, include its yield and effective yield in
advertisements or reports to shareholders or prospective investors. Current
yield (or "SEC Seven Day Yield") for each Fund will be based on the change in
the value of a hypothetical investment (exclusive of capital changes) over a
particular 7-day period, less a pro-rata share of a Fund's expenses accrued over
that period (the "base period"), and stated as a percentage of the investment at
the start of the base period (the "base period return"). The base period return
is then annualized by multiplying by 365/7, with the resulting yield figure
carried to at least the nearest hundredth of one percent. "Effective yield" for
the Funds assumes that all dividends received during an annual period have been
reinvested. Calculation of "effective yield" begins with the same "base period
return" used in the calculation of yield, which is then annualized to reflect
weekly compounding pursuant to the following formula: Effective Yield - [(Base
Period Return) + 1) 365/7] - 1.
As of April 30, 1998, the Seven Day Effective Yield and the SEC Seven Day
Yield for the Treasury Fund was 5.20% and 5.08%, respectively. As of
April 30, 1998, the Seven Day Effective Yield and the SEC Seven Day Yield for
the Government Fund was 5.43% and 5.28%, respectively. The Prime Fund had not
commenced operations as of April 30, 1997.
Each Fund may, from time to time, include its average annual total returns
in advertisements or reports to shareholders or prospective investors.
Quotations of average annual total return will be expressed in terms of the
average annual compounded rate of return of a hypothetical investment in the
Fund over periods of 1, 5 and 10 years (up to the life of the Fund), calculated
pursuant to the following formulas:
n
P (1 + T) = ERV
OR
1/n
T = [C (ERV) - 1]
P
All total return figures will reflect a proportional share of Fund expenses
(net of certain reimbursed expenses) on an annual basis, and will assume that
all dividends and distributions are reinvested when paid. Quotations of total
return will reflect only the performance of a hypothetical investment in the
Funds during the particular time period shown. Total return for the Fund will
vary based on changes in the market conditions and the level of a Fund's
expenses, and no reported performance figure should be considered an indication
of performance, which may be expected in the future.
The yield and total return for each Class of the Prime Fund are calculated
separately due to separate expense structures. The yield and total return of
Class II will be lower than that of Class I.
In connection with communicating its total return to current or prospective
shareholders, each Fund also may compare these figures to the performance of
other mutual funds tracked by mutual fund rating or ranking services or to other
unmanaged indices which may assume reinvestment of dividends but generally do
not reflect deductions for administrative and management costs.
From time to time, in marketing pieces and other Fund literature, the
Funds' total performance may be compared to the performance of broad groups of
comparable funds or unmanaged indices of comparable securities. Evaluations of
Fund performance made by independent sources may also be used in advertisements
concerning the Funds. Sources for Fund performance information may include, but
are not limited to, the following:
Barron's, a Dow Jones and Company, Inc. business and financial weekly that
periodically reviews mutual fund performance data.
Business Week, a national business weekly that periodically reports the
performance rankings and ratings of a variety of mutual funds investing
abroad.
Changing Times, The Kiplinger Magazine, a monthly investment advisory
publication that periodically features the performance of a variety of
securities.
12
<PAGE>
Donoghue's Money Fund Report, a weekly publication of the Donoghue
Organization, Inc., of Holliston, Massachusetts, reporting on the
performance of the nation's money market funds, summarizing money market
fund activity, and including certain averages as performance benchmarks,
specifically "Donoghue's Money Fund Average," and "Donoghue's Government
Money Fund Average."
Financial Times, Europe's business newspaper, which features from time to
time articles on international or country-specific funds.
Forbes, a national business publication that from time to time reports the
performance of specific investment companies in the mutual fund industry.
Fortune, a national business publication that periodically rates the
performance of a variety of mutual funds.
Global Investor, a European publication that periodically reviews the
performance of U.S. mutual funds investing internationally.
Lipper Analytical Services, Inc.'s Mutual Fund Performance Analysis, a
weekly publication of industry-wide mutual fund averages by type of fund.
Money, a monthly magazine that from time to time features both specific
funds and the mutual fund industry as a whole.
New York Times, a nationally distributed newspaper which regularly covers
financial news.
Personal Investor, a monthly investment advisory publication that includes
a "Mutual Funds Outlook" section reporting on mutual fund performance
measures, yields, indices and portfolio holdings.
Sylvia Porter's Personal Finance, a monthly magazine focusing on personal
money management that periodically rates and ranks mutual funds by
performance.
Wall Street Journal, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
Wall Street Journal, a Dow Jones and Company, Inc. newspaper which
regularly covers financial news.
Wiesenberger Investment Companies Services, an annual compendium of
information about mutual funds and other investment companies, including
comparative data on funds' backgrounds, management policies, salient
features, management results, income and dividend records, and price
ranges.
FUND RATINGS. Although it is not an investment objective of the Funds,
consistent with the Funds' investment objectives and restrictions, each Fund may
seek and receive the highest rating from certain nationally recognized
statistical rating organizations (NRSROs), for example, "AAAm" from Standard &
Poor's Ratings Group, a Division of McGraw Hill, Inc., or "AAA/V-1+" from Fitch
Investor Services, Inc. An NRSRO rating is subject to change and neither
insures nor guarantees that the Fund will pay interest or repay principal.
NRSRO ratings represent the opinion of the NRSRO based on the investment
adviser, quality of the Fund's portfolio holdings, and other criteria. If an
NRSRO rating is obtained, the Fund may use the information in advertising or
reports to shareholders or prospective investors.
DETERMINATION OF NET ASSET VALUE
The Funds' net asset value per share is determined by dividing the total
current market value of the assets of a Fund, less liabilities, by the total
number of shares outstanding at the time of determination. All expenses,
including the advisory and administrative fees, are accrued daily and taken into
account for the purpose of determining the net asset value.
As indicated under "Determination of Net Asset Value" in the Funds'
Prospectuses, the Funds use the amortized cost method to determine the value of
their portfolio securities pursuant to Rule 2a-7 under the Investment Company
Act of 1940. The amortized cost method involves valuing a security at its cost
and amortizing any discount or premium over the period until maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security. While this method provides certainty in valuation, it may result
in periods during which the value, as determined by amortized cost, is higher or
lower than the price which the Fund would receive if the security were sold.
During these
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periods the yield to a shareholder may differ somewhat from that which could be
obtained from a similar fund which utilizes a method of valuation based upon
market prices. Thus, during periods of declining interest rates, if the use of
the amortized cost method resulted in a lower value of the Fund's portfolio on a
particular day, a prospective investor in the Fund would be able to obtain a
somewhat higher yield than would result from an investment in a fund utilizing
solely market values, and existing Fund shareholders would receive
correspondingly less income. The converse would apply during periods of rising
interest rates.
Rule 2a-7 provides that in order to value its portfolio using the amortized
cost method, the Funds must maintain a dollar-weighted average portfolio
maturity of 90 days or less, purchase securities having remaining maturities of
thirteen months or less and invest only in securities determined by the Trust's
Board of Trustees to be "eligible securities" as defined by Rule 2a-7 and to
present minimal credit risks. Pursuant to Rule 2a-7, the Board is required to
establish procedures designed to stabilize, to the extent reasonably possible,
the price per share of the Funds, as computed for the purpose of sales and
redemptions, at $1.00. Such procedures include review of the Funds' portfolio
holdings by the Board of Trustees, at such intervals as it may deem appropriate,
to determine whether the net asset value of the Fund calculated by using
available market quotations deviates from $1.00 per share based on amortized
cost. The extent of any deviation will be examined by the Board of Trustees.
If such deviation exceeds 1/2 of 1%, the Board will promptly consider what
action, if any, will be initiated. In the event the Board determines that a
deviation exists which may result in material dilution or other unfair results
to investors or existing shareholders, the Board will take such corrective
action as it regards as necessary and appropriate, including the sale of
portfolio instruments prior to maturity to realize capital gains or losses or to
shorten average portfolio maturity, withholding dividends or establishing a net
asset value per share by using available market quotations.
Each Fund will compute its net asset value once daily as of 5:00 p.m. (New
York City time), on each day the New York Stock Exchange is open for business
which excludes New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Columbus Day, Thanksgiving Day and Christmas Day.
PORTFOLIO TRANSACTIONS
The Trust has no obligation to deal with any dealer or group of dealers in
the execution of transactions in portfolio securities. Subject to policy
established by the Trustees, the Adviser is primarily responsible for portfolio
decisions and the placing of portfolio transactions. In placing orders, it is
the policy of the Fund to obtain the best results taking into account the
dealer's general execution and operational facilities, the type of transaction
involved and other factors such as the dealer's risk in positioning the
securities involved. While the Adviser generally seeks reasonably competitive
spreads or commissions, the Funds will not necessarily be paying the lowest
spread or commission available.
Purchases and sales of securities will often be principal transactions in
the case of debt securities traded otherwise than on an exchange. Debt
securities normally will be purchased or sold from or to issuers directly or to
dealers serving as market makers for the securities at a net price. Generally,
money market securities are traded on a net basis and do not involve brokerage
commissions. Under the 1940 Act, persons affiliated with the Adviser, the Funds
or the Distributor are prohibited from dealing with the Funds as a principal in
the purchase and sale of securities except in accordance with regulations
adopted by the Securities and Exchange Commission. Under the 1940 Act, persons
affiliated with the Adviser, the Funds or the Distributor may act as a broker
for the Funds. In order for such persons to effect any portfolio transactions
for the Funds, the commissions, fees or other remuneration received by such
persons must be reasonable and fair compared to the commissions, fees or other
remunerations paid to other brokers in connection with comparable transactions
involving similar securities being purchased or sold on an exchange during a
comparable period of time. This standard would allow the affiliate to receive
no more than the remuneration which would be expected to be received by an
unaffiliated broker in a commensurate arms-length transaction. The Trustees of
the Trust will regularly review the commissions paid by the Funds to affiliated
brokers.
The Adviser may, in circumstances in which two or more dealers are in a
position to offer comparable results, give preference to a dealer which has
provided statistical or other research services to the Adviser. By allocating
transactions in this manner, the Adviser is able to supplement its research and
analysis with the views and information of securities firms.
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EXCHANGE PRIVILEGE
Shareholders who have held all or part of their shares in one of the Funds
for at least seven days may exchange those shares for shares of the other Fund
if such Fund is available for sale in their state and meets the investment
criteria of the investor.
Before effecting an exchange, shareholders should review the Prospectus of
the other Fund. Exercise of the exchange privilege is treated as a redemption
for income tax purposes and, depending on the circumstances, a gain or loss may
be recognized.
The exchange privilege may be modified or terminated upon sixty (60) days'
written notice to shareholders. Although initially there will be no limit on
the number of times a shareholder may exercise the exchange privilege, the Funds
reserve the right to impose such a limitation. Call or write the Funds for
further details.
REDEMPTIONS
In the event that a Fund does not maintain a constant net asset value per
share, the proceeds of a redemption may be more or less than the amount invested
and, therefore, a redemption may result in a gain or loss for Federal and state
and local income tax purposes. Any loss realized on the redemption of Fund
shares held, or treated as held, for six months or less will be treated as a
long-term capital loss to the extent of any long-term capital gain dividends
received on the redeemed shares.
A shareholder's account with the Funds remains open for at least one year
following complete redemption and all costs during the period will be borne by
the Funds. This permits an investor to resume investments in the Fund during
the period in an amount of $25,000 or more.
To be in a position to eliminate excessive shareholder expense burdens, the
Funds reserve the right to adopt a policy pursuant to which a Fund may redeem,
upon not less than 30 days' notice, shares of the Fund in an account which has a
value below the designated amount set forth in each Fund's prospectus. However,
any shareholder affected by the exercise of this right will be allowed to make
additional investments prior to the date fixed for redemption to avoid
liquidation of the account. Shareholder accounts which have a value below the
designated amount due to changes in the market value in portfolio securities
will not be redeemed.
The Funds may suspend the right of redemption during any period when
(i) trading on the New York Stock Exchange is restricted or that Exchange is
closed, other than customary weekend and holiday closings, (ii) the Securities
and Exchange Commission has by order permitted such suspension or (iii) an
emergency exists making disposal of portfolio securities or determination of the
value of the net assets of the Fund not reasonably practicable.
Although it would not normally do so, the Trust has the right to pay the
redemption price in whole or in part in securities of a Fund's portfolio as
prescribed by the Trustees. When a shareholder sells portfolio securities
received in this fashion he would incur a brokerage charge. The Trust has,
however, elected to be governed by Rule 18f-1 under the 1940 Act, as amended.
Under that rule, the Trust must redeem its shares for cash except to the extent
that the redemption payments to any shareholder during any 90-day period would
exceed the lesser of $250,000 or 1% of a Fund's net asset value at the beginning
of such period.
FEDERAL INCOME TAXES
The Treasury Fund and the Government Fund have each elected to be treated
as a regulated investment company and qualified as such in 1997. The Prime Fund
will elect to be treated as a regulated investment company and intends to
qualify as such. The Funds intend to continue to so qualify by complying with
the provisions of the Internal Revenue Code of 1986, as amended (the "Code")
applicable to regulated investment companies so that the Funds will not be
liable for Federal income tax with respect to amounts distributed to
shareholders in accordance with the timing requirements of the Code.
In order to qualify as a regulated investment company for a taxable year,
each Fund must, among other things, (a) derive at least 90% of its gross income
from dividends, interest, payments with respect to securities loans and gains
from the sale or other disposition of stock or securities or foreign currency
gains related to investments in stock or securities or other income (including
but not limited to gains from options, futures or forward contracts) derived
with
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<PAGE>
respect to its business of investing in stock, securities or currency;
(b) diversify its holdings so that, at the end of each quarter of its taxable
year, (i) at least 50% of the market value of the Fund's assets is represented
by cash, cash items, U.S. Government securities, securities of other regulated
investment companies and certain other securities in respect of any one issuer
to an amount not greater in value than 5% of its assets and 10% of the
outstanding voting securities of the issuer, and (ii) not more than 25% of the
value of its total assets is invested in the securities of any one issuer (other
than U.S. Government securities or securities of other regulated investment
companies). As such, and by complying with the applicable provisions of the
Code, the Funds will not be subject to Federal income tax on taxable income
(including realized capital gains) which is distributed to shareholders in
accordance with the timing requirements of the Code.
The amount of capital gains, if any, realized in any given year will result
from sales of securities made with a view to the maintenance of a portfolio
believed by Fund management to be most likely to attain a Fund's investment
objective. Such sales and any resulting gains or losses, may therefore vary
considerably from year to year. Since at the time of an investor's purchase of
shares, a portion of the per share net asset value by which the purchase price
is determined may be represented by realized or unrealized appreciation in a
Fund's portfolio or undistributed income of the Fund, subsequent distributions
(or portions thereof) on such shares may be taxable to such investor even if the
net asset value of his shares is, as a result of the distributions, reduced
below his cost for such shares and the distributions (or portions thereof)
represent a return of a portion of his investment.
The Funds are required to report to the Internal Revenue Service (the
"IRS") all distributions of taxable dividends and of capital gains, as well as
the gross proceeds of share redemptions. The Funds may be required to withhold
Federal income tax at a rate of 31% ("backup withholding") from taxable
dividends (including capital gain dividends) and the proceeds of redemptions of
shares paid to non-corporate shareholders who have not furnished the Fund with a
correct taxpayer identification number and made certain required certifications
or who have been notified by the IRS that they are subject to backup
withholding. The Funds may also be required to withhold Federal income tax at a
rate of 31% if they are notified by the IRS or a broker that the taxpayer
identification number is incorrect or that backup withholding applies because of
underreporting of interest or dividend income.
Distributions of taxable net investment income and net realized capital
gains will be taxable whether made in shares or in cash. In determining amounts
of net realized capital gains to be distributed, any capital loss carryovers
from prior years will be applied against realized capital gains. Shareholders
receiving distributions in the form of additional shares will have a cost basis
for Federal income tax purposes in each share so received equal to the net asset
value of a share of the Fund on the reinvestment date. Fund distributions will
also be included in individual and corporate shareholders' income on which the
alternative minimum tax may be imposed.
Any loss realized upon the redemption of shares held (or treated as held)
for six months or less will be treated as a long-term capital loss to the extent
of any long-term capital gain dividend received on the redeemed shares. Any
loss realized upon the redemption of shares within six months after receipt of
an exempt-interest dividend will be disallowed. All or a portion of a loss
realized upon the redemption of shares may be disallowed to the extent shares
are purchased (including shares acquired by means of reinvested dividends)
within 30 days before or after such redemption. Exchanges are treated as
redemptions for Federal tax purposes.
Different tax treatment is accorded to accounts maintained as IRAs,
including a penalty on early distributions. Shareholders should consult their
tax advisers for more information.
Each Fund will be separate for investment and accounting purposes and will
be treated as a separate taxable entity for Federal income tax purposes.
Each Fund is subject to a 4% nondeductible excise tax to the extent that it
fails to distribute to its shareholders during each calendar year an amount
equal to (a) at least 98% of its ordinary income (excluding any capital gain or
losses) for the calendar year; plus (b) at least 98% of the excess of its
capital gains over capital losses (adjusted for ordinary losses) for the one
year period ending on October 31 of such calendar year; plus (c) any ordinary
income or capital gain net income (adjusted for certain ordinary losses) from
the preceding calendar years which was neither distributed to shareholders nor
taxed to the Fund during such year. The Funds intend to distribute to
shareholders each year an amount sufficient to avoid the imposition of such
excise tax.
It is important to note that for tax years beginning after August 5, 1997,
the Taxpayer Relief Act of 1997 repealed Section 851(b)(3) which required that a
RIC must derive less than 30 percent of its gross income from the sales or
disposition of stocks or securities held for less than three months.
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SHARES OF BENEFICIAL INTEREST
The Trust consists of multiple separate portfolios or Funds. When certain
matters affect one Fund but not another, the shareholders would vote as a Fund
regarding such matters. Subject to the foregoing, on any matter submitted to a
vote of shareholders, all shares then entitled to vote will be voted separately
by the Fund unless otherwise required by the 1940 Act, in which case all shares
will be voted in the aggregate. For example, a change in a Fund's fundamental
investment policies would be voted upon only by shareholders of the Fund.
Additionally, approval of the Advisory Contract is a matter to be determined
separately by each Fund. Approval by the shareholders of one Fund is effective
as to that Fund whether or not sufficient votes are received from the
shareholders of the other Fund to approve the proposal as to that Fund. As used
in the Prospectuses and in this Statement of Additional Information, the term
"majority," when referring to approvals to be obtained from shareholders of a
Fund means the vote of the lesser of (i) 67% of the shares of the Fund or class
represented at a meeting if the holder of more than 50% of the outstanding
shares of the Fund or class are present in person or by proxy, or (ii) more than
50% of the outstanding shares of the Fund. The term "majority", when referring
to the approvals to be obtained from shareholders of the Trust as a whole means
the vote of the lesser of (i) 67% of the Trust's shares represented at a meeting
if the holders of more than 50% of the Trust's outstanding shares are present in
person or proxy, or (ii) more than 50% of the Trust's outstanding shares.
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held.
The Trust may dispense with annual meetings of shareholders in any year in
which it is not required to elect trustees under the 1940 Act. However, the
Trust undertakes to hold a special meeting of its shareholders if the purpose of
voting on the question of removal of a director or trustees is requested in
writing by the holders of at least 10% of the Trust's outstanding voting
securities, and to assist in communicating with other shareholders as required
by Section 16(c) of the 1940 Act.
Each share of a Fund represents an equal proportional interest in the Fund
with each other share and is entitled to such dividends and distributions out of
the income earned on the assets belonging to the Fund as are declared in the
discretion of the Trustees. In the event of the liquidation or dissolution of
the Trust, shareholders of each Fund are entitled to receive the assets
attributable to such Fund that are available for distribution, and a
distribution of any general assets of the Trust not attributable to a particular
Fund that are available for distribution in such manner and on such basis as the
Trustees in their sole discretion may determine.
Shareholders are not entitled to any preemptive rights. All shares, when
issued, will be fully paid and non-assessable by the Trust.
As of July 31, 1998, the following shareholders owned 5% or more of the
outstanding shares of the Funds as listed below:
<TABLE>
<CAPTION>
FUND PERCENTAGE INTEREST
- --------------------------------------------------------------------------------
<S> <C>
U.S. TREASURY MONEY MARKET FUND
City of Cranston 15.55%
869 Park Avenue
Cranston, RI 02910
City of Bridgeport 11.63%
Attn: Sharon D. Lemdon
45 Lyons Terrace
Bridgeport, CT 06604
Union Labor Life Insurance Co. 9.69%
111 Massachusetts Avenue, N.W.
Washington, DC 20001
Metropolitan District 7.88%
555 Main Street, Po. Box 800
Hartford, CT 06142-0800
</TABLE>
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<TABLE>
<CAPTION>
FUND PERCENTAGE INTEREST
- --------------------------------------------------------------------------------
<S> <C>
U.S. TREASURY MONEY MARKET FUND (CON'T)
Riverside County Transportation Commission 5.64%
3560 University Place
Riverside, CA 92501
U.S. GOVERNMENT MONEY MARKET FUND
Diplomat Properties LTD Partnership 22.95%
901 Massachusetts Avenue, N.W.
Washington, D.C.
City of Hartford 11.42%
City Treasurer's Office
Denise Nappier
550 Main Street
Hartford, CT 06103
City of Quincy 8.81%
1305 Hancock Street
Quincy, MA 02169
County of Rock Island 7.71%
1504 Third Avenue
Rock Island, IL 61201-8684
</TABLE>
DISTRIBUTION PLAN
The Trustees of the Trust have adopted a Distribution Plan on behalf of
Class II of the Prime Fund (the "Plan") pursuant to Rule 12b-1 (the "Rule")
under the 1940 Act. The Rule provides in substance that a mutual fund may not
engage directly or indirectly in financing any activity that is intended
primarily to result in the sale of shares of the fund except pursuant to a plan
adopted by the fund under the Rule. The Trustees have adopted the Plan to allow
the Prime Fund and ALPS to incur distribution expenses. The Plan provides for
payment of a distribution fee (12b-1 fee) of up to 0.25% of the average net
assets of Class II of the Prime Fund (these fees are in addition to the fees
paid to ALPS under the Administration Agreement). The Trust or ALPS, on behalf
of Class II of the Prime Fund, may enter into servicing agreements (Service
Agreements) with banks, broker/dealers or other institutions (Agency
Institutions). The Plan provides that ALPSmay use its fees and other resources
to make payments to Agency Institutions for performance of distribution-related
services, including those enumerated below. The Service Agreements further
provide for compensation to broker/dealers for their efforts to sell Class II
shares of the Prime Fund. The distribution-related services include, but are
not limited to, the following: formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; preparation, printing and
distribution of sales literature; preparation, printing and distribution of
prospectuses of the Prime Fund and reports to recipients other than existing
shareholders of the Prime Fund; obtaining such information, analyses and reports
with respect to marketing and promotional activities as ALPS may, from time to
time, deem advisable; making payments to securities dealers and others engaged
in the sales of Class II Shares of the Prime Fund; and providing training,
marketing and support to such dealers and others with respect to the sale of
Class II Shares of the Prime Fund. The Plan recognizes ALPS may use its fees
and other resources to pay expenses associated with the promotion and
administration of activities primarily intended to result in the sale of shares.
The Plan has been approved by the Trustees, including the majority of
disinterested Trustees. As required by the Rule, the Trustees carefully
considered all pertinent factors relating to the implementation of the Plan
prior to its approval, and have determined that there is a reasonable likelihood
that the Plan will benefit the Prime Fund and its shareholders. To the extent
that the Plan gives ALPS greater flexibility in connection with the distribution
of shares of the class, additional sales of shares may result.
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<PAGE>
The Plan could be construed as compensation because ALPS is paid a fixed
fee and is given discretion concerning what expenses are payable under the Plan.
ALPS may spend more for marketing and distribution than it receives in fees and
reimbursements from the Prime Fund. However, to the extent fees received exceed
expenses, including indirect expenses such as overhead, ALPScould be said to
have received a profit. For example, if ALPS pays $1 for distribution-related
expenses for Class II of the Prime Fund and receives $2 under the Plan, the $1
difference could be said to be a profit for ALPS. (Because ALPS is reimbursed
for its out-of-pocket direct promotional expenses, the Plan also could be
construed as a reimbursement plan. Until the issue is resolved by the SEC,
unreimbursed expenses incurred in one year will not be carried over to a
subsequent year.) If after payment by ALPS for marketing and distribution there
are any remaining fees attributable to the Plan, these may be used as ALPS may
elect. Since the amount payable under the Plan will be commingled with ALPS'
general funds, including the revenues it receives in the conduct of its
business, it is possible that certain of ALPS' overhead expenses will be paid
out of Plan fees and that these expenses may include items such as the costs of
leases, depreciation, communications, salaries, training and supplies. The
Prime Fund believes that such expenses, if paid, will be paid only indirectly
out of the fees being paid under the Plan.
OTHER INFORMATION
The Trust's Registration Statement, including the Prospectuses, the
Statement of Additional Information and the exhibits filed therewith, may be
examined at the office of the SEC in Washington, D.C. Statements contained in
the Prospectuses or the Statement of Additional Information as to the contents
of any contract or other document referred to herein or in the Prospectuses are
not necessarily complete, and, in each instance, reference is made to the copy
of such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference.
CUSTODIAN AND SUB-CUSTODIAN
State Street Bank & Trust Company of Connecticut, N.A. acts as Custodian
for the Trust. The Custodian, among other things, maintains a custody account
or accounts in the name of the Funds; receives and delivers all assets for the
Funds upon purchase and upon sale or maturity; collects and receives all income
and other payments and distributions on account of the assets of the Funds and
pays all expenses of the Funds. For its services as Custodian, State Street
receives an asset-based fee and transaction charges. State Street Bank and
Trust Company serves as Sub-Custodian for the Trust. The Administrative
Services Agreement between ALPS Mutual Fund Services and the Trust currently
provides that the asset-based fee and transaction costs of the Trust's Custodian
and Sub-Custodian be paid by ALPS Mutual Fund Services.
EXPERTS
Deloitte & Touche LLP has been selected as the independent accountants for
the Trust. Deloitte & Touche provides audit services, tax return preparation
and assistance and consultation in connection with review of certain SEC
filings. Deloitte & Touche's address is 555 Seventeenth Street, Suite 3600,
Denver, Colorado 80202.
FINANCIAL STATEMENTS
The Treasury and Government Funds' financial statements and financial
highlights for the fiscal year ended April 30, 1998 are included in the Trust's
Annual Report which is a separate report supplied independent of this Statement
of Additional Information. The Prime Fund had not commenced operations as of
April 30, 1998. The Treasury and Government Funds' financial statements and
financial highlights are incorporated herein by reference.
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