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As filed with the Securities and Exchange Commission on May 8, 2000
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1933 Act Registration No. 33-72424
1940 Act Registration No. 811-8194
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x
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Pre-Effective Amendment No.
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Post-Effective Amendment No. 17 x
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
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Amendment No. 19 x
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(Check appropriate box or boxes.)
FINANCIAL INVESTORS TRUST
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(Exact name of Registrant as Specified in Charter)
370 17th Street, Suite 3100
Denver, CO 80202
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(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 623-2577
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Russell C. Burk, Secretary
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
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(Name and Address of Agent of Service)
Copy to:
Lester Woodward, Esq.
Davis, Graham & Stubbs LLP
370 17th Street, Suite 4700
Denver, CO 80202
Approximate Date of Proposed As soon as practicable after the effective
Public Offering: date of this Amendment
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
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x on May 8, 2000 pursuant to paragraph (b)
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60 days after filing pursuant to paragraph (a)(1)
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on____________, pursuant to paragraph (a)(1)
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75 days after filing pursuant to paragraph (a)(2)
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on (date) pursuant to paragraph (a)(2)
- --
If appropriate, check the following box:
_ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
Registrant registered an indefinite number of shares pursuant to regulation
24f-2 under the Investment Company Act of 1940 on July 21, 1999.
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INTERSTATE FUND
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR PASSED UPON THE ACCURACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospectus
Dated May 8, 2000
AN INVESTMENT IN THIS FUND:
o IS NOT FDIC INSURED;
o MAY LOSE VALUE; AND
o IS NOT GUARANTEED BY A BANK.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Investment Objective, Principal Strategies and Risks................................................3
Performance.........................................................................................3
Fees and Expenses of the Fund.......................................................................4
Other Investment Strategies and Risks Related to the Fund...........................................5
Investment Adviser..................................................................................6
How Do I Invest in the Fund?........................................................................7
Distribution Plan..................................................................................12
Financial Highlights...............................................................................12
</TABLE>
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is 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. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
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INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
INVESTMENT OBJECTIVES -- The Interstate Fund (the "Fund") seeks long-term
capital appreciation.
PRINCIPAL INVESTMENT STRATEGIES -- The Fund is diversified and will invest at
least 75% of its total assets in common stocks of U. S. companies with market
capitalizations comparable to those in the Standard & Poor's 500 Composite
Stock Price Index (the "S&P 500 Index"). The S&P 500 Index is a widely
recognized, unmanaged index of 500 companies' stocks whose average market
capitalization as of March 31, 2000 was $25 billion, and whose range of
capitalization was between approximately $320 million and $553 billion.
Interstate Advisors, Inc. (the "Adviser") selects investments for the Fund's
portfolio by examining a company's earnings trend and expected growth rates.
Additionally, the Adviser examines the sustainability of that company's growth
rate, its industry leadership and trends, as well as the company's management
and product development.
PRINCIPAL INVESTMENT RISKS -- The principal risks of investing in this Fund
are:
o STOCK MARKET RISK - The value of the stocks and other
securities owned by the Fund will fluctuate depending on the
performance of the companies that issued them, general market
and economic conditions, and investor confidence. In
addition, if the Adviser's assessment of a company's
potential is not correct, the securities in the Fund may
decrease in value.
o INVESTMENT STYLE RISK - Market performance tends to
fluctuate, and during various periods, certain investment
strategies may fall out of favor. If the market is not
favoring the Fund's style of investing, the Fund may lose
money.
An investment in the Fund is not a bank deposit and is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any
government agency. Additionally, the value of the Fund's shares, like stock
prices generally, will fluctuate within a wide range, so an investor in the
Fund could lose money over short or even long periods.
For more information about the risk factors identified above, please refer to
the section entitled "Other Investment Strategies and Risks Related to the
Fund" later in this prospectus. The Statement of Additional Information ("SAI")
contains more specific information about the risks associated with investing in
the Fund.
PERFORMANCE
There is no performance information for the Fund because it has not completed a
full calendar year of operations.
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FEES AND EXPENSES OF THE FUND
The information in this section describes the fees and expenses that you may
pay if you buy and hold shares of the Fund. The Fund's fees and expenses are
based upon estimates of the operating expenses for the Fund's initial year of
operation.
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption None
Exchange None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund Assets)
Management Fees (1) 1.00%
Distribution (12b-1) Fees 0.25%
Other Expenses (1) 0.77%
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Total Annual Fund Operating Expenses 2.02%
Fee Waiver and/or Expense Reimbursement (1) (.52)%
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Net Annual Fund Operating Expenses (1) 1.50%
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(1) The Fund's Adviser has contractually agreed to waive a portion of the
investment advisory fees and/or to reimburse other expenses for the Fund so
that Net Annual Fund Operating Expenses will be no more than 1.50% for the
fiscal year ended April 30, 2001.
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes a 5% return each year and that the Fund's operating
expenses will remain the same. However, after one year the example does not
take into consideration the Adviser's agreement to waive fees. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
ONE YEAR THREE YEARS
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INTERSTATE FUND $153 $584
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OTHER INVESTMENT STRATEGIES AND RISKS RELATED TO THE FUND
The principal investment strategies and risks of the Fund have been described
earlier in this Prospectus. This section discusses other strategies that may be
used by the Fund and provides in more detail the risks associated with those
strategies. Although the Adviser may not always use all of the different
techniques and investments described below, some of these techniques are
designed to help reduce the risks associated with the Fund. The Statement of
Additional Information contains more detailed information about the Fund's
investment policies and risks.
CONVERTIBLE SECURITIES RISK - The Fund may also invest in convertible
securities. Convertible securities have characteristics of both fixed income
and equity securities. The value of the convertible security may move with the
market value of the underlying stock, but may also be adversely affected by
interest rates, credit quality of the issuer and any call provisions.
HEDGING RISK -- Hedging is a strategy designed to offset investment risks.
Hedging activities include, among other things, the use of forwards, options
and futures. There are risks associated with hedging activities, including:
o The success of a hedging strategy may depend on an ability to
predict movements in the prices of individual securities,
fluctuations in markets, and movements in interest and
currency exchange rates.
o There may be an imperfect or no correlation between the
changes in market value of the securities held by the Fund
and the prices of forward contracts, futures and options on
futures.
o There may not be a liquid secondary market for a futures
contract or option.
o Trading restrictions or limitations may be imposed by an
exchange and government regulations may restrict trading in
currencies, futures contracts and options.
LEVERAGING RISK - If the Fund borrows money to buy securities (leverages) and
the prices of those securities decrease, or if the cost of borrowing exceeds
any increases in the prices of those securities, the net asset value of the
Fund's shares will decrease faster than if the Fund had not used leverage. To
repay borrowings, the Fund may have to sell securities at a time and at a price
that is unfavorable to the Fund. Interest on borrowings is an expense the Fund
would not otherwise incur.
SHORT SALES RISK - Short sales are transactions in which the Fund sells a
security it does not own. To complete a short sale, the Fund must borrow the
security to deliver to the buyer. The Fund is then obligated to replace the
borrowed security by purchasing the security at the market price at the time of
replacement. This price may be more or less than the price at which the
security was sold by the Fund. If the Fund sells a security short, and the
security increases in value, the Fund will have to pay the higher price to
purchase the security. Since there is no limit on how much the price of the
security can increase, the Fund's exposure is unlimited. The more the Fund pays
to purchase the security, the more it will lose on the transaction and the more
the price of your shares will be affected. The Fund will also incur transaction
costs to engage in this practice.
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OTHER INVESTMENTS - In addition to the non-principal investments and strategies
described in this prospectus, the Fund may also invest in other securities, use
other strategies and engage in other investment practices. These investments
and strategies, as well as those described in this prospectus, are described in
detail in the Statement of Additional Information. Of course, the Trust cannot
guarantee the Fund will achieve its investment goal.
The investments and strategies described in this prospectus are those that the
Adviser uses under normal conditions. During unusual economic, market,
political or other adverse market conditions, the Fund may invest up to 100% of
its assets in short-term high quality debt instruments that would not
ordinarily be consistent with the Fund's principal investment strategies. The
Fund will do so only if the Adviser believes that the risk of loss outweighs
the opportunity for achieving the Fund's investment objective. If the Adviser
employs this strategy, the Fund may not achieve its investment objective.
INVESTMENT ADVISER
Interstate Advisors, Inc. ("Adviser") acts as the investment adviser to the
Fund and will be paid an advisory fee at an annual rate of 1.00% of the average
daily net asset value of the Fund up to $500 million, 0.75% of the average
daily net asset value of the Fund on the next $500 million, and 0.50% of the
average daily net asset value of the Fund in excess of $1 billion. The
Adviser's address is 125 TownPark Drive, Suite 300, Kennesaw, Georgia 30144.
The Adviser manages the investment and reinvestment of the assets of the Fund
and continuously reviews, supervises and administers the Fund's investments.
The Adviser is responsible for placing orders for the purchase and sale of the
Fund's investments directly with brokers and dealers selected by it in its
discretion.
The managers responsible for making investment decisions are Arthur D. Lyons
and Jerry J. Hodges. Each manager has 20 years experience in the investment
industry and brings a broad base of knowledge, experience, ideas, and expertise
to the Fund's management.
Mr. Lyons earned his B.A. degree from Samford University in Birmingham,
Alabama, in 1979. Since 1980, Mr. Lyons has held positions with such notable
Wall Street firms as Merrill Lynch, E.F. Hutton, Prudential Securities and
PaineWebber as investment representative, pension consultant, trader and
portfolio manager. In 1996, while Vice President at NewCrest Advisors (a
subsidiary organization of PaineWebber), Mr. Lyons was responsible for creating
and managing a convertible securities hedging program and an equity trading
program. In 1999, Mr. Lyons formed LHM Trading, a proprietary trading firm.
Mr. Hodges finished his formal education in 1967 at Arkansas State University
in Business and Accounting. He has been actively involved in the futures and
equity markets as a trader, broker and commodity-trading adviser (CTA). In 1984
he left Prudential - Bache to form his own firm, Futures Technology, which he
is still President of today. Mr. Hodges purchased Security Market Research
(SMR) a stock and commodity charting service in 1989. SMR provides research to
some of the country's most successful traders. Mr. Hodges is still actively
involved with SMR in its research efforts.
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HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE?
MINIMUM INITIAL INVESTMENT
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New Account $ 1,000
IRA Account $ 1,000
Systematic Investment Program $ 250
Systematic Withdrawal Program $10,000
As described below, you may purchase shares of the Fund directly from the Fund,
or through an authorized broker or investment adviser. Your orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good form. Your payment will be
invested in full and fractional shares of the Fund. Orders transmitted to the
Fund in proper form prior to the close of business (normally 4:00 p.m. Eastern
Time) will be executed that day. You will not receive certificates for shares
that you purchase. ALPS Mutual Funds Services, Inc. ("ALPS") serves as the
Fund's Transfer Agent and maintains records of each shareholder's holdings of
fund shares. Your initial investment in the Fund must be preceded or
accompanied by a completed, signed application. The Fund reserves the right to
reject any purchase.
INVESTING DIRECTLY WITH THE FUND
You can invest in the Fund directly by using any of the methods described
below:
BY MAIL. Make your check payable to the INTERSTATE FUND and mail it, along with
the Account Application (if your purchase is an initial investment). Third
party and foreign checks will not be accepted. For existing accounts please
include the Fund name and your account number on all checks. The check should
be mailed to:
Interstate Fund
PMB 603
303 16th Street, Suite #016
Denver, CO 80202-5657
BY WIRE. You may purchase shares by wire transfer from your bank account to
your Interstate Fund account. There is a $1,000 minimum for purchases by wire.
To place a purchase by wire, please call 1-888-761-9525 to speak with a
representative. To initiate your wire transaction, contact your depository
institution and instruct them to wire Federal Funds (monies transferred from
one bank to another through the Federal Reserve System with same-day
availability) to:
State Street Bank & Trust Co.
ABA #011000028
Interstate Fund
Credit DDA#34985176
(Account Registration)
(Account Number)
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The Fund may at its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. The Fund reserves the
right to suspend the sale of shares, or to reject any purchase order, including
orders in connection with exchanges, for any reason.
INVESTING THROUGH YOUR BROKER OR INVESTMENT ADVISER
To purchase shares through authorized brokers and investment advisers, simply
complete an Account Application and contact your broker or investment adviser
with instructions as to the amount you wish to invest. Your broker will then
contact the Fund to place the order on your behalf. Authorized brokers and
investment advisers may impose additional requirements and charges for the
services rendered.
Your orders received by the Fund prior to the close of business (normally 4:00
p.m. Eastern Time) will be executed that day. Brokers who receive your orders
are obligated to transmit them promptly. You will receive written confirmation
of your order within a few days of receipt of instructions from your broker.
HOW DO I REDEEM FUND SHARES?
Shareholders may redeem their shares, in whole or in part, on each day the Fund
is valued (see the section entitled "HOW ARE FUND SHARES VALUED?" later in this
Prospectus). Shares will be redeemed at the net asset value next determined
after a redemption request has been received by the Fund.
A redemption is a tax reportable transaction and any gain or loss is a taxable
event. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON
THIS INVESTMENT?" later in this Prospectus for more information.
Where the shares to be redeemed have been purchased by check or by ACH, the
payment of redemption proceeds may be delayed until the purchase has cleared.
Shareholders may avoid this delay by investing through wire transfers of
Federal Funds. Prior to the time the shares are redeemed, dividends on the
shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than customary weekend or holiday closings, or if an emergency condition, as
determined by the SEC, merits such action, the Fund may suspend redemptions or
postpone payment dates beyond the normal seven day redemption period.
To ensure acceptance of your redemption request, it is important to follow the
procedures described below. Although the Fund has no present intention to do
so, the Fund reserves the right to refuse or to limit the frequency of any
telephone, wire or bank transfer redemptions. It may be difficult to make
contact by telephone during periods of severe market or economic change.
Shareholders should consider redeeming by mail during such times.
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The Fund may modify or terminate certain redemption services and provisions at
any time. If the Fund terminates any particular service, it will do so only
after giving written notice to shareholders. Redemption by mail will always be
available to shareholders.
You can redeem your shares using any of the methods described below:
REDEEMING YOUR SHARES DIRECTLY FROM THE FUND
BY MAIL. You may redeem your shares by sending a letter directly to the Fund.
To be accepted, a letter requesting redemption must include:
o the Fund name and account registration from which you are
redeeming shares;
o your account number;
o the amount to be redeemed; and
o an authorized signature along with a signature guarantee (if
required).
A signature guarantee is designed to protect you, the Fund, and its agents from
fraud. Your written request requires a signature guarantee if the check is
being mailed to an address that has been changed within the last 30 days, if
the check is not being mailed to the address on your account, or if the check
is not being made out to the account owner. The following institutions should
be able to provide you with a signature guarantee: banks, broker-dealers,
credit unions (if authorized under state law), securities exchanges and
associations, clearing agencies, and savings associations. A signature
guarantee may not be provided by a notary public.
BY TELEPHONE. If you have established the telephone redemption privilege on
your Account Application, you may redeem your shares by calling the Fund at
1-888-761-9525. You should be prepared to give the telephone representative the
following information:
o your account number, social security number and account
registration;
o the Fund name from which you are redeeming shares; and
o the amount to be redeemed.
The telephone conversation may be recorded to protect you and the Fund. The
Fund employs reasonable procedures to confirm that instructions communicated to
its representatives by telephone are genuine. If the Fund fails to employ such
reasonable procedures, it may be liable for any loss, damage or expense arising
out of any telephone transactions purporting to be on a shareholder's behalf.
However, if the Fund acts on instructions it reasonably believes to be genuine,
you will bear the loss.
You cannot redeem shares held in IRAs via the telephone.
REDEEMING YOUR SHARES USING AN AUTHORIZED BROKER OR INVESTMENT ADVISER
You may redeem your shares by contacting your authorized broker or investment
adviser and instructing them to redeem your shares. They will then contact ALPS
and place a redemption order on your behalf.
METHODS OF REDEMPTION PAYMENTS
BY CHECK. Unless otherwise instructed, a check will be issued to the address of
record on your account. For your protection, telephone redemptions by check
will be suspended for a period of 30 days following an address change given
over the telephone.
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BY WIRE. You may instruct the Fund to send your redemption proceeds via Federal
wire ($1,000 minimum per transaction) to your personal bank.
Wire redemptions can be made only if the privilege has been established on your
Account Application and you have attached a copy of a voided check. You may
change the bank account designated to receive an amount redeemed at any time by
sending a letter of instruction with a signature guarantee to the Transfer
Agent. Your bank may charge you a fee for receiving a wire payment on your
behalf.
LARGE REDEMPTIONS
It is important that you call the Fund before you redeem a large dollar amount.
The Fund must consider the interests of all fund shareholders and so reserves
the right to delay delivery of your redemption proceeds--up to seven days--if
the amount will disrupt the Fund's operations or performance. If you redeem
more than $250,000 worth of Fund shares within any 90-day period, the Fund
reserves the right to pay part or all of the redemption proceeds above $250,000
in-kind, i.e., in securities, rather than in cash. If payment is made in-kind,
you may incur brokerage commissions if you elect to sell the securities for
cash.
INVOLUNTARY SALES OF YOUR SHARES
If your account balance drops below $500 because of redemptions, you may be
required to sell your shares. But, you will always be given at least 60 days
written notice to give you time to add to your account and avoid the sale of
your shares.
WHAT ADDITIONAL SERVICES ARE OFFERED BY THE FUND?
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program offers a simple
way to establish and maintain a consistent investment program. You may arrange
automatic transfers (minimum $50 per transaction) from your bank account to
your Fund account on a periodic basis by simply completing the Automatic
Investment Program section of your Account Application. When you participate in
this program, the minimum initial investment in the Fund is $250. You may
change the amount of your automatic investment, skip an investment, or stop the
Automatic Investment Program by calling the Fund at 1-888-761-9525 at least
three business days prior to your next scheduled investment date.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund account balance is $10,000 or more,
you may elect to have periodic redemptions made from your account on a monthly,
quarterly, semi-annual or annual basis by completing the Systematic Withdrawal
Plan section of the Account Application. The minimum periodic withdrawal is
$100 and the transaction normally will be executed on the fifth or twentieth
day of the selected month(s). You may request that these payments be sent to a
predesignated bank account or other designated party. Depending on the size of
the payment requested and fluctuation in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or
even exhaust your account. If a shareholder participates in the Systematic
Withdrawal Plan, all dividends are automatically reinvested unless the
shareholder directs otherwise.
INDIVIDUAL RETIREMENT ACCOUNTS. The Fund may be used as a funding medium for
traditional and Roth IRAs. In addition, a traditional or Roth IRA may be
established through a custodial account with the Fund. Completion of a special
application is required in order to create such an account, and the minimum
initial investment for an IRA is $1,000. Contributions to IRAs are subject to
the limits and conditions established by the Internal Revenue Service. For more
information, call the Fund at 1-888-761-9525 or your tax adviser.
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Additional account level fees are imposed for IRA accounts.
WHAT STATEMENT AND REPORTS DO I RECEIVE FROM THE FUND?
You will receive a quarterly statement and a confirmation after every
transaction that affects your share balance or account registration. A
statement with tax information will be mailed to you by January 31 of each tax
year and also will be filed with the IRS. At least twice a year, you will
receive the Fund's financial statements. Please write to the Fund at PMB 603,
303 16th Street, Suite 016, Denver, Colorado 80202-5657 or call the Fund at
1-888-761-9525 to request additional copies of these reports.
HOW ARE FUND SHARES VALUED?
The price at which you buy or sell fund shares is the share price or net asset
value (NAV). The NAV for the Fund is determined by adding the value of the
Fund's investments, cash and other assets, deducting liabilities, and then
dividing that value by the total number of the shares outstanding. The Fund's
NAV is calculated at the close of the regular trading session of the New York
Stock Exchange (normally 4:00 p.m. Eastern Time) each day that the Exchange is
open.
When the Fund calculates the NAV for the Fund shares, it values the securities
it holds at market value. Sometimes market quotes for some securities are not
available or are not representative of market value. Examples would be when
events occur that materially affect the value of a security at a time when the
security is not trading or when the securities are illiquid. In that case,
securities may be valued in good faith at fair value, using consistently
applied procedures decided on by the Trustees of the Fund.
For more information please refer to the SAI.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT?
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. Any net capital gains realized are normally distributed
in December. Income dividends for the Fund, if any, are also declared and paid
in December.
FEDERAL TAXES. Distributions of gains from the sale of assets held by the Fund
for more than one year generally are taxable to shareholders at the applicable
capital gains rate, regardless of how long they have owned their fund shares.
Distributions from other sources generally are taxed as ordinary income. A
portion of the Fund's dividends may qualify for the dividends-received
deduction for corporations. Distributions are taxable when they are paid,
whether taken in cash or reinvested in additional shares, except that
distributions declared in October, November or December and paid in January are
taxable as if paid on December 31. The Fund will send each shareholder an IRS
Form 1099-DIV by January 31.
"BUYING A DIVIDEND." When shares are purchased just before a distribution
("buying a dividend"), the share price will reflect the amount of the upcoming
distribution. Consequently, a portion of the share price will be received back
as a taxable distribution.
OTHER TAX INFORMATION. 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 generally
affecting the Fund and its shareholders. In addition to Federal tax,
distributions may be subject to state or local taxes. Shareholders
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should consult their tax advisers for details and up-to-date information on the
tax laws in your state to determine whether the Fund is suitable given your
particular tax situation.
When you sign your Account Application, you will be asked to certify that your
taxpayer identification number is correct and that you are not subject to
backup withholding for failing to report income to the IRS. If you do not
comply with IRS regulations, the IRS can require the Fund to withhold 31% of
taxable distributions from your account.
DISTRIBUTION PLAN
The Trustees have adopted a plan of distribution pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, for the Fund (the "Distribution
Plan"). The Distribution Plan permits the use of portfolio assets to compensate
ALPS for its services and costs in distributing Fund shares and servicing
shareholder accounts.
Under the Distribution Plan, ALPS receives an amount up to .25% of the average
net assets of the Fund. All or a portion of the fees paid to ALPS under the
Distribution Plan may, in turn, be paid to certain broker-dealers, investment
advisers, and other third parties as compensation for selling Fund shares and
for providing ongoing sales support services.
Because the fees paid under the Distribution Plan are paid out of portfolio
assets on an on-going basis, over time these fees will increase the cost of
your investment and may cost you more than other types of sales charges.
FINANCIAL HIGHLIGHTS
There are no Financial Highlights for the Fund because it has not completed a
fiscal year of operations.
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ADDITIONAL INFORMATION ABOUT THE FUND
If you would like more information about the Fund, the following additional
information is available free upon request:
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI contains additional information about all aspects of the Fund. A
current SAI has been filed with the Securities and Exchange Commission (the
"SEC") and is incorporated herein by reference. For a copy of the SAI, write or
call the Fund at the address or phone number listed below.
Information about the Fund (including the SAI) also may be reviewed and copied,
upon payment of a duplicating fee, at the SEC's Public Reference Room in
Washington, D.C. You also can obtain this information, upon payment of a
duplicating fee, by writing to the Public Reference Section of the SEC,
Washington, D.C. 20549-6009. Copies of this information may also be obtained,
upon payment of a duplicating fee, by electronic request at the following e-mail
address: [email protected].
The SEC also maintains a Web site located at http://www.sec.gov that contains
the SAI, material incorporated herein by reference, and other information
regarding the Fund. For more information about the operation of the Public
Reference Room, please call the SEC at 1-202-942-8090.
ADMINISTRATOR & DISTRIBUTOR
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 3100
Denver, CO 80202
TO OBTAN THE SAI FOR THE FUND FREE OF CHARGE, OR TO
OBTAIN OTHER INFORMATION ABOUT THE FUND AND TO MAKE
SHAREHOLDER INQUIRIES, YOU MAY WRITE TO ALPS MUTUAL
FUNDS SERVICES AT 370 17TH STREET, SUITE 3100, DENVER,
COLORADO 80202 OR CALL ALPS AT 1-888-761-9525.
Investment Company Act File No. 811-8194
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INTERSTATE FUND
370 17th Street, Suite 3100
Denver, Colorado 80202
May 8, 2000
General & Account Information: 1-888-761-9525
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("SAI") is not a prospectus and is only
authorized for distribution when preceded or accompanied by the prospectus for
shares of the Interstate Fund (the "Fund") dated May 8, 2000 (the "prospectus").
This SAI contains additional and more detailed information than that set forth
in the prospectus and should be read in conjunction with the prospectus. The
prospectus may be obtained without charge by writing or calling the Fund at the
address and information number printed above.
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TABLE OF CONTENTS
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INVESTMENT POLICIES AND RISKS 1
Common Stocks 1
Convertible Securities 1
Lending of Portfolio Securities 2
Illiquid Securities 2
Borrowings and Leverage 3
Hedging and other Investment Techniques 3
Short Sales 8
Securities of Other Investment Companies 9
INVESTMENT RESTRICTIONS 10
MANAGEMENT 12
Trustees and Officers 12
Investment Adviser 15
Code of Ethics 16
Distribution of Fund Shares 16
Administrator, Transfer Agent, Bookkeeping and Pricing Agent 16
Fees and Expenses 17
DETERMINATION OF NET ASSET VALUE 17
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION 18
PORTFOLIO TRANSACTIONS 19
TAXATION 20
OTHER INFORMATION 21
Description of the Trust 21
Voting Rights 21
Custodian 22
Performance Information 22
Independent Accountants 23
Registration Statement 23
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INVESTMENT POLICIES AND RISKS
Under normal conditions, at least 75% of the Fund's total assets will
be invested in a diversified portfolio of common stocks and securities
convertible into common stocks of companies with market capitalizations
comparable to those in the Standard & Poor's 500 Composite Stock Price Index
(the "S&P 500 Index"). The Fund's Adviser selects common stocks based on a
number of factors, including historical and projected earnings growth, earnings
quality and liquidity, each in relation to the market price of the stock. Stocks
purchased for the Fund generally will be listed on a national securities
exchange or will be unlisted securities with an established over-the-counter
market.
The Fund is a diversified Fund as defined in the 1940 Act. A
diversified portfolio may not, with respect to 75% of its total assets, invest
more than 5% of its assets in the securities of one issuer. The Fund also
intends to satisfy the diversification requirements of the Internal Revenue Code
in order to qualify as a regulated investment company.
The prospectus discusses the investment objective of the Fund and the
policies to be employed to achieve that objective. This section contains
supplemental information concerning certain types of securities and other
instruments in which the Fund may invest, the investment policies and portfolio
strategies that the Fund may utilize, and certain risks attendant to such
investments, policies and strategies.
COMMON STOCKS
The Fund will invest in common stocks. Common stocks represent the
residual ownership interest in the issuer and are entitled to the income and
increase in the value of the assets and business of the entity after all of its
obligations and preferred stocks are satisfied. Common stocks generally have
voting rights. Common stocks fluctuate in price in response to many factors
including historical and prospective earnings of the issuer, the value of its
assets, general economic conditions, interest rates, investor perceptions and
market liquidity.
CONVERTIBLE SECURITIES
The Fund may invest up to 25% of its total assets in convertible
securities. A convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a prescribed
amount of common stock or other equity security of the same or a different
issuer within a particular period of time at a specified price or formula.
Convertible securities consequently often involve attributes of both debt and
equity instruments, and investment in such securities requires analysis of both
credit and stock market risks. A convertible security entitles the holder to
receive interest paid or accrued on debt or the dividend paid on preferred stock
until the convertible security matures or is redeemed, converted or exchanged.
Before conversion, convertible securities have characteristics similar to
nonconvertible income securities in that they ordinarily provide a stable stream
of income with generally higher yields than those of common stocks of the same
or similar issuers. Convertible securities rank senior to common stock in a
corporation's capital structure but are usually subordinated to comparable
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nonconvertible securities. Convertible securities may be subject to redemption
at the option of the issuer at a price established in the convertible security's
governing instrument and in some instances may be subject to conversion into or
exchanged for another security at the option of an issuer. The Fund will only
purchase convertible securities that have adequate protection parameters,
including an adequate capacity to pay interest and repay principal in a timely
manner.
LENDING OF PORTFOLIO SECURITIES
The Fund may lend securities to broker-dealers, banks or other
institutional borrowers pursuant to agreements requiring that the loans be
continuously secured by cash, securities of the U.S. government or its agencies,
or any combination of cash and such securities, as collateral equal to at least
100% of the market value at all times of the securities lent. Such loans will
not be made if, as a result, the aggregate amount of all outstanding securities
loans for the Fund exceed 33 1/3% of the value of its total assets taken at fair
market value. Collateral must be valued daily by the Fund's Adviser and the
borrower will be required to provide additional collateral should the market
value of the loaned securities increase. During the time portfolio securities
are on loan, the borrower pays the Fund any dividends or interest paid on such
securities. Loans are subject to termination by the Fund or the borrower at any
time. While the Fund does not have the right to vote securities on loan, it
intends to terminate the loan and regain the right to vote if this is considered
important with respect to the investment. The Fund will only enter into loan
arrangements with broker-dealers, banks or other institutions which its Adviser
has determined are creditworthy under guidelines established by the Trust's
Board of Trustees.
The Fund will continue to receive interest on the securities lent
while simultaneously earning interest on the investment of the cash collateral
in U.S. government securities. However, the Fund will normally pay lending fees
to such broker-dealers and related expenses from the interest earned on invested
collateral. There may be risks of delay in receiving additional collateral or
risks of delay in recovery of the securities or even loss of rights in the
collateral should the borrower of the securities fail financially. However,
loans are made only to borrowers deemed by the Adviser to be of good standing
and when, in the judgment of the Adviser, the consideration which can be earned
currently from such securities loans justifies the attendant risk. Either party
upon reasonable notice to the other party may terminate any loan.
ILLIQUID SECURITIES
The Fund will not invest more than 15% of its net assets in securities
that are illiquid. Illiquid securities would generally include repurchase
agreements and GICs with notice/termination dates in excess of seven days and
certain securities which are subject to trading restrictions because they are
not registered under the Securities Act of 1933, as amended (the "1933 Act").
The Fund may purchase securities which are not registered under the
1933 Act but which can be sold to "qualified institutional buyers" in accordance
with Rule 144A under the 1933 Act. Any such security will not be considered
illiquid so long as it is determined by the Board of Trustees or the Fund's
Adviser, acting under guidelines approved and monitored by the Board, that an
adequate trading market exists for that security. This investment practice could
have the effect of increasing the level of illiquidity in the Fund during any
period that qualified institutional buyers become uninterested in purchasing
these restricted securities.
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BORROWINGS AND LEVERAGE
The Fund may borrow money from banks (including the Fund's custodian
bank), subject to the limitations under the 1940 Act. The Fund will limit
borrowings and reverse repurchase agreements to an aggregate of 33 1/3% of the
Fund's total assets at the time of the transaction.
The Fund may employ "leverage" by borrowing money and using it to
purchase additional securities. Leverage increases both investment opportunity
and investment risk. If the investment gains on the securities purchased with
borrowed money exceed the interest paid on the borrowing, the net asset value of
the Fund's shares will rise faster than would otherwise be the case. On the
other hand, if the investment gains fail to cover the cost (including interest
on borrowings), or if there are losses, the net asset value of the Fund's shares
will decrease faster than would otherwise be the case. The Fund will maintain
asset coverage of at least 300% for all such borrowings, and should such asset
coverage at any time fall below 300%, the Fund will be required to reduce its
borrowing within three days to the extent necessary to satisfy this requirement.
To reduce its borrowing, the Fund might be required to sell securities at a
disadvantageous time. Interest on money borrowed is an expense the Fund would
not otherwise incur, and the Fund may therefore have little or no investment
income during periods of substantial borrowings.
HEDGING AND OTHER INVESTMENT TECHNIQUES
The Fund may enter into transactions in options, futures and forward
contracts on a variety of instruments and indexes, in order to protect against
declines in the value of portfolio securities and increases in the cost of
securities to be acquired as well as to increase the Fund's return.
Options. The Fund may write (sell) "covered" put and call options and
buy put and call options, including securities index and foreign currency
options. A call option is a contract that gives to the holder the right to buy a
specified amount of the underlying security at a fixed or determinable price
(called the exercise or strike price) upon exercise of the option. A put option
is a contract that gives the holder the right to sell a specified amount of the
underlying security at a fixed or determinable price upon exercise of the
option. In the case of index options, exercises are settled through the payment
of cash rather than the delivery of property. A written call option is covered
if, for example, the Fund owns the underlying security covered by the call or,
in the case of a call option on an index, holds securities the price changes of
which are expected to substantially correlate with the movement of the index. A
written put option is covered if, for example, the Fund's segregate cash or
liquid securities with a value equal to the exercise price of the put option.
Options purchased or written by the Fund may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, it may be
difficult to
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enter into closing transactions with respect to such options. Such options and
the securities used as "cover" for such options, unless otherwise indicated,
would be considered illiquid securities.
In some instances in which the Fund has entered into agreements with
primary dealers with respect to the over-the-counter options it has written, and
such agreements would enable the Fund to have an absolute right to repurchase at
a pre-established formula price the over-the-counter option written by them, the
Fund would treat as illiquid only securities equal in amount to the formula
price described above less the amount by which the option is "in-the-money,"
i.e., the price of the option exceeds the exercise price.
Options are subject to certain risks, including the risk of imperfect
correlation between the option and the Fund's other investments and the risk
that there may not be a liquid secondary market for the option when the Fund
seeks to hedge against adverse market movements. This may cause the Fund to lose
the entire premium on purchased options or reduce their ability to effect
closing transactions at favorable prices.
The Fund will not write options if, immediately after such sale, the
aggregate value of the securities or obligations underlying the outstanding
options exceeds 50% of the Fund's total assets. The Fund will not purchase
options if, at the time of the investment, the aggregate premiums paid for
outstanding options will exceed 25% of the Fund's total assets.
The Fund may write covered call options both to reduce the risks
associated with certain of its investments and to increase total investment
return through the receipt of premiums. In return for the premium income, a Fund
loses any opportunity to profit from an increase in the market price of the
underlying securities, above the exercise price, while the contract is
outstanding, except to the extent the premium represents a profit. The Fund also
retains the risk of loss if the price of the security declines, although the
premium is intended to offset that loss in whole or in part. As long as its
obligations under the option continue, the Fund must assume that the call may be
exercised at any time and that the net proceeds realized from the sale of the
underlying securities pursuant to the call may be substantially below the
prevailing market price.
The Fund may enter into a "closing purchase transaction", by purchasing
an option identical to the one it has written, and terminate its obligations
under the covered call. The Fund will realize a gain (or loss) from a closing
purchase transaction if the amount paid to purchase a call option is less (or
more) than the premium received upon writing the corresponding call option. Any
loss resulting from the exercise or closing out of a call option is likely to be
offset in whole or in part by unrealized appreciation of the underlying security
owned by the Fund primarily because a price increase of a call option generally
reflects an increase in the market price of the securities on which the option
is based. In order to sell portfolio securities that cover a call option, the
Fund will effect a closing purchase transaction so as to close out any existing
covered call option on those securities. A closing purchase transaction for
exchange-traded options may be made only on a national securities exchange. A
liquid secondary market on an exchange may not always exist for any particular
option, or at any particular time, and, for some options, such as
over-the-counter options, no secondary market on an exchange may exist. If the
Fund is unable to effect a closing purchase transaction, it will not sell the
underlying security until the option expires or until it delivers the underlying
security upon exercise.
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The Fund may write put options to earn additional income in the form of
option premiums if it expects the price of the underlying securities to remain
stable or rise during the option period so that the option will not be
exercised. The Fund may also write put options if it expects a decline in the
price of the underlying securities and intends to exercise the option at a price
which, offset by the option premium, is less than the current price. The risk of
either strategy is that the price of the underlying securities may decline by an
amount greater than the premium received.
The Fund may effect a closing purchase transaction to realize a profit
on an outstanding put option or to prevent an outstanding put option from being
exercised. If the Fund is able to enter into a closing purchase transaction, it
will realize a profit (or loss) from that transaction if the cost of the
transaction is less (or more) than the premium received from the writing of the
option. After writing a put option, the Fund may incur a loss equal to the
difference between the exercise price of the option and the sum of the market
value of the underlying securities plus the premiums received from the sale of
the option.
The purchase of put options on securities enables the Fund to preserve,
at least partially, unrealized gains in an appreciated security in its portfolio
without actually selling the security. In addition, the Fund may continue to
receive interest or dividend income on the security.
The Fund may write call options on securities or securities indexes for
the purpose of providing a partial hedge against a decline in the value of its
portfolio securities. The Fund may write put options on securities or securities
indexes in order to earn additional income or (in the case of put options
written on individual securities) to purchase the underlying security at a price
below the current market price. If the Fund writes an option which expires
unexercised or is closed out by the Fund at a profit, it will retain all or part
of the premium received for the option, which will increase its gross income. If
the price of the underlying security moves adversely to the Fund's position, the
option may be exercised and the Fund will be required to sell or purchase the
underlying security at a disadvantageous price, or, in the case of index
options, delivery of an amount of cash, which loss may only be partially offset
by the amount of premium received.
The Fund may also purchase put or call options on securities and
securities indexes in order to hedge against changes in interest rates or stock
prices which may adversely affect the prices of securities that the Fund wants
to purchase at a later date, to hedge its existing investments against a decline
in value, or to attempt to reduce the risk of missing a market or industry
segment advance or decline. In the event that the expected changes in interest
rates or stock prices occur, the Fund may be able to offset the resulting
adverse effect on the Fund by exercising or selling the options purchased. The
premium paid for a put or call option plus any transaction costs will reduce the
benefit, if any, realized by the Fund upon exercise or liquidation of the
option. Unless the price of the underlying security or level of the securities
index changes by an amount in excess of the premium paid, the option may expire
without value to the Fund.
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An option on a securities index, unlike a stock option (which gives the
holder the right to purchase or sell a specified stock at a specified price)
gives the holder the right to receive a cash "exercise settlement amount" equal
to (i) the difference between the exercise price of the option and the value of
the underlying stock index on the exercise date, multiplied by (ii) a fixed
"index multiplier." A securities index fluctuates with changes in the market
values of the securities included in the index. For example, some securities
index options are based on a broad market index such as the S&P 500 or the NYSE
Composite Index, or a narrower market index such as the S&P 100. Indexes may
also be based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on stock indexes are
currently traded on the following exchanges, among others: The Chicago Board
Options Exchange, New York Stock Exchange, and American Stock Exchange. Options
on indexes of debt securities and other types of securities indexes are not
currently available. If such options are introduced and traded on exchanges in
the future, the Fund may use them.
The value of securities index options in any investment strategy
depends upon the extent to which price movements in the portion of the
underlying securities correlate with price movements in the selected securities
index. Perfect correlation is not possible because the securities held or to be
acquired by the Fund will not exactly match the composition of the securities
indexes on which options are written. In the purchase of securities index
options, the principal risk is that the premium and transaction costs paid by
the Fund in purchasing an option will be lost if the changes (increase in the
case of a call, decrease in the case of a put) in the level of the index do not
exceed the cost of the option. In writing securities index options, the
principal risk is that the Fund could bear a loss on the options that would be
only partially offset (or not offset at all) by the increased value or reduced
cost of the hedged securities. Moreover, in the event the Fund was unable to
close an option it had written, it might be unable to sell the securities used
as cover.
The Fund, for hedging purposes, may purchase and write options in
combination with each other to adjust the risk and return characteristics of a
Fund's overall position. For example, the Fund may purchase a put option and
write a covered call option on the same underlying instrument, in order to
construct a combined position whose risk and return characteristics are similar
to selling a futures contract. This technique, called a "collar," enables the
Fund to offset the cost of purchasing a put option with the premium received
from writing the call option. However, by selling the call option, the Fund
gives up the ability for potentially unlimited profit from the put option.
Another possible combined position would involve writing a covered call option
at one strike price and buying a call option at a lower price, in order to
reduce the risk of the written covered call option in the event of a substantial
price increase. Because combined options positions involve multiple trades, they
result in higher transaction costs and may be more difficult to open and close
out.
Futures Contracts and Forwards. A futures contract is a bilateral
agreement to buy or sell a security (or deliver a cash settlement price, in the
case of an index future) for a set price in the future. When the contract is
entered into, a good faith deposit, known as initial margin, is made with the
broker. Subsequent daily payments, known as variation margin, are made to and by
the broker reflecting changes in the value of the security or level of the
index. Futures contracts are authorized by boards of trade
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designated as "contracts markets" by the Commodity Futures Trading Commission
("CFTC"). Certain results may be accomplished more quickly, and with lower
transaction costs, in the futures market (because of its greater liquidity) than
in the cash market.
The Fund will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. Positions taken
in the futures markets are typically liquidated through offsetting transactions,
which may result in a gain or a loss, before delivery or cash settlement is
required. However, the Fund may close out a position by making or taking
delivery of the underlying securities wherever it appears economically
advantageous to do so.
Purchases of options on futures contracts may present less risk than
the purchase and sale of the underlying futures contracts, since the potential
loss is limited to the amount of the premium plus related transaction costs. A
call option on a futures contract gives the purchaser the right, in return for
the premium paid, to purchase a futures contract (assume a "long" position) at a
specified exercise price at any time before the option expires. A put option
gives the purchaser the right, in return for the premium paid, to sell a futures
contract (assume a "short" position), for a specified exercise price, at any
time before the option expires.
Positions in futures contracts may be closed out only on an exchange or
a board of trade which provides the market for such futures. Although the Fund
intends to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active market, there may not always be a liquid market,
and it may not be possible to close a futures position at that time; in the
event of adverse price movements, the Fund would continue to be required to make
daily cash payments of maintenance margin. Whenever futures positions are used
to hedge portfolio securities, however, any increase in the price of the
underlying securities held by the Fund may partially or completely offset losses
on the futures contracts.
If a broker or clearing member of an options or futures clearing
corporation were to become insolvent, the Fund could experience delays and might
not be able to trade or exercise options or futures purchased through that
broker. In addition, the Fund could have some or all of its positions closed out
without its consent. If substantial and widespread, these insolvencies could
ultimately impair the ability of the clearing corporations themselves. While the
principal purpose of engaging in these transactions is to limit the effects of
adverse market movements, the attendant expense may cause the Fund's returns to
be less than if the transactions had not occurred. Their overall effectiveness,
therefore, depends on the Adviser's accuracy in predicting future changes in
interest rate levels or securities price movements, as well as on the expense of
engaging in these transactions.
The Fund has the ability to short futures.
The Fund may purchase and sell stock index futures contracts to hedge
the value of the portfolio against changes in market conditions. The Fund may
also purchase put and call options on futures contracts and write "covered" put
and call options on futures contracts in order to hedge against changes in stock
prices. Although the Fund is authorized to invest in futures contracts and
related options with
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respect to non-U.S. instruments, they will limit such investments to those which
have been approved by the CFTC for investment by U.S. investors. The Fund may
enter into futures contracts and buy and sell related options, provided that the
futures contracts and related options investments are made for "bona fide
hedging" purposes, as defined under CFTC regulations. No more than 25% of the
Fund's total assets will be committed to initial margin deposits required
pursuant to futures contracts. Percentage investment limitations on the Fund's
investment in options on futures contracts are set forth above under "Options."
Bona fide Hedging. The Fund will only enter into options and futures
transactions for bona fide hedging purposes. The CFTC has defined bona fide
hedging in its Rule 1.3(z), which provides that the transaction must be
"economically appropriate to the reduction of risks in the conduct and
management of a commercial enterprise." Common uses of financial futures and
related options by the Funds that would satisfy the Rule include the following:
(1) to hedge various pertinent securities market risks (e.g. interest
rate movements, and broad based or specific equity or fixed-income market
movements);
(2) to establish a position as a temporary substitute for purchasing
or selling particular securities;
(3) to maintain liquidity while simulating full investment in the
securities markets.
SHORT SALES
The Fund intends from time to time to sell securities short. A short
sale is effected when it is believed that the price of a particular security
will decline, and involves the sale of a security which the Fund does not own in
the hope of purchasing the same security at a later date at a lower price. To
make delivery to the buyer, the Fund must borrow the security from a
broker-dealer through which the short sale is executed, and the broker-dealer
delivers such securities, on behalf of the Fund, to the buyer. The broker-dealer
is entitled to retain the proceeds from the short sale until the Fund delivers
to such broker-dealer the securities sold short. In addition, the Fund is
required to pay to the broker-dealer the amount of any dividends paid on shares
sold short.
To secure their obligation to deliver to such broker-dealer the
securities sold short, the Fund must segregate an amount of cash or liquid
securities equal to the difference between the market value of the securities
sold short at the time they were sold short and any cash or liquid securities
deposited as collateral with the broker in connection with the short sale (not
including the proceeds of the short sale). Furthermore, until the Fund replaces
the borrowed security, they must maintain daily the segregated assets at a level
so that (1) the amount deposited in it plus the amount deposited with the broker
(not including the proceeds from the short sale) will equal the current market
value of the securities sold short, and (2) the amount deposited in it plus the
amount deposited with the broker (not including the proceeds from the short
sale) will not be less than the market value of the securities at the time they
were sold short. As a result of these requirements, the Fund will not gain any
leverage merely by selling short,
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except to the extent that it earns interest on the immobilized cash or liquid
securities while also being subject to the possibility of gain or loss from the
securities sold short.
The Fund is said to have a short position in the securities sold until
they deliver to the broker-dealer the securities sold, at which time the Fund
receive the proceeds of the sale. The Fund will normally close out a short
position by purchasing on the open market and delivering to the broker-dealer an
equal amount of the securities sold short.
The amount of the Fund's net assets that will at any time be in the
type of deposits described above (that is, collateral deposits or segregated
assets) will not exceed 25%. These deposits do not have the effect of limiting
the amount of money that the Fund may lose on a short sale, as the Fund's
possible losses may exceed the total amount of deposits.
The Fund will realize a gain if the price of a security declines
between the date of the short sale and the date on which the Fund purchases a
security to replace the borrowed security. On the other hand, the Fund will
incur a loss if the price of the security increases between those dates. The
amount of any gain will be decreased and the amount of any loss increased by any
premium or interest that the Fund may be required to pay in connection with a
short sale. It should be noted that possible losses from short sales differ from
those that could arise from a cash investment in a security in that losses from
a short sale may be limitless, while the losses from a cash investment in a
security cannot exceed the total amount of the Fund's investment in the
security. For example, if the Fund purchases a $10 security, potential loss is
limited to $10; however, if the Fund sells a $10 security short, it may have to
purchase the security for return to the broker-dealer when the market value of
that security is $50, thereby incurring a loss of $40.
The Fund may also make short sales "against the box." A short sale is
"against the box" to the extent that the Fund contemporaneously owns or has the
right to obtain securities identical to those sold short without payment of
further consideration. Such short sales will also be subject to the limitations
on short sale transactions referred to above. Short sales "against the box"
result in a "constructive sale" and require the Fund to recognize any taxable
gain unless an exception to the constructive sale rule applies.
In addition to enabling the Fund to hedge against market risk, short
sales may afford the Fund an opportunity to earn additional current income to
the extent the Fund is able to enter into arrangements with broker-dealers
through which the short sales are executed to receive income with respect to the
proceeds of the short sales during the period the Fund's short positions remain
open. The Fund believe that many broker-dealers will be willing to enter into
such arrangements, but there is no assurance that the Fund will be able to enter
into such arrangements to the desired degree.
SECURITIES OF OTHER INVESTMENT COMPANIES
Subject to 1940 Act limitations and pursuant to applicable SEC
requirements, the Fund may invest in securities issued by other investment
companies which invest in high quality, short-term debt securities and which
determine their net asset value per share based on the amortized cost or
penny-rounding method. As a shareholder of another investment company, the Fund
would bear, along with other
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shareholders, its pro rata portion of that company's expenses, including
advisory fees. These expenses would be in addition to the advisory and other
expenses that the Fund bears directly in connection with its own operations.
Investment companies in which the Fund may invest may also impose a sales or
distribution charge in connection with the purchase or redemption of their
shares and other types of commissions or charges. Such charges will be payable
by the Fund and, therefore, will be borne indirectly by its shareholders.
The Fund may invest in securities issued by other investment companies
as described in the Prospectus. The Fund currently intends to limit its
investments in securities issued by other investment companies so that, as
determined immediately after a purchase of such securities is made: (i) not more
than 5% of the value of the Fund's total assets will be invested in the
securities of any one investment company; (ii) not more than 10% of the value of
its total assets will be invested in the aggregate in securities of investment
companies as a group; and (iii) not more than 3% of the outstanding voting stock
of any one investment company will be owned by the Fund or by the Trust as a
whole.
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
The Fund is subject to the following investment restrictions, which may
be changed only by a vote of a majority of the Fund's outstanding shares:
(a) Borrow money except (i) the Fund may borrow from banks (as
defined in the 1940 Act) or through reverse repurchase
agreements in amounts up to 33 1/3% of its total assets
(including the amount borrowed), (ii) the Fund may, to the
extent permitted by applicable law, borrow up to an additional
5% of its total assets for temporary purposes, (ii) the fund
may obtain such short-purchases and sales of fund securities,
(iv) the Fund may purchase securities on margin to the extent
permitted by applicable law.
(b) the Fund may not issue senior securities, except as may be
permitted by the 1940 Act Laws, Interpretations and
Exemptions.
(c) the Fund may not underwrite the securities of other
issuers. This restriction does not prevent the Fund from
engaging in transactions involving the acquisition,
disposition or resale of its portfolio securities, regardless
of whether the Fund may be considered to be an underwriter
under the Securities Act of 1933.
(d) the Fund will not make investments that will result in the
concentration (as that term may be defined or interpreted by
the 1940 Act Laws, Interpretations and Exemptions) of its
investments in the securities of issuers primarily engaged in
the same industry. This restriction does not limit the Fund's
investments in (i) obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities, or (ii)
tax-exempt obligations issued by governments or political
subdivisions of governments. In complying with this
restriction, the Fund will not consider a bank-issued guaranty
or financial guaranty insurance as a separate security.
10
<PAGE> 27
(e) the Fund may not purchase real estate or sell real estate
unless acquired as a result of ownership of securities or
other instruments. This restriction does not prevent the Fund
from investing in issuers that invest, deal, or otherwise
engage in transactions in real estate or interests therein, or
investing in securities that are secured by real estate or
interests therein.
(f) the Fund may not purchase physical commodities or sell
physical commodities unless acquired as a result of ownership
of securities or other instruments. This restriction does not
prevent the Fund from engaging in transactions such as
futures, contracts and options thereon or investing in
securities that are secured by physical commodities.
(g) the Fund may not make any loan including, but not limited
to, personal loans or loans to persons who control or are
under the common control of the Fund, except to the extent
permitted by 1940 Act Laws, Interpretations and Exemptions.
This restriction does not prevent a Fund from purchasing debt
obligations, entering into repurchase agreements, loaning its
assets to broker-dealers or institutional investors, or
investing in loans, including assignments and participation
interests.
(h) the Fund may, notwithstanding any other fundamental
investment policy or restriction, invest all of its assets in
the securities of a single open-end management investment
company with substantially the same fundamental investment
objectives, policies and restrictions as the Fund.
The investment restrictions set forth above provide the Fund with the
ability to operate under new interpretations of the 1940 Act or pursuant to
exemptive relief from the SEC without receiving prior shareholder approval of
the change. Even though the Fund has this flexibility, the Board of Trustees of
the Trust has adopted internal guidelines for the Fund relating to certain of
these restrictions which the adviser must follow in managing the Fund. Any
changes to these guidelines, which are set forth below, require the approval of
the Board of Trustees, but do not require a shareholder vote.
1. In complying with the borrowing restriction set forth in (a), the
Fund may borrow money in an amount not exceeding 33 1/3% of its total
assets (including the amount borrowed) less liabilities (other than
borrowings). The Fund may borrow from banks, broker/dealers or other
investment companies.
2. In complying with the concentration restriction set forth in (d)
above, the Fund may invest up to 25% of its total assets in the
securities of issuers whose principal business activities are in the
same industry.
11
<PAGE> 28
3. In complying with the lending restrictions set forth in (g) above,
the Fund may lend up to 33 1/3% of its total assets.
4. Notwithstanding the restriction set forth in (h) above, the Fund
may not invest all of its assets in the securities of a single
open-end management investment company with the same fundamental
investment objectives, policies and limitations as the Fund.
If a percentage restriction is adhered to at the time of investment, a
later change in percentage resulting from changes in values of assets will not
be considered a violation of the restriction.
MANAGEMENT
TRUSTEES AND OFFICERS
The Fund is a separate series under Financial Investors Trust (the
"Trust"). The Trust's Board of Trustees oversees the overall management of the
Fund and elects the officers of the Trust. 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, with the exception
of Mr. Lee and Mr. Maddaloni, were elected at a special meeting of shareholders
held March 21, 1997.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS**
TRUST
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
W. Robert Alexander (72)* Trustee, Chairman and Mr. Alexander, a member of the Board of Trustees since
President December 1993, is the Chief Executive 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.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE> 29
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS**
TRUST
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Mary K. Anstine (58) Trustee President/Chief Executive Officer, HealthONE Alliance,
Denver, CO; Former Executive Vice President, First
Interstate Bank of Denver. Ms. Anstine is currently a
Director of the Trust 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 (68) Trustee Mr. Crowder currently operates a marketing concern 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Martin J. Maddaloni (60) Trustee Mr. Maddaloni is General President of the United Association
of Journeymen and Apprentices of the Plumbing and Pipe
Fitting Industry of the United States and Canada (United
Association). Mr. Maddaloni is also Chairman of the United
Association's National Pension Fund, Treasurer for the
National Coordinating Committee for Multiemployer Plans
Board of Directors, and he serves as a Member on the Labor
Advisory Board for the American Income Life Insurance
Company (AIL), and a Director of Union Labor Life Insurance
Company (ULLICO). He has served the United Association in
various positions including International Vice President
(District 2), Special Representative, and International
Representative. He is deeply involved in charity work for
the Special Olympics, Diabetes/Dad's Day, and the Miami
Project to Cure Paralysis.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE> 30
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS**
TRUST
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
John R. Moran, Jr. (69) Trustee Mr. Moran is President of The Colorado Trust, a private
foundation trust 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. He is also a member 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.
- -----------------------------------------------------------------------------------------------------------------------------------
Robert E. Lee (64) Trustee Mr. Lee has been a Director of Storage Technology
Corporation since 1989 and of Equitable of Iowa since 1981.
Mr. Lee was the Executive Director of The Denver Foundation
from 1989 to 1996, and is currently the Executive Director
of Emeritus. Mr. Lee is also a Director of Meredith Capital
Corporation and Source Capital Corporation.
- -----------------------------------------------------------------------------------------------------------------------------------
H. David Lansdowne (52) Vice President President and CEO of Tempest, Isenhart, Chafee, Lansdowne
and Associates, Inc. since January, 1988. Mr. Lansdowne
joined Tempest, Isenhart as Director of Research in 1983.
- -----------------------------------------------------------------------------------------------------------------------------------
Robert Alder (57) Vice President Executive Vice President of Tempest, Isenhart, Chafee,
Lansdowne and Associates, Inc. since January, 1993.
- -----------------------------------------------------------------------------------------------------------------------------------
Russell C. Burk (41) Secretary Mr. Burk has been General Counsel of ALPS Mutual Funds
Services, Inc., the Administrator and Distributor, since
February 1999. Prior to joining ALPS, Mr. Burk served as
Securities Counsel for Security Life of Denver, A subsidiary
of ING Group. Prior to joining Security Life, Mr. Burk
served as General Counsel for RAF Financial Corporation,
member NASD.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 31
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME POSITION(S) HELD WITH THE PRINCIPAL OCCUPATION DURING THE PAST 5 YEARS**
TRUST
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Jeremy May (30) Treasurer Mr. May has been a Director of Mutual Fund Operations at
ALPS Mutual Funds Services, Inc. since October 1997. Prior
to joining ALPS, Mr. May was an auditor with Deloitte &
Touche LLP in their Denver office.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
**Except as otherwise indicated, each individual has held the office shown or
other offices in the same company for the last five years.
The 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 or
committee meeting. The Trustees are reimbursed for all reasonable out-of-pocket
expenses relating to attendance at meetings. Mr. Alexander is an interested
Trustee and receives no compensation from the Trust.
For the Trust's fiscal year ended April 30, 1999, the Trustees were
compensated as follows (Mr. Maddaloni was elected as a Trustee at the December
14, 1999 Trustees Meeting and therefore received no compensation during the
Trust's fiscal year ended April 30, 1999):
<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 $6,500(1) $0 $0 $6,500
- -----------------------------------------------------------------------------------------------------------------------------------
Edwin B. Crowder,
Trustee $6,500(1) $0 $0 $6,500
- -----------------------------------------------------------------------------------------------------------------------------------
Robert E. Lee $3,000(1) $0 $0 $3,000
Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
John R. Moran, Jr. $6,500(1) $0 $0 $6,500
Trustee
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Member of the Audit Committee.
</TABLE>
INVESTMENT ADVISER
Interstate Advisors, Inc. ("Interstate") serves as investment Adviser
to the Fund under an Advisory Agreement dated May 8, 2000. The Advisory
Agreement was approved by the Fund's sole shareholder prior to the commencement
of the Fund's operations. The Advisory Agreement provides that the Adviser shall
not be liable for any error of judgement or mistake of law or for any loss
suffered by the Fund in connection with the performance of the Advisory
Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from
15
<PAGE> 32
willful misfeasance, bad faith or gross negligence on the part of the Adviser in
the performance of its duties or from reckless disregard by the Adviser of its
duties and obligations thereunder.
Unless sooner terminated, the Advisory Agreement will continue in
effect with respect to the Fund until May 7, 2001 and from year to year
thereafter, subject to annual approval by the Fund's Board of Trustees, or by a
vote of the majority of the outstanding shares of the Fund and a majority of the
Trustees who are not parties to the Agreement or interested persons (as defined
in the 1940 Act) of any party by votes cast in person at a meeting called for
such purpose. The Advisory Agreement may be terminated by the Fund or the
Adviser on 60 days written notice, and will terminate immediately in the event
of its assignment.
CODE OF ETHICS
The Fund permits "Access Persons" as defined by Rule 17j-1 under the
1940 Act to engage in personal securities transactions, subject to the terms of
the Code of Ethics (the "Code") that has been adopted by the Fund's Board of
Trustees. Access Persons are required to follow the guidelines established by
the Code in connection with all personal securities transactions and are subject
to certain prohibitions on personal trading. The Fund's Adviser, pursuant to
Rule 17j-1 and other applicable laws, and pursuant to the Code, must adopt and
enforce its own Code of Ethics appropriate to its operations. The Board of
Trustees is required to review and approve the Code of Ethics for the Adviser
and Distributor. The Adviser is also required to report to the Fund's Board of
Trustees on a quarterly basis with respect to the administration and enforcement
of such Code of Ethics, including any violations thereof which may potentially
affect the Fund.
DISTRIBUTION OF FUND SHARES
Shares of the Fund are offered on a continuous basis through ALPS
Mutual Funds Services, Inc. ("ALPS"), 370 17th Street, Suite 3100, Denver, CO
80202, as Sponsor and Distributor of the Fund. ALPS also serves as administrator
and distributor of other mutual funds. As distributor, ALPS acts as the Fund's
agent to underwrite, sell and distribute shares in a continuous offering. ALPS
is compensated for its expenses from the Fund.
ADMINISTRATOR, TRANSFER AGENT, BOOKKEEPING AND PRICING AGENT
Pursuant to an Administration Contract, ALPS acts as Administrator for
the Fund. ALPS provides management and administrative services necessary for the
operation of the Fund, including, among other things, (i) preparation of
shareholder reports and communications, (ii) regulatory compliance, such as
reports to and filings with the Securities and Exchange Commission ("SEC") and
state securities commissions and (iii) general supervision of the operation of
the Fund, including coordination of the services performed by the Fund's
adviser, custodian, independent accountants, legal counsel and others. In
addition, ALPS furnishes office space and facilities required for conducting the
business of the Fund and pays the compensation of the Fund's officers, employees
and Trustees affiliated with ALPS.
16
<PAGE> 33
The Administration Agreement for the Fund was approved by the Board of
Trustees, including a majority of the Trustees who are not parties to the
contracts or interested persons of such parties, at its meeting held on March
13, 2000. At any time, the Administration Agreement is terminable with respect
to the Fund without penalty by vote of a majority of the Trustees who are not
"interested persons" of the Fund and who have no direct or indirect financial
interest in the Administration Agreement upon not more than 60 days written
notice to ALPS or by vote of the holders of a majority of the shares of the
Fund, or, upon 60 days notice by ALPS.
Under separate agreements, ALPS also serves as the transfer and
dividend dispersing agent of the Fund and the bookkeeping and pricing agent of
the Fund.
FEES AND EXPENSES
As compensation for advisory, services, the Adviser is paid a monthly
fee at an annual rate of 1.00% of the average daily net asset value of the Fund
up to $500 million, 0.75% of the average daily net asset value of the Fund on
the next $500 million, and 0.50% of the average daily net asset value of the
Fund in excess of $1 billion.
As compensation for management and administrative services, ALPS (the
"Administrator") is paid a monthly fee at the annual rate of the greater of
$45,000 per year or .050% of the average daily net asset value of the Fund.
DETERMINATION OF NET ASSET VALUE
As indicated under "How are Fund Shares Valued?" in the Prospectus, the
Fund's NAV is calculated at the close of the regular trading session of the New
York Stock Exchange (normally 4:00 p.m. New York Time) each day that the
Exchange is open. The Fund will be closed on the following holidays: New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Securities listed on an exchange or over-the-counter are valued on the
basis of the last sale prior to the time the valuation is made. If there has
been no sale since the immediately previous valuation, then the average of the
last bid and asked prices is used. Quotations are taken from the exchange where
the security is primarily traded. Portfolio securities which are primarily
traded on foreign exchanges may be valued with the assistance of pricing
services and are generally valued at the preceding closing values of such
securities on their respective exchanges, except that when an occurrence
subsequent to the time a foreign security is valued is likely to have changed
such value, then the fair value of those securities will be determined by
consideration of other factors by or under the direction of the Board of
Trustees. Also, it is possible that events can occur that have a significant
impact on the value of foreign securities at times when shareholders are unable
to purchase or redeem shares of the Funds.
Securities for which market quotations are not readily available are
valued at fair value as determined in good faith by or at the direction of the
Board of Trustees. Notwithstanding the above,
17
<PAGE> 34
bonds and other fixed-income securities are valued by using market quotations
and may be valued on the basis of prices provided by a pricing service approved
by the Board of Trustees. All assets and liabilities initially expressed in
foreign currencies will be converted into U.S. dollars at the mean between the
bid and asked prices of such currencies against U.S. dollars as last quoted by
any major bank.
ADDITIONAL PURCHASE AND REDEMPTION INFORMATION
Payment for shares may, in the discretion of the Adviser, be made in
the form of securities that are permissible investments for the Fund as
described in the prospectus. For further information about this form of payment,
please contact ALPS. In connection with an in-kind securities payment, the Fund
will require, among other things, that the securities be valued on the day of
purchase in accordance with the pricing methods used by the fund and that the
fund receive satisfactory assurances that (i) it will have good and marketable
title to the securities received by it; (2) the securities are in proper form
for transfer to the Fund; and (3) adequate information will be provided
concerning the basis and other matters relating to the securities.
Under the 1940 Act, the Fund may suspend the right of redemption or
postpone the date of payment upon redemption for any period during which the New
York Stock Exchange is closed (other than customary weekend and holiday
closings), or during which trading on said exchange is restricted, or during
which (as determined by the SEC by rule or regulation) an emergency exists as a
result of which disposal or valuation of portfolio securities is not reasonably
practicable, or for such other periods as the SEC may permit. (The Fund may also
suspend or postpone the recordation of the transfer of its shares upon the
occurrence of any of the foregoing conditions.)
The Fund may suspend redemption rights or postpone redemption payments
(as well as suspend the recordation of the transfer of shares) for such periods
as are permitted under the 1940 Act. The Fund may also redeem shares
involuntarily or make payment for redemption in securities or other property if
it appears appropriate to do so in light of the Fund's responsibilities under
the 1940 Act.
In addition, the Fund may redeem shares involuntarily to reimburse the
Fund for any loss sustained by reason of the failure of a shareholder to make
full payment for shares purchased by the shareholder.
All redemptions of shares of the Fund will be made in cash, except that
the commitment to redeem shares in cash extends only to redemption requests made
by each shareholder of a fund during any 90-day period of up to the lesser of
$250,000 or 1% of the net asset value of the Fund at the beginning of such
period. This commitment is irrevocable without the prior approval of the SEC and
is a fundamental policy of the Fund that may not be changed without shareholder
approval. In the case of redemption requests by shareholders in excess of such
amounts, the Board of Trustees reserves the right to have the Fund make payment,
in whole or in part, in securities or other assets in case of an emergency or
any time a cash distribution would impair the liquidity of the Fund to the
detriment of its existing shareholders. In this event, the securities would be
valued in the same manner as the securities of the Fund are valued. If the
recipient were to sell such securities, he or she may incur brokerage or other
transactional charges.
18
<PAGE> 35
PORTFOLIO TRANSACTIONS
Pursuant to its Advisory Agreement with the Trust, Interstate is
responsible for making decisions with respect to and placing orders for all
purchases and sales of portfolio securities for the Fund. The Adviser purchases
portfolio securities either directly from the issuer or from an underwriter or
dealer making a market in the securities involved. Purchases from an underwriter
of portfolio securities include a commission or concession paid by the issuer to
the underwriter and purchases from dealers serving as market makers may include
the spread between the bid and asked price. Transactions on stock exchanges
involve the payment of negotiated brokerage commissions. There is generally no
stated commission in the case of securities traded in the over-the-counter
market, but the price includes an undisclosed commission or mark-up.
While the Adviser generally seeks competitive spreads or commissions,
it may not necessarily allocate each transaction to the underwriter or dealer
charging the lowest spread or commission available on the transaction.
Allocation of transactions, including their frequency, to various dealers is
determined by the Adviser in its best judgment and in a manner deemed fair and
reasonable to shareholders. Under the Advisory Agreement, pursuant to Section
28(e) of the Securities Exchange Act of 1934, as amended, the Adviser is
authorized to negotiate and pay higher brokerage commissions in exchange for
research services rendered by broker-dealers. Subject to this consideration,
broker-dealers who provide supplemental investment research to the Adviser may
receive orders for transactions by the Fund. Information so received is in
addition to and not in lieu of services required to be performed by the Adviser
and does not reduce the fees payable to the Adviser by the Fund. Such
information may be useful to the Adviser in serving both the Trust and other
clients, and, similarly, supplemental information obtained by the placement of
business of other clients may be useful to the Adviser in carrying out its
obligations to the Trust.
Portfolio securities will not be purchased from or sold to the Trust's
Adviser, Distributor, or any "affiliated person" (as such term is defined under
the 1940 Act) of any of them acting as principal, except to the extent permitted
by the SEC. In addition, the Fund will not give preference to its Adviser's
correspondents with respect to such transactions, securities, savings deposits,
repurchase agreements and reverse repurchase agreements.
The adviser to the Fund has agreed to maintain a policy and practice of
conducting its investment management activities independently of the respective
commercial departments of all of the Adviser's banking affiliates. In making
recommendations for the Trust, the Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed for purchase or
sale for the Trust's respective accounts are customers of the respective
commercial departments of the Adviser's affiliates.
Investment decisions for the Fund are made independently from those for
the other funds and for other investment companies and accounts advised or
managed by the Adviser. Such other funds, investment companies and accounts may
also invest in the same securities as the Fund. When a purchase or sale of the
same security is made at substantially the same time on behalf of the Fund and
another investment company or account, the transaction will be averaged as to
price, and available investments
19
<PAGE> 36
allocated as to amount, in a manner which the Adviser believes to be equitable
to the Fund and such other investment company or account. In some instances,
this investment procedure may adversely affect the price paid or received by the
Fund or the size of the position obtained or sold by the Fund. In connection
therewith, and to the extent permitted by law, and by the Advisory Agreement,
the Adviser may aggregate the securities to be sold or purchased for the Fund
with those to be sold or purchased for other investment companies or advisory
clients.
TAXATION
The following summarizes certain additional tax considerations
generally affecting the Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of the Fund or its shareholders or possible legislative changes, and
the discussion here and in the Prospectus is not intended as a substitute for
careful tax planning. Potential investors should consult their tax advisers with
specific reference to their own tax situation.
The Fund will be treated as a separate corporate entity under the
Internal Revenue Code of 1986 (the "Code") and intends to qualify as a regulated
investment company. In order to qualify for tax treatment as a regulated
investment company under the Code, the Fund must satisfy, in addition to the
distribution requirement described in the Prospectus, certain requirements with
respect to the source of its income during a taxable year. At least 90% of the
gross income of the Fund must be derived from dividends, interest, payments with
respect to securities loans, gains from the sale or other disposition of stocks,
securities or foreign currencies, and other income (including but not limited to
gains from options, futures, or forward contracts) derived with respect to the
Fund's business of investing in such stock, securities or currencies. The
Treasury Department may by regulation exclude from qualifying income foreign
currency gains which are not directly related to the Fund's principal business
of investing in stock or securities, or options and futures with respect to
stock or securities. Any income derived by the Fund from a partnership or trust
is treated as derived with respect to the Fund's business of investing stock,
securities or currencies only to the extent that such income is attributable to
items of income which would have been qualifying income if realized by the Fund
in the same manner as by the partnership or trust.
A 4% non-deductible excise tax is imposed on regulated investment
companies that fail to currently distribute an amount equal to specified
percentages of their ordinary taxable income and capital gain net income (excess
of capital gains over capital losses). The Fund intends to make sufficient
distributions or deemed distributions of its ordinary income and capital gain
net income each calendar year to avoid liability for this excise tax.
If for any taxable year the Fund does not qualify for federal tax
treatment as a regulated investment company, all of the Fund's taxable income
will be subject to federal income tax at regular corporate rates without any
deduction for distributions to its shareholders. In such event, dividend
distributions (including amounts derived from interest on Municipal Securities)
would be taxable as ordinary income to the Fund's shareholders to the extent of
the Fund's current and accumulated earnings and profits, and would be eligible
for the dividends received deduction for corporations.
20
<PAGE> 37
The Fund may be required in certain cases to withhold and remit to the
U.S. Treasury 31% of taxable dividends or gross proceeds realized upon sale paid
to shareholders who have failed to provide a correct tax identification number
in the manner required, or who are subject to withholding by the Internal
Revenue Service for failure to properly include on their return payments of
taxable interest or dividends, or who have failed to certify to the Fund that
they are not subject to backup withholding when required to do so or that they
are "exempt recipients".
The tax principles applicable to transactions in financial instruments
and futures contracts and options that may be engaged in by the Fund, and
investments in passive foreign investment companies ("PFICs"), are complex and,
in some cases, uncertain. Such transactions and investments may cause the Fund
to recognize taxable income prior to the receipt of cash, thereby requiring the
Fund to liquidate other positions, or to borrow money, so as to make sufficient
distributions to shareholders to avoid corporate-level tax. Moreover, some or
all of the taxable income recognized may be ordinary income or short-term
capital gain, so that the distributions may be taxable to shareholders as
ordinary income.
In addition, in the case of any shares of a PFIC in which the Fund
invests, the Fund may be liable for corporate-level tax on any ultimate gain or
distributions on the shares if the Fund fails to make an election to recognize
income annually during the period of its ownership of the shares.
OTHER INFORMATION
DESCRIPTION OF THE TRUST
The Interstate Fund is a Fund of Financial Investors Trust (the
"Trust"), an open-end management investment company organized as a Delaware
Business Trust. The Trust consists of eight funds including the Interstate Fund.
The capitalization of the Fund consists solely of an unlimited number
of shares of beneficial interest with no par value. The Board of Trustees may
establish additional funds (with different investment objectives and fundamental
policies) at any time in the future. Establishment and offering of additional
funds will not alter the rights of the shareholders. When issued, shares are
fully paid, nonassessable, redeemable and freely transferable. Shares do not
have preemptive rights or subscription rights. In any liquidation of the Fund,
each shareholder is entitled to receive their pro rata share of the net assets
of the Fund.
VOTING RIGHTS
Under the Declaration of Trust, the Trust is not required to hold
annual meetings of the Trust's shareholders to elect Trustees or for other
purposes. It is not anticipated that the Trust will hold shareholders' meetings
unless required by law or the Declaration of Trust. In this regard, the Trust
will be required to hold a meeting to elect Trustees to fill any existing
vacancies on the Board if, at any time, fewer than a majority of the Trustees
have been elected by the shareholders of the Trust. In addition, the Declaration
of Trust provides that the holders of not less than two-thirds of the
outstanding shares of the Trust may remove persons serving as Trustee either by
declaration in writing or at a meeting called for
21
<PAGE> 38
such purpose. The Trustees are required to call a meeting for the purpose of
considering the removal of persons 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. To the extent required by applicable law, the Trustees shall assist
shareholders who seek to remove any person serving as Trustee.
The Trust's shares do not have cumulative voting rights, so that the
holders of more than 50% of the outstanding shares may elect the entire Board of
Trustees, in which case the holders of the remaining shares would not be able to
elect any Trustees.
Shareholders of all of the Funds in the Trust, as well as those of any
other investment portfolio now or hereafter offered by the Trust, will vote
together in the aggregate and not separately on a fund-by-fund basis, except as
otherwise required by law or when permitted by the Board of Trustees. Rule 18f-2
under the 1940 Act provides that any matter required to be submitted to the
holders of the outstanding voting securities of an investment company such as
the Fund shall not be deemed to have been effectively acted upon unless approved
by the holders of a majority of the outstanding shares of each fund affected by
the matter. A fund is not affected by a matter unless it is clear that the
interests of each fund in the matter are substantially identical or that the
matter does not affect any interest of the fund. Under the Rule, the approval of
an investment advisory agreement or any change in a fundamental investment
policy would be effectively acted upon with respect to a fund only if approved
by a majority of the outstanding shares of such fund. However, the Rule also
provides that the ratification of the appointment of independent auditors, the
approval of principal underwriting contracts and the election of trustees may be
effectively acted upon by shareholders of the funds voting together in the
aggregate without regard to a particular fund.
CUSTODIAN
Firstar Institutional Custody Services has been appointed as the Fund's
custodian. Pursuant to a Custodian Agreement, Firstar Institutional Custody
Services is responsible for holding the Fund's cash and portfolio securities.
PERFORMANCE INFORMATION
The Fund may, from time to time, include its 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 formula:
P(l+T)(n)=ERV
(where P = a hypothetical initial payment of $1,000, T = the average annual
total return, n = the number of years, and ERV = the ending redeemable value of
a hypothetical $1,000 payment made at the beginning of
22
<PAGE> 39
the period). 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 Fund during the particular time period shown.
Total return for the Fund will vary based on changes in the market conditions
and the level of the Fund's expenses, and no reported performance figure should
be considered an indication of performance which may be expected in the future.
In connection with communicating its total return to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indices which may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs.
Performance information for the Fund may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index, Dow Jones
Industrial Average, or other unmanaged indices so that investors may compare the
Fund's results with those of a group of unmanaged securities widely regarded by
investors as representative of the securities markets in general; (ii) other
groups of mutual funds tracked by Lipper Analytical Services, a widely used
independent research firm which ranks mutual funds by overall performance,
investment objectives, and assets, or tracked by other services, companies,
publications, or persons who rank mutual funds on overall performance or other
criteria, and (iii) the Consumer Price Index (measure for inflation) to assess
the real rate of return from an investment of dividends but generally do not
reflect deductions for administrative and management costs and expenses.
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP serves as the independent accountants for the
Fund. Deloitte & Touche provides audit services, tax return preparation and
assistance and consultation in connection with review of SEC filings. Deloitte &
Touche's address is 555 Seventeenth Street, Suite 3600, Denver, Colorado 80202.
REGISTRATION STATEMENT
This SAI and the prospectus do not contain all the information included
in the Trust's Registration Statement filed with the SEC under the Securities
Act of 1933 with respect to the securities offered hereby, certain portions of
which have been omitted pursuant to the rules and regulations of the SEC. The
Registration Statement, including the exhibits filed therewith, may be examined
at the office of the SEC in Washington, D.C.
Statements contained herein and in the Prospectus as to the contents of
any contract or other documents referred to are not necessarily complete, and,
in each instance, reference is made to the copy of such contract or other
documents filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
23
<PAGE> 40
PART C. OTHER INFORMATION
<TABLE>
<CAPTION>
Item 23. Exhibits
<S> <C>
* (a) (1) Trust Instrument.
* (2) Revised Trust Instrument.
* (b) (1) By-Laws of Registrant.
* (2) Revised By-Laws of Registrant.
(c) None.
* (d) (1) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the U.S. Treasury Money
Market Fund.
* (2) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the U.S. Government Money
Market Fund.
** (3) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Equity Fund.
** (4) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Quality Bond Fund.
** (5) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Colorado Quality Tax-Exempt Fund.
** (6) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the Prime Money Market Fund.
***** (7) Investment Advisory Contract between Registrant and National City
Investment Management Company.
</TABLE>
<PAGE> 41
<TABLE>
<S> <C>
(8) Investment Advisory Contract between Registrant and Interstate
Advisors, Inc. is filed electronically herewith.
** (e) (1) Distribution Agreement between Registrant and
ALPS Mutual Funds Services, Inc.
(2) Amended Distribution Agreement between Registrant and ALPS Mutual
Funds Services, Inc. is filed electronically herewith.
(3) Amended and restated Administration Agreement between Registrant and
ALPS Mutual Funds Services, Inc. is filed electronically herewith.
(f) None.
* (g) (1) Custodian Contract between Registrant and State Street Bank and Trust Company.
* (2) Custodian Contract between Registrant and Fifth Third Bank.
***** (3) Custodian Contract between Registrant and National City Bank.
(4) Custodian Contract between Registrant and Firstar Institutional
Custody Services is filed electronically herewith.
** (h) (1) Transfer Agency and Service Agreement between Registrant and ALPS
Mutual Funds Services, Inc.
(2) Amended and Restated Transfer Agency and Service Agreement between Registrant
and ALPS Mutual Funds Services, Inc. is filed electronically herewith.
** (3) Bookkeeping and Pricing Agreement between Registrant and ALPS Mutual
Funds Services, Inc.
(4) Amended Bookkeeping and Pricing Agreement between Registrant and
ALPS Mutual Funds Services, Inc. is filed electronically herewith.
</TABLE>
<PAGE> 42
<TABLE>
<S> <C>
*** (5) Subscription Agreement.
(i) Opinion and Consent of Davis, Graham & Stubbs LLP, counsel to Registrant is filed
electronically herewith.
(j) None
(k) None
(l) None
****(m) (1) Distribution Plan - Prime Money Market Fund Class II
***** (2) Distribution Plan - United Association S & P 500 Index Fund.
(3) Distribution Plan - Interstate Fund is filed electronically herewith.
(n) Omitted by Rule Change
****(o) Rule 18f-3 Plan
(p) (1) Code of Ethics for ALPS Mutual Funds Services, Inc. is filed electronically herewith.
(2) Code of Ethics for Tempest, Isenhart, Chafee, Lansdowne & Associates, Inc.
is filed electronically herewith.
(3) Code of Ethics for National City Bank is filed electronically herewith.
(4) Code of Ethics for Interstate Advisors, Inc. is filed electronically herewith.
</TABLE>
* Filed with Post-Effective Amendment No. 7 to Registrant's Registration
Statement on August 28, 1997.
** Filed with Post-Effective Amendment No. 10 to Registrant's
Registration Statement on June 12, 1998
*** Filed with Post-Effective Amendment No. 5 to Registrant's Registration
Statement on August 28, 1996.
**** Filed with Post-Effective Amendment 12 to Registrant's Registration
Statement on June 29, 1999.
***** Filed with Post-Effective Amendment 15 to Registrant's Registration
Statement on February 14, 2000.
<PAGE> 43
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
Item 25. Indemnification.
As permitted by Section 17(h) and (i) of the Investment Company Act of
1940 (the "1940 Act") and pursuant to Article X of the Registrant's Trust
Instrument (Exhibit 1 to the Registration Statement), Section 7 of each
Investment Advisory Agreement (Exhibits 5(a), 5(b), 5(c), 5(d) and 5(e) to this
Registration Statement) and Sections 1.9 and 1.10 of the Distribution Agreement
(Exhibit 6(a) to this Registration Statement), officers, trustees, employees and
agents of the Registrant will not be liable to the Registrant, any shareholder,
officer, trustee, employee, agent or other person for any action or failure to
act, except for bad faith, willful misfeasance, gross negligence or reckless
disregard of duties, and those individuals may be indemnified against
liabilities in connection with the Registrant, subject to the same exceptions.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant understands that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
The Registrant has purchased an insurance policy insuring its officers
and trustees against liabilities, and certain costs of defending claims against
such officers and trustees, to the extent such officers and trustees are not
found to have committed conduct constituting willful misfeasance, bad faith,
gross negligence or reckless disregard in the performance of their duties. The
insurance policy also insures the Registrant against the cost of indemnification
payments to officers under certain circumstances.
Section 7 of each Investment Advisory Contract and Section 1.9 of the
Distribution Contract limit the liability of GE Investment Management, Inc.,
Tempest, Isenhart, Chafee, Lansdowne & Associates, Inc. and ALPS Mutual Funds
Services, Inc., respectively, to liabilities arising from willful misfeasance,
bad faith or gross negligence in the performance of their respective duties or
from reckless disregard by them of their respective obligations and duties under
the agreements.
<PAGE> 44
The Registrant hereby undertakes that it will apply the indemnification
provisions of its Declaration of Trust, By-Laws, Investment Advisory Contracts
and Distribution Contract in a manner consistent with Release No. 11330 of the
Securities and Exchange Commission under the 1940 Act so long as the
interpretations of Section 17(h) and 17(i) of such Act remain in effect and are
consistently applied.
Item 26. Business and Other Connections of Investment Advisers
With respect to all Funds, reference is made to "Management of the
Trust" in the Prospectus for each such Fund forming Part A and "Management" in
the Statement of Additional Information for such Funds forming Part B of this
Registration Statement.
The list required by this Item 28 of officers and directors of GEIM,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by those officers and directors
during the past two years, is incorporated by reference to Schedules A and D of
Form ADV filed by GEIM pursuant to the Investment Advisers Act of 1940, as
amended (SEC File No. 801-31947).
The list required by this Item 28 of officers and directors of Tempest,
Isenhart, Chafee, Lansdowne & Assocs. ("Tempest"), together with information as
to any other business, profession, vocation or employment of a substantial
nature engaged in by those officers and directors during the past two years, is
incorporated by reference to Schedules A and D of Form ADV filed by Tempest
pursuant to the Investment Advisers Act of 1940, as amended (SEC File No.
801-11809-3).
The list required by this Item 28 of officers and directors of National
City Investment Management Company ("National City"), together with information
as to any other business, profession, vocation or employment of a substantial
nature engaged in by those officers and directors during the past two years, is
incorporated by reference to Schedules A and D of Form ADV filed by National
City pursuant to the Investment Advisers Act of 1940, as amended (SEC File No.
801-446).
The list required by this Item 28 of officers and directors of
Interstate Advisors, Inc., together with information as to any other business,
profession, vocation or employment of a substantial nature engaged in by those
officers and directors during the past two years, is incorporated by reference
to Schedules A and D of Form ADV filed by National City pursuant to the
Investment Advisers Act of 1940, as amended (SEC File No. 801-57203).
Item 27. Principal Underwriter
(a) ALPS Mutual Funds Services, Inc. acts as Distributor/Underwriter
for various other unrelated registered investment companies.
(b) Officers and Directors
<PAGE> 45
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Positions and Offices with
Business Address* Registrant Underwriter
- ------------------------------ ------------------------------------- -------------------------------
<S> <C> <C>
W. Robert Alexander Chairman of the Board of Trustees and Chairman and Chief Executive
President Officer and Secretary
Arthur J. L. Lucey None President and Director
Thomas A. Carter None Chief Financial Officer
Edmund J. Burke None Executive Vice President
and Director
Russell C. Burk Secretary General Counsel
Jeremy O. May Assistant Treasurer Vice President
Rick A. Pederson None Director
Chris Woessner None Director
John Hannon None Director
</TABLE>
- -------------------
* All addresses are 370 Seventeenth Street, Suite 3100, Denver, Colorado 80202.
(c) Not applicable.
Item 28. Location of Accounts and Records
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the rules thereunder are
maintained at the offices of ALPS Mutual Funds Services, Inc., General Electric
Investment Management, Inc. and Tempest, Isenhart, Chafee, Lansdowne &
Associates, Inc..
Item 29. Management Services
Not applicable.
Item 30. Undertakings.
<PAGE> 46
(a) Registrant undertakes to call a meeting of shareholders for
the purpose of voting upon the removal of a trustee if
requested to do so by the holders of at least 10% of the
Registrant's outstanding shares.
(b) Registrant undertakes to provide the support to shareholders
specified in Section 16(c) of the 1940 Act as though that
section applied to the Registrant.
(c) Registrant hereby undertakes to furnish each person to whom
a prospectus is delivered with a copy of Registrant's latest
annual report upon request and without a charge.
<PAGE> 47
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for the effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 17 of its Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the city of Denver,
and State of Colorado, on May 8, 2000.
FINANCIAL INVESTORS TRUST (Registrant)
By: /s/ W. ROBERT ALEXANDER
---------------------------------
W. Robert Alexander
Trustee and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ W. ROBERT ALEXANDER Trustee and May 8, 2000
- ----------------------------
W. Robert Alexander President
/s/ ROBERT E. LEE Trustee May 8, 2000
- ----------------------------
Robert E. Lee
/s/ MARY K. ANSTINE Trustee May 8, 2000
- ----------------------------
Mary K. Anstine
/s/ EDWIN B. CROWDER Trustee May 8, 2000
- ----------------------------
Edwin B. Crowder
/s/ JOHN R. MORAN, JR Trustee May 8, 2000
- ----------------------------
John R. Moran, Jr.
/s/ MARTIN J. MADDALONI, JR. Trustee May 8, 2000
- ----------------------------
Martin J. Maddaloni, Jr.
</TABLE>
<PAGE> 48
EXHIBIT INDEX
<TABLE>
<CAPTION>
Item 23. Exhibits
<S> <C>
* (a) (1) Trust Instrument.
* (2) Revised Trust Instrument.
* (b) (1) By-Laws of Registrant.
* (2) Revised By-Laws of Registrant.
(c) None.
* (d) (1) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the U.S. Treasury Money
Market Fund.
* (2) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the U.S. Government Money
Market Fund.
** (3) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Equity Fund.
** (4) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Quality Bond Fund.
** (5) Investment Advisory Contract between Registrant and Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. with respect to the
Aristata Colorado Quality Tax-Exempt Fund.
** (6) Investment Advisory Contract between Registrant and GE Investment
Management, Incorporated with respect to the Prime Money Market Fund.
***** (7) Investment Advisory Contract between Registrant and National City
Investment Management Company.
</TABLE>
<PAGE> 49
<TABLE>
<S> <C>
(8) Investment Advisory Contract between Registrant and Interstate
Advisors, Inc. is filed electronically herewith.
** (e) (1) Distribution Agreement between Registrant and
ALPS Mutual Funds Services, Inc.
(2) Amended Distribution Agreement between Registrant and ALPS Mutual
Funds Services, Inc. is filed electronically herewith.
(3) Amended and restated Administration Agreement between Registrant and
ALPS Mutual Funds Services, Inc. is filed electronically herewith.
(f) None.
* (g) (1) Custodian Contract between Registrant and State Street Bank and Trust Company.
* (2) Custodian Contract between Registrant and Fifth Third Bank.
***** (3) Custodian Contract between Registrant and National City Bank.
(4) Custodian Contract between Registrant and Firstar Institutional
Custody Services is filed electronically herewith.
** (h) (1) Transfer Agency and Service Agreement between Registrant and ALPS
Mutual Funds Services, Inc.
(2) Amended and Restated Transfer Agency and Service Agreement between Registrant
and ALPS Mutual Funds Services, Inc. is filed electronically herewith.
** (3) Bookkeeping and Pricing Agreement between Registrant and ALPS Mutual
Funds Services, Inc.
(4) Amended Bookkeeping and Pricing Agreement between Registrant and
ALPS Mutual Funds Services, Inc. is filed electronically herewith.
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
*** (5) Subscription Agreement.
(i) Opinion and Consent of Davis, Graham & Stubbs LLP, counsel to Registrant is filed
electronically herewith.
(j) None
(k) None
(l) None
****(m) (1) Distribution Plan - Prime Money Market Fund Class II
***** (2) Distribution Plan - United Association S & P 500 Index Fund.
(3) Distribution Plan - Interstate Fund is filed electronically herewith.
(n) Omitted by Rule Change
****(o) Rule 18f-3 Plan
(p) (1) Code of Ethics for ALPS Mutual Funds Services, Inc. is filed electronically herewith.
(2) Code of Ethics for Tempest, Isenhart, Chafee, Lansdowne & Associates, Inc.
is filed electronically herewith.
(3) Code of Ethics for National City Bank is filed electronically herewith.
(4) Code of Ethics for Interstate Advisors, Inc. is filed electronically herewith.
</TABLE>
* Filed with Post-Effective Amendment No. 7 to Registrant's Registration
Statement on August 28, 1997.
** Filed with Post-Effective Amendment No. 10 to Registrant's
Registration Statement on June 12, 1998
*** Filed with Post-Effective Amendment No. 5 to Registrant's Registration
Statement on August 28, 1996.
**** Filed with Post-Effective Amendment 12 to Registrant's Registration
Statement on June 29, 1999.
***** Filed with Post-Effective Amendment 15 to Registrant's Registration
Statement on February 14, 2000.
<PAGE> 1
INVESTMENT ADVISORY AGREEMENT
INTERSTATE FUND
(A SERIES OF FINANCIAL INVESTORS TRUST)
THIS INVESTMENT ADVISORY AGREEMENT (the "Agreement") is made this _____
day of March, 2000, between Interstate Advisors, Inc., a [state] corporation
("Interstate Advisors") and Financial Investors Trust, a Delaware business trust
(the "Trust"), with respect to the Interstate Fund, a series of the Trust (the
"Fund").
RECITALS
A. The Trust is registered as an open-end management investment company
under the Investment Company Act of 1940, as amended (the "1940 Act"), and has
registered its shares for public offering under the Securities Act of 1933, as
amended (the "1933 Act").
B. The Trust is authorized to create separate series of shares, each
with its own separate investment portfolio, one of such series created by the
Trust being the Fund.
C. The Trust and Interstate Advisors deem it mutually advantageous that
Interstate Advisors should assist the Trustees and officers of the Trust in the
management of the securities portfolio of the Fund.
AGREEMENT
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Appointment. The Trust hereby appoints Interstate Advisors as
investment adviser and manager with respect to the Fund for the period and on
the terms set forth in this Agreement. Interstate Advisors hereby accepts such
appointment and agrees to render the services herein set forth, for the
compensation herein provided.
2. Investment Advisory Functions. In its capacity as investment
adviser to the Fund, Interstate Advisors shall have the following duties and
responsibilities:
(a) To manage the investment operations of the Fund and the
composition of its investment portfolio, and to determine
without prior consultation with the Trust, what securities
and other assets of the Fund will be acquired, held,
disposed of or loaned, in conformity with the investment
objective, policies and restrictions and the other
statements concerning the Fund in the Trust's trust
instrument, as amended from time to time (the "Trust
Instrument"), bylaws, and registration statements under the
1940 Act and the 1933 Act, the Investment Advisers Act of
1940, as amended (the "Advisers Act"), the rules thereunder,
and all other applicable federal and state laws and
regulations, and the provisions of the Internal Revenue Code
of 1986, as amended, applicable to the Fund as a regulated
investment company;
(b) To cause its officers to attend meetings and furnish oral or
written reports, as the Trustees may reasonably require, in
order to keep the Trustees and appropriate officers of the
Trust fully informed as to the condition of the investment
portfolio of the Fund, the investment decisions of
Interstate Advisors, and the investment considerations which
have given rise to those decisions;
<PAGE> 2
(c) To place orders for the purchase and sale of securities for
investments of the Fund and for other related transactions;
to give instructions to the custodian (including any
subcustodian) of the Fund as to deliveries of securities to
and from such custodian and receipt and payments of cash for
the account of the Fund, and advise the Trust on the same
day such instructions are given; to submit such reports
relating to the valuation of the Fund's assets and to
otherwise assist in the calculation of the net asset value
of shares of the Fund as may reasonably be requested; on
behalf of the Fund, to exercise such voting rights,
subscription rights, rights to consent to corporate action
and any other rights pertaining to the Fund's assets that
may be exercised, in accordance with any policy pertaining
to the same that may be adopted or agreed to by the Trustees
of the Trust, or, in the event that the Trust retains the
right to exercise such voting and other rights, to furnish
the Trust with advice as to the manner in which such rights
should be exercised;
(d) To maintain all books and records required to be maintained
by Interstate Advisors pursuant to the 1940 Act and the
rules and regulations promulgated thereunder, as the same
may be amended from time to time, with respect to
transactions on behalf of the Fund, and shall furnish the
Trustees with such periodic and special reports as the
Trustees reasonably may request. Interstate Advisors agrees
that all records which it maintains for the Fund are the
property of the Trust, agrees to permit the reasonable
inspection thereof by the Trust or its designees and agrees
to preserve for the periods prescribed under the 1940 Act
any records which it maintains for the Fund and which are
required to be maintained under the 1940 Act, and further
agrees to surrender promptly to the Trust or its designees
any records which it maintains for the Trust upon request by
the Trust; and
(e) At such times as shall be reasonably requested by the
Trustees, to provide the Trustees with economic, operational
and investment data and reports, including without
limitation all information and materials reasonably
requested by or requested to be delivered to the Trustees of
the Trust pursuant to Section 15(c) of the 1940 Act, and
make available to the Trustees any economic, statistical and
investment services normally available to similar investment
company clients of Interstate Advisors.
3. Further Obligations. In all matters relating to the performance of
this Agreement, Interstate Advisors shall act in conformity with the Trust's
Trust Instrument, bylaws and currently effective registration statements under
the 1940 Act and the 1933 Act and any amendments or supplements thereto (the
"Registration Statements") and with the written policies, procedures and
guidelines of the Fund, and written instructions and directions of the Trustees
of the Trust and shall comply with the requirements of the 1940 Act, the
Advisers Act, the rules thereunder, and all other applicable federal and state
laws and regulations. The Trust agrees to provide Interstate Advisors with
copies of the Trust's Trust Instrument, bylaws, Registration Statements, written
policies, procedures and guidelines, and written instructions and directions of
the Trustees, and any amendments or supplements to any of them at, or, if
practicable, before the time such materials become effective.
2
<PAGE> 3
4. Obligations of Trust. The Trust shall fulfill or cause its agents to
fulfill the following obligations under this Agreement:
(a) To keep Interstate Advisors continuously and fully informed as to
the composition of the investment portfolio of the Fund and the
nature of all of the Fund's assets and liabilities from time to
time;
(b) To furnish Interstate Advisors with a certified copy of any
financial statements or reports prepared for the Fund by
certified or independent public accountants and with copies of
any financial statements or reports made to the Fund's
shareholders or to any governmental body or securities exchange;
(c) To furnish Interstate Advisors with any further materials or
information which Interstate Advisors may reasonably request to
enable it to perform its function under this Agreement; and
(d) To compensate Interstate Advisors for its services in accordance
with the provisions of Section 5 hereof.
5. Compensation. The Trust shall pay to Interstate Advisors for its
services under this Agreement a fee, payable in United States dollars, at an
annual rate of 1.00% of the average daily net asset value of the Fund up to $500
million, .75% of the average daily net asset value of the Fund on the next $500
million, and .50% of the average daily net asset value of the Fund in excess of
$1 billion. This fee shall be computed and accrued daily and payable monthly on
the last day of each month during which or part of which this Agreement is in
effect. For the month during which this Agreement becomes effective and the
month during which it terminates, however, there shall be an appropriate
proration of the fee payable for such month based on the number of calendar days
of such month during which this Agreement is effective.
6. Expenses.
(a) Expenses Paid by the Trust. The Trust assumes and shall pay all
expenses incidental to its operations and business not
specifically assumed or agreed to be paid by Interstate Advisors
hereunder or otherwise, including, but not limited to, any
compensation, fees or reimbursements which the Trust pays to its
Trustees who are not interested persons of Interstate Advisors;
compensation of the Fund's custodian, transfer agent, registrar
and dividend disbursing agent and other service providers; legal,
accounting, audit and printing expenses; administrative,
clerical, record keeping and bookkeeping expenses; brokerage
commissions and all other expenses in connection with execution
of portfolio transactions; interest; all federal, state and local
taxes (including stamp, excise, income and franchise taxes);
costs of stock certificates and expenses of delivering such
certificates to the purchasers thereof; expenses of local
representation in Delaware; expenses of shareholders' meetings
and of preparing, printing and distributing proxy statements,
notices, and reports to shareholders; expenses of preparing and
filing reports and tax returns with federal and state regulatory
authorities; all expenses incurred in complying with all federal
and state laws and the laws of any foreign country applicable to
the issue, offer or sale of shares of the Fund, including, but
not limited to, all costs involved in preparing, printing and
mailing prospectuses and statements of additional information to
shareholders of the Fund; and all fees, dues and other expenses
incurred by the Trust in connection with the membership of the
Trust in any trade association or other investment company
organization.
3
<PAGE> 4
(b) Expenses Paid by Interstate Advisors. Interstate Advisors
shall pay all its own costs and expenses incurred in rendering
the services required under this Agreement. In addition to
such costs and expenses, Interstate Advisors shall incur and
pay reasonable compensation, fees and related expenses of any
of the Trust's officers or Trustees who are interested persons
of Interstate Advisors.
7. Brokerage Commissions. For purposes of this Agreement, brokerage
commissions paid by the Fund upon the purchase or sale of its portfolio
securities shall be considered a cost of securities of the Fund and shall be
paid by the Fund. Absent instructions from the Trust to the contrary, Interstate
Advisors is authorized and directed to place Fund portfolio transactions only
with brokers and dealers who render satisfactory service in the execution of
orders at the most favorable prices and at reasonable commission rates,
provided, however, that Interstate Advisors may pay a broker an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker would have charged for effecting that transaction if
Interstate Advisors determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research services
provided by such broker viewed in terms of either that particular transaction or
the overall responsibilities of Interstate Advisors. Interstate Advisors is also
authorized to consider sales of Fund shares as a factor in selecting
broker-dealers to execute Fund portfolio transactions. In placing portfolio
business with such broker-dealers, Interstate Advisors shall seek the best
execution of each transaction. Notwithstanding the foregoing, the Trustees of
the Trust may establish policies or guidelines to be followed by Interstate
Advisors in placing portfolio transactions for the Trust pursuant to the
foregoing provisions. Interstate Advisors shall report on the placement of
portfolio transactions in the prior fiscal quarter at each quarterly meeting of
such Trustees. To the extent consistent with applicable law, purchase or sell
orders for the Fund may be aggregated with simultaneous purchase or sell orders
for other clients of Interstate Advisors. Whenever Interstate Advisors
simultaneously places orders to purchase or sell the same security on behalf of
the Fund and one or more other clients of Interstate Advisors, such orders will
be allocated as to price and amount among all such clients in a manner
reasonably believed by Interstate Advisors to be fair and equitable to each
client. The Trust recognizes that in some cases, this procedure may adversely
affect the results obtained for the Fund.
8. Termination. This Agreement may be terminated at any time, without
penalty, by the Trustees of the Trust, or by the shareholders of the Fund acting
by vote of at least a majority of its outstanding voting securities, provided in
either case that sixty (60) days' advance written notice of termination be given
to Interstate Advisors at its principal place of business. This Agreement may be
terminated by Interstate Advisors at any time, without penalty, by giving sixty
(60) days' advance written notice of termination to the Trust, addressed to its
principal place of business. The Trust agrees that the name "Interstate" is the
property of Interstate Advisors, and that the Trust is using such name in the
name of the Fund with the permission of Interstate Advisors, and that the Trust
shall cease to use the name Interstate in connection with the Fund as soon as
reasonably practicable following any termination of this Agreement if Interstate
Advisors does not continue to provide investment advice to the Fund after such
termination.
9. Assignment. This Agreement shall terminate automatically in the
event of any assignment of this Agreement.
10. Term. This Agreement shall continue in effect until ,2000, unless
sooner terminated in accordance with its terms, and shall continue in effect
from year to year thereafter only so long as such continuance is specifically
approved at least annually by the vote of a majority of the Trustees of the
Trust who are not parties hereto or interested persons of any such party, cast
in person at a
4
<PAGE> 5
meeting called for the purpose of voting on the approval of the terms of such
renewal, and by either the Trustees of the Trust or the affirmative vote of a
majority of the outstanding voting securities of the Fund.
11. Amendments. This Agreement may be amended by the parties only if
such amendment is specifically approved (i) by a majority of the Trustees,
including a majority of the Trustees who are not interested persons of the Fund
or Interstate Advisors and, (ii) if required by applicable law, by the
affirmative vote of a majority of the outstanding voting securities of the Fund.
12. Allocation of Expenses. The Trustees shall determine the basis for
making an appropriate allocation of the Trust's expenses (other than those
directly attributable to the Fund) between the Fund and any other series of the
Trust.
13. Limitation on Personal Liability. NOTICE IS HEREBY GIVEN that the
Trust is a business trust organized under the Delaware Business Trust Act
pursuant to a Certificate of Trust filed in the office of the Secretary of State
of the State of Delaware. All parties to this Agreement acknowledge and agree
that the Trust is a series trust and all debts, liabilities, obligations and
expenses incurred, contracted for or otherwise existing with respect to a
particular series shall be enforceable against the assets held with respect to
such series only, and not against the assets of the Trust generally or against
the assets held with respect to any other series and further that no trustee,
officer or holder of shares of beneficial interest of the Trust shall be
personally liable for any of the foregoing.
14. Limitation of Liability of Interstate Advisors. Interstate Advisors
shall not be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission taken with respect to
the Fund, except for willful misfeasance, bad faith or negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder and except to the extent otherwise provided by law.
15. Activities of Interstate Advisors. The services of Interstate
Advisors to the Trust hereunder are not intended to be exclusive, and Interstate
Advisors and its affiliates are free to render services to other parties, so
long as its services under this Agreement are not materially or adversely
affected or otherwise impaired thereby. Nothing in this Agreement shall limit or
restrict the right of any director, officer or employee of Interstate Advisors
to engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any other business, whether of a
similar nature or a dissimilar nature. It is understood that trustees, officers
and shareholders of the Trust are or may become interested in Interstate
Advisors as directors, officers and shareholders of Interstate Advisors, that
directors, officers, employees and shareholders of Interstate Advisors are or
may become similarly interested in the Trust, and that Interstate Advisors may
become interested in the Trust as a shareholder or otherwise.
16. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities", "assignment", "approved at least annually" and
"interested persons" when used herein, shall have the respective meanings
specified in the 1940 Act, as now in effect or hereafter amended, and the rules
and regulations thereunder, subject to such orders, exemptions and
interpretations as may be issued by the Securities and Exchange Commission under
said Act and as may be then in effect. Where the effect of a requirement of the
federal securities laws reflected in any provision of this Agreement is made
less restrictive by a rule, regulation, order, interpretation or other authority
of the Securities and Exchange Commission, whether of special or general
application, such provision shall be deemed to incorporate the effect of such
rule, regulation, order, interpretation or other authority.
17. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Colorado (without giving effect to the conflicts of
laws principles thereof) and the 1940 Act. To
5
<PAGE> 6
the extent that the applicable laws of the State of Colorado conflict with the
applicable provisions of the 1940 Act, the latter shall control.
18. Miscellaneous. The headings in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Investment Advisory Agreement as of the date and year
first above written.
INTERSTATE ADVISORS, INC.
By:
-----------------------------------
Arthur Lyons
President
FINANCIAL INVESTORS TRUST, with
respect to the Interstate Fund
By:
-----------------------------------
President
6
<PAGE> 1
AMENDED AND RESTATED
DISTRIBUTION AGREEMENT
This Agreement entered into as of this 14th day of December, 1999, by
and between Financial Investors Trust, a Delaware business trust having its
principal place of business at 370 17th Street, Suite 3100, Denver, Colorado
80202 (the "Trust") and ALPS Mutual Funds Services, Inc., a Colorado corporation
having its principal place of business at 370 17th Street, Suite 3100, Denver,
Colorado 80202 (the "Distributor").
WHEREAS, the Trust wishes to employ the services of the Distributor in
connection with the promotion and distribution of the Trust's shares of
beneficial interest of the U.S. Treasury Money Market Fund, U.S. Government
Money Market Fund and any other Funds offered by the Trust as listed on Schedule
A, attached hereto (the "Funds");
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and covenants herein contained, the parties agree as follows:
1. Services as Distributor
1.1 The Distributor will act as agent for the distribution of shares in
accordance with the instructions of the Trust's Board of Trustees and
registration statement and prospectuses then in effect with respect to the Funds
under the Securities Act of 1933, as amended, and will transmit promptly any
orders received by the Distributor for the purchase or redemption of Shares
either directly to the Trust's transfer agent for the Fund involved or to any
qualified broker/dealer for transmittal to said agent.
1.2(a) In consideration of these rights granted to the Distributor, the
Distributor agrees to use its best efforts, consistent with its other business,
to solicit orders for the sale of Shares. This shall not prevent the Distributor
from entering into like arrangements (including arrangements involving the
payment of underwriting commissions) with other issuers. The Distributor, at its
expense, shall finance appropriate activities which it deems reasonable which
are primarily intended to result in the sale of Shares, including but not
limited to, advertising, compensation of underwriters, dealers and sales
personnel, the printing and mailing of prospectuses to other than current
shareholders, and the printing and mailing of sales literature. In addition, the
Distributor will provide one or more persons, during normal business hours, to
respond to telephone questions with respect to the Funds.
1.2(b) All shares of the Funds offered for sale by the Distributor
shall be offered for sale to the public at a price per share (the "offering
price") equal to their net asset value (determined in the manner set forth in
the Trust's Declaration of Trust and then current prospectuses and/or Statements
of Additional Information), plus a sales charge (if any) described in the
Trust's current Prospectuses and/or Statements of Additional Information. The
Trust shall in all cases receive the net asset value per share on all shares. If
a sales charge is in effect, the Distributor shall have the right, subject to
such rules or regulations of the Securities and Exchange Commission as may then
be in effect pursuant to Section 22 of the Investment Company Act of
<PAGE> 2
1940, as amended, (the "1940 Act") to pay a portion of the sales charge to
dealers who have sold shares of the Trust. If a fee in connection with
shareholder redemptions is in effect, the Trust shall collect the fee on behalf
of the Distributor and, unless otherwise agreed upon by the Trust and the
Distributor, the Distributor shall be entitled to receive all of such fees. The
offering price, if not an exact multiple of one cent, shall be adjusted to the
nearest cent.
1.2(c) This Agreement shall apply to unissued shares of the Trust,
shares of the Trust held in its treasury in the event that in the discretion of
the Trust, treasury shares shall be sold, and shares of the Trust repurchased
for resale.
1.3 The Distributor shall act as distributor of the shares in
compliance with all applicable laws, rules and regulations, including, without
limitation, all rules and regulations made or adopted pursuant to the Investment
Company Act of 1940, as amended, by the Securities and Exchange Commission or
any securities association registered under the Securities and Exchange Act of
1934, as amended. THE DISTRIBUTOR SHALL NOT MAKE OFFERS OF SALE OF SHARES IN ANY
STATE UNLESS THE DISTRIBUTOR HAS BEEN NOTIFIED BY THE TRUST THAT SUCH SHARES
HAVE BEEN REGISTERED UNDER THE SECURITIES LAWS OF SUCH STATE, OR THAT THERE IS
AN AVAILABLE EXEMPTION FROM REGISTRATION.
1.4 Whenever in their judgment such action is warranted by market,
economic or political conditions, or by circumstances of any kind, the Trust's
officers may decline to accept any orders for, or make any sales of, any shares
until such time as they deem it advisable to accept such orders and to make such
sales and the Trust shall advise you promptly of such determination.
1.5 Except as otherwise provided for in the Administrative Agreement
dated as of December 14, 1999, by and between the Trust and the Distributor (the
"Administration Agreement"),the Trust agrees to pay all costs and expenses in
connection with the registration of shares under the Securities Act of 1933, as
amended, and all expenses in connection with maintaining facilities for the
issue and transfer of shares and for supplying information, prices and other
data to be furnished by the Trust hereunder.
1.6 The Trust agrees to execute any and all documents and to furnish
any and all information and otherwise to take all actions which may be
reasonably necessary in the discretion of the Trust's officers in connection
with the qualification of shares for sale in such states as the Distributor may
designate to the Trust and the Trust may approve, and the Trust agrees to pay
all expenses which may be incurred in connection with such qualification. the
Distributor shall pay all expenses connected with its own qualification as a
broker under State or Federal laws and, except as otherwise specifically
provided in this agreement, all other expenses incurred by the Distributor in
connection with the sale of shares as contemplated in this agreement.
1.7 The Trust shall furnish the Distributor from time to time, for use
in connection with the sale of shares, such information with respect to the
Trust and the shares as the
2
<PAGE> 3
Distributor may reasonably request, and the Trust warrants that the statements
contained in any such information, when so signed by the Trust's officers, shall
be true and correct. Subject to the provisions of the Administration Agreement
the Trust also shall furnish the Distributor upon request with: (a) annual
audited reports of the Trust's books and accounts with respect to each of the
Funds, made by independent public accountants regularly retained by the Trust,
(b) semi-annual reports with respect to each of the Funds prepared by the Trust,
and (c) from time to time such additional information regarding the Trust's
financial condition as the Distributor may reasonably request.
1.8 The Trust represents to the Distributor that all registration
statements and prospectuses filed by the Trust with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, with respect to the
shares have been prepared in conformity with the requirements of said Act and
rules and regulations of the Securities and Exchange Commission thereunder. As
used in this agreement the terms "registration statement" and "prospectus" shall
mean any registration statement and prospectus (together with the related
statement of additional information) filed with the Securities and Exchange
Commission with respect to any of the shares and any amendments and supplements
thereto which at any time shall have been filed with said Commission. The Trust
represents and warrants to the Distributor that any registration statement and
prospectus, when such registration statement becomes effective, will contain all
statements required to be stated therein in conformity with said Act and the
rules and regulations of said Commission; that all statements of fact contained
in any such registration statement and prospectus will be materially true and
correct when such registration statement becomes effective; and that neither any
registration statement nor any prospectus when such registration statement
becomes effective will include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading. The Trust may but shall not be obligated to
propose from time to time such amendment or amendments to any registration
statement and such supplement or supplements to any prospectus as, in the light
of future developments, may, in the opinion of the Trust's counsel, be necessary
or advisable. If the Trust shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Trust of a
written request from the Distributor to do so, the Distributor may, at its
option, terminate this agreement. The Trust shall not file any amendment to any
registration statement or supplement to any prospectus without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained into this agreement shall in any way limit the Trust's right
to file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as the Trust may deem
advisable, such right being in all respects absolute and unconditional.
1.9 The Trust authorizes the Distributor to use any prospectus in the
form furnished to the Distributor from time to time, in connection with the sale
of shares. The Trust agrees to indemnify, defend and hold the Distributor, its
several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the Securities Act of 1933, as amended,
(hereinafter referred to collectively as "indemnified party") free and harmless
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating
3
<PAGE> 4
or defending such claims, demands, or liabilities and any counsel fees in
connection therewith) which the Distributor, its officers and directors, or any
such controlling person, may incur under the Securities Act of 1933, as amended,
or under common law, or otherwise, arising out of or based upon any untrue
statement, or alleged untrue statement, of a material fact contained in any
registration statement or any prospectus or arising out of or based upon any
omission, or alleged omission, to state a material fact required to be stated in
either any registration statement or any prospectus or necessary to make the
statements in either thereof not misleading; provided, however, that the Trust's
agreement to indemnify the Distributor, its officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands, liabilities
or expenses arising out of or based on any omission, or alleged omission, made
in any registration statement or prospectus in reliance upon and in conformity
with information furnished to the Trust or its counsel by the Distributor and
used in the preparation thereof; and provided further that the Trust's agreement
to indemnify the Distributor and the Trust's representations and warranties
herein set forth shall not be deemed to cover any liability to the Trust or its
shareholders to which the Distributor would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in performance of its duties,
or by reason of its reckless disregard of its obligations and duties under this
agreement. The Trust's agreement to indemnify the Distributor, its officers and
directors, and any such controlling person, as aforesaid, is expressly
conditioned upon the Trust's being notified of any action brought against the
Distributor, its officers and directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to the Trust at its
principal office within ten days after the summons or other first legal process
shall have been served. The failure to so notify the Trust of any such action
shall not relieve the Trust from any liability which the Trust may have to the
person against whom such action is brought by reason of any such untrue, or
alleged untrue, statement or omission, or alleged omission, otherwise than on
account of the Trust's indemnity agreement contained in this paragraph 1.9. The
Trust will be entitled to assume the defense of any suit brought to enforce any
such claim, demand, or liability, but, in such case, such defense shall be
conducted by counsel of good standing chosen by the Trust and approved by the
Distributor. In the event the Trust elects to assume the defense of any such
suit and retain counsel of good standing chosen by the Trust and approved by the
Distributor, which approval shall not be unreasonably withheld, the defendant or
defendants in such suit shall bear the fees and expenses of any additional
counsel retained by the defense of any such suit, or in case the Distributor
does not reasonably approve of counsel chosen by the Trust, the Trust will
reimburse the Distributor, its officers and directors, or the controlling person
or persons named as defendant or defendants in such suit, for the fees and
expenses of any counsel retained by the Distributor or them. The Trust's
indemnification agreement contained in this paragraph 1.9 and the Trust's
representations and warranties in this agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
the Distributor, its officers and directors, and their respective estates, and
to the benefit of any controlling persons and their successors. The Trust agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against the Trust or any of its officers or trustees in connection
with the issue and sale of any of the shares.
1.10 The Distributor agrees to indemnify, defend and hold the Trust,
its several officers and trustees, and any person who controls the Trust within
the meaning of Section 15 of the
4
<PAGE> 5
Securities Act of 1933, as amended, free and harmless from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands, liabilities, and any counsel
fees incurred in connection therewith) which the Trust, its officers or
trustees, or any such controlling person, may incur under the Securities Act of
1933, as amended, or under common law or otherwise, but only to the extent that
such a liability or expense incurred by the Trust, its officers or trustees, or
such controlling person resulting from such claims or demands, shall arise out
of or be based upon any omission, or alleged omission, to state a material fact
in connection with such information furnished by the Distributor to the Trust,
or necessary to make such information not misleading. The Distributor's
agreement to indemnify the Trust, its officers and trustees, or any such
controlling person, such notification to be given by letter or telegram
addressed to the Distributor at its principal office within ten days after the
summons or other first legal process shall have been served. The Distributor
shall have the right to control the defense of such action with counsel of its
own choosing, satisfactory to the Trust, if such action is based solely upon
such alleged misstatement or omission on the Distributor's part, and in any
other event the Trust, its officers or trustees or such controlling person shall
each have the right to participate in the defense or preparation of the defense
of such action. The failure so to notify the Distributor of any such action
shall not relieve the Distributor from any liability which the Distributor may
have to the Trust, its officers or trustees, or to such controlling person by
reason of any such untrue, or alleged untrue, statement of your omission, or
alleged omission, otherwise than on account of your indemnity agreement
contained in this paragraph 1.10.
1.11 No shares shall be offered by either the Distributor or the Trust
under any of the provisions of this agreement and no orders for the purchase or
sale of such shares hereunder shall be accepted by the Trust if and so long as
the effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the
Securities and Exchange Commission; provided, however, that nothing contained in
this paragraph 1.11 shall in any way restrict or have an application to or
bearing upon the Trust's obligation to repurchase shares from any shareholder in
accordance with the provisions of the prospectuses or Declaration of Trust.
1.12 The Distributor and the Trust each agree to advise the other
promptly in writing:
(a) of any request by the Securities and Exchange Commission
for amendments to the registration statement or prospectuses
then in effect;
(b) in the event of the issuance by the Securities and
Exchange Commission of any stop order suspending the
effectiveness of the registration statement or prospectuses
then in effect or the initiation of any proceeding for that
purpose;
(c) of the happening of any event which makes untrue any
statement of a material fact made in the registration
statement or
5
<PAGE> 6
prospectuses in order to make the statements therein not
misleading; and
(d) of all the actions of the Securities and Exchange
Commission with respect to any registration statement or
prospectus which may from time to time be filed with the
Securities and Exchange Commission.
2. Term
2.1 This agreement shall become effective as of the date hereof and,
unless sooner terminated, shall continue until December 14, 2000, and thereafter
shall continue automatically for successive annual periods, provided such
continuance is specifically approved at least annually by (i) the Trust's Board
of Trustees or (ii) the vote of a majority (as defined in the Investment Company
Act of 1940) of the Funds' outstanding shares, provided that in either event its
continuance also is approved by a majority of the Trust's trustees who are not
"interested persons" (as defined in said Act) of any party to this agreement, by
vote cast in person at a meeting called for the purpose of voting on such
approval. Notwithstanding anything to the contrary in this Agreement, you may
not terminate this Agreement prior to the later of: (i) the Administration
Agreement; or (ii) the effectiveness of any termination notice pursuant to the
Administration Agreement.
3. Miscellaneous
3.1 Other Work. The Trust recognizes that from time to time the
Distributor's directors, officers and employees may serve as directors, officers
and employees of other corporations or business trusts (including other
investment companies) and that such other corporations and trust may include the
name ALPS as part of their name, and that the Distributor or its affiliates may
enter into investment advisory or other agreements with such other corporations
and trusts.
3.2 Limitation of Liability of the Trustees and Shareholders. The names
"Financial Investors Trust" and "Trustees of Financial Investors Trust" refer
respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under a Declaration of
Trust dated Feb. 23, 1994, which is hereby referred to and a copy of which is on
file at the office of the State Secretary of State of Delaware and the principal
office of the Trust. The obligations of "Financial Investors Trust" entered into
in the name of or on behalf thereof by any of its trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the trustees, shareholders, or representatives of the Trust
personally, but bind only the Trust property belonging to such class for the
enforcement of any claims against the Trust.
3.3 Amendments. No substantive amendment of this Agreement shall be
effective as to the Trust until approved by vote of a majority of the
outstanding voting securities of the Trust.
6
<PAGE> 7
3.4 Modification. No provision of this agreement may be modified,
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which an enforcement of the change, waiver,
discharge or determination is sought.
3.5 Governing Law. This agreement shall be governed and construed in
accordance with the laws of the State of Colorado.
3.6 Assignment. This agreement shall not be assigned by a party without
the prior written consent of the other party.
3.7 Headings. The titles and headings herein have been inserted for
convenience only and are not to be considered when interpreting the provisions
of this Agreement.
3.8 Waiver. The waiver by either party of a breach of any of the
covenants, provisions, or conditions herein contained shall not operate or be
construed as a waiver of any subsequent breach.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives and to be effective as of the
date first above written.
FINANCIAL INVESTORS TRUST
By:
------------------------------
ALPS Mutual Funds Services
By:
------------------------------
7
<PAGE> 8
FINANCIAL INVESTORS TRUST
DISTRIBUTION AGREEMENT DATED DECEMBER 14, 1999
SCHEDULE A
Aristata Equity Fund
Aristata Quality Bond Fund
Aristata Colorado Quality Tax-Exempt Bond Fund
Prime Money Market Fund
U.S. Treasury Money Market Fund
U.S. Government Money Market Fund
United Association 500 Index Fund
Interstate Fund
FINANCIAL INVESTORS TRUST
By:
-----------------------------------
ATTEST:
- -----------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
By:
-----------------------------------
ATTEST:
- ---------------------------
8
<PAGE> 1
AMENDED AND RESTATED
ADMINISTRATION AGREEMENT
December 14, 1999
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 3100
Denver, Colorado 80202
Dear Sirs:
Financial Investors Trust, a Delaware business trust (the "Trust"),
herewith confirms its agreement with ALPS Mutual Funds Services, Inc. ("ALPS")
as follows:
WHEREAS, the Trust desires to employ the capital of its U.S. Treasury Money
Market Fund, U.S. Government Money Market Fund and any other fund to be offered
by the Trust designated by the parties hereto and made subject to this Agreement
(each, a "Fund" and collectively, the "Funds") by investing and reinvesting the
same in investments of the type and in accordance with the limitations specified
within each Fund's Prospectus and Statement of Additional Information as from
time to time in effect, copies of which have been or will be submitted to ALPS,
and resolutions of the Trust's Board of Trustees;
WHEREAS, the Trust desires to employ ALPS as its administrator for the Funds;
WHEREAS, the Trust and ALPS wish to amend and restate their Amended and Restated
Administration Agreement dated as of March 15, 1994 to clarify that the
calculation of fees hereunder shall be determined by computing the assets of
each Fund subject to this Agreement separately from each other Fund and deriving
the fee therefore separately for each Fund rather than on an aggregate basis;
WHEREAS, the Trust and ALPS wish to amend and restate their Amended and Restated
Administration Agreement dated as of April 15, 1997 to clarify and distinguish
the services to be performed by ALPS and the fees payable to ALPS for such
services with respect to the Money Market Funds set forth on Schedule A,
attached hereto and made a part hereof, and with respect to the Aristata Group
of Funds set forth on Schedule B, attached hereto and made a part hereof;
WHEREAS, the Trust and ALPS wish to amend and restate their Amended and Restated
Administration Agreement dated as of January 20, 1998 by adding the UA 500 Index
Fund to the Agreement as set forth on Schedule C, attached hereto and made a
part hereof;
NOW THEREFORE, in consideration of the mutual covenants set forth herein, the
parties hereto agree as follows:
<PAGE> 2
1. Services as Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, ALPS will perform the services enumerated in the schedules attached
hereto with respect to the Funds set forth in each such Schedule.
2. Fees; Delegation; Expenses
In consideration of services rendered pursuant to this Agreement, the
Bookkeeping and Pricing Agreement, the Transfer Agency Agreement, the Custodian
Contract, and all other services described herein, each Fund will pay ALPS a
fee, computed daily and payable monthly, at the rates set forth in the schedules
attached hereto with respect to the Funds set forth in each such Schedule.
3. Proprietary and Confidential Information
ALPS agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of the Trust all records and other
information relative to the Funds (and clients of said shareholders), and not to
use such record and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to and
approval in writing by the Trust, which approval shall not be unreasonably
withheld and may not be withheld where ALPS may be exposed to civil or criminal
contempt proceedings for failure to comply, when requested to divulge such
information by duly constituted authorities, or when so requested by the Trust.
4. Limitation of Liability
ALPS shall not be liable for any error of judgment or mistake of law or
for any loss suffered by the Trust in connection with the matters to which this
Agreement and the other agreements referred to in paragraph two relates, except
for a loss resulting from willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement.
5. Term
This Agreement shall become effective the earlier of the commencement
of Fund operations or December 14, 1999, and unless sooner terminated as
provided herein, shall continue until December 14, 2000 (the "Initial Term").
Thereafter, this Agreement shall continue automatically with respect to the
Trust for successive annual periods ending December 14 of each year, provided
such continuance is specifically approved at least annually (i) by the Trust's
Board of Trustees or (ii) by a vote of a majority of the outstanding voting
securities of the Fund (as defined in the 1940 Act), and provided further that
in either event such continuance is also approved by a majority of the Trust's
Trustees who are not interested person's (as defined in the 1940 Act) of any
party to this Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval.
2
<PAGE> 3
During the Initial Term, the performance of ALPS' obligations and duties as
Administrator shall be specifically reviewed at least annually by the Trust's
Board of Trustees. During the Initial Term, this Agreement may be terminated
with respect to a Fund, without penalty, solely by agreement of the parties or
for cause (as defined below) on not less than ninety days written notice by the
Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of such Fund (as defined by the 1940 Act). After the Initial Term,
this Agreement may be terminated without cause or respect to a Fund and without
penalty, by the Trust's Board of Trustees, by a vote of a majority (as defined
in the 1940 Act) of the outstanding voting securities of such Fund, or by ALPS,
on not less than ninety days written notice.
Termination for "cause" for the Initial Term shall mean:
(i) willful misfeasance, bad faith, gross negligence, abandonment, or
reckless disregard on the part of ALPS with respect to its obligations and
duties hereunder;
(ii) Regulatory, administrative, or judicial proceedings against ALPS
which result in a determination that it has violated any rule, regulation,
order, or law and which in the reasonable judgement of the Trust's Board of
Trustees, including a majority of the Trust's Trustees who are not interested
persons (as defined in the 1940 Act) of any party to this Agreement, which
substantially impairs the performance of ALPS' obligations and duties hereunder;
(iii) financial difficulties on the part of ALPS which are evidenced by
the authorization or commencement of, or involvement by way of pleading, answer,
consent, or acquiescence in, a voluntary or involuntary case under title 11 of
the United States Code, as from time to time in effect, or any applicable law
other than said Title 11, of any jurisdiction relating to the liquidation or
reorganization of debtors or to the modification or alteration of the rights of
creditors;
(iv) Any other circumstance which in the reasonable judgement of the
Trust's Board of Trustees, including a majority of the Trust's Trustees who are
not interested persons (as defined in the 1940 Act) of any party to this
Agreement, substantially impairs the performance of ALPS' obligations and duties
hereunder.
6. Governing Law:
This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of the State of Colorado without regard to conflicts
of law principles.
7. Other Provisions
The Trust recognizes that from time to time directors, officers and
employees of ALPS may serve as directors, officers and employees of other
corporations or business trusts (including other investment companies) and that
such other corporations and trusts may include ALPS as part of their name and
that ALPS or its affiliates may enter into administration or other agreements
with such other corporations and trusts.
3
<PAGE> 4
The names "Financial Investors Trust" and "Trustees of Financial
Investors Trust" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under a
Declaration of Trust dated February 23, 1994 which is hereby referred to and a
copy of which is on file at the office of the Secretary of State of the
Commonwealth of Massachusetts and the principal office of the Trust. The
obligations of "Financial Investors Trust" entered into in the name or on behalf
thereof by any of its trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of the
trustees, shareholders, or representatives of the Trust personally, but bind
only the Trust property, and all persons dealing with any class of shares of the
Trust must look solely to the Trust property belonging to such class for the
enforcement of any claims against the Trust.
If the foregoing is in accordance with your understanding, will you
kindly so indicate by signing and returning to us the enclosed copy hereof.
Very Truly Yours,
FINANCIAL INVESTORS TRUST
By
---------------------------------------
Name: W. Robert Alexander
Title: Chairman
Accepted:
ALPS MUTUAL FUNDS SERVICES, INC.
By
--------------------------------
Name: Edmund J. Burke
Title: Executive Vice President
4
<PAGE> 5
SCHEDULE A
U.S. TREASURY MONEY MARKET FUND
U.S. GOVERNMENT MONEY MARKET FUND
1. Services as Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, ALPS will: (a) assist in maintaining office facilities (which may be in
the offices of ALPS or a corporate affiliate but shall be in such location as
the Trust and ALPS shall reasonably determine); (b) furnish clerical services
and stationery and office supplies; (c) compile data for and prepare with
respect to the Funds timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act") and Semi-Annual Reports on Form N-SAR; (d) coordinate execution and
filing by the Funds of all federal and state tax returns and required tax
filings other than those required to be made by the Funds' custodian; (e)
prepare compliance filings pursuant to state securities laws with the advice of
the Trust's counsel; (f) assist to the extent requested by the Funds with the
preparation of Annual and Semi-Annual Reports to the Funds' shareholders and
Registration Statements for the Funds (on Form N-1A or any replacement
therefor); (g) monitor the Funds' expense accruals and pay all expenses on
proper authorization from the Funds; (h) monitor the Funds' status as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended from time to time; (i) maintain the Trust's fidelity bonds as
required by the 1940 Act; (j) monitor compliance with the policies and
limitations of each fund as set forth in the Prospectus, Statement of Additional
Information, Code of Regulations and Declaration of Trust; and (k) generally
assist in the Fund's operations; (l) perform fund accounting and pricing as set
out in the "Bookkeeping and Pricing Agreement"; (m) perform Transfer Agency as
set out in the "Transfer Agency Agreement" and 800-line servicing; (n) Monitor
the costs and coordinate custodial services as performed by a bank contracted by
ALPS; (o) cover the costs of external audit and tax work performed by one of the
"big six" accounting firms determined by ALPS; (p) monitor and pay Securities
and Exchange Commission registration fees; (q) cover all costs involved with the
coordination and printing of the Prospectus, Semi-Annual Report, Annual Report,
the Statement of Additional Information and the account applications; (r)
payment of trustee fees . (Bob Alexander will serve as trustee at no
compensation.); (s) coordinate and pay for fund ratings, provided by two of the
major ratings agencies; (t) provide NASD licensing and training to the Financial
Investors Trust mutual fund sales force; (u) act as principal underwriter and
distributor of the Funds' securities pursuant to a Distribution Agreement; and
(v) perform corporate secretarial services. The selected sales force is subject
to review and approval by ALPS.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ALPS hereby agrees that all records which it maintains for each Fund are the
property of the Trust and further agrees to surrender promptly to the Trust any
of such records upon the Trust's request. ALPS further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act.
5
<PAGE> 6
2. Fees; Delegation; Expenses
In consideration of services rendered pursuant to this Agreement, the
Bookkeeping and Pricing Agreement, the Transfer Agency Agreement, the Custodian
Contract, and all other services described herein, each Fund will pay ALPS a
fee, computed daily and payable monthly, at the following annual rate of average
daily net assets of each Fund:
<TABLE>
<CAPTION>
U.S. Treasury U.S. Government
Money Market Money Market
------------ ---------------
<S> <C> <C>
First $500 Million .26% .16%
Next $500 Million .24% .14%
In Excess of $1 Billion .22% .12%
Minimum Fee $50,000/month $30,000/month
</TABLE>
The fee for the period from the day of the month of this Agreement is
entered into until the end of that month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
ALPS will from time to time employ or associate itself with such person
or persons or organizations as ALPS may believe to be desirable in the
performance of its duties. Such person or persons may be officers and employees
who are employed by both ALPS and the Trust. The compensation of such person or
persons or organizations shall be paid by ALPS and no obligation shall be
incurred on behalf of a Fund in such respect.
ALPS will bear all expenses in connection with the performance of its
services under this Agreement and all related agreements, except as otherwise
provided herein. ALPS will not bear any of the costs of Financial Investors
personnel, except with regard to licensing and training Financial Investors
mutual fund sales staff, as outlined above. Other expenses to be incurred in the
operation of the Funds, including organizational expenses, taxes, interest,
brokerage fees and commissions, state Blue Sky qualification fees, advisory
fees, insurance premiums, fidelity bond, Trust and Advisory related legal
expenses, costs of maintenance of corporate existence, travel and entertainment
expenses for Trustees in excess of $36,000, shall be borne by the Trust.
6
<PAGE> 7
SCHEDULE B
ARISTATA EQUITY FUND
ARISTATA QUALITY BOND FUND
ARISTATA COLORADO QUALITY TAX-EXEMPT BOND FUND
1. Services as Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, ALPS will: (a) assist in maintaining office facilities (which may be in
the offices of ALPS or a corporate affiliate but shall be in such location as
the Trust and ALPS shall reasonably determine); (b) furnish clerical services
and stationery and office supplies; (c) compile data for and prepare with
respect to the Funds timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act") and Semi-Annual Reports on Form N-SAR; (d) coordinate execution and
filing by the Funds of all federal and state tax returns and required tax
filings other than those required to be made by the Funds' custodian; (e)
prepare compliance filings pursuant to state securities laws with the advice of
the Trust's counsel; (f) assist to the extent requested by the Funds with the
preparation of Annual and Semi-Annual Reports to the Funds' shareholders and
Registration Statements for the Funds (on Form N-1A or any replacement
therefor); (g) monitor the Funds' expense accruals and pay all expenses on
proper authorization from the Funds; (h) monitor the Funds' status as a
regulated investment company under Subchapter M of the Internal Revenue Code of
1986, as amended from time to time; (i) maintain the Trust's fidelity bonds as
required by the 1940 Act; (j) on a monthly basis, monitor compliance with the
policies and limitations of each fund as set forth in the Prospectus, Statement
of Additional Information, Code of Regulations and Declaration of Trust; and (k)
generally assist in the Fund's operations; (l) perform fund accounting and
pricing as set out in the "Bookkeeping and Pricing Agreement"; (m) perform
Transfer Agency as set out in the "Transfer Agency Agreement" and 800-line
servicing; (n) cover the costs and coordinate custodial services as performed by
a bank contracted by ALPS; (o) cover the costs of external audit and tax work
performed by one of the "big six" accounting firms determined by ALPS; (p) cover
all costs involved with the coordination and printing of the Prospectus,
Semi-Annual Report, Annual Report, and the Statement of Additional Information
for existing shareholders, up to $10,000 per year; (q) payment of trustee fees ;
(r) act as principal underwriter and distributor of the Funds' securities
pursuant to a Distribution Agreement; and (s) perform corporate secretarial
services.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ALPS hereby agrees that all records which it maintains for each Fund are the
property of the Trust and further agrees to surrender promptly to the Trust any
of such records upon the Trust's request. ALPS further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act.
7
<PAGE> 8
2. Fees; Delegation; Expenses
In consideration of services rendered pursuant to this Agreement, the
Bookkeeping and Pricing Agreement, the Transfer Agency Agreement, the Custodian
Contract, and all other services described herein, each Fund will pay ALPS a
fee, computed daily and payable monthly, at the annual rate of .20% of average
daily net assets of each Fund, subject to a minimum fee per month of $15,000,
$7,500 and $5,000 for the Equity, Quality Bond and Colorado Quality Tax-Exempt
Bond Funds, respectively.
The fee for the period from the day of the month of this Agreement is
entered into until the end of that month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
ALPS will from time to time employ or associate itself with such person
or persons or organizations as ALPS may believe to be desirable in the
performance of its duties. Such person or persons may be officers and employees
who are employed by both ALPS and the Trust. The compensation of such person or
persons or organizations shall be paid by ALPS and no obligation shall be
incurred on behalf of a Fund in such respect.
ALPS will bear all expenses in connection with the performance of its
services under this Agreement and all related agreements, except as otherwise
provided herein. ALPS will not bear any of the costs of Financial Investors
personnel, except with regard to licensing and training Financial Investors
mutual fund sales staff, as outlined above. Other expenses to be incurred in the
operation of the Funds, including organizational expenses, taxes, interest,
brokerage fees and commissions, state Blue Sky qualification fees, advisory
fees, insurance premiums, fidelity bond, Trust and Advisory related legal
expenses, costs of maintenance of corporate existence, travel and entertainment
expenses for Trustees in excess of $36,000, shall be borne by the Trust.
8
<PAGE> 9
SCHEDULE C
UA 500 INDEX FUND
1. Services as Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, ALPS will: (a) assist in maintaining office facilities (which may be in
the offices of ALPS or a corporate affiliate but shall be in such location as
the Trust and ALPS shall reasonably determine); (b) furnish clerical services
and stationery and office supplies; (c) compile data for and prepare with
respect to the Fund's timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act") and Semi-Annual Reports on Form N-SAR; (d) coordinate execution and
filing by the Fund of all federal and state tax returns and required tax filings
other than those required to be made by the Fund's custodian; (e) prepare
compliance filings pursuant to state securities laws with the advice of the
Trust's counsel; (f) coordinate the preparation of Annual and Semi-Annual
Reports to the Fund's shareholders and Registration Statements for the Fund (on
Form N-1A or any replacement therefor); (g) monitor the Fund's expense accruals
and direct payment of all fund expenses on proper authorization from the Fund;
(h) monitor the Fund's status as a regulated investment company under Subchapter
M of the Internal Revenue Code of 1986, as amended from time to time; (i)
maintain the Trust's fidelity bond as required by the 1940 Act; (j) on a monthly
basis, monitor compliance with the policies and limitations of the Fund, as set
forth in the Prospectus, Statement of Additional Information, Code of
Regulations and Declaration of Trust; (k) perform fund accounting and pricing as
set out in the "Bookkeeping and Pricing Agreement"; (l) perform Transfer Agency
as set out in the "Transfer Agency Agreement" and 800-line servicing; (m) cover
the costs of external audit and tax work performed by an accounting firm
determined by ALPS; (n) monitor and cover the costs of Securities and Exchange
Commission registration fees; (o) cover all costs and coordinate printing of the
Prospectus, Semi-Annual Report, Annual Report, the Statement of Additional
Information and the account applications; (p) pay the trustee fees for the
non-interested trustees; (q) act as principal underwriter and distributor of the
Fund's securities pursuant to the Distribution Agreement; and (r) perform
corporate secretarial services.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ALPS hereby agrees that all records which it maintains for each Fund are the
property of the Trust and further agrees to surrender promptly to the Trust any
of such records upon the Trust's request. ALPS further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act.
2. Expenses of the Trust
It is understood that ALPS will pay all of the Trust's expenses other
than those expressly stated to be payable by the Trust hereunder. The expenses
payable by the Trust shall include: (i) advisory fees; (ii) custody fees; (iii)
interest and taxes; (iv) such non-recurring or extraordinary expenses as may
arise, including those relating to actions, suits or proceedings to which the
Trust is a party and the legal obligation which the Trust is
9
<PAGE> 10
a party; and (v) fees and expenses of the Trust pursuant to a plan adopted by
the Trust under Rule 12b-1 of the 1940 Act.
3. Fees; Delegation; Expenses
In consideration of services rendered pursuant to this Agreement, the
Bookkeeping and Pricing Agreement, the Transfer Agency Agreement, and all other
services described herein, the Fund will pay ALPS a fee, computed daily and
payable monthly, at the following annual rate of average daily net assets of the
Fund:
<TABLE>
<CAPTION>
UA 500
Index Fund
----------
<S> <C>
First $500 Million .12%
Next $500 Million .085%
Next $1.5 Billion .06%
In Excess of $2.5 Billion .04%
</TABLE>
The fee for the period from the day of the month that the Fund begins
operations, until the end of that month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
ALPS will from time to time employ or associate itself with such person
or persons or organizations as ALPS may believe to be desirable in the
performance of its duties. Such person or persons may be officers and employees
who are employed by both ALPS and the Trust. The compensation of such person or
persons or organizations shall be paid by ALPS and no obligation shall be
incurred on behalf of a Fund in such respect.
10
<PAGE> 11
SCHEDULE D
INTERSTATE FUND
1. Services as Administrator
Subject to the direction and control of the Board of Trustees of the
Trust, ALPS will: (a) assist in maintaining office facilities (which may be in
the offices of ALPS or a corporate affiliate but shall be in such location as
the Trust and ALPS shall reasonably determine); (b) furnish clerical services
and stationery and office supplies; (c) compile data for and prepare with
respect to the Fund timely Notices to the Securities and Exchange Commission
required pursuant to Rule 24f-2 under the Investment Company Act of 1940 (the
"1940 Act") and Semi-Annual Reports on Form N-SAR; (d) coordinate execution and
filing by the Fund of all federal and state tax returns and required tax filings
other than those required to be made by the Fund's custodian; (e) prepare
compliance filings pursuant to state securities laws with the advice of the
Trust's counsel; (f) assist to the extent requested by the Fund with the
preparation of Annual and Semi-Annual Reports to the Fund's shareholders and
Registration Statements for the Fund (on Form N-1A or any replacement therefor);
(g) monitor the Fund's expense accruals and pay all expenses on proper
authorization from the Fund; (h) monitor the Fund's status as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended from time to time; (i) maintain the Trust's fidelity bonds as required
by the 1940 Act; (j) on a monthly basis, monitor compliance with the policies
and limitations of the fund as set forth in the Prospectus, Statement of
Additional Information, Code of Regulations and Declaration of Trust; and (k)
generally assist in the Fund's operations; (l) perform fund accounting and
pricing as set out in the "Bookkeeping and Pricing Agreement"; (m) perform
Transfer Agency as set out in the "Transfer Agency Agreement" and 800-line
servicing; (n) payment of trustee fees; and (o) act as principal underwriter and
distributor of the Fund's securities pursuant to a Distribution Agreement.
In compliance with the requirements of Rule 31a-3 under the 1940 Act,
ALPS hereby agrees that all records which it maintains for the Fund are the
property of the Trust and further agrees to surrender promptly to the Trust any
of such records upon the Trust's request. ALPS further agrees to preserve for
the periods prescribed by Rule 31a-2 under the 1940 Act the records required to
be maintained by Rule 31a-1 under the 1940 Act.
2. Fees; Delegation; Expenses
In consideration of services rendered pursuant to this Agreement, the
Bookkeeping and Pricing Agreement, the Transfer Agency Agreement, the Custodian
Contract, and all other services described herein, the Fund will pay ALPS a fee,
computed daily and payable monthly, at the rate of the greater of $45,000 per
year or .05% (5 basis points) for Administration, the greater of $30,000 per
year or .03% (3 basis points) plus out-of-pocket expenses for Fund Accounting,
and the greater of $27,000 per year or $13 per open account plus out-of-pocket
expenses for Transfer Agency.
11
<PAGE> 12
The fee for the period from the day of the month of this Agreement is
entered into until the end of that month shall be pro-rated according to the
proportion which such period bears to the full monthly period and shall be
payable upon the date of termination of this Agreement.
ALPS will from time to time employ or associate itself with such person
or persons or organizations as ALPS may believe to be desirable in the
performance of its duties. Such person or persons may be officers and employees
who are employed by both ALPS and the Trust. The compensation of such person or
persons or organizations shall be paid by ALPS and no obligation shall be
incurred on behalf of the Fund in such respect.
ALPS will bear all expenses in connection with the performance of its
services under this Agreement and all related agreements, except as otherwise
provided herein. ALPS will not bear any of the costs of the Interstate Fund
personnel. Other expenses to be incurred in the operation of the Fund, including
organizational expenses, audit and tax fees, taxes, custody fees, printing
expenses, interest, brokerage fees and commissions, state Blue Sky qualification
fees, advisory fees, insurance premiums, fidelity bond, Trust and Advisory
related legal expenses shall be borne by the Fund.
12
<PAGE> 1
CUSTODIAN AGREEMENT
This AGREEMENT, dated as of , by and between the (the "Trust"), a
business trust organized under the laws of the , acting with respect to the
, (the "Fund"), a series of the Trust and operated and administered by the
Trust, and FIRSTAR BANK, N.A., a national banking association (the "Custodian").
WITNESSETH:
WHEREAS, the Trust desires that the Fund's Securities and cash be held
and administered by the Custodian pursuant to this Agreement; and
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Custodian represents that it is a bank having the
qualifications prescribed in Section 26(a)(i) of the 1940 Act;
NOW, THEREFORE, in consideration of the mutual agreements herein made,
the Trust and the Custodian hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
1.1 "Authorized Person" means any Officer or other person duly
authorized by resolution of the Board of Trustees to give Oral Instructions and
Written Instructions on behalf of the Fund and named in Exhibit A hereto or in
such resolutions of the Board Of Trustees, certified by an Officer, as may be
received by the Custodian from time to time.
1.2 "Board Of Trustees" shall mean the Trustees from time to time
serving under the Trust's Agreement and Declaration of Trust, as from time to
time amended.
1.3 "Book-Entry System" shall mean a federal book-entry system as
provided in Subpart O of Treasury Circular No. 300, 31 CFR 306, in Subpart B of
31 CFR Part 350, or in such book-entry regulations of federal agencies as are
substantially in the form of such Subpart O.
1.4 "Business Day" shall mean any day recognized as a settlement day by
The New York Stock Exchange, Inc. and any other day for which the Trust computes
the net asset value of Shares of the Fund.
1
<PAGE> 2
1.5 "Fund Custody Account" shall mean any of the accounts in the name
of the Trust, which is provided for in Section 3.2 below.
1.6 "NASD" shall mean The National Association of Securities Dealers,
Inc.
1.7 "Officer" shall mean the Chairman, President, any Vice President,
any Assistant Vice President, the Secretary, any Assistant Secretary, the
Treasurer, or any Assistant Treasurer of the Trust.
1.8 "Oral Instructions" shall mean instructions orally transmitted to
and accepted by the Custodian because such instructions are: (i) reasonably
believed by the Custodian to have been given by an Authorized Person, (ii)
recorded and kept among the records of the Custodian made in the ordinary course
of business and (iii) orally confirmed by the Custodian. The Trust shall cause
all Oral Instructions to be confirmed by Written Instructions prior to the end
of the next Business Day. If such Written Instructions confirming Oral
Instructions are not received by the Custodian prior to a transaction, it shall
in no way affect the validity of the transaction or the authorization thereof by
the trust. If Oral Instructions vary from the Written Instructions which purport
to confirm them, the Custodian shall notify the trust of such variance but such
Oral Instructions will govern unless the Custodian has not yet acted.
1.9 "Proper Instructions" shall mean Oral Instructions or Written
Instructions. Proper Instructions may be continuing Written Instructions when
deemed appropriate by both parties.
1.10 "Securities Depository" shall mean The Depository Trust Company
and (provided that Custodian shall have received a copy of a resolution of the
Board Of Trustees, certified by an Officer, specifically approving the use of
such clearing agency as a depository for the Fund) any other clearing agency
registered with the Securities and Exchange Commission under Section 17A of the
Securities and Exchange Act of 1934 as amended (the "1934 Act"), which acts as a
system for the central handling of Securities where all Securities of any
particular class or series of an issuer deposited within the system are treated
as fungible and may be transferred or pledged by bookkeeping entry without
physical delivery of the Securities.
1.11 "Securities" shall include, without limitation, common and
preferred stocks, bonds, call options, put options, debentures, notes, bank
certificates of deposit, bankers' acceptances, mortgage-backed securities or
other obligations, and any certificates, receipts, warrants or other instruments
or documents representing rights to receive, purchase or subscribe for the same,
or evidencing or representing any other rights or interests therein, or any
similar property or assets that the Custodian has the facilities to clear and to
service.
1.12 "Shares" shall mean, with respect to a Fund, the units of
beneficial interest issued by the trust on account of the Fund.
2
<PAGE> 3
1.13 "Sub-Custodian" shall mean and include (i) any branch of a "U.S.
Bank," as that term is defined in Rule 17f-5 under the 1940 Act, (ii) any
"Eligible Foreign Custodian," as that term is defined in Rule 17f-5 under the
1940 Act, having a contract with the Custodian which the Custodian has
determined will provide reasonable care of assets of the Funds based on the
standards specified in Section 3.3 below. Such contract shall include provisions
that provide: (i) for indemnification or insurance arrangements (or any
combination of the foregoing) such that the Funds will be adequately protected
against the risk of loss of assets held in accordance with such contract; (ii)
that the Funds' assets will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of the Sub-Custodian or its
creditors except a claim of payment for their safe custody or administration, in
the case of cash deposits, liens or rights in favor of creditors of the
Sub-Custodian arising under bankruptcy, insolvency, or similar laws; (iii) that
beneficial ownership for the Funds' assets will be freely transferable without
the payment of money or value other than for safe custody or administration;
(iv) that adequate records will be maintained identifying the assets as
belonging to the funds or as being held by a third party for the benefit of the
Funds; (v) that the Funds' independent public accountants will be given access
to those records or confirmation of the contents of those records; and (vi) that
the Funds will receive periodic reports with respect to the safekeeping of the
Funds' assets, including, but not limited to, notification of any transfer to or
from a Fund's account or a third party account containing assets held for the
benefit of the Fund. Such contract may contain, in lieu of any or all of the
provisions specified above, such other provisions that the Custodian determines
will provide, in their entirety, the same or a greater level of care and
protection for Fund assets as the specified provisions, in their entirety.
1.14 "Written Instructions" shall mean (i) written communications
actually received by the Custodian and signed by an Authorized Person, or (ii)
communications by telex or any other such system from one or more persons
reasonably believed by the Custodian to be Authorized Persons, or (iii)
communications between electro-mechanical or electronic devices provided that
the use of such devices and the procedures for the use thereof shall have been
approved by resolutions of the Board Of Trustees, a copy of which, certified by
an Officer, shall have been delivered to the Custodian.
ARTICLE II
APPOINTMENT OF CUSTODIAN
2.1 Appointment. The Trust hereby constitutes and appoints the
Custodian as custodian of all Securities and cash owned by or in the possession
of the Fund at any time during the period of this Agreement.
3
<PAGE> 4
2.2 Acceptance. The Custodian hereby accepts appointment as such
custodian and agrees to perform the duties thereof as hereinafter set forth.
2.3 Documents to be Furnished. The following documents, including any
amendments thereto, will be provided contemporaneously with the execution of the
Agreement to the Custodian by the trust:
a. A copy of the Declaration of Trust of the Trust certified by the
Secretary;
b. A copy of the Bylaws of the Trust certified by the Secretary;
c. A copy of the resolution of the Board Of Trustees of the Trust
appointing the Custodian, certified by the Secretary;
d. A copy of the then current Prospectus of the Fund; and
e. A certification of the Chairman and Secretary of the Trust setting
forth the names and signatures of the current Officers of the Trust and other
Authorized Persons.
2.4 Notice of Appointment of Dividend and Transfer Agent. The Trust
agrees to notify the Custodian in writing of the appointment, termination or
change in appointment of any Dividend and Transfer Agent of the Fund.
ARTICLE III
CUSTODY OF CASH AND SECURITIES
3.1 Segregation. All Securities and non-cash property held by the
Custodian for the account of the Fund (other than Securities maintained in a
Securities Depository or Book-Entry System) shall be physically segregated from
other Securities and non-cash property in the possession of the Custodian
(including the Securities and non-cash property of the other Funds) and shall be
identified as subject to this Agreement.
3.2 Fund Custody Accounts. As to each Fund, the Custodian shall open
and maintain in its trust department a custody account in the name of the Trust
coupled with the name of the Fund, subject only to draft or order of the
Custodian, in which the Custodian shall enter and carry all Securities, cash and
other assets of such Fund which are delivered to it.
3.3 Appointment of Agents. (a) In its discretion, the Custodian may
appoint one or more Sub-Custodians to act as Securities Depositories or as
sub-custodians to hold Securities and cash of the Funds and to carry out such
other provisions of this Agreement as it may determine, provided, however, that
the appointment of any such agents and maintenance of any Securities and cash of
the Fund shall be at the Custodian's expense and shall not relieve the Custodian
of any of its obligations or liabilities under this Agreement.
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(b) If, after the initial approval of Sub-Custodians by the Board Of
Trustees in connection with this Agreement, the Custodian wishes to appoint
other Sub-Custodians to hold property of the Fund, it will so notify the Trust
and provide it with information reasonably necessary to determine any such new
Sub-Custodian's eligibility under Rule 17f-5 under the 1940 Act, including a
copy of the proposed agreement with such Sub-Custodian. The Trust shall at the
meeting of the Board Of Trustees next following receipt of such notice and
information give a written approval or disapproval of the proposed action.
(c) The Agreement between the Custodian and each Sub-Custodian acting
hereunder shall contain the required provisions set forth in Rule
17f-5(a)(1)(iii).
(d) At the end of each calendar quarter, the Custodian shall provide
written reports notifying the Board of Trustees of the placement of the
Securities and cash of the Funds with a particular Sub-Custodian and of any
material changes in the Funds' arrangements. The Custodian shall promptly take
such steps as may be required to withdraw assets of the Funds from any
Sub-Custodian that has ceased to meet the requirements of Rule 17f-5 under the
1940 Act.
(e) With respect to its responsibilities under this Section 3.3, the
Custodian hereby warrants to the Trust that it agrees to exercise reasonable
care, prudence and diligence such as a person having responsibility for the
safekeeping of property of the Funds. The Custodian further warrants that a
Fund's assets will be subject to reasonable care, based on the standards
applicable to custodians in the relevant market, if maintained with each
Sub-Custodian, after considering all factors relevant to the safekeeping of such
assets, including, without limitation: (i) the SubCustodian's practices,
procedures, and internal controls, for certificated securities (if applicable),
the method of keeping custodial records, and the security and data protection
practices; (ii) whether the Sub-Custodian has the requisite financial strength
to provide reasonable care for Fund assets; (iii) the Sub-Custodian's general
reputation and standing and, in the case of a Securities Depository, the
Securities Depository's operating history and number of participants; and (iv)
whether the Fund will have jurisdiction over and be able to enforce judgments
against the Sub-Custodian, such as by virtue of the existence of any offices of
the Sub-Custodian in the United States or the Sub-Custodian's consent to service
of process in the United States.
(f) The Custodian shall establish a system to monitor the
appropriateness of maintaining the Fund's assets with a particular Sub-Custodian
and the contract governing the Funds' arrangements with such Sub-Custodian.
3.4 Delivery of Assets to Custodian. The Trust shall deliver, or cause
to be delivered, to the Custodian all of the Funds' Securities, cash and other
assets, including (a) all payments of income, payments of principal and capital
distributions received by the Fund with respect to such Securities, cash or
other assets
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owned by the Fund at any time during the period of this Agreement, and (b) all
cash received by the Fund for the issuance, at any time during such period, of
Shares. The Custodian shall not be responsible for such Securities, cash or
other assets until actually received by it.
3.5 Securities Depositories and Book-Entry Systems. The Custodian may
deposit and/or maintain Securities of the Fund in a Securities Depository or in
a Book-Entry System, subject to the following provisions:
(a) Prior to a deposit of Securities of the Funds in any Securities
Depository or Book-Entry System, the Trust shall deliver to the Custodian a
resolution of the Board Of Trustees, certified by an Officer, authorizing and
instructing the Custodian on an on-going basis to deposit in such Securities
Depository or Book-Entry System all Securities eligible for deposit therein and
to make use of such Securities Depository or Book-Entry System to the extent
possible and practical in connection with its performance hereunder, including,
without limitation, in connection with settlements of purchases and sales of
Securities, loans of Securities, and deliveries and returns of collateral
consisting of Securities.
(b) Securities of the Funds kept in a Book-Entry System or Securities
Depository shall be kept in an account ("Depository Account") of the Custodian
in such Book-Entry System or Securities Depository which includes only assets
held by the Custodian as a fiduciary, custodian or otherwise for customers.
(c) The records of the Custodian with respect to Securities of the Fund
maintained in a Book-Entry System or Securities Depository shall, by book-entry,
identify such Securities as belonging to such Fund.
(d) If Securities purchased by a Fund are to be held in a Book-Entry
System or Securities Depository, the Custodian shall pay for such Securities
upon (i) receipt of advice from the Book-Entry System or Securities Depository
that such Securities have been transferred to the Depository Account, and (ii)
the making of an entry on the records of the Custodian to reflect such payment
and transfer for the account of such Fund. If Securities sold by a Fund are held
in a Book-Entry System or Securities Depository, the Custodian shall transfer
such Securities upon (i) receipt of advice from the Book-Entry System or
Securities Depository that payment for such Securities has been transferred to
the Depository Account, and (ii) the making of an entry on the records of the
Custodian to reflect such transfer and payment for the account of such Fund.
(e) The Custodian shall provide the Trust with copies of any report
(obtained by the Custodian from a Book-Entry System or Securities Depository in
which Securities of the Fund are kept) on the internal accounting controls and
procedures for safeguarding Securities deposited in such Book-Entry System or
Securities Depository.
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(f) Anything to the contrary in this Agreement notwithstanding, the
Custodian shall be liable to the Trust for any loss or damage to the Fund
resulting (i) from the use of a Book-Entry System or Securities Depository by
reason of any negligence or willful misconduct on the part of Custodian or any
Sub-Custodian appointed pursuant to Section 3.3 above or any of its or their
employees, or (ii) from failure of Custodian or any such Sub-Custodian to
enforce effectively such rights as it may have against a Book-Entry System or
Securities Depository. At its election, the Trust shall be subrogated to the
rights of the Custodian with respect to any claim against a Book-Entry System or
Securities Depository or any other person from any loss or damage to the Fund
arising from the use of such Book-Entry System or Securities Depository, if and
to the extent that the Funds has not been made whole for any such loss or
damage.
3.6 Disbursement of Moneys from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall disburse moneys from the Fund Custody
Account but only in the following cases:
(a) For the purchase of Securities for the Fund but only in accordance
with Section 4.1 of this Agreement and only (i) in the case of Securities (other
than options on Securities, futures contracts and options on futures contracts),
against the delivery to the Custodian (or any Sub-Custodian appointed pursuant
to Section 3.3 above) of such Securities registered as provided in Section 3.9
below or in proper form for transfer, or if the purchase of such Securities is
effected through a Book-Entry System or Securities Depository, in accordance
with the conditions set forth in Section 3.5 above; (ii) in the case of options
on Securities, against delivery to the Custodian (or such Sub-Custodian) of such
receipts as are required by the customs prevailing among dealers in such
options; (iii) in the case of futures contracts and options on futures
contracts, against delivery to the Custodian (or such Sub-Custodian) of evidence
of title thereto in favor of the Fund or any nominee referred to in Section 3.9
below; and (iv) in the case of repurchase or reverse repurchase agreements
entered into between the Trust and a bank which is a member of the Federal
Reserve System or between the Trust and a primary dealer in U.S. Government
securities, against delivery of the purchased Securities either in certificate
form or through an entry crediting the Custodian's account at a Book-Entry
System or Securities Depository with such Securities;
(b) In connection with the conversion, exchange or surrender, as set
forth in Section 3.7(f) below, of Securities owned by the Fund;
(c) For the payment of any dividends or capital gain distributions
declared by the Fund;
(d) In payment of the redemption price of Shares as provided in Section
5.1 below;
(e) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of the Fund:
interest; taxes; administration, investment advisory,
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<PAGE> 8
accounting, auditing, transfer agent, custodian, trustee and legal fees; and
other operating expenses of the Fund; in all cases, whether or not such expenses
are to be in whole or in part capitalized or treated as deferred expenses;
(f) For transfer in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered under the 1934 Act
and a member of the NASD, relating to compliance with rules of The Options
Clearing Corporation and of any registered national securities exchange (or of
any similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(g) For transfer in accordance with the provision of any agreement
among the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in connection with
transactions by the Fund;
(h) For the funding of any uncertificated time deposit or other
interest-bearing account with any banking institution (including the Custodian),
which deposit or account has a term of one year or less; and
(i) For any other proper purpose, but only upon receipt, in addition to
Proper Instructions, of a copy of a resolution of the Board Of Trustees,
certified by an Officer, specifying the amount and purpose of such payment,
declaring such purpose to be a proper corporate purpose, and naming the person
or persons to whom such payment is to be made.
3.7 Delivery of Securities from Fund Custody Account. Upon receipt of
Proper Instructions, the Custodian shall release and deliver Securities from the
Fund Custody Account but only in the following cases:
(a) Upon the sale of Securities for the account of the Fund but only
against receipt of payment therefor in cash, by certified or cashiers check or
bank credit;
(b) In the case of a sale effected through a Book-Entry System or
Securities Depository, in accordance with the provisions of Section 3.5 above;
(c) To an offeror's depository agent in connection with tender or other
similar offers for Securities of the Fund; provided that, in any such case, the
cash or other consideration is to be delivered to the Custodian;
(d) To the issuer thereof or its agent (i) for transfer into the name
of the Fund, the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above, or of any nominee or nominees of any of the foregoing, or (ii) for
exchange for a different number of certificates or other evidence representing
the same aggregate face amount or number of units; provided that, in any such
case, the new Securities are to be delivered to the Custodian;
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<PAGE> 9
(e) To the broker selling Securities, for examination in accordance
with the "street delivery" custom;
(f) For exchange or conversion pursuant to any plan or merger,
consolidation, recapitalization, reorganization or readjustment of the issuer of
such Securities, or pursuant to provisions for conversion contained in such
Securities, or pursuant to any deposit agreement, including surrender or receipt
of underlying Securities in connection with the issuance or cancellation of
depository receipts; provided that, in any such case, the new Securities and
cash, if any, are to be delivered to the Custodian;
(g) Upon receipt of payment therefor pursuant to any repurchase or
reverse repurchase agreement entered into by the Fund;
(h) In the case of warrants, rights or similar Securities, upon the
exercise thereof, provided that, in any such case, the new Securities and cash,
if any, are to be delivered to the Custodian;
(i) For delivery in connection with any loans of Securities of the
Fund, but only against receipt of such collateral as the Trust shall have
specified to the Custodian in Proper Instructions;
(j) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Trust, but only against receipt by the
Custodian of the amounts borrowed;
(k) Pursuant to any authorized plan of liquidation, reorganization,
merger, consolidation or recapitalization of the Trust;
(l) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian and a broker-dealer registered under the 1934 Act
and a member of the NASD, relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities exchange (or of
any similar organization or organizations) regarding escrow or other
arrangements in connection with transactions by the Fund;
(m) For delivery in accordance with the provisions of any agreement
among the Trust, the Custodian, and a futures commission merchant registered
under the Commodity Exchange Act, relating to compliance with the rules of the
Commodity Futures Trading Commission and/or any contract market (or any similar
organization or organizations) regarding account deposits in connection with
transactions by the Fund; or
(n) For any other proper corporate purpose, but only upon receipt, in
addition to Proper Instructions, of a copy of a resolution of the Board Of
Trustees, certified by an Officer, specifying the Securities to be delivered,
setting forth the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or persons to
whom delivery of such Securities shall be made.
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3.8 Actions Not Requiring Proper Instructions. Unless otherwise
instructed by the Trust, the Custodian shall with respect to all Securities held
for the Fund:
(a) Subject to Section 7.4 below, collect on a timely basis all income
and other payments to which the Fund is entitled either by law or pursuant to
custom in the securities business;
(b) Present for payment and, subject to Section 7.4 below, collect on a
timely basis the amount payable upon all Securities which may mature or be
called, redeemed, or retired, or otherwise become payable;
(c) Endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments;
(d) Surrender interim receipts or Securities in temporary form for
Securities in definitive form;
(e) Execute, as custodian, any necessary declarations or certificates
of ownership under the federal income tax laws or the laws or regulations of any
other taxing authority now or hereafter in effect, and prepare and submit
reports to the Internal Revenue Service ("IRS") and to the Trust at such time,
in such manner and containing such information as is prescribed by the IRS;
(f) Hold for the Fund, either directly or, with respect to Securities
held therein, through a Book-Entry System or Securities Depository, all rights
and similar securities issued with respect to Securities of the Fund; and
(g) In general, and except as otherwise directed in Proper
Instructions, attend to all non-discretionary details in connection with the
sale, exchange, substitution, purchase, transfer and other dealings with
Securities and assets of the Fund.
3.9 Registration and Transfer of Securities. All Securities held for a
Fund that are issued or issuable only in bearer form shall be held by the
Custodian in that form, provided that any such Securities shall be held in a
Book-Entry System if eligible therefor. All other Securities held for the Fund
may be registered in the name of such Fund, the Custodian, or any SubCustodian
appointed pursuant to Section 3.3 above, or in the name of any nominee of any of
them, or in the name of a Book-Entry System, Securities Depository or any
nominee of either thereof. The Trust shall furnish to the Custodian appropriate
instruments to enable the Custodian to hold or deliver in proper form for
transfer, or to register in the name of any of the nominees hereinabove referred
to or in the name of a Book-Entry System or Securities Depository, any
Securities registered in the name of a Fund.
3.10 Records. (a) The Custodian shall maintain, by Fund, complete and
accurate records with respect to Securities, cash or other property held for the
Fund, including (i) journals or other records of original entry containing an
itemized daily record in detail of all receipts and deliveries of Securities and
all receipts and disbursements of cash; (ii) ledgers (or other records)
reflecting (A) Securities in transfer, (B) Securities in
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physical possession, (C) monies and Securities borrowed and monies and
Securities loaned (together with a record of the collateral therefor and
substitutions of such collateral), (D) dividends and interest received, and (E)
dividends receivable and interest receivable; and (iii) canceled checks and bank
records related thereto. The Custodian shall keep such other books and records
of the Funds as the Trust shall reasonably request, or as may be required by the
1940 Act, including, but not limited to, Section 31 of the 1940 Act and
Rule 31a-2 promulgated thereunder.
(b) All such books and records maintained by the Custodian shall (i) be
maintained in a form acceptable to the Trust and in compliance with rules and
regulations of the Securities and Exchange Commission, (ii) be the property of
the Trust and at all times during the regular business hours of the Custodian be
made available upon request for inspection by duly authorized officers,
employees or agents of the Trust and employees or agents of the Securities and
Exchange Commission, and (iii) if required to be maintained by Rule 31a-1 under
the 1940 Act, be preserved for the periods prescribed in Rule 31a-2 under the
1940 Act.
3.11 Fund Reports by Custodian. The Custodian shall furnish the Trust
with a daily activity statement and a summary of all transfers to or from each
Fund Custody Account on the day following such transfers. At least monthly and
from time to time, the Custodian shall furnish the Trust with a detailed
statement of the Securities and moneys held by the Custodian and the
Sub-Custodians for the Fund under this Agreement.
3.12 Other Reports by Custodian. The Custodian shall provide the Trust
with such reports, as the Trust may reasonably request from time to time, on the
internal accounting controls and procedures for safeguarding Securities, which
are employed by the Custodian or any Sub-Custodian appointed pursuant to Section
3.3 above.
3.13 Proxies and Other Materials. The Custodian shall cause all proxies
relating to Securities which are not registered in the name of the Fund, to be
promptly executed by the registered holder of such Securities, without
indication of the manner in which such proxies are to be voted, and shall
promptly deliver to the Trust such proxies, all proxy soliciting materials and
all notices relating to such Securities.
3.14 Information on Corporate Actions. The Custodian shall promptly
deliver to the Trust all information received by the Custodian and pertaining to
Securities being held by the Fund with respect to optional tender or exchange
offers, calls for redemption or purchase, or expiration of rights as described
in the Standards of Service Guide attached as Appendix B. If the Trust desires
to take action with respect to any tender offer, exchange offer or other similar
transaction, the Trust shall notify the Custodian at least five Business Days
prior to the date on which the Custodian is to take such action. The Trust will
provide or cause to be
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provided to the Custodian all relevant information for any Security which has
unique put/option provisions at least five Business Days prior to the beginning
date of the tender period.
ARTICLE IV
PURCHASE AND SALE OF INVESTMENTS OF THE FUND
4.1 Purchase of Securities. Promptly upon each purchase of Securities
for the Fund, Written Instructions shall be delivered to the Custodian,
specifying (a) the name of the issuer or writer of such Securities, and the
title or other description thereof, (b) the number of shares, principal amount
(and accrued interest, if any) or other units purchased, (c) the date of
purchase and settlement, (d) the purchase price per unit, (e) the total amount
payable upon such purchase, and (f) the name of the person to whom such amount
is payable. The Custodian shall upon receipt of such Securities purchased by
such Fund pay out of the moneys held for the account of a Fund the total amount
specified in such Written Instructions to the person named therein. The
Custodian shall not be under any obligation to pay out moneys to cover the cost
of a purchase of Securities for the Fund, if in the Fund Custody Account there
is insufficient cash available to the Fund for which such purchase was made.
4.2 Liability for Payment in Advance of Receipt of Securities
Purchased. In any and every case where payment for the purchase of Securities
for a Fund is made by the Custodian in advance of receipt of the Securities
purchased but in the absence of specified Written Instructions to so pay in
advance, the Custodian shall be liable to the Fund for such Securities to the
same extent as if the Securities had been received by the Custodian.
4.3 Sale of Securities. Promptly upon each sale of Securities by a
Fund, Written Instructions shall be delivered to the Custodian, specifying (a)
the name of the issuer or writer of such Securities, and the title or other
description thereof, (b) the number of shares, principal amount (and accrued
interest, if any), or other units sold, (c) the date of sale and settlement, (d)
the sale price per unit, (e) the total amount payable upon such sale, and (f)
the person to whom such Securities are to be delivered. Upon receipt of the
total amount payable to the Fund as specified in such Written Instructions, the
Custodian shall deliver such Securities to the person specified in such Written
Instructions. Subject to the foregoing, the Custodian may accept payment in such
form as shall be satisfactory to it, and may deliver Securities and arrange for
payment in accordance with the customs prevailing among dealers in Securities.
4.4 Delivery of Securities Sold. Notwithstanding Section 4.3 above or
any other provision of this Agreement, the Custodian, when instructed to deliver
Securities against payment, shall be entitled, if in accordance with generally
accepted market practice, to deliver such Securities prior to actual receipt of
final
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payment therefor. In any such case, the Fund shall bear the risk that final
payment for such Securities may not be made or that such Securities may be
returned or otherwise held or disposed of by or through the person to whom they
were delivered, and the Custodian shall have no liability for any for the
foregoing.
4.5 Payment for Securities Sold, etc. In its sole discretion and from
time to time, the Custodian may credit the Fund Custody Account, prior to actual
receipt of final payment thereof, with (i) proceeds from the sale of Securities
which it has been instructed to deliver against payment, (ii) proceeds from the
redemption of Securities or other assets of the Fund, and (iii) income from
cash, Securities or other assets of the Fund. Any such credit shall be
conditional upon actual receipt by Custodian of final payment and may be
reversed if final payment is not actually received in full. The Custodian may,
in its sole discretion and from time to time, permit the Fund to use funds so
credited to the Fund Custody Account in anticipation of actual receipt of final
payment. Any such funds shall be repayable immediately upon demand made by the
Custodian at any time prior to the actual receipt of all final payments in
anticipation of which funds were credited to the Fund Custody Account.
4.6 Advances by Custodian for Settlement. The Custodian may, in its
sole discretion and from time to time, advance funds to the Trust to facilitate
the settlement of a Fund's transactions in the Fund Custody Account. Any such
advance shall be repayable immediately upon demand made by Custodian.
ARTICLE V
REDEMPTION OF FUND SHARES
5.1 Transfer of Funds. From such funds as may be available for the
purpose in the relevant Fund Custody Account, and upon receipt of Proper
Instructions specifying that the funds are required to redeem Shares of the
Fund, the Custodian shall wire each amount specified in such Proper Instructions
to or through such bank as the Trust may designate with respect to such amount
in such Proper Instructions.
5.2 No Duty Regarding Paying Banks. The Custodian shall not be under
any obligation to effect payment or distribution by any bank designated in
Proper Instructions given pursuant to Section 5.1 above of any amount paid by
the Custodian to such bank in accordance with such Proper Instructions.
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ARTICLE VI
SEGREGATED ACCOUNTS
Upon receipt of Proper Instructions, the Custodian shall establish and
maintain a segregated account or accounts for and on behalf of the Fund, into
which account or accounts may be transferred cash and/or Securities, including
Securities maintained in a Depository Account,
(a) in accordance with the provisions of any agreement among the Trust,
the Custodian and a broker-dealer registered under the 1934 Act and a member of
the NASD (or any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The Options Clearing
Trust and of any registered national securities exchange (or the Commodity
Futures Trading Commission or any registered contract market), or of any similar
organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Fund,
(b) for purposes of segregating cash or Securities in connection with
securities options purchased or written by the Fund or in connection with
financial futures contracts (or options thereon) purchased or sold by the Fund,
(c) which constitute collateral for loans of Securities made by the
Fund,
(d) for purposes of compliance by the Fund with requirements under the
1940 Act for the maintenance of segregated accounts by registered investment
companies in connection with reverse repurchase agreements and when-issued,
delayed delivery and firm commitment transactions, and
(e) for other proper corporate purposes, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the Board
Of Trustees, certified by an Officer, setting forth the purpose or purposes of
such segregated account and declaring such purposes to be proper corporate
purposes. Each segregated account established under this Article VI shall be
established and maintained for a single Fund only. All Proper Instructions
relating to a segregated account shall specify the Fund involved.
ARTICLE VII
CONCERNING THE CUSTODIAN
7.1 Standard of Care. The Custodian shall be held to the exercise of
reasonable care in carrying out its obligations under this Agreement, and shall
be without liability to the Trust or any Fund for arty loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim unless
such loss, damage, cost, expense, liability or claim arises from negligence, bad
faith or willful misconduct on its part or on the part of any Sub-Custodian
appointed pursuant to Section 3.3 above. The Custodian shall be entitled to rely
on and may
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act upon advice of counsel on all matters, and shall be without liability for
any action reasonably taken or omitted pursuant to such advice. The Custodian
shall promptly notify the Trust of any action taken or, omitted by the Custodian
pursuant to advice of counsel. The Custodian shall not be under any obligation
at any time to ascertain whether the Trust or the Fund is in compliance with the
1940 Act, the regulations thereunder, the provisions of the Trust's charter
documents or by-laws, or its investment objectives and policies as then in
effect.
7.2 Actual Collection Required. The Custodian shall not be liable for,
or considered to be the custodian of, any cash belonging to a Fund or any money
represented by a check, draft or other instrument for the payment of money,
until the Custodian or its agents actually receive such cash or collect on such
instrument.
7.3 No Responsibility for Title, etc. So long as and to the extent that
it is in the exercise of reasonable care, the Custodian shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received or delivered by it pursuant to this Agreement.
7.4 Limitation on Duty to Collect. Custodian shall not be required to
enforce collection, by legal means or otherwise, of any money or property due
and payable with respect to Securities held for the Fund if such Securities are
in default or payment is not made after due demand or presentation.
7.5 Reliance Upon Documents and Instructions. The Custodian shall be
entitled to rely upon any certificate, notice or other instrument in writing
received by it and reasonably believed by it to be genuine. The Custodian shall
be entitled to rely upon any Oral Instructions and any Written Instructions
actually received by it pursuant to this Agreement.
7.6 Express Duties Only. The Custodian shall have no duties or
obligations whatsoever except such duties and obligations as are specifically
set forth in this Agreement, and no covenant or obligation shall be implied in
this Agreement against the Custodian.
7.7 Co-operation. The Custodian shall cooperate with and supply
necessary information to the entity or entities appointed by the Trust to keep
the books of account of the Funds and/or compute the value of the assets of the
Funds. The Custodian shall take all such reasonable actions as the Trust may
from time to time request to enable the Trust to obtain, from year to year,
favorable opinions from the Trust's independent accountants with respect to the
Custodian's activities hereunder in connection with (a) the preparation of the
Trust's reports on Form N-lA and Form N-SAR and any other reports required by
the Securities and Exchange Commission, and (b) the fulfillment by the Trust of
any other requirements of the Securities and Exchange Commission.
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ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by Trust. The Trust shall indemnify and hold
harmless the Custodian and any Sub-Custodian appointed pursuant to Section 3.3
above, and any nominee of the Custodian or of such Sub-Custodian, from and
against any loss, damage, cost, expense (including attorneys' fees and
disbursements), liability (including, without limitation, liability arising
under the Securities Act of 1933, the 1934 Act, the 1940 Act, and any state or
foreign securities and/or banking laws) or claim arising directly or indirectly
(a) from the fact that Securities are registered in the name of any such
nominee, or (b) from any action or inaction by the Custodian or such
Sub-Custodian (i) at the request or direction of or in reliance on the advice of
the Trust, or (ii) upon Proper Instructions, or (c) generally, from the
performance of its obligations under this Agreement or any sub-custody agreement
with a Sub-Custodian appointed pursuant to Section 3.3 above, provided that
neither the Custodian nor any such Sub-Custodian shall be indemnified and held
harmless from and against any such loss, damage, cost, expense, liability or
claim arising from the Custodian's or such Sub-Custodian's negligence, bad faith
or willful misconduct.
8.2 Indemnification by Custodian. The Custodian shall indemnify and
hold harmless the Trust from and against any loss, damage, cost, expense
(including attorneys' fees and disbursements), liability (including without
limitation, liability arising under the Securities Act of 1933, the 1934 Act,
the 1940 Act, and any state or foreign securities and/or banking laws) or claim
arising from the negligence, bad faith or willful misconduct of the Custodian or
any SubCustodian appointed pursuant to Section 3.3 above, or any nominee of the
Custodian or of such Sub-Custodian.
8.3 Indemnity to be Provided. If the Trust requests the Custodian to
take any action with respect to Securities, which may, in the opinion of the
Custodian, result in the Custodian or its nominee becoming liable for the
payment of money or incurring liability of some other form, the Custodian shall
not be required to take such action until the Trust shall have provided
indemnity therefor to the Custodian in an amount and form satisfactory to the
Custodian.
8.4 Security. If the Custodian advances cash or Securities to the Fund
for any purpose, either at the Trust's request or as otherwise contemplated in
this Agreement, or in the event that the Custodian or its nominee incurs, in
connection with its performance under this Agreement, any loss, damage, cost,
expense (including attorneys' fees and disbursements), liability or claim
(except such as may arise from its or its nominee's negligence, bad faith or
willful misconduct), then, in any such event, any property at any time held for
the account of such Fund shall be security therefor, and should the Fund fail
promptly to repay or indemnify the
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<PAGE> 17
Custodian, the Custodian shall be entitled to utilize available cash of such
Fund and to dispose of other assets of such Fund to the extent necessary to
obtain reimbursement or indemnification.
ARTICLE IX
FORCE MAJEURE
Neither the Custodian nor the Trust shall be liable for any failure or
delay in performance of its obligations under this Agreement arising out of or
caused, directly or indirectly, by circumstances beyond its reasonable control,
including, without limitation, acts of God; earthquakes; fires; floods; wars;
civil or military disturbances; sabotage; strikes; epidemics; riots; power
failures;; computer failure and any such circumstances beyond its reasonable
control as may cause interruption, loss or malfunction of utility,
transportation, computer (hardware or software) or telephone communication
service; accidents; labor disputes; acts of civil or military authority;
governmental actions; or inability to obtain labor, material, equipment or
transportation; provided, however, that the Custodian in the event of a failure
or delay (i) shall not discriminate against the Funds in favor of any other
customer of the Custodian in making computer time and personnel available to
input or process the transactions contemplated by this Agreement and (ii) shall
use its best efforts to ameliorate the effects of any such failure or delay.
ARTICLE X
EFFECTIVE PERIOD: TERMINATION
10.1 Effective Period. This Agreement shall become effective as of its
execution and shall continue in full force and effect until terminated as
hereinafter provided.
10.2 Termination. Either party hereto may terminate this Agreement by
giving to the other party a notice in writing specifying the date of such
termination, which shall be not less than sixty (60) days after the date of the
giving of such notice. If a successor custodian shall have been appointed by the
Board Of Trustees, the Custodian shall, upon receipt of a notice of acceptance
by the successor custodian, on such specified date of termination (a) deliver
directly to the successor custodian all Securities (other than Securities held
in a Book-Entry System or Securities Depository) and cash then owned by the Fund
and held by the Custodian as custodian, and (b) transfer any Securities held in
a Book-Entry System or Securities Depository to an account of or for the benefit
of the Funds at the successor custodian, provided that the Trust shall have paid
to the Custodian all fees, expenses and other amounts to the payment or
reimbursement of which it shall then be entitled. Upon such delivery and
transfer, the Custodian shall be relieved of all obligations under this
17
<PAGE> 18
Agreement. The Trust may at any time immediately terminate this Agreement in the
event of the appointment of a conservator or receiver for the Custodian by
regulatory authorities or upon the happening of alike event at the direction of
an appropriate regulatory agency or court of competent jurisdiction.
10.3 Failure to Appoint Successor Custodian. If a successor custodian
is not designated by the Trust on or before the date of termination specified
pursuant to Section 10.1 above, then the Custodian shall have the right to
deliver to a bank or corporation company of its own selection, which (a) is a
"bank" as defined in the 1940 Act and (b) has aggregate capital, surplus and
undivided profits as shown on its then most recent published report of not less
than $25 million, all Securities, cash and other property held by Custodian
under this Agreement and to transfer to an account of or for the Funds at such
bank or trust company all Securities of the Funds held in a Book-Entry System or
Securities Depository. Upon such delivery and transfer, such bank or trust
company shall be the successor custodian under this Agreement and the Custodian
shall be relieved of all obligations under this Agreement.
ARTICLE XI
COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to compensation as agreed upon from
time to time by the Trust and the Custodian. The fees and other charges in
effect on the date hereof and applicable to the Fund are set forth in Appendix C
attached hereto.
ARTICLE XII
LIMITATION OF LIABILITY
It is expressly agreed that the obligations of the Trust hereunder
shall not be binding upon any of the Trustees, shareholders, nominees, officers,
agents or employees of the Trust personally, but shall bind only the property of
the Trust as provided in the Trust's Agreement and Articles of Incorporation, as
from time to time amended. The execution and delivery of this Agreement have
been authorized by the Trustees, and this Agreement has been signed and
delivered by an authorized officer of the Trust, acting as such, and neither
such authorization by the Trustees nor such execution and delivery by such
officer shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the
corporation property of the Trust as provided in the above-mentioned Agreement
and Articles of Incorporation.
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<PAGE> 19
ARTICLE XIII
NOTICES
Unless otherwise specified herein, all demands, notices, instructions,
and other communications to be given hereunder shall be in writing and shall be
sent or delivered to the recipient at the address set forth after its name
hereinbelow:
To the Trust:
ATTORNEY
To Custodian:
Firstar Bank, N.A.
425 Walnut Street, M.L. CN-WN-06TC
Cincinnati, Ohio 45202
Attention: Mutual Fund Custody Services
Telephone: (513) 632-4432
Facsimile: (513) 632-3299
or at such other address as either party shall have provided to the other by
notice given in accordance with this Article XIII. Writing shall include
transmissions by or through teletype, facsimile, central processing unit
connection, on-line terminal and magnetic tape.
ARTICLE XIV
MISCELLANEOUS
14.1 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio.
14.2 References to Custodian. The Trust shall not circulate any printed
matter which contains any reference to Custodian without the prior written
approval of Custodian, excepting printed matter contained in
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<PAGE> 20
the prospectus or statement of additional information for the Fund and such
other printed matter as merely identifies Custodian as custodian for the Fund.
The Trust shall submit printed matter requiring approval to Custodian in draft
form, allowing sufficient time for review by Custodian and its counsel prior to
any deadline for printing.
14.3 Note. No failure by either party hereto to exercise, and no delay
by such party in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by either party hereto of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein are
cumulative and not exclusive of any remedies provided at law or in equity.
14.4 Amendments. This Agreement cannot be changed orally and no
amendment to this Agreement shall be effective unless evidenced by an instrument
in writing executed by the parties hereto.
14.5 Counterparts. This Agreement may be executed in one or more
counterparts, and by the parties hereto on separate counterparts, each of which
shall be deemed an original but all of which together shall constitute but one
and the same instrument.
14.6 Severability. If any provision of this Agreement shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired thereby.
14.7 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns; provided, however, that this Agreement shall not be assignable by
either party hereto without the written consent of the other party hereto.
14.8 Headings. The headings of sections in this Agreement are for
convenience of reference only and shall not affect the meaning or construction
of any provision of this Agreement.
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<PAGE> 21
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered in its name and on its behalf by its
representative thereunto duly authorized, all as of the day and year first above
written.
ATTEST:
By:
- ------------------------- ----------------------------------
ATTEST: FIRSTAR BANK, N.A.
By:
- ------------------------- ----------------------------------
21
<PAGE> 1
AMENDED AND RESTATED
TRANSFER AGENCY AND SERVICE AGREEMENT
between
FINANCIAL INVESTORS TRUST
and
ALPS MUTUAL FUNDS SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Article 1. Terms of Appointment; Duties 4
Article 2. Fees and Expenses 9
Article 3. Representations and Warranties of ALPS 9
Article 4. Representations and Warranties of the Trust 10
Article 5. Data Access and Proprietary Information 11
Article 6. Indemnification 13
Article 7. Standard of Care 16
Article 8. Covenants of the Trust and ALPS 16
Article 9. Termination of Agreement 18
Article 10. Assignment 18
Article 11. Amendment 19
Article 12. Colorado Law to Apply 19
Article 13. Merger of Agreement 19
Article 14. Counterparts 20
Article 15. Limitation of Liability of the Trustees
and Shareholders 20
Article 16. Year 2000 20
Article 17. Notices 21
Article 18. Waiver 21
Article 19. Severability 22
Article 20. Survival 22
Article 21. Headings 22
</TABLE>
2
<PAGE> 3
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 14th day of December, 1999, by and between
FINANCIAL INVESTORS TRUST, a Delaware business trust, having its principal
office and place of business at 370 Seventeenth Street, Suite 3100, Denver,
Colorado 80202 (the "Trust"), and ALPS MUTUAL FUNDS SERVICES, INC., a Colorado
Corporation having its principal office and place of business at 370 Seventeenth
Street, Suite 3100, Denver, Colorado 80202 ("ALPS" or the "Administrator");
WHEREAS, the Trust and ALPS have entered into an Administration
Agreement dated as of December 14, 1999 (the "Administration Agreement")
pursuant to which ALPS is to provide various services,
WHEREAS, the Trust in accordance with the Administration Agreement
desires to appoint ALPS as its transfer agent, dividend disbursing agent and
agent in connection with certain other activities, and ALPS desires to accept
such appointment;
WHEREAS, the Trust is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Trust presently offers shares in separate series, as
described in Appendix A to this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
3
<PAGE> 4
Article 1. Terms of Appointment; Duties of ALPS
1.01 Subject to the terms and conditions set forth in this
Agreement, the Trust hereby employs and appoints ALPS to act as, and ALPS agrees
to act as its transfer agent for the Trust's authorized and issued shares of
beneficial interest in the Trust or any other fund of the Trust ("Shares"),
dividend disbursing agent and agent in connection with any accumulation,
open-account or similar plans provided to the shareholders of the Trust
("Shareholders") and set out in the currently effective prospectus and statement
of additional information ("prospectus") of the Trust, including without
limitation any periodic investment plan or periodic withdrawal program.
1.02 ALPS agrees that it will perform the following services
in accordance with the Trust's prospectus:
(a) In accordance with procedures established from
time to time by agreement between the Trust and ALPS, ALPS shall:
(i) Receive for acceptance, orders for the
purchase of Shares, promptly deliver payment
and appropriate documentation thereof to the
Custodians of the Trust authorized pursuant
to the Declaration of Trust of the Trust
(who is referred to herein as the
"Custodian"), and make proper remittance of
any sales load received by it to the persons
entitled
4
<PAGE> 5
to the same as instructed by the Trust's
Administrator;
(ii) Pursuant to purchase orders, issue the
appropriate number of Shares and hold Shares
in the appropriate Shareholder account;
(iii) In the event any check or other order for
the transfer of money is returned unpaid,
take such steps as it may deem appropriate
or the Trust may instruct to protect the
Trust and ALPS from financial loss;
(iv) Receive for acceptance redemption requests
and redemption directions and deliver the
appropriate documentation thereof to the
appropriate Custodian;
(v) In respect to the transactions in items (i),
(ii) and (iv) above, ALPS shall execute
transactions directly with broker-dealers
authorized by the Trust who shall thereby be
deemed to be acting on behalf of the Trust;
At the appropriate time as and when it
receives monies paid to it by the Custodian
with respect to any redemption, pay over or
cause to be paid over in the appropriate
manner such monies as instructed by the
redeeming Shareholders;
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<PAGE> 6
(vii) Effect transfers of Shares by the registered
owners thereof upon receipt of appropriate
instructions;
(viii) Prepare and transmit payments (or where
appropriate credit a Shareholder account)
for dividends and distributions declared by
a Fund;
(ix) Issue replacement certificates for those
certificates alleged to have been lost,
stolen or destroyed upon receipt by ALPS of
indemnification satisfactory to ALPS and
protecting ALPS and the Trust, and ALPS at
its option, may issue replacement
certificates in place of mutilated stock
certificates upon presentation thereof and
without such indemnity;
(x) Maintain records of account for and advise
the Trust and its Shareholders as to the
foregoing; and Record the issuance of Shares
of the Trust and maintain pursuant to SEC
Rule 17Ad-lO(e) a record of the total number
of Shares of the Trust which are authorized,
based upon data provided to it by the Trust,
and issued and outstanding. ALPS shall also
provide the Trust on a regular basis with
the total number of Shares which are
authorized and issued and
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<PAGE> 7
outstanding and shall have no obligation,
when recording the issuance of Shares, to
monitor the issuance of such Shares or to
take cognizance of any laws relating to the
issue or sale of such Shares, which
functions shall be the sole responsibility
of the Trust.
(b) In addition to and neither in lieu nor in
contravention of the services set forth in the above paragraph (a), ALPS shall:
(i) perform the customary services of a transfer
agent, dividend disbursing agent and, as
relevant, agent in connection with
accumulation, open-account or similar plans
(including without limitation any periodic
investment plan or periodic withdrawal
program), including but not limited to:
maintaining all Shareholder accounts,
preparing shareholder meeting lists, mailing
proxies, mailing Shareholder reports and
prospectuses to current Shareholders,
withholding taxes on U.S. resident and
non-resident alien accounts and maintaining
records with respect to such withholding,
preparing and filing U.S. Treasury
Department Forms 1099 and other appropriate
forms required with respect to dividends and
distributions by federal authorities for all
Shareholders, preparing and mailing
7
<PAGE> 8
confirmation forms and statements of account
to Shareholders for all purchases and
redemptions of Shares and other confirmable
transactions in Shareholder accounts,
responding to Shareholder telephone calls
and Shareholder correspondence, preparing
and mailing activity statements for
Shareholders, and providing Shareholder
account information and (ii) provide a
system which will enable the Trust to
monitor the total number of Shares sold in
each State.
(c) In addition, the Trust's outside legal counsel
shall (i) identify to ALPS in writing those transactions and assets to be
treated as exempt from blue sky reporting for each State and (ii) verify the
establishment of transactions for each State on the system prior to activation
and thereafter monitor the daily activity for each State. The responsibility of
ALPS for a Fund's blue sky State registration status is solely limited to the
initial establishment of transactions subject to blue sky compliance by such
Fund and the reporting of such transactions to the Fund as provided above.
(d) Procedures as to who shall provide certain of
these services in Article 1 may be established from time to time by agreement
between the Trust and ALPS per the attached service responsibility schedule.
ALPS may at times perform only a portion of these services and the Trust or its
agent may perform these services on the Trust's behalf.
8
<PAGE> 9
(e) ALPS shall provide additional services on behalf
of the Trust (i.e., escheatment services) which may be agreed upon in writing
between the Trust and ALPS.
Article 2. Fees and Expenses
2.01 For the performance by ALPS pursuant to this Agreement,
the Trust agrees to pay ALPS the fees in accordance with the terms of the
Administration Agreement.
2.02 In addition to the fee paid under Section 2.01 above, the
Trust agrees to reimburse ALPS for tabulating proxies. In addition, any other
expenses incurred by ALPS at the request or with the consent of the Trust, will
be reimbursed by the Fund.
2.03 The Trust agrees to pay all fees and reimbursable
expenses within thirty days following the receipt of the respective billing
notice. Postage for mailing of proxies to all Shareholder accounts shall be
advanced to ALPS by the Trust at least seven (7) days prior to the mailing date
of such materials.
Article 3. Representations and Warranties of ALPS
ALPS represents and warrants to the Trust that:
3.01 It is a company duly organized and existing and in good
standing under the laws of the State of Colorado.
3.02 It is duly qualified to carry on its business in the
State of Colorado.
3.03 It is empowered under applicable laws and by its Charter
and By-Laws to enter into and perform this Agreement.
9
<PAGE> 10
3.04 All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4. Representations and Warranties of the Trust
The Trust represents and warrants to ALPS that:
4.01 It is a business trust duly organized and existing and in
good standing under the laws of the State of Delaware.
4.02 It is empowered under applicable laws and by its
Declaration of Trust and Code of Regulations to enter into and perform this
Agreement.
4.03 All trust proceedings required by said Declaration of
Trust and Code of Regulations have been taken to authorize it to enter into and
perform this Agreement.
4.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940, as amended.
4.05 A registration statement under the Securities Act of
1933, as amended is currently effective and will remain effective, and
appropriate state securities law filings have been made and will continue to be
made, with respect to all Shares of the Trust being offered for sale.
10
<PAGE> 11
Article 5. Data Access and Proprietary Information
5.01 The Trust acknowledges that the data bases, computer
programs, screen formats, report formats, interactive design techniques, and
documentation manuals furnished to the Trust by ALPS as part of the Trust's
ability to access certain related data ("Customer Data") maintained by ALPS on
data bases under the control and ownership of ALPS ("Data Access Services")
constitute copyrighted, trade secret, or other proprietary information
(collectively, "Proprietary Information") of substantial value to ALPS. It is
understood that Customer Data, which includes data provided to ALPS by or on
behalf of the Trust and records belonging to the Trust pursuant to Section 31 of
the Investment Company Act of 1940 as amended (and the Rules thereunder), will
not be deemed to be Data Access Services or Proprietary Information. The Trust
agrees to treat all Proprietary Information as proprietary to ALPS and further
agrees that it shall not divulge any Proprietary Information to any person or
organization except as may be provided hereunder. Without limiting the
foregoing, the Trust agrees for itself and its employees and agents:
(a) to access Customer Data solely from locations as may
be designated in writing by and solely in accordance
with ALPS' applicable user documentation;
(b) to refrain from copying or duplicating in any way the
Proprietary Information;
(c) to refrain from obtaining unauthorized access to any
portion of the Proprietary Information, and if such
access is inadvertently obtained, to inform
11
<PAGE> 12
in a timely manner of such fact and dispose of such
information in accordance with ALPS' instructions;
(d) to refrain from causing or allowing third-party data
acquired hereunder from being retransmitted to any
other computer facility or other location, except
with the prior written consent of ALPS;
(e) that the Trust shall have access only to those
authorized transactions agreed upon by the parties;
(f) to honor all reasonable written requests made by ALPS
to protect at ALPS' expense the rights of ALPS in
Proprietary Information at common law, under federal
copyright law and under other federal or state law.
Each party shall take reasonable efforts to advise its
employees or independent service contractors of the obligations pursuant to this
Article 5. The obligations of this Article shall survive any earlier termination
of this Agreement.
5.02 If the Trust notifies ALPS that any of the Data Access
Services do not operate in material compliance with the most recently issued
user documentation for such services, ALPS shall endeavor in a timely manner to
correct such failure. Organizations from which ALPS may obtain certain data
included in the Data Access Services are solely responsible for the contents of
such data and the Trust agrees to make no claim against ALPS arising out of the
contents of such third-party data, including, but not limited to, the accuracy
thereof, provided that ALPS will
12
<PAGE> 13
comply with all reasonable requests for assistance from the Trust in resolving
any claim or other discrepancy the Trust may have with such third party
organizations. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS IS, AS
AVAILABLE BASIS (PROVIDED THAT ALPS SHALL CONTINUE TO BE RESPONSIBLE FOR ANY
DELAY IN OR OTHER FAILURE OF PERFORMANCE THAT ARISES AS A RESULT OF A MATTER
REASONABLY WITHIN ALPS' CONTROL). ALPS EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT
THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
5.03 If the transactions available to the Trust include the
ability to originate a customer originated electronic financial instruction to
ALPS in order to (i) effect the transfer or movement of cash or Shares or (ii)
transmit Shareholder information or other information (such transactions
constituting a "COEFI"), then in such event ALPS shall be entitled to rely on
the validity and authenticity of such instruction without undertaking any
further inquiry as long as such instruction is undertaken in conformity with
reasonable security procedures established by ALPS from time to time.
Article 6. Indemnification
6.01 ALPS shall not be responsible for, and the Trust shall
indemnify and hold ALPS harmless from and against, any and all losses, damages,
costs, charges, counsel fees, payments, expenses and liability arising out of or
attributable to:
(a) All actions taken or omitted to be taken by ALPS
or its agent or subcontractors required to be taken pursuant
13
<PAGE> 14
to this Agreement, provided that such actions are taken in good faith and
without negligence or willful misconduct.
(b) The Funds lack of good faith, negligence or
willful misconduct which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The good faith reliance on or use by ALPS or its
agents or subcontractors of written information, records and documents or
services which (i) are received or relied upon by ALPS or its agents or
subcontractors and furnished to it or performed by or on behalf of the Fund, and
(ii) have been prepared, maintained and/or performed by the Fund or any other
authorized person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by ALPS or
its agents or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the securities
laws or regulations of any state that such Shares be registered in such state or
in violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 At any time ALPS may apply to any officer of the Trust
for instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by ALPS under this
Agreement, and ALPS and its agents or subcontractors shall not be liable and
shall be indemnified by the Trust for any action taken or omitted by it in
14
<PAGE> 15
reliance upon such instructions or upon the opinion of such counsel (provided
such counsel is reasonably satisfactory to the Trust). ALPS, its agents and
subcontractors shall be protected and indemnified in acting upon any paper or
document furnished by or on behalf of the Trust, reasonably believed to be
genuine and to have been signed by the proper person or persons, or upon any
instruction, information, data, records or documents provided ALPS or its agents
or subcontractors by machine readable input, telex, CRT data entry or other
similar means authorized by the Trust, and shall not be held to have notice of
any change of authority of any person, until receipt of written notice thereof
from the Fund. ALPS, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably believed to
bear the proper manual or facsimile signatures of the officer(s) of the Trust,
and the proper countersignature of any former transfer agent or former
registrar, or of a co-transfer agent or co-registrar.
6.03 In the event either party is unable to perform its
obligations under the terms of this Agreement because of acts of God, strikes,
equipment or transmission failure or damage reasonably beyond its control, or
other causes reasonably beyond its control, such party shall not be liable for
damages to the other for any damages resulting from such failure to perform or
otherwise from such causes.
6.04 In order that the indemnification provisions contained in
this Article 6 shall apply, upon the assertion of a claim for which the Trust
may be required to indemnify ALPS, ALPS shall promptly notify the Trust of such
assertion, and shall keep the Trust advised with respect to all developments
concerning such claim. The Trust shall have the option to participate with ALPS
in the defense of such claim or to defend against said claim
15
<PAGE> 16
in its own name or in the name of ALPS. ALPS shall in no case confess any claim
or make any compromise in any case in which the Trust may be required to
indemnify ALPS except with the Trust's prior written consent.
Article 7. Standard of Care
7.01 ALPS shall at all times act in good faith and agrees to
use its best efforts within reasonable limits to insure the accuracy of all
services performed under this Agreement, but assumes no responsibility and shall
not be liable for loss Of damage due to errors unless said errors are caused by
its negligence, bad faith, or willful misconduct or that of its employees.
Article 8. Covenants of the Trust and ALPS
8.01 The Trust shall promptly furnish to ALPS the following:
(a) A certified copy of the resolution of the Board
of Trustees of the Trust authorizing the appointment of ALPS and the execution
and delivery of this Agreement.
(b) A copy of the Declaration of Trust and Code of
Regulations of the Trust and all amendments thereto.
(c) Copies of each vote of the Board of Trustees of
the Trust designating authorized persons to give instructions to ALPS.
8.02 ALPS hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Trust for
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<PAGE> 17
safekeeping of stock certificates, check forms and facsimile signature
imprinting devices, if any; and for the preparation or use, and for keeping
account of, such certificates, forms and devices.
8.03 ALPS shall keep records relating to the services to be
performed hereunder, in the form and manner, as it may deem advisable, as
required by applicable laws, rules and regulations. To the extent required by
Section 31 of the Investment Company Act of 1940, as amended, and the Rules
thereunder, ALPS agrees that all such records prepared or maintained by ALPS
relating to the services to be performed by ALPS hereunder are the property of
the Trust and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Trust on
and in accordance with its request. Additionally, ALPS will make reasonably
available to the Trust and its authorized representatives records maintained by
ALPS pursuant to this Agreement for reasonable inspection, use and audit, and
will take all reasonable action to assist the Trust's independent accountants in
rendering their opinion.
8.04 ALPS and the Trust agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential and shall not be voluntarily disclosed to
any other person, except as may be required by law.
8.05 In case of any requests or demands for the inspection of
the Shareholder records of the Trust, ALPS will endeavor to notify the Trust and
to secure instructions from an authorized officer of the Trust as to such
inspection. ALPS reserves the right, however, to exhibit the Shareholder records
17
<PAGE> 18
to any person whenever it is advised by its counsel that it may be held liable
for the failure to exhibit the Shareholder records to such person.
Article 9. Termination of Agreement
9.01 This Agreement may be terminated by either party upon
ninety (90) days written notice to the other. Not withstanding anything to the
contrary in this Agreement, ALPS may not terminate this Agreement prior to the
later of: (i) the expiration of the initial or any renewal term of the
Administration Agreement; or (ii) the effectiveness of any termination notice
pursuant to the Administration Agreement. This Agreement may be terminated
immediately by the Trust should ALPS cease to be qualified to act as the Trust's
transfer agent pursuant to applicable law.
9.02 Should the Trust exercise its right to terminate, other
than as a result of a default under this Agreement by ALPS, all out-of-pocket
expenses associated with the movement of records and material will be borne by
the Trust. Additionally, ALPS reserves the right to charge for any other
reasonable expenses associated with such termination.
Article 10. Assignment
10.01 Except as provided in Section 10.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
18
<PAGE> 19
10.02 This Agreement shall inure to the benefit of and be
binding upon the parties and their respective permitted successors and assigns.
10.03 ALPS may, without further consent on the part of the
Trust, subcontract for the performance hereof with (i) State Street Bank Trust,
a duly registered transfer agent pursuant to Section 17A(c)(l) of the Securities
Exchange Act of 1934, as amended ("Section 17A(c)(l)"); provided, however, that
ALPS shall be as fully responsible to the Trust for the acts and omissions of
any subcontractor as it is for its own acts and omissions.
Article 11. Amendment
11.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Trustees of the Trust.
Article 12. Colorado Law to Apply
12.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Colorado.
Article 13. Merger of Agreement
13.01 This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
19
<PAGE> 20
Article 14. Counterparts
14.01 This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
Article 15. Limitation of Liability of the Trustees and Shareholders
15.01 The names "Financial Investors Trust" and "Trustees of
Financial Investors Trust" refer respectively to the Trust created and the
Trustees, as trustees but not individually or personally, acting from time to
time under a Declaration of Trust dated Feb. 23, 1994, which may be further
amended from time to time which is hereby referred to and a copy of which is on
file at the office of the Secretary of the State of Delaware and the principal
office of the Trust. The obligations of "Financial Investors Trust" entered into
in the name or on behalf thereof by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders, or representatives of the Trust
personally, but bind only the Trust Property, and all persons dealing with any
class of shares of the Trust must look solely to the Trust Property belonging to
such class for the enforcement of any claims against the Trust.
Article 16. Year 2000
16.01 ALPS is in the process of preparing its electronic data
processing system and programs for the arrival of the Year 2000, and will inform
the Trust of the status of such preparations upon reasonable request. ALPS will
make every reasonable effort to ensure such systems and programs utilized by
ALPS to
20
<PAGE> 21
provide services to the Trust under this Agreement will be able to process
date-related data on and after January 1, 2000 accurately.
Article 17. Notices
17.01 All notices and other communications as required or
permitted hereunder shall be in writing and delivered by certified mail, postage
prepaid, return receipt requested, addressed as follows or to such other address
or addresses of which the respective party shall have notified the other.
(a) If to the Trust, to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202-5631
Attention: Jeremy May
(b) If to Alps, to:
ALPS Mutual Funds Services, Inc.
370 17th Street, Suite 3100
Denver, CO 80202-5631
Attention: General Counsel
Article 18. Waiver.
18.01 The waiver by either party of a breach of any of the
covenants, provisions, or conditions herein
21
<PAGE> 22
contained shall not operate, or be construed, as a waiver of any subsequent
breach.
Article 19. Severability.
19.01 If any provision or provisions of this Agreement shall
be held invalid, unlawful, or unenforceable, the validity, legality, or
enforceability of the remaining provisions shall not in any way be affected or
impaired.
Article 20. Survival.
20.01 All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or protections of
proprietary rights and trade secrets shall survive the termination of this
Agreement.
Article 21. Headings.
21.01 The titles and headings herein have been inserted for
convenience only and are not to be considered when interpreting the provisions
of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf by and through their duly authorized
officers, as of the day and year first above written.
FINANCIAL INVESTORS TRUST
BY:
-----------------------
22
<PAGE> 23
ATTEST:
- ------------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
------------------------------
ATTEST:
- ------------------------------
23
<PAGE> 24
ALPS MUTUAL FUNDS SERVICES, INC.
FUND SERVICE RESPONSIBILITY
<TABLE>
<CAPTION>
Service Performed Responsibility
- ----------------- ---------------------
ALPS Trust
---- -----
<S> <C> <C>
1. Receives orders for the purchase of Shares. X
2. Issue Shares and hold Shares in Shareholder's accounts. X
3. Receive redemption requests. X
4. Effect transactions 1-3 above directly with broker-dealers. X
5. Pay over monies to redeeming Shareholders. X
6. Effect transfers of Shares. X
7. Prepare and transmit dividends and distributions. X
8. Issue replacement Certificates. X
9. Reporting of abandoned property. X
10. Maintain records of account. X
11. Maintain and keep a current and accurate control book for each issue of
securities. X
12. Mail proxies. X
13. Mail Shareholder reports. X
14. Mail prospectuses to current Shareholders. X
</TABLE>
24
<PAGE> 25
<TABLE>
<S> <C>
15. Withhold taxes on U.S. resident and non-resident alien accounts. X
16. Prepare and file U.S. Treasury Department forms. X
17. Prepare and mail account and confirmation statements for Shareholders. X
18. Provide Shareholder account information. X
19. Blue sky reporting. X
</TABLE>
o Such services are more fully described in Article 1.02 (a), (b) and (c)
of the Agreement.
FINANCIAL INVESTORS TRUST
BY:
------------------------------
ATTEST:
- ------------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
------------------------------
ATTEST:
- ------------------------------
25
<PAGE> 26
APPENDIX A
Series Offered Under Financial Investors Trust:
U.S. Treasury Money Market Fund
U.S. Government Money Market Fund
Prime Money Market Fund
Aristata Equity Fund
Aristata Quality Bond Fund
Aristata Colorado Quality Tax Exempt Bond Fund
United Association 500 Index Fund
Interstate Fund
FINANCIAL INVESTORS TRUST
BY:
------------------------------
ATTEST:
- ------------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
BY:
------------------------------
ATTEST:
- ------------------------------
26
<PAGE> 1
AMENDED AND RESTATED
BOOKKEEPING AND PRICING AGREEMENT
Between
FINANCIAL INVESTORS TRUST
and
ALPS MUTUAL FUNDS SERVICES, INC.
<PAGE> 2
BOOKKEEPING AND PRICING AGREEMENT
AGREEMENT made this 14th day of December,1999 between FINANCIAL
INVESTORS Trust, a Delaware business trust having its principal office at 370
Seventeenth Street, Suite 3100, Denver, Colorado 80202 (the "Trust") and ALPS
MUTUAL FUNDS SERVICES, INC., a Colorado corporation having its principal office
at 370 Seventeenth Street, Suite 3100, Denver, Colorado 80202 (the "Agent").
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940 which presently offers
shares in separate series, as described in Appendix A to this Agreement, (herein
referred to individually as a "Portfolio" and collectively as the "Portfolios");
and
WHEREAS, the Trust and the Agent have entered into an Administration
Agreement, (the "Administration Agreement"), pursuant to which the Agent will
provide certain services; and
WHEREAS, the Trust desires to appoint the Agent as agent to perform
certain bookkeeping and pricing services for the Portfolios on behalf of the
Trust, and the Agent has indicated its willingness to so act, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
hereinafter contained, the parties hereto agree as follows:
1. Agent Appointed Bookkeeping and Pricing Agent. The Trust hereby
appoints the Agent as bookkeeping and pricing agent for the Portfolios
and the Agent agrees to provide the services contemplated herein upon
the terms and conditions hereinafter set forth.
2. Definitions. In this Agreement the terms below have the following
meanings:
(a) Authorized Person. Authorized Person means any of the persons duly
authorized to give Proper Instructions or otherwise act on behalf
of the Trust by appropriate resolution of the Board of Trustees of
the Trust. The Trust will at all times maintain on file with the
Agent certification, in such form as may be acceptable to the
Agent, of (i) the names and signatures of the Authorized Person(s)
and (ii) the names of the members of the Board of Trustees of the
Trust, it being understood that upon the occurrence of any change
in the information set forth in the most recent certification on
file (including without limitation any person named in the most
recent certification who is no longer an Authorized Person as
designated therein), the Trust will provide a new or amended
certification setting forth the change. The Agent will be entitled
to rely upon any Proper Instruction (defined below) which has been
signed by person(s) named in the most recent certification.
(b) Proper Instructions. Proper Instructions means any request,
instruction or certification signed by one or more Authorized
Persons. Oral instructions will be considered Proper Instructions
if the Agent reasonably believes them to have been given by an
Authorized Person and they are confirmed in writing. Proper
Instructions
2
<PAGE> 3
may include communication effected directly between
electromechanical or electronic devices as agreed upon by the
parties hereto.
3. Duties of the Agent. The Agent agrees to provide or to arrange to
provide at its expense the following services for the Trust:
(a) Maintain separate accounts for the Portfolios, all as directed from
time to time by Proper Instructions;
(b) Timely calculate and transmit to NASDAQ if eligible each
Portfolio's daily net asset value and public offering price (such
determinations to be made in accordance with the provisions of the
Declaration of Trust and the appropriate prospectus and statement
of additional information relating to the Portfolios, and any
applicable resolutions of the Board of Trustees of the Trust) and
promptly communicate such values and prices to the Portfolios and
the Portfolios' transfer agent;
(c) Maintain and keep current all books and records of the Fund as
required by Section 31 of the 1940 Act and the rules promulgated
thereunder ("Section 31") in connection with the Agent's duties
hereunder. The Agent shall comply with all laws, rules and
regulations applicable to the performance of its obligations
hereunder. Without limiting the generality of the foregoing, the
Agent will prepare and maintain the following records upon receipt
of information in proper form from Authorized Persons of the Trust:
(i) Cash receipts journal
(ii) Cash disbursements journal
(iii) Dividend records
(iv) Purchase and sales - portfolio securities journals
(v) Subscription and redemption journals
(vi) Security ledgers
(vii) Broker ledgers
(viii) General ledger
(ix) Daily expense accruals
(x) Daily income accruals
(xi) Securities and monies borrowed or loaned and collateral
therefore
(xii) Foreign currency journals
(xiii) Trial balances
(d) Provide the Trust and its investment adviser(s) with daily
portfolio values, net asset values and other statistical data for
each Portfolio as requested from time to time.
(e) Compute the net income, exempt interest income and capital gains of
the Portfolio for dividend purposes in accordance with relevant
prospectus policies and resolutions of the Board of Trustees of the
Trust.
(f) Provide the Portfolio and its investment adviser(s) with copies of
the semi-annual and annual financial statements to be furnished to
shareholders of each Portfolio and all raw financial data necessary
for the timely preparation of tax returns, Form N-SAR, prospectus
updates, Rule 24f-2 filings and proxy statements.
3
<PAGE> 4
(g) Provide facilities to accommodate annual audits and any audits or
examinations conducted by the Securities and Exchange Commission or
other governmental entities.
(h) Provide audited financial statements regarding the Agent on an
annual basis, as requested. Such audits shall be conducted by an
independent accounting firm mutually agreed upon by the Agent and
the Trust.
(i) Furnish to the Trust at the end of every month, and at the close of
each quarter of the Trust's fiscal year, a list of the portfolio
securities and the aggregate amount of cash in the Portfolios.
(j) Assist in the preparation of certain reports, audits of accounts,
and other matters of like nature, as reasonably requested from time
to time by the Trust.
The Agent shall for all purposes be deemed to be an independent
contractor and shall, unless otherwise expressly authorized, have no
authority to act for or represent the Fund in any way or otherwise be
deemed an agent of the Trust.
4. Subcontractors. It is understood that the Agent may from time to time
at its own expense delegate the performance of all or a portion of its
obligations under this Agreement to one or more persons (hereinafter
"subcontractor(s)") as the Agent may believe to be particularly fit to
assist it in the performance of this Agreement. The Agent shall provide
oversight over any subcontractor(s) who shall in turn provide services
pursuant to an agreement with the Agent approved by a resolution of the
Board of Trustees of the Trust.
5. Instructions to the Agent. The Agent shall promptly take all
appropriate steps necessary to carry out or comply with any Proper
Instructions received from the Trust.
6. Agent Compensation. In consideration for the services to be performed
by the Agent, the Agent shall be entitled to receive from the Fund such
compensation as set forth in the Administration Agreement.
7. Liability of the Agent.
(a) The Agent may rely upon the written advice of counsel for the Trust
and the Trust's independent accountants, and upon oral or written
statements of brokers and other persons reasonably believed by the
Agent in good faith to be an expert in the matters upon which they
are consulted and, for any actions reasonably taken in good faith
reliance upon such advice or statements and without gross
negligence, the Agent shall not be liable to anyone.
(b) Nothing herein contained shall be construed to protect the Agent
against any liability to the Trust or its security holders to which
the Agent would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
its duties.
(c) Except as may otherwise be provided by applicable law, neither the
Agent nor its shareholders, officers, directors, employees or
agents shall be subject to, and the
4
<PAGE> 5
Trust shall indemnify and hold such persons harmless from and
against, any liability for and any damages, expenses or losses
incurred by reason of the inaccuracy of factual information
furnished to the Agent or any subcontractor(s) by an Authorized
Person of the Fund.
(d) The Agent shall ensure that it or any subcontractors have and
maintain Errors and Omissions Insurance for the services rendered
under this Agreement of at least S1 million (provided the Board of
Trustees of the Trust may by resolution approve some lesser
amount). The Agent shall provide to the Trust annually a
certificate from the appropriate errors and omissions insurance
carrier(s) certifying that such Errors and Omissions Insurance is
in full force and effect.
8. Reports. Whenever, in the course of performing its duties under this
Agreement, the Agent determines, on the basis of information supplied
to the Agent by the Trust or its authorized agents, that a violation of
applicable law has occurred or that, to its knowledge, a possible
violation of applicable law may have occurred or, with the passage of
time, would occur, the Agent shall promptly notify the Trust and its
counsel.
9. Activities of the Agent. The services of the Agent under this Agreement
are not to be deemed exclusive, and the Agent shall be free to render
similar services to others so long as its services hereunder are not
impaired thereby.
10. Accounts and Records. The accounts and records maintained by the Agent
shall be the property of the Trust, and shall be surrendered to the
Trust promptly upon receipt of Proper Instructions from the Trust in
the form in which such accounts and records have been maintained or
preserved. The Agent agrees to maintain a back-up set of accounts and
records of the Trust (which back-up set shall be updated on at least a
weekly basis) at a location other than that where the original accounts
and records are stored. The Agent shall assist the Trust, the Trust's
independent auditors, or, upon approval of the Trust, any regulatory
body, in any requested review of the Trust by the Agent or its
independent accountants concerning its accounting system and internal
auditing controls will be open to such entities for audit or inspection
upon reasonable request. There shall be no additional fee for these
services. The Agent shall preserve the accounts and records, as they
are required to be maintained and preserved by Section 31 of the
Investment Company Act of 1940.
11. Confidentiality. The Agent agrees that it will, on behalf of itself and
its officers and employees, treat all transactions contemplated by this
Agreement, and all other information germane thereto, as confidential
and not to be disclosed to any person except as may be authorized by
the Trust in Proper Instructions.
12. Duration and Termination of this Agreement. This Agreement shall become
effective as of the date hereof. Notwithstanding anything to the
contrary in this Agreement, the Agent may not terminate this Agreement
prior to the later of: (i) the expiration of the initial or any renewal
term of the Administration Agreement; or (ii) the effectiveness of any
termination notice pursuant to the Administration Agreement.
Upon termination of this Agreement, the Agent shall deliver to the
Trust or as otherwise directed in Proper Instructions (at the expense
of the Fund, unless such termination is for breach of this Agreement by
the Agent) all records and other documents made or
5
<PAGE> 6
accumulated in the performance of its duties or the duties of any
subcontractor(s) for the Trust hereunder.
13. Assignment. This Agreement shall extend to and shall be binding upon
the parties hereto and their respective successors and assigns;
provided, however, that this Agreement shall not be assignable by the
Trust without the prior written consent of the Agent, or by the Agent
without the prior written consent of the Trust.
14. Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of the state of Colorado and
the 1940 Act and the rules thereunder. To the extent that the laws of
Colorado conflict with the 1940 Act or such rules, the latter shall
control.
15. Names. The names "Financial Investors Trust" and "Trustees of Financial
Investors Trust" refer respectively to the Trust created and the
Trustees as trustees but not individually or personally, acting from
time to time under the Declaration of Trust dated Feb. 23, 1994 and as
may be amended from time to time which is hereby referred to and a copy
of which is on file at the office of the Secretary of the State of
Delaware and the principal office of the Trust. The obligations of
"Financial Investors Trust" entered into in the name or on behalf
thereof by any of the Trustees, representatives or agents are made not
individually, but in such capacities, and are not binding upon any of
the Trustees, shareholders, or representatives of the Trust personally,
but bind only the Trust Property, and all persons dealing with any
class of shares of the Trust must look solely to the Trust Property
belonging to such class for the enforcement of any claims against the
Trust.
16. Amendments to this Agreement. No change, amendment, modification or
waiver of any term of this Agreement shall be valid unless it is in
writing and signed by both parties.
17. Notices. All notices and other communications hereunder shall be in
writing, shall be deemed to have been given when received or when sent
by telex or facsimile, and shall be given to the following addresses
(or such other addresses as to which notice is given):
TO THE AGENT:
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street - Suite 3100
Denver, Colorado 80202
Attn: Russell C. Burk
TO THE FUND:
Financial Investors Trust
370 Seventeenth Street - Suite 3100
Denver, Colorado 80202
18. Counterparts. This Agreement may be executed by the parties hereto on
any number of counterparts, and all of said counterparts taken together
shall be deemed to constitute one and the same instrument.
6
<PAGE> 7
19. Waiver. The waiver by either party of a breach of any provision of this
Agreement shall not operate, or be construed, as a waiver of any
subsequent breach.
20. Headings. The headings have been inserted for convenience only and are
not to be considered when interpreting the provisions of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
FINANCIAL INVESTORS TRUST
By:
---------------------------------
ATTEST:
- ------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
By:
---------------------------------
ATTEST:
- -------------------------
7
<PAGE> 8
APPENDIX A
Series Offered Under Financial Investors Trust:
U.S. Treasury Money Market Fund
U.S. Government Money Market Fund
Prime Money Market Fund
Aristata Equity Fund
Aristata Quality Bond Fund
Aristata Colorado Quality Tax Exempt Bond Fund
United Association 500 Index Fund
Interstate Fund
FINANCIAL INVESTORS TRUST
By:
--------------------------------------
ATTEST:
- -------------------------
ALPS MUTUAL FUNDS SERVICES, INC.
By:
--------------------------------------
ATTEST:
- ---------------------------
8
<PAGE> 1
May 8, 2000
Financial Investors Trust
370 17th Street
Denver, Colorado 80202
Re: Interstate Fund
Ladies and Gentlemen:
We have acted as counsel to Financial Investors Trust, a Delaware business
trust (the "Trust"), and are providing this opinion in connection with the
registration by the Trust of shares of beneficial interest, no par value (the
"Shares"), of the Interstate Fund (the "Fund"), a series of the Trust, described
in Post-Effective Amendment Nos. 17 to the Registration Statement on Form N1-A
of the Trust (1933 Act File No. 33-72424; 1940 Act File No. 811-08194), as filed
with the Securities and Exchange Commission on May 8, 2000 (the "Registration
Statement").
In such connection, we have examined the Trust Instrument and Bylaws of the
Trust, the proceedings of its Trustees relating to the authorization, issuance
and proposed sale of the Shares, and considered such other records and documents
and such factual and legal matters as we deemed appropriate for purposes of this
opinion.
Based on the foregoing, it is our opinion that the Shares have been duly
authorized and, when sold as contemplated in the Registration Statement,
including receipt by the Fund of full payment for the Shares and compliance with
the Securities Act of 1933, the Investment Company Act of 1940 and applicable
state law regulating the offer and sale of securities, will be validly issued,
fully paid and non-assessable Shares of the Trust.
We hereby consent to all references to this firm in the Registration
Statement and to the filing of this opinion as an exhibit to the Registration
Statement. This consent does not constitute a consent under Section 7 of the
Securities Act of 1933, and in consenting to the references to our firm in the
Registration Statement, we have not certified any part of the Registration
Statement and do not otherwise come within the categories of persons whose
consent is required under Section 7 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
DAVIS, GRAHAM & STUBBS LLP
<PAGE> 1
DISTRIBUTION PLAN
Financial Investors Trust, Interstate Fund
This Distribution Plan (the Distribution Plan), made as of March 13, 2000, is
the plan of Financial Investors Trust (the Trust), a business trust organized
and existing under the laws of the state of Delaware, on behalf of the
Interstate Fund (the Fund).
1. This Distribution Plan, when effective in accordance with its terms, shall be
the written plan contemplated by Securities and Exchange Commission Rule 12b-1
under the Investment Company Act of 1940, as amended (the 1940 Act), for shares
of beneficial interest of the Fund.
2. The Trust has entered into a General Distribution Agreement on behalf of the
Fund with ALPS Mutual Funds Services, Inc. (ALPS) under which ALPS uses all
reasonable efforts, consistent with its other business, to secure purchasers of
the Fund's shares. Such efforts may include, but are neither required to include
nor are limited to, the following:
(1) formulation and implementation of marketing and promotional
activities, such as mail promotions and television, radio, newspaper,
magazine and other mass media advertising;
(2) preparation, printing and distribution of sales literature;
(3) preparation, printing and distribution of prospectuses of the Fund and
reports to recipients other than existing shareholders of the Fund;
(4) obtaining such information, analyses and reports with respect to
marketing and promotional activities as ALPS may from time to time,
deem advisable;
(5) making payments to securities dealers and others engaged in the sales
of the Fund shares, and
(6) providing training, marketing and support to such dealers and others
with respect to the sale of the Fund shares.
3. In consideration for the services provided and the expenses incurred by ALPS
pursuant to the General Distribution Agreement, the Fund shall pay to ALPS a fee
at the annual rate of up to (and including) .25% of the Fund's average daily net
assets throughout the month, or such lesser amount as may be established from
time to time by the Trustees of the Trust by resolution, as specified in this
paragraph; provided that, for any period during which the total of such fees and
all other expenses of the Fund would exceed the gross income of the Fund, such
fee shall be reduced by such excess. Such fee shall be computed daily and paid
monthly. The determination of daily net assets for the Fund shall be made at the
close of business each day throughout the month and computed in the manner
specified in the Fund's then current Prospectus for the determination of the net
asset value of the shares of the Fund. ALPS may use all or any portion of the
fee received pursuant to the Distribution Plan to compensate securities dealers
or other persons who have engaged in the sale of shares of the Fund pursuant to
agreements with ALPS, or to pay any of the expenses associated with other
activities authorized under paragraph 2 hereof.
<PAGE> 2
4. This Distribution Plan became effective with respect to the Fund as of March
13, 2000, this Distribution Plan having been approved (1) by a vote of majority
of the Trustees of the Trust, including a majority of Trustees who are not
"interested persons" of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Distribution Plan
or in any agreement related to the Distribution Plan (the Independent Trustees),
cast in person at a meeting called for the purpose of voting on this
Distribution Plan; and (2) by a vote of a majority of the outstanding voting
securities (as such term is defined in Section 2(a)(42) of the 1940 Act) of the
Fund.
5. During the existence of this Distribution Plan, the Trust will commit the
selection and nomination of those Trustees who are not interested persons of the
Trust to the discretion of such Independent Trustees.
6. This Distribution Plan shall, unless terminated as hereinafter provided,
remain in effect until March 13, 2001 and from year to year thereafter;
provided, however, that such continuance is subject to approval annually by a
vote of a majority of the Trustees of the Trust, including a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on this Distribution Plan.
7. This Distribution Plan may be amended with respect to the Fund, at any time
by the Board of Trustees, provided that (a) any amendment to increase materially
the maximum fee provided for in paragraph 3 hereof, must be approved by a vote
of a majority of the outstanding voting securities (as such term is defined in
Section 2(a)(42) of the 1940 Act) of the Fund, and (b) any material amendment of
this Distribution Plan must be approved in the manner provided in paragraph 4(1)
above.
8. This Distribution Plan may be terminated with respect to the Fund, at any
time, without the payment of any penalty, by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities (as such term is defined in Section 2(a)(42) of the 1940 Act) of the
Fund.
9. During the existence of this Distribution Plan, the Trust shall require ALPS
to provide to the Trust, for review by the Trust's Trustees, and the Trustees
shall review, at least quarterly, a written report of the amounts expended in
connection with financing any activity primarily intended to result in the sale
of the shares (making estimates of such costs where necessary or desirable) and
the purposes for which such expenditures were made.
10. This Distribution Plan does not require ALPS to perform any specific type or
level of distribution activities or to incur any specific level of expenses for
activities primarily intended to result in the sale of shares of the Fund.
11. In the event that Rule 2830 of the NASD Conduct Rules precludes the Fund (or
any NASD member) from imposing a sales charge (as defined in that Rule) or any
portion
<PAGE> 3
thereof, then ALPS shall not make payments hereunder from the date that the Fund
discontinues or is required to discontinue imposition of some or all of its
sales charges. If the Fund resumes imposition of some or all of its sales
charge, ALPS will receive payments hereunder.
12. Consistent with the limitation of shareholder and Trustee liability as set
forth in the Trust's Declaration of Trust, any obligations assumed by the Trust,
the Fund or Shareholders thereof pursuant to this Plan and any agreements
related to this Plan shall be limited in all cases to the proportionate
ownership of shares of the Fund and its assets, and shall not constitute
obligations of any shareholder of any other funds of the Trust or of any
Trustee.
13. If any provision of the Distribution Plan shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of the Distribution
Plan shall not be affected thereby.
<PAGE> 1
ALPS MUTUAL FUNDS SERVICES, INC.
(THE "COMPANY")
CODE OF ETHICS
I. Purpose of the Code of Ethics
This code is based on the principle that, you as an access person of
the Company, will conduct your personal investment activities in accordance
with:
o the duty at all times to place the interests of each Investment
Company's shareholders first;
o the requirement that all personal securities transactions be
conducted consistent with this Code of Ethics and in such a
manner as to avoid any actual or potential conflict of interest
or any abuse of an individual's position of trust and
responsibility; and
o the fundamental standard that Company personnel should not take
inappropriate advantage of their positions.
In view of the foregoing, the Company has adopted this Code of Ethics
(the "Code") to specify a code of conduct for certain types of personal
securities transactions which may involve conflicts of interest or an
appearance of impropriety and to establish reporting requirements and
enforcement procedures.
II. Legal Requirement
Pursuant to Rule 17j-1(b) of the Investment Company Act of 1940 (the
"Act"), it is unlawful for any Access Person to:
o employ any device, scheme or artifice to defraud the Investment
Company;
o make any untrue statement of a material fact or fail to state a
material fact necessary in order to make the statements made, in
light of the circumstances under which they were made, not
misleading to the Company;
o engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon the Company;
or
o engage in any manipulative practice with respect to any Trust's
investment portfolios,
in connection with the purchase or sale (directly or indirectly) by such Access
Person of a security "held or to be acquired" by an Investment Company.
<PAGE> 2
III. Definitions - All definitions shall have the same meaning as explained
in Section 2(a) of the Act and are summarized below.
ACCESS PERSON - Any director, officer, general partner, registered person, or
employee, of the Underwriter, if in connection with his/her regular functions,
he/she is in communication or contact with portfolio managers and advisory
staff of an Investment Company or otherwise has access to current information
about portfolio transactions for an investment adviser to an Investment Company
in the course of his/her duties, attends board meetings of an Investment
Company or visits the investment advisory location of an Investment Company.
BENEFICIAL OWNERSHIP shall have the same meaning as that set forth in Rule
16a-1(a)(2) of the Securities Exchange Act of 1934.
CONTROL shall have the same meaning as that set forth in Section 2(a)(9) of the
Act.
COVERED SECURITY - shall have the meaning set forth in Section 2(a)(36) of the
Act except that it does not include an exempt security.
EXEMPT SECURITY - shall include securities issued by the United States
Government, short-term debt securities which are "government securities" within
the meaning of Section 2(a)(16) of the Act, bankers' acceptances, bank
certificates of deposit or commercial paper, shares of registered open-end
investment companies, and high quality short-term debt instruments, including
repurchase agreements.
EXEMPT TRANSACTIONS shall mean:
1. Purchases or sales effected in any account over which the Access
Person has no direct or indirect influence or control.
2. Purchases or sales of securities issued by any company included in the
Standard & Poor's 500 Stock Index in an amount less than $10,000.
3. Purchases which are part of an automatic dividend reinvestment plan.
4. Purchases effected upon the exercise of rights issued by an issuer pro
rata to all holders of a class of its securities, to the extent such
rights were acquired from such issuer, and sales of such rights so
acquired.
INVESTMENT COMPANY - A company registered as such under the Investment Company
Act of 1940 and for which the Underwriter is the principal underwriter.
INVESTMENT PERSONNEL - (a) employees of the Investment Company, its investment
adviser, and/or the Underwriter who participate in making investment
recommendations to the Investment Company; and (b) persons in a control
relationship with the Investment Company or adviser who obtain information
about investment recommendations made to the Investment Company.
Page 2 of 6
<PAGE> 3
SECURITY BEING CONSIDERED FOR PURCHASE OR SALE - when a recommendation to
purchase or sell a security has been made or communicated and, with respect to
the person making the recommendation, when such person seriously considers
making such a recommendation.
SECURITY HELD OR TO BE ACQUIRED means: (1) any Covered Security which, within
the most recent 15 days: (a) is or has been held by the Investment Company; or
(b) is being or has been considered by the Investment Company or its investment
advisor for purchase by the Investment Company; and (2) any option to purchase
or sell, and any security convertible into or exchangeable for, a Covered
Security that is held or to be acquired by the Investment Company.
UNDERWRITER - means ALPS Mutual Funds Services, Inc.
IV. Policies of the Company Regarding Personal Securities Transactions
General
No Access Person of the Company shall engage in any act, practice or
course of business that would violate the provisions of Rule 17j-1 as set forth
above, or in connection with any personal investment activity, engage in
conduct inconsistent with this Code.
Specific Policies
No Access Person shall purchase or sell, directly or indirectly, any
security in which he/she has, or by reason of such transaction acquires, any
direct or indirect beneficial ownership and which he/she knows or should have
known at the time of such purchase or sale:
o is being considered for purchase or sale by an Investment
Company; or
o is being purchased or sold by an Investment Company.
Pre-approval of Investments in IPOs and Limited Offerings
Investment Personnel must obtain approval from the Investment Company
or the Investment Company's investment adviser before directly or indirectly
acquiring beneficial ownership in any securities in an initial public offering
or in a private placement or other limited offering.
V. Reporting Procedures
The Compliance Officer of the Company shall notify each person
(annually in January of each year), considered to be an Access Person of the
Company that he/she is subject to the reporting requirements detailed in
Sections (a), (b) and (c) below and shall deliver a copy of this Code to such
Access Person.
Page 3 of 6
<PAGE> 4
In order to provide the Company with information to enable it to
determine with reasonable assurance whether the provisions of this Code are
being observed, every Access Person of the Company must report to the Company
the following:
a) Initial Holdings Reports. Every Access Person must report on
Exhibit A, attached hereto, no later than 10 days after becoming an Access
Person, the following information:
o The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership when the person became an Access Person;
o The name of any broker, dealer or bank with whom the Access
Person maintained an account in which any securities were held
for the direct or indirect benefit of the Access Person as of
the date the person became an Access Person; and
o The date that the report is submitted by the Access Person.
b) Quarterly Transaction Reports. Every Access Person must report on
Exhibit B, attached hereto, no later than 10 days after the end of a calendar
quarter, the following information with respect to any transaction during the
quarter in a Covered Security in which the Access Person had any direct or
indirect beneficial ownership:
o The date of the transaction, the title, the interest rate and
maturity date (if applicable),the number of shares, and the
principal amount of each Covered Security involved;
o The nature of the transaction (i.e., purchase, sale or any other
type of acquisition or disposition);
o The price of the Covered Security at which the transaction was
effected;
o The name of the broker, dealer or bank with or through whom the
transaction was effected; and
o The date that the report is submitted by the Access Person.
With respect to any account established by the Access Person in which
ANY SECURITIES were held during the quarter for the direct or indirect benefit
of the Access Person, each Access Person must report on Exhibit C, attached
hereto, no later than 10 days after the end of a calendar quarter the following
information:
o The name of the broker, dealer or bank with whom the Access
Person established the account;
Page 4 of 6
<PAGE> 5
o The date the account was established; and
o The date that the report is submitted by the Access Person.
c) Annual Holdings Reports. Every Access Person must report on
Exhibit D, attached hereto, annually, the following information (which
information must be current as of a date no more than 30 days before the report
is submitted):
o The title, number of shares and principal amount of each Covered
Security in which the Access Person had any direct or indirect
beneficial ownership;
o The name of any broker, dealer or bank with whom the Access
Person maintains an account in which any securities are held for
the direct or indirect benefit of the Access Person; and
o The date that the report is submitted by the Access Person.
VI. Review of Reports
The Compliance Officer of the Company shall be responsible for
reviewing the reports received, maintaining a record of the names of the
persons responsible for reviewing these reports, and as appropriate, comparing
the reports with this Code, and reporting to the Company's senior management:
o any transaction that appears to evidence a possible violation of
this Code; and
o apparent violations of the reporting requirements stated herein.
Senior management shall review the reports made to them hereunder and
shall determine whether the policies established in Sections IV and V of this
Code have been violated, and what sanctions, if any, should be imposed on the
violator. Sanctions include but are not limited to a letter of censure,
suspension or termination of the employment of the violator or termination of
the violator's license with the Underwriter, or the unwinding of the
transaction and the disgorgement of any profits.
Senior management and the board of directors of the Company shall
review the operation of this Code at least annually. All material violations of
this Code and any sanctions imposed with respect thereto shall periodically be
reported to the board of trustees of the Investment Company with respect to the
securities being considered for purchase or sale by, or held or to be acquired
by, that Investment Company.
Page 5 of 6
<PAGE> 6
VII. Certification
Each Access Person will be required to certify annually that he/she
has read and understood the provisions of this Code and will abide by them.
Each Access Person will further certify that he/she has disclosed or reported
all personal securities transactions required to be reported under the Code. A
form of such certification is attached hereto as Exhibit E.
Before the Board of Directors of an Investment Company may approve the
code of ethics, the Company must certify to the Board that the Company has
adopted procedures reasonably necessary to prevent Access Persons from
violating their Code of Ethics. Such certification shall be submitted to the
Board of Directors at least annually.
Sources:
Section 17j-1 (as amended) of the Investment Company Act of 1940 (the
"Act");
Section 16 (as amended) of the Securities Exchange Act of 1934 (the
"Exchange Act");
The "Report of the Advisory Group on Personal Investing" issued by the
Investment Company Institute on May 9, 1994; and,
The Securities and Exchange Commission's September 1994 Report on
"Personal Investment Activities of Investment Company Personnel."
dated: May, 1994
revised: March 1, 2000
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<PAGE> 7
Exhibit A
ALPS MUTUAL FUNDS SERVICES, INC.
INITIAL HOLDINGS REPORT
To the Compliance Officer of ALPS Mutual Funds Services, Inc.:
At the time I became an Access Person, I had the following Covered Securities
holdings, which are required to be reported pursuant to the ALPS Mutual Funds
Services, Inc. Code of Ethics. I understand that this information must be
reported no later than ten (10) days after I became an Access Person.
No. of Shares and Principal Broker/Dealer or Bank
Security Dollar Amount through whom Effected
- -------- --------------------------- ---------------------
This report: (i) excludes transactions with respect to which I had no direct or
indirect influence or control; (ii) excludes other transactions not required to
be reported; and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Date:
------------------------------------------
Signature:
------------------------------------------
Print Name:
------------------------------------------
<PAGE> 8
Exhibit B
ALPS MUTUAL FUNDS SERVICES, INC.
SECURITIES TRANSACTION REPORT
For the Calendar Quarter Ended March 31, 2000
To the Compliance Officer of ALPS Mutual Funds Services, Inc.:
During the quarter referred to above, the following transactions were effected
in securities of which I had, or by reason of such transaction acquired, direct
or indirect beneficial ownership, and which are required to be reported
pursuant to the ALPS Mutual Funds Services, Inc. Code of Ethics. I understand
that this information must be reported no later than April 10, 2000.
<TABLE>
<CAPTION>
Price of
Covered
Interest Rate No. of Security at
and Maturity Shares and which Broker/Dealer or
Date of Date (if Principal Nature of Transaction Bank through whom
Security Transaction applicable) Amount Transaction was effected Effected
- -------- ----------- ------------- ---------- ----------- ------------ -----------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
This report: (i) excludes transactions with respect to which I had no direct or
indirect influence or control; (ii) excludes other transactions not required to
be reported; and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Date:
------------------------------------------
Signature:
------------------------------------------
Print Name:
------------------------------------------
<PAGE> 9
Exhibit C
ALPS MUTUAL FUNDS SERVICES, INC.
SECURITIES TRANSACTION REPORT
For the Calendar Quarter Ended March 31, 2000
To the Compliance Officer of ALPS Mutual Funds Services, Inc.:
During the quarter referred to above, I established a securities account with
the following broker/dealer or bank. This information is required to be
reported pursuant to the ALPS Mutual Funds Services, Inc. Code of Ethics. This
information is reported in addition to the information required on Exhibit B
herein. I understand that this information must be reported no later than April
10, 2000.
Broker/Dealer or Bank through whom Account
was Established Date the Account was Established
- ------------------------------------------ --------------------------------
Date:
------------------------------------------
Signature:
------------------------------------------
Print Name:
------------------------------------------
<PAGE> 10
Exhibit D
ALPS MUTUAL FUNDS SERVICES, INC.
SECURITIES TRANSACTION REPORT
For the following period: September 1, 1999 through August 31, 2000
To the Compliance Officer of ALPS Mutual Funds Services, Inc.:
During the period referred to above, the following transactions were effected
in Covered Securities of which I had, or by reason of such transaction
acquired, direct or indirect beneficial ownership, and which are required to be
reported pursuant to the ALPS Mutual Funds Services, Inc. Code of Ethics. I
understand that this information must be reported no later than September 10,
2001.
<TABLE>
<CAPTION>
Principal Amount of Broker/Dealer or Bank through
Security Number of Shares Covered Security whom Effected
- -------- ---------------- ------------------- -----------------------------
<S> <C> <C> <C>
</TABLE>
This report: (i) excludes transactions with respect to which I had no direct or
indirect influence or control; (ii) excludes other transactions not required to
be reported; and (iii) is not an admission that I have or had any direct or
indirect beneficial ownership in the securities listed above.
Date:
------------------------------------------
Signature:
------------------------------------------
Print Name:
------------------------------------------
<PAGE> 11
Exhibit E
ALPS MUTUAL FUNDS SERVICES, INC.
ANNUAL CERTIFICATION
The undersigned hereby certifies as follows:
1. I have read and understand the revised ALPS Mutual Funds Services,
Inc. Code of Ethics dated March 1, 2000.
2. I acknowledge that I am subject to the Code of Ethics.
3. Since the date of the last Annual Certification (if any), I have
complied and will continue to comply with all requirements under this
Code of Ethics. I understand that any violation of the Code of Ethics
may lead to sanctions, including dismissal.
Signature:
------------------------------------------
Name (print):
------------------------------------------
Date:
------------------------------------------
<PAGE> 1
TEMPEST, ISENHART, CHAFEE, LANSDOWNE & ASSOCIATES, INC.
CODE OF ETHICS
This Code of Ethics (the "Code") establishes rules of conduct for persons who
are officers, directors, employees, shareholders, and affiliates of Tempest,
Isenhart, Chafee, Lansdowne & Associates, Inc. ("Tempest Isenhart"), and the
Firm. The Code governs their personal investments and other investment-related
activities.
The basic rule is very simple: Clients' interests come first. Officers,
directors, employees, and shareholders have a fiduciary duty to conduct their
personal Securities transactions in a manner which does not interfere with
Client portfolio transactions or otherwise take unfair advantage of their
relationships with Clients. Persons covered by the Code must adhere to these
general principles as well as comply with the Code's specific provisions.
Some of these provisions are imposed by law. For example, the Investment
Advisers Act of 1940 (the "Advisers Act"), as amended, and the Investment
Company Act of 1940 (the "Investment Company Act"), as amended, specifically
prohibit fraudulent activity, making statements that are not true or that are
misleading, omitting something that is significant in the context, and engaging
in manipulative practices. The Advisers Act and the Investment Company Act
require Tempest Isenhart to adopt and enforce written procedures reasonably
designed to prevent such activities.
This Code will assist persons who serve as officers, directors, employees, and
shareholders of Tempest Isenhart in fulfilling their obligations under the law.
The first part of the Code explains its applicability. The second part restricts
personal investment activities. The third part relates to other sensitive
business practices while subsequent parts implement reporting and administrative
procedures.
This Code is very important to Tempest Isenhart and those who serve as officers,
directors, employees, and shareholders of Tempest Isenhart. Violations of the
Code may cause Tempest Isenhart embarrassment, loss of business, legal
liability, fines and other punishments. Violations of the Code may result in
demotion, suspension, firing, fines and other punishments for individuals.
I. Applicability
(A) The Code applies to the following:
1. Every officer, director, employee, and shareholder of
Tempest Isenhart. Due to the manner in which Tempest
Isenhart conducts its business, every officer,
director, employee, and shareholder should assume
that they are subject to the Code unless the
Compliance Officer specifies otherwise.
2. Tempest, Isenhart, Chafee, Lansdowne & Associates,
Inc. in securities transactions for its corporate
account.
(B) Definitions
1. Covered Persons. The persons described in item (A).
<PAGE> 2
2. Covered Person Accounts. Includes all advisory,
brokerage, trust or other accounts or forms of direct
beneficial ownership in which one or more Covered
Person and/or one or more members of a Covered
Person's immediate family have a substantial
proportionate economic interest. Immediate family
includes an Covered Person's spouse and minor
children living with the Covered Person. A
substantial proportionate economic interest will
generally be 10% of the principal amount in the case
of an account in which only one Covered Person has
an interest and 25% of the principal amount in the
case of an account in which more than one Covered
Person has an interest, whichever is first
applicable. Investment partnerships and similar
indirect means of ownership are also included.
As an exception, accounts in which one or more
Covered Persons and/or their immediate family have a
substantial proportionate interest which are
maintained with persons who have no affiliation with
Tempest Isenhart and with respect to which no Covered
Person has, in the judgment of the Compliance
Officer, any direct or indirect influence or control
over the investment or portfolio execution process
are not Covered Person Accounts.
3. Client. Any individual or entity to which Tempest
Isenhart provides investment advisory services.
4. Compliance Officer. David H. Squire is the Compliance
Officer of Tempest Isenhart. H. David Lansdowne is
Alternate Compliance Officer.
5. Portfolio Managers. Covered Persons responsible for
implementing investment decisions in Client accounts.
Transactions in Client accounts may be either
discretionary or nondiscretionary.
6. Security. Any financial instrument treated as a
security for investment purposes and any related
instrument such as options, futures, warrants,
convertible securities, forward or swap contracts
entered into with respect to one or more securities,
a basket of or an index of securities or components
of securities. However, the term security does not
include direct obligations issued by the Government
of the United States, bankers' acceptances, bank
certificates of deposit, commercial paper, or shares
of registered open-end investment companies.
II. Restrictions on Personal Investing Activities
(A) Fraudulent or Deceptive Practices
No Covered Person shall, in connection with the purchase or
sale, directly or indirectly, by such person of a security
held or to be acquired by a Client or on behalf of a Client:
1. employ any device, scheme or artifice to defraud a
Client;
2. make any untrue statement of a material fact to a
Client or omit to state a material fact necessary in
order to make the statements made, in light of the
circumstances under which made, not misleading;
<PAGE> 3
3. engage in any act, practice or course of business
which would operate as a fraud or deceit upon a
Client;
4. engage in any manipulative practice with respect to
a Client; or
5. trade while in possession of material non-public
information for personal or Adviser investment
accounts, or disclose such information to others in
or outside the Adviser.
(B) Restrictions on Investment Activities
1. If an actual purchase or sale order is pending for
any Client, or under active consideration by the
firm's Investment Committee, neither the same
Security nor any related Security may be bought or
sold for any Covered Person Account, unless the
Compliance Officer approves the transaction.
2. No Covered Person shall effect a transaction for
their personal account in a security on which the
firm's Investment Committee has taken action until
thirty (30) days after the date of the action, unless
the Compliance Officer approves the transaction.
3. Even after satisfying the 30-day restriction in
paragraph (B)2 above, no Covered Person shall effect
a transaction in the same or any related security for
their personal account on the day that any account
managed or advised by our firm is in the process of
completing identical transactions, until the Clients'
orders are completed or withdrawn. (Checking with the
firm's trader will insure that this is observed.)
(C) Initial Public Offerings
No Security or related Security may be acquired in an initial
public offering or through a secondary market underwriting by
any Covered Person.
(D) Seven Day Rule - Front Running
No Portfolio Manager, or Covered Person performing account
supervisory functions, shall trade in any security seven days
before or seven days after trading the same or a related
security in any client's account for which they have
responsibility. Such personal trading is commonly known as
"Front Running," and is illegal.
(E) Exempt Transactions
Participation on an ongoing basis in an issuer's dividend
reinvestment or stock purchase plan, participation in any
transaction over which no Covered Person had any direct or
indirect influence or control and involuntary transactions
(such as mergers, inheritances, gifts, etc.) are exempt from
the restrictions in paragraphs (B)
<PAGE> 4
and (D) above and do not require pre-clearance under
paragraph (G) below.
(F) Private Placements
The Compliance Officer will not approve purchases or sales of
Securities that are not publicly traded, unless the Covered
Person provides full details of the proposed transaction
(including written certification that the investment
opportunity did not arise by virtue of such person's
activities on behalf of any Client) and the Compliance Officer
concludes that no Client would have any foreseeable interest
in investing in such Security.
(G) Pre-Clearance of Personal Securities Transactions
No Security or related security may be bought or sold for any
Covered Person Account unless the Covered Person obtains prior
approval from the Compliance Officer or, in the absence of the
Compliance Officer, from a designee of the Compliance Officer.
(H) Pre-Clearance Process
1. A Trading Approval Form (Exhibit A) must be
completed and submitted to the Compliance
Officer for approval prior to entry of an order.
2. After reviewing the proposed trade, the level of
potential investment interest on behalf of any Client
in the Security in question and Tempest Isenhart's
"Diversification List," the Compliance Officer shall
approve (or disapprove) the Trading Approval Form on
behalf of an Covered Person as expeditiously as
possible.
3. In the absence of the Compliance Officer, a Covered
Person may submit the Trading Approval Form to the
Alternate Compliance Officer. Trading approval for
Compliance Officer transactions must be obtained
from the President of Tempest Isenhart.
4. If a Covered Person's Trading Approval Form is
approved, the form will be returned to the requesting
Covered Person for necessary action on the day of
approval. If the Trading Approval Form is not
approved, or is not executed on the same day it is
approved, the request may be resubmitted at a later
date.
5. Third party brokers will supply the Compliance
Officer, on a timely basis, duplicate copies of
confirmations of all personal Securities transactions
for all Covered Persons in the accounts maintained
with such third party broker.
6. The Compliance Officer shall regularly review all
Trading Approval Forms, all required disclosure
certifications and the trading activities on behalf
of all Clients with a view to ensuring that all
Covered Persons are complying with the spirit as well
as the detailed requirements of this Code.
<PAGE> 5
III. Other Investment-Related Restrictions
(A) Gifts
No Covered Person shall accept any gift or other item of more
than $100 in value from any person or entity that does
business with or on behalf of any Client.
(B) Service As a Director
No Covered Person shall commence service on the Board of
Directors of a publicly traded company or any company in which
any Client has an interest without prior authorization from
the Compliance Officer based upon a determination that the
Board service would not be inconsistent with the best
interests of the Client.
(C) No Favorable Considerations
No Covered Person may solicit or accept any offer made by a
broker, whereby they would be enabled to purchase or sell
under conditions more favorable than those obtainable or
offered to clients.
IV. Reports and Additional Compliance Procedures
Every Covered Person must submit a quarterly report (Exhibit B)
containing the information set forth in paragraph (B) below with
respect to transactions in any Security in which such Covered Person
has acquired or by reason of such transactions will acquire any direct
or indirect beneficial ownership (Exhibit C); provided, however, that:
(A) a Covered Person need not make a report with respect to any
transaction effected for any account over which such person
does not have any direct or indirect influence or control;
(B) A Covered Person must submit the report required by this
Article IV to the Compliance Officer no later than 10 calendar
days after the end of the calendar quarter in which the
transaction to which the report relates was effected. A report
must contain the following information:
1. The date of the transaction, the title and number of
shares or the principal amount of fixed income
Securities;
2. The nature of the transaction (i.e., purchase, sale
or any other type of acquisition or disposition);
3. The price at which the transaction was effected; and
4. The name of the broker, dealer or bank with or
through whom the transaction was affected.
(C) Any report submitted to comply with the requirements of this
Article IV may contain a statement that the report shall not
be construed as an admission by the person making such report
that he has any direct or indirect benefit ownership in the
Security to which the report relates.
(D) At the time of initial association or employment with Tempest
Isenhart, each
<PAGE> 6
Covered Person shall be required to disclose all current
personal Securities holdings in any account in which such
Covered Person has an interest. Upon association or
employment with Tempest Isenhart, each Covered Person must
certify on a report (Exhibit D) that he has read and
understands the Code and recognizes that he is subject to
such Code.
(E) Annually each Covered Person must certify (Exhibit D) that he
has read and understands the Code and recognizes that he is
subject to such Code. In addition, annually each Covered
Person must certify that he has disclosed or reported all
personal Securities transactions required to be disclosed or
reported under the Code and that he is not subject to any
regulatory disability.
(F) Any Covered Person who participates in Investment Committee
discussions, shall at that time reveal their personal position
or interest in any security being considered and any
transactions in the security during the month prior to the
date of consideration.
(G) At least annually (or quarterly in the case of Items 2 and 3
below), Tempest Isenhart shall report to the Board of
Directors of any investment company registered pursuant to the
Investment Company Act for which Tempest Isenhart serves as
investment adviser:
1. All existing procedures concerning Covered Persons'
personal trading activities and reporting
requirements and any procedural changes made during
the past year;
2. A summary of any violations of this Code which
occurred during the past quarter and the nature of
any remedial action taken; and
3. Any exceptions made hereunder, which will be
maintained in writing by the Compliance Officer.
V. Sanctions
Upon discovering that a Covered Person has not complied with the
requirements of this Code, the Board of Directors of Tempest Isenhart
may impose whatever sanctions within its power the Board deems
appropriate, including, among other things: censure, suspension or
termination of employment and recommendations of disgorgement of
profit.
<PAGE> 7
VI. Exceptions
The Compliance Officer reserves the right to decide, on a case-by-case
basis, exceptions to any provisions under this Code.
VII. Preservation of Documents
This Code, a copy of each report by a Covered Person, any written
report made hereunder by Tempest Isenhart or the Compliance Officer,
and lists of all persons required to make reports shall be preserved
with the records of Tempest Isenhart for a five year period in an
easily accessible place.
VIII. Other Laws, Rules and Statements of Policy
Nothing contained in this Code shall be interpreted as relieving any
Covered Person from acting in accordance with the provision of any
applicable law, rule or regulation or any other statement of policy or
procedure governing the conduct of such person adopted by Tempest
Isenhart.
IX. Further Information
Any questions with regard to the applicability of the provisions of
this Code or with regard to any Securities transactions should be
referred to the Compliance Officer or the Alternate Compliance Officer.
APPROVED FOR AND ADOPTED BY TEMPEST, ISENHART, CHAFEE, LANSDOWNE & ASSOCIATES,
INC.
BY:
-------------------------------
TITLE:
-----------------------------
DATE:
------------------------------
<PAGE> 8
Exhibit A
TEMPEST, ISENHART, CHAFEE, LANSDOWNE & ASSOCIATES, INC.
PRE-CLEARANCE TRADING APPROVAL FORM
I, ______________________________________ (print name), am a Covered Person and
seek approval to engage in the transaction described below:
Name of Account:
--------------------------------------------------------------
Account Number:
--------------------------------------------------------------
Broker:
-----------------------------------------------------------------------
Date of Request:
---------------------------------------------------------------
("Good Until Cancelled" and similar open orders will be reviewed daily for
approval or disapproval.)
PURCHASE OR SALE (CIRCLE ONE)
If requested transaction is for a sale, date of purchase must be provided .
------
Security:
---------------------------------------------------------------------
Amount or # of Shares:
--------------------------------------------------------
For any Security that is not publicly traded, a description of proposed
transaction, source, or investment opportunity and any potential conflicts of
interest must be included with this request:
I hereby certify that, to the best of my knowledge, the transaction described
hereon is not prohibited by Tempest Isenhart's Code of Ethics dated March 12,
1998 and that the opportunity to engage in this transaction did not arise by
virtue of my activities on behalf of any Client, nor as a result of access to
material non-public information.
Signature:
--------------------------------------------------------
Approved or Disapproved (Circle One)
Signature:
--------------------------------------------------------
Compliance Officer Date
<PAGE> 9
TEMPEST, ISENHART, CHAFEE, LANSDOWNE & ASSOCIATES, INC.
Quarterly Report - Securities Transactions for Calendar Quarter Ending:
Report submitted by: (print name)
--------------------------------------------
The undersigned, pursuant to the provisions of the Code of Ethics for the
Officers, Directors and Employees of Tempest, Isenhart, Chafee, Lansdowne &
Associates, Inc., and Regulation 275,204-2 (a) (12) (A) & (B) of the Investment
Advisers Act of 1940 (as amended) hereby submits the following record of
securities transactions (if no reportable transactions, annotate this report
accordingly):
<TABLE>
<CAPTION>
# Shares Purchase, Sale Trade Time
$ Bond Title of Security Price Other Date Submitted* Broker, Dealer, Other
- -------- ----------------- ------- -------------- ----- ---------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
* Required for securities on which Investment Committee action has been taken
and/or are on Diversification List.
The above record of transactions shall not be construed as an admission that the
undersigned has any direct or indirect beneficial ownership in the security or
securities to which this report relates.
I hereby certify that I am fully familiar with the Code of Ethics and that to
the best of my knowledge, the information furnished on this report is complete,
true and accurate.
- -------------------------------- -----------------
Signature Date
<PAGE> 10
Exhibit C
BENEFICIAL OWNERSHIP
For purposes of this Code of Ethics, "beneficial ownership" shall be
interpreted in the same manner as it would be in determining whether a person is
subject to the provisions of Section 16 of the Securities Exchange Act of 1934
and the rules and regulations thereunder, except the determination of direct or
indirect beneficial ownership shall apply to all securities that a Covered
Person has or acquires. The term "beneficial ownership" of securities would
include not only ownership of securities held by a Covered Person for his own
benefit, whether in bearer form or registered in his name or otherwise, but also
ownership of securities held for his benefit by others (regardless of whether or
how they are registered) such as custodians, brokers, executors, administrators,
or trustees (including trusts in which he has only a remainder interest), and
securities held for his account by pledges, securities owned by a partnership in
which he is a member if he may exercise a controlling influence over the
purchase, sale or voting of such securities, and securities owned by any
corporation or similar entry in which he owns securities if the Covered Person
is a controlling shareholder of the entity and has or shares investment control
over the entity's portfolio.
Ordinarily, this term would not include securities held by executors or
administrators in estates in which a Covered Person is a legatee or beneficiary
unless there is a specified legacy to such person of such securities or such
person is the sole legatee or beneficiary and there are other assets in the
estate sufficient to pay debts ranking ahead of such legacy, or the securities
are held in the estate more than a year after the decedent's death.
Securities held in the name of another should be considered as
"beneficially" owned by a Covered Person where such person enjoys "financial
benefits substantially equivalent to ownership." The Securities and Exchange
Commission has said that although the final determination of beneficial
ownership is a question to be determined in the light of the facts of the
particular case, generally a person is regarded as the beneficial owner of
securities held in the name of his or her spouse and their minor children.
Absent special circumstances such relationship ordinarily results in such person
obtaining financial benefits substantially equivalent to ownership, e.g.,
application of the income derived from such securities to maintain a common
home, or to meet expenses that such person otherwise would meet from other
sources, or the ability to exercises a controlling influence over the purchase,
sale or voting of such securities.
A Covered Person may be regarded as the beneficial owner of securities
held in the name of another person, if by reason of any contract, understanding,
relationship, agreement, or other agreement, financial benefits substantially
equivalent to those of ownership are obtained by the Covered Person. A Covered
Person is regarded as the beneficial owner of securities held in the name of a
spouse, minor children or other person, even though he does not obtain therefrom
the aforementioned benefits of ownership, if he can vest or revest title in
himself at once or at some future time.
<PAGE> 11
Exhibit D
TEMPEST, ISENHART, CHAFEE, LANSDOWNE & ASSOCIATES, INC.
ANNUAL CERTIFICATION OF CODE OF ETHICS
A. I ________________ (print name) hereby certify that I have read and
understand the Code of Ethics dated March 12, 1998, and recognize that
I am subject to its provisions. In addition, I hereby certify that I
have complied with the requirements of the Code of Ethics and that I
have disclosed or reported all personal Securities transactions
required to be disclosed or reported under the Code of Ethics;
B. Within the last ten years, there have been no complaints or
disciplinary actions filled against me by any regulated securities or
commodities exchange, any self-regulatory securities or commodities
organization, any attorney general, or any governmental office or
agency regulating insurance securities, commodities or financial
transactions in the United States, in any state of the United States,
or in any other country;
C. I have not within the last ten years been convicted of or acknowledged
commission of any felony or misdemeanor arising out of my conduct as
an employee, salesperson, officer, director, insurance agent, broker,
dealer, underwriter, investment manager or investment adviser; and
D. I have not been denied permission or otherwise enjoined by order,
judgment or decree of any court of competent jurisdiction, regulated
securities or commodities exchange, self-regulatory securities or
commodities organization or other federal or state regulatory authority
from acting as an investment adviser, securities or commodities broker
or dealer, commodity pool operator or trading adviser or as an
affiliated person or employee of any investment company, bank,
insurance company or commodity broker, dealer, pool operator or trading
adviser or from engaging in or continuing any conduct or practice in
connection with any such activity or the purchase or sale of any
security.
Signature
- -------------------------
Date
- -------------------------
<PAGE> 1
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
CODE OF ETHICS
I. Legal Requirement.
Rule 17j-1(b) under the Investment Company Act of 1940, as amended (the
"1940 ACT"), makes it unlawful for any officer or director of National City
Investment Management Company (the "COMPANY"), in connection with the purchase
or sale by such person of a security held or to be acquired by any investment
company registered under the 1940 Act (each such investment company for which
the Company is investment adviser, a "FUND"):
1. To employ any device, scheme or artifice to defraud
any Fund;
2. To make to any Fund any untrue statement of a
material fact or omit to state to any Fund a material
fact necessary in order to make the statements made,
in light of the circumstances under which they are
made, not misleading;
3. To engage in any act, practice, or course of business
which operates or would operate as a fraud or deceit
upon any Fund; or
4. To engage in any manipulative practice with respect
to any Fund's investment portfolios.
II. Purpose of the Code of Ethics.
The Company expects that its directors and officers will conduct their
personal investment activities in accordance with (1) the duty at all times to
place the interests of each Fund's shareholders first, (2) the requirement that
all personal securities transactions be conducted consistent with this Code of
Ethics (this "CODE") and in such a manner as to avoid any actual or potential
conflict of interest or any abuse of an individual's position of trust and
responsibility, and (3) the fundamental standard that an investment adviser's
personnel should not take inappropriate advantage of their positions.
In view of the foregoing, the provisions of Section 17(j) of the 1940
Act, the Securities and Exchange Commission's 1940 Act Release No. 23958
"Personal Investment Activities of Investment Company Personnel" (August 24,
1999), the "Report of the Advisory Group on Personal Investing" issued by the
Investment Company Institute on May 9, 1994 and the Securities and Exchange
Commission's September 1994 Report on "Personal Investment Activities of
Investment Company Personnel," the Company has determined to adopt this Code to
specify a code of conduct for certain types of personal securities transactions
which might involve conflicts of interest or an appearance of impropriety, and
to establish reporting requirements and enforcement procedures.
<PAGE> 2
III. Definitions.
A. An "ACCESS PERSON" means: (1) each director or officer of the
Company; (2) each employee (if any) of the Company (or of any
company in a control relationship to the Company) who in
connection with his or her regular functions or duties, makes,
participates in, or obtains information regarding the purchase
or sale of a security by any portfolio of which the Company is
investment adviser, or whose functions relate to the making of
any recommendations with respect to such purchases or sales;
and (3) any natural person in a control relationship to the
Company who obtains information concerning recommendations
made to any portfolio of which the Company is investment
adviser, with regard to the purchase or sale of a security.
B. "EXEMPT SECURITY" means
1. any direct obligations of the Government of the
United States;
2. any banker's acceptance;
3. any bank certificate of deposit;
4. any commercial paper;
5. any high quality short-term debt instruments (any
instrument having a maturity at issuance of less than
366 days and that is rated in one of the two highest
rating categories by a nationally recognized
statistical rating organization), including any
repurchase agreement;
6. any share of any registered open-end investment
company; and
7. any share of the capital stock of National City
Corporation.
C. "EXEMPT TRANSACTION" means
1. any purchase or sale of securities in any account
over which the Access Person has no direct or
indirect influence or control;
2. any purchase or sale of securities in a transaction
which is not volitional on the part of the Access
Person;
3. any automatic acquisition of securities with the
proceeds of a dividend pursuant to any dividend
reinvestment plan; and
4. any acquisition of securities in a recapitalization,
statutory share exchange, statutory consolidation,
statutory merger, stock dividend, stock split, or
similar transaction whereby the issuer of such
securities issues such securities pro rata to all
holders of a class of its or another issuer's
-2-
<PAGE> 3
securities, or any surrender or exchange of
securities as a condition to the receipt of
securities in any such acquisition.
D. An Access Person's "IMMEDIATE FAMILY" includes that Access
Person's spouse, if any, and any minor children and adults
living in the same household as that Access Person.
E. "INITIAL PUBLIC OFFERING" means an offering of securities
registered under the Securities Act of 1933, the issuer of
which, immediately before the registration, was not subject to
the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934.
F. "INVESTMENT PERSONNEL" of the Company means:
(i) any employee of the Company (or of any company in
a control relationship to the Company) who, in connection with
his or her regular functions or duties, makes or participates
in making recommendations regarding the purchase or sale of
securities by any portfolio of which the Company is investment
adviser.
(ii) Any natural person who controls the Company and
who obtains information concerning recommendations made by the
Company regarding the purchase or sale of securities by any
portfolio of which the Company is investment adviser.
G. "LIMITED OFFERING" means an offering that is exempt from
registration under the Securities Act of 1933 pursuant to
Section 4(2) or Section 4(6) or pursuant to Rule 504, Rule
505, or Rule 506 under the Securities Act of 1933.
H. "S & P 500 INDEX PORTFOLIO" means any portfolio the investment
objective of which is to provide investment results that,
before taking into account the expenses of such portfolio,
approximate that aggregate price and dividend performance of
the securities included in the Standard & Poor's Composite 500
Index by investing in securities comprising that index.
I. "S & P 500 INDEX SECURITY" means any security which, at the
time in question, is included in the Standard & Poor's
Composite 500 Index.
IV. Policies of the Company Regarding Personal Securities Transactions.
A. General Policy.
No Access Person shall engage in any act, practice or course
of business that would violate the provisions of Rule 17j-1(b)
set forth above, or in connection
-3-
<PAGE> 4
with any personal investment activity, engage in conduct
inconsistent with this Code.
B. Specific Policies.
1. Restrictions on Personal Securities Transactions By
Access Persons.
a. No Access Person may purchase or sell any
securities (other than any Exempt Securities
or any purchase or sale of securities in an
Exempt Transaction) for his or her personal
portfolio or the portfolio of another member
of his or her immediate family without
obtaining oral authorization from a
Compliance Officer of the Company PRIOR to
effecting such transaction.
b. In addition to, and not in limitation of,
the restrictions contained in the preceding
paragraph IV.B.1.a, no Access Person may
purchase any securities in an Initial Public
Offering or a Limited Offering for his or
her personal portfolio or the portfolio of
another member of his or her immediate
family without obtaining oral authorization
from Senior Company Management PRIOR to
effecting such transaction.
c. If any authorization is granted to an Access
Person who is also classified as Investment
Personnel for a purchase of securities in an
Initial Public Offering or a Limited
Offering, a record of the decision and the
reason supporting the decision to authorize
that purchase shall be made by the
Compliance Officer of the Company granting
such authorization.
d. If oral authorization is granted for a
purchase or sale of securities, a written
authorization for such transaction will be
provided by a Compliance Officer of the
Company to the Access Person receiving the
authorization in order to memorialize the
oral authorization that was granted.
NOTE: If an Access Person has
questions as to whether purchasing
or selling a security for his or her
personal portfolio or the portfolio
of another member of his or her
immediate family requires prior oral
authorization, the Access Person
should consult a Compliance Officer
of the Company for authorization or
denial of authorization to trade
PRIOR to effecting the transaction.
e. Any authorization granted for a transaction
under paragraph (a) will expire at the close
of business on the trading day after the
date
-4-
<PAGE> 5
on which oral authorization was granted, and
the Access Person receiving such
authorization shall be required to receive a
new oral authorization for the transaction
if the trade is not completed before the
authorization shall have expired.
f. No clearance will be given to an Access
Person to purchase or sell any security (1)
on a day when any non-indexed portfolio of
the Company (whether proprietary fund or
separately managed account) has a pending
"buy" or "sell" order in the same security
until that order is executed or withdrawn or
(2) when the Compliance Officer has been
advised by the investment adviser that the
same security is being considered for
purchase or sale for any non-indexed
portfolio of the Company (whether
proprietary fund or separately managed
account).
2. Additional Restrictions on Personal Securities
Transactions By Access Persons.
a. Persons employed by the Company are
forbidden from profiting from the purchase
and sale, sale and purchase, or any
transaction deemed the same (i.e. puts,
calls, use of derivatives, convertibles,
etc.) of the same or equivalent securities
within sixty (60) calendar days on any
security held in the Armada or Parkstone
Mutual Funds, or any Company client account.
b. Access Persons are expressly prohibited from
receiving any gift or other thing of more
than de minimis value from any person or
entity that does business with or on behalf
of the Company, its clients, Armada or
Parkstone Funds.
c. Memberships or partnerships in any
investment club by Access Persons are
forbidden.
d. Access persons are prohibited from serving
on the Board of Directors of publicly traded
companies without prior authorization based
on a determination that the Board service
would be consistent with the interests of
the Company and its clients.
V. Procedures.
A. In order to provide the Company with information to enable it
to determine with reasonable assurance whether the provisions
of this Code are being observed by its Access Persons:
1. Each Access Person will submit to a Compliance
Officer of the Company an Initial Beneficial
Ownership Report in the form attached hereto as
-5-
<PAGE> 6
Exhibit A that lists all securities other than Exempt
Securities beneficially owned(1) by the Access
Person. This report must be submitted within ten days
of becoming an Access Person and must include the
title of each security, the number of shares held,
and the principal amount of the security and the name
of any broker, dealer or bank with whom the Access
person maintains an account in which only such
securities are held.
2. Each Access Person will also submit annually to a
Compliance Officer of the Company a Beneficial
Ownership Report attached hereto as Exhibit A. The
Annual Beneficial Ownership Report must list all
securities other than Exempt Securities beneficially
owned by the Access Person, the title of each
security, the number of shares held, and the
principal amount of the security and the name of any
broker, dealer or bank with whom the Access person
maintains an account in which only such securities
are held.
3. Each Access Person shall direct his or her broker to
supply to a Compliance Officer of the Company, on a
timely basis, duplicate copies of confirmations of
all securities transactions other than Exempt
Transactions in which the person has, or by reason of
any transaction acquires, any direct or indirect
beneficial ownership of any security and copies of
periodic statements for all securities accounts.
4. Each Access Person shall, no later than the tenth
(10th) day after the end of each calendar quarter,
submit a report in the form attached hereto as
Exhibit B to a Compliance Officer of the Company,
showing each transaction in securities other than
Exempt Transactions and other than transactions in
Exempt Securities in which the person has, or by
reason of such transaction acquires, any direct or
indirect beneficial ownership during the calendar
quarter in question, as well as all accounts
established with brokers, dealers or banks during the
calendar quarter in question for the direct or
indirect beneficial interest of the Access Person.(2)
- ------------------------------
1. You will be treated as the "beneficial owner" of a security under this
policy only if you have a direct or indirect pecuniary interest in the security.
(a) A direct pecuniary interest is the opportunity, directly or
indirectly, to profit, or to share the profit, from the
transaction.
(b) An indirect pecuniary interest is any nondirect financial
interest, but is specifically defined in the rules to include
securities held by members of your immediate family sharing
the same household; securities held by a partnership of which
you are a general partner; securities held by a trust of which
you are the settlor if you can revoke the trust without the
consent of another person, or a beneficiary if you have or
share investment control with the trustee; and equity
securities which may be acquired upon exercise of an option or
other right, or through conversion.
For interpretive guidance on this test, you should consult
counsel.
2. See footnote 1 above.
-6-
<PAGE> 7
5. A Compliance Officer of the Company shall notify each
Access Person who is subject to the transaction
pre-authorization requirements or the reporting
requirements of this Code that such person is subject
to such the pre-authorization or reporting
requirements and shall deliver a copy of this Code to
each such person.
6. A Compliance Officer of the Company shall review the
Initial Beneficial Ownership Reports, Annual
Beneficial Ownership Reports, and Quarterly
Transaction Reports received, and as appropriate
compare the reports with the pre-authorizations
received, and report to the Company's Board of
Directors:
a. with respect to any transaction that appears
to evidence a possible violation of this
Code; and
b. apparent violations of the reporting
requirement stated herein.
7. The Company's Board of Directors shall consider
reports made to it hereunder and shall determine
whether the policies established in Sections IV and V
of this Code have been violated, and what sanctions,
if any, should be imposed on the violator, including
but not limited to a letter of censure, suspension or
termination of the employment of the violator, or the
unwinding of the transaction and the disgorgement of
any profits. The Company's Board of Directors shall
review the operation of this Code at least once a
year.
8. At each quarterly meeting of the Company's Board of
Directors a Compliance Officer of the Company shall
provide a written report to the Company's Board of
Directors stating:
a. any reported securities transaction that
occurred during the prior quarter that may
have been inconsistent with the provisions
of this Code; and
b. all disciplinary actions(3) taken in
response to such violations.
9. At least once a year, a Compliance Officer of the
Company shall provide to the Company's Board of
Directors and to the Board members of any registered
investment company for which the Company serves as
investment adviser a written report which contains:
(a) a summary of existing procedures concerning
personal investing by Access Persons and any changes
in the compliance procedures under this Code during
the past year; (b) an evaluation of current
compliance procedures under this Code
- ------------------------------
3. Disciplinary action includes but is not limited to any action that has
a material financial effect upon the employee, such as fining, suspending, or
demoting the employee, imposing a substantial fine or requiring the disgorgement
of profits.
-7-
<PAGE> 8
and a report on any recommended changes in existing
restrictions or any such procedures based upon the
Company's experience under this Code, industry
practices, or developments in applicable laws and
regulations; (c) a description of any issues arising
under this Code or the compliance procedures
thereunder since the last such report, including but
not limited to, information about material violations
of this Code and sanctions imposed in response to
material violations; and (d) a certification that the
procedures which have been adopted under this Code
are those reasonably necessary to prevent Access
Persons from violating this Code.
10. This Code, a copy of each report by an Access Person,
any record of any violation of this Code and any
action taken as a result thereof, any written report
hereunder by the any Compliance Officer of the
Company, records of authorizations relating to the
purchase of securities in Initial Public Offerings
and Limited Offerings, and lists of all persons
required to make reports and a list of all persons
responsible for reviewing such reports shall be
preserved with the Company's records for the period
required by Rule 17j-1 under the 1940 Act and Rule
204-2(a)(12) of the Investment Advisers Act of 1940.
VI. Certification.
Each Access Person will be required to certify annually that he or she
has read and understood this Code, and will abide by it at all times during
which such person is an Access Person. Each Access Person will further certify
that he or she has disclosed or reported all personal securities transactions
required to be disclosed or reported under this Code of Ethics. A form of such
certification is attached hereto as Exhibit C.
Date of Adoption: April 21, 2000
-8-
<PAGE> 9
EXHIBIT A
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
INITIAL/ANNUAL
BENEFICIAL OWNERSHIP REPORT
For the Year/Period Ended _______________________
(month/day/year)
[ ] Check Here if this is an Initial Beneficial Ownership Report
To: National City Investment Management Company (the "Company")
As of the calendar year/period referred to above, I have a
direct or indirect beneficial ownership interest in the securities listed below
which are required to be reported pursuant to the Company's Code of Ethics (the
"Code"):
Title of Number Principal
Security of Shares Amount
-------- --------- ---------
The name of any broker, dealer or bank with whom I maintain an
account in which my securities are held for my direct or indirect benefit are as
follows:
THIS REPORT (i) EXCLUDES MY BENEFICIAL OWNERSHIP OF "EXEMPT
SECURITIES" AS DEFINED IN THE CODE AND (ii) IS NOT AN ADMISSION THAT I HAVE OR
HAD ANY DIRECT OR INDIRECT BENEFICIAL OWNERSHIP IN THE SECURITIES LISTED ABOVE.
Date: Signature:
------------------------------- ---------------------------
Print Name:
--------------------------
<PAGE> 10
EXHIBIT B
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
SECURITIES TRANSACTION REPORT
For the Calendar Quarter Ended _______________________
(month/day/year)
To: National City Investment Management Company (the "Company")
During the quarter referred to above, the following
transactions were effected in securities of which I had, or by reason of such
transactions acquired, direct or indirect beneficial ownership, and which are
required to be reported pursuant to the Code of Ethics of the Company:
<TABLE>
Nature of Broker/Dealer
Interest Rate Transaction or Bank
Date of Number of Principal and Maturity (Purchase, Through Whom
Security Transaction Shares Amount Date (if applicable) Sale, Other) Price Effected
- -------- ----------- --------- --------- -------------------- ------------ ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
During the quarter referred to above, I established the
following accounts in which securities were held during the quarter for my
direct or indirect benefit:
1. The name of the broker, dealer or bank with whom I
established the account:
2. The date the account was established:
THIS REPORT (i) EXCLUDES TRANSACTIONS IN "EXEMPT SECURITIES"
AS DEFINED IN THE CODE, (ii) EXCLUDES "EXEMPT TRANSACTIONS" AS DEFINED IN THE
CODE, AND (iii) IS NOT AN ADMISSION THAT I HAVE OR HAD ANY DIRECT OR INDIRECT
BENEFICIAL OWNERSHIP IN THE SECURITIES LISTED ABOVE.
Date: Signature:
------------------------------- ---------------------------
Print Name:
--------------------------
<PAGE> 11
EXHIBIT C
NATIONAL CITY INVESTMENT MANAGEMENT COMPANY
ANNUAL CERTIFICATE
For the Calendar Year Ended ___12/31/____________________
(month/day/year)
To: National City Investment Management Company (the "Company")
Pursuant to the requirements of the Company's Code of Ethics
(the "Code"), the undersigned hereby certifies as follows:
1. I have read the Code.
2. I understand the Code and acknowledge that I am
subject to it.
3. Since the date of the last Annual Certificate (if
any) given pursuant to the Code, I have reported all
personal securities transactions and provided any
beneficial ownership reports required to be reported
or provided, respectively, by me under the
requirements of the Code.
Date:
---------------------------
Print Name
--------------------------
Signature
<PAGE> 1
CODE OF ETHICS
To avoid any conflict of interest in carrying out our responsibilities to the
clients and the public, every officer, director and employee of Interstate
Advisors, Inc. ("Interstate") is bound by this Code of Ethics. The general
principles involved are stated in the following quote from the Securities and
Exchange Commission:
"An investment advisor is a fiduciary. As such he owes his clients
undivided loyalty, should not engage in any activity in conflict with the
interest of any client, and should take the steps reasonably necessary to
fulfill his fiduciary obligations. Thus, an investment advisor must not
only refrain from effecting, on his own behalf, securities transaction
which are inconsistent with his fiduciary obligation; he should also be
reasonably certain that persons associated with him are not improperly
utilizing the information which they obtain in the conduct of the
investment advisory business in such manner as to adversely effect the
interest of clients or limit the advisor's ability to fulfill his fiduciary
obligations."
To avoid even the appearance of any conflict of interest in our investment
advisory dealings, you:
1. may not seek or accept any gifts, favors, preferential treatment, or
valuable consideration of any kind offered from any broker/dealer or other
company or persons involved in the securities industry because of your
association with Interstate. If you receive an unsolicited gift that has a
value in excess of $100, you must immediately report the gift to Mr. Lyons,
and then gift the item to any charity of your choice.
2. may not release information (except to those concerned with the
transaction) as to any portfolio changes proposed or in process, until such
information becomes publicly available. You must not divulge information to
any outsider concerning either proposed or partially completed programs to
buy or sell particular securities.
3. must conduct your private transactions in such a way as not to conflict
with the interest of our clients whose assets we manage or advise.
4. may not trade, either personally or on behalf of others, on material
nonpublic information, or communicate material nonpublic information to
others in violation of the law.
5. must report to Interstate, in writing, all personal transactions in
securities in which you have a direct or indirect beneficial ownership
within 10 days of the end of each calendar quarter.
-1-
<PAGE> 2
CODE OF ETHICS
WHAT ACCOUNTS AND SECURITIES ARE COVERED BY THIS POLICY?
This Code of Ethics Policy DOES relate to any account established, or
transactions contemplated, in which you have discretionary authority, and
which is for the benefit of you, your spouse, any minor children, any
relative living with you, and any person to whom you contribute support.
This Code of Ethics Policy DOES NOT relate to any account established, or
transactions contemplated, over which you have no direct or indirect
influence or control, transactions that are non-volitional on your part,
purchases that are part of an automatic dividend reinvestment plan,
exercise of rights issued by an issuer pro rata to all holders of a class
of its securities (if the rights were acquired from the issuer), or to the
sale of any such rights acquired from the issuer.
This Code of Ethics Policy DOES NOT relate to any security issued by the
Government of the United States or by federal agencies that are direct
obligations of the United States, bankers' acceptances, certificates of
deposit, commercial paper, variable contracts issued by insurance
companies, or securities of open-end investment companies registered under
the Investment Company Act of 1940 that are not affiliated with Interstate.
You must read and retain this Code of Ethics. Any Questions regarding
Interstate's Code of Ethics should be referred to Mr. Lyons.
-2-
<PAGE> 3
POLICY STATEMENT ON INSIDER TRADING
Interstate Advisors, Inc. forbids you to trade, either personally or on behalf
of others, including accounts managed by Interstate, on material non-public
information, or communicating material nonpublic information to others in
violation of the law. This conduct is frequently referred to as "insider
trading." Interstate's policy extends to activities within and outside your
duties at Interstate.
The term "insider trading" in not defined in the federal securities laws, but
generally is used to refer to the use of material nonpublic information to trade
in securities (whether or not one is an "insider") or to the communication of
material nonpublic information to others.
While the law concerning insider trading is not static, it is generally
understood that the law prohibits:
1. trading by an insider while in possession of material nonpublic
information,
2. trading by non-insider, while in possession of material nonpublic
information, where the information either was disclosed to the non-insider
in violation of an insider's duty to keep it confidential or was
misappropriated, or
3. communicating material nonpublic information to others.
The elements of insider trading and the penalties for such unlawful conduct are
discussed below. If, after reviewing this policy statement, you have any
questions you should consult Mr. Lyons.
WHO IS AN INSIDER?
The concept of "insider" is broad. It includes officers, directors and employees
of a company. In addition, a person can be a "temporary insider" if he or she
enters into a special confidential relationship in the conduct of a company's
affairs and as a result is given access to information solely for the company's
purposes. A temporary insider can include, among others, a company's attorneys,
accountants, consultants, bank lending officers, and the employees of such
organizations. According to the Supreme Court, the company must expect the
outsider to keep the disclosed nonpublic information confidential and the
relationship must at least imply such a duty before the outsider will be
considered an insider.
WHAT IS MATERIAL INFORMATION?
Trading on inside information is not a basis for liability unless the
information is material. "Material information" is generally defined as
information that there is a substantial likelihood a reasonable investor would
consider important to make his or her investment decisions, or information that
is reasonably certain to have substantial effect
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<PAGE> 4
POLICY STATEMENT ON INSIDER TRADING
on the price of a company's securities. Information you should consider material
includes, but is not limited to:
o dividend changes
o earnings estimates
o changes in previously released earnings estimates
o significant merger or acquisition proposals or agreements
o major litigation
o liquidation problems
o extraordinary management developments.
Material information does not have to relate to a company's business. For
example, in Carpenter v. U.S., 108 U.S. 316 (1987), the Supreme Court considered
as material certain information about the contents of a forthcoming newspaper
column that was expected to affect the market price of security. In this case, a
Wall Street Journal reporter was found criminally liable for closing to others
the dates that reports on various companies would appear in the Journal and
whether those reports would be favorable or not.
WHAT IS NONPUBLIC INFORMATION?
Information is nonpublic until it has been effectively communicated to the
market place. One must be able to point to some fact to show that the
information is generally public. For example, information found in a report
filed with the SEC, or appearing in Dow Jones, Reuters Economic Services, the
Wall Street Journal or other publications of general circulation would be
considered public.
PENALTIES FOR INSIDER TRADING
Penalties for trading on, or communicating, material nonpublic information are
severe, for both the individuals involved in the unlawful conduct and their
employers. Persons can be subject to some or all of the penalties below, even if
they do not personally benefit from the violation.
o civil injunctions
o treble damages
o disgorgement of profits
o jail sentences
o fines for the person who committed the violation of up to three times the
profit gained or loss avoided, whether or not the person actually
benefited, and
o fines for the employer or other controlling person of up to the greater of
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<PAGE> 5
POLICY STATEMENT ON INSIDER TRADING
In addition, any violation of this Code of Ethics can be expected to result in
serious sanctions by Interstate, including dismissal of the persons involved.
PROCEDURES TO IMPLEMENT INSIDER TRADING POLICY
Before trading for yourself or others, including accounts managed by Interstate,
in the securities of a company about which you may have potential inside
information, ask yourself the following questions:
1. Is the information material? Would an investor consider it important in
making their investment decisions? Would it substantially effect the market
price of the securities if generally disclosed?
2. Is the information nonpublic? To whom has this information been provided?
Has the information been effectively communicated to the marketplace by
being published in Reuters, the Wall Street Journal, or other publication
of general circulation?
If, after considering the above, you believe the information may be material and
nonpublic:
1. Report the matter immediately to Mr. Lyons.
2. Do not purchase or sell the securities on behalf of yourself or others,
including accounts managed by Interstate.
3. Do not communicate the information inside or outside Interstate, other then
to Mr. Lyon. In addition, you should take care that the information is
secure. For example, you should seal files and restrict access to the
computer files containing material nonpublic information.
4. Mr. Lyons will instruct you to continue the prohibitions against trading
and communication, or will allow you to trade and communicate the
information. Any questions about whether information is material or
nonpublic, the applicability or interpretation of these procedures, or the
property of any action, must be discussed with Mr. Lyons before you trade
or communicate the information to anyone.
These procedures have been established to help you avoid insider trading, and
help Interstate prevent, detect and impose sanctions against insider trading.
You must follow these procedures or risk serious sanctions, including dismissal,
substantial personal liability and criminal penalties. If you have any questions
about these procedures consult Mr. Lyons.
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<PAGE> 6
POLICY STATEMENT ON PERSONAL SECURITIES TRANSACTIONS
Interstate Advisors, Inc. forbids you to trade, either in your own personal
account, or in any account in which you have direct or indirect beneficial
ownership, in any security that is currently trading, or being considered for
trading, in any account managed by Interstate until two (2) business days after
the last trade has been effected in any such managed account.
PROCEDURES TO IMPLEMENT PERSONAL SECURITIES TRANSACTIONS POLICY
Prior to entering any order for personal security transactions, you must submit
to Mr. Lyons a request form (attached as EXHIBIT C) regarding the proposed
transaction. Mr. Lyons will determine if any client trades are pending, or if
there have been trades within the guidelines stated above.
If the security has been traded in any client account during the past two
(2) business days, or is expected to be traded, the transaction will be
approved.
If the security involved is not currently being traded, has not traded in
any client account during the past two (2) business days, or is not
currently being considered for trading in any client account, the
transaction will be approved.
Mr. Lyons will initial, in the space provided on the form, indicating the
approval or disapproval of each transaction. All requests, whether approved or
denied, will be maintained in a confidential file. Additional copies of this
form may be obtained from Mr. Lyons.
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<PAGE> 7
MONITORING COMPLIANCE
On implementation of this policy you are required to sign the certificate
appearing on the final page stating you have read and understand this Code of
Ethics, and agree to comply with it. Thereafter, all new employees will be
required to sign this certificate as a condition of employment.
At the same time you are required to advise Interstate of all accounts covered
by this Code of Ethics with any brokerage firm or other financial institution
through which any securities covered by this Code of Ethics may be purchased or
sold, using the form attached as EXHIBIT B. In addition, you must notify
Interstate of all securities held in each of these accounts. Thereafter you must
advise Mr. Lyons and receive authorization from Interstate prior to opening any
new account.
You are required to obtain consent from Interstate prior to entering any order
for personal securities transactions in any account, or in any security, covered
by this Code of Ethics, using the form attached as EXHIBIT C.
You are required to have copies of each confirmation relating to a trade in any
security covered by this Code of Ethics Policy, and copies of each periodic
account statement for accounts you are required to disclose to Interstate,
promptly sent to Interstate, to the attention of Mr. Lyons.
You are responsible for promptly providing Interstate with the date, security,
nature of the transaction, price, parties and brokers involved in such trade if
a confirmation is not available. Use the attached form EXHIBIT C, and indicate
on the form that this is for NOTIFICATION.
You are required to sign a certificate annually stating you have complied with
this Code of Ethics for the preceding year, on the attached form EXHIBIT A.
All confirmations, statements, forms and other information will be reviewed to
monitor compliance with firm policies. Interstate reserves the right to require
you to reserve, cancel or freeze, at your own expense, any transaction or
position in a specific security if Interstate believes such transaction or
position might violate this Code of Ethics policy or appears improper. Except as
required to enforce this Code of Ethics, or to participate in an investigation
concerning violations of applicable law, Interstate will keep all such
information confidential.
If you have questions, concerning any aspect of this Code of Ethics or how it
applies in particular situations, please consult with Mr. Lyons.
-7-
<PAGE> 8
MONITORING COMPLIANCE
Exhibit A
to
INTERSTATE ADVISORS, INC.
CODE OF ETHICS
Annual Certificate of Compliance
I hereby certify that, since the day on which I received the copy of the Code of
Ethics of Interstate Advisors, Inc., or the date of my most recent certificate
of like tenor hereto, whichever is later, and to the best of my knowledge, I
have complied with all such Code of Ethics procedures applicable to me.
Signed:
---------------------------------------
Name (printed):
---------------------------------------
Date:
---------------------------------------
-8-
<PAGE> 9
MONITORING COMPLIANCE
Exhibit B
to
INTERSTATE ADVISORS, INC.
CODE OF ETHICS
Account with Brokerage Firms and Financial Institution
I hereby certify that the following is a complete list of accounts with any
brokerage firm or other financial institution through which any securities
covered by this Code of Ethics may be purchased or sold in accordance with the
Code of Ethics of Interstate Advisors, Inc.:
I understand that you require this list to monitor my compliance with Interstate
Advisors, Inc's. Code of Ethics. I agree to notify Interstate and obtain its
consent before opening any new account that falls within the Code of Ethics. I
further agree to furnish Interstate with copies of confirmations of trades,
periodic statements and any other information concerning activity in any of the
listed accounts.
<TABLE>
<CAPTION>
Broker Name Account Number Account Name Relationship
- ----------- -------------- ------------ ------------
<S> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
Signed:
-----------------------------------
Name (printed):
-----------------------------------
Date:
-----------------------------------
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<PAGE> 10
MONITORING COMPLIANCE
Exhibit C
to
INTERSTATE ADVISORS, INC.
CODE OF ETHICS
Personal Security Transaction Authorization.
(valid only for proposed trade date)
Employee Name:
------------------------------------------------------------------
Account Title:
------------------------------------------------------------------
Proposed Trade Date:
------------------------------------------------------------
Security:
-----------------------------------------------------------------------
Number of Shares:
---------------------------------------------------------------
Buy: Sell:
------------------------------------------ ----------------------------
AUTHORIZATION
1. Has the security been approved for purchase or sale for client accounts
within the last two business days, or is currently being considered for
trading in client accounts?
Yes No
------------------ -----------------
2. Are there currently any open orders for client accounts, or have their
been any purchases or sales for client accounts within the last two
business days?
Yes No
------------------ -----------------
Request Approved Request Denied
-------------------------- ------------------
THIS FORM MUST BE INITIALED BY MR. LYONS PRIOR TO ENTERING INTO PERSONAL
SECURITY TRANSACTIONS.
Comments:
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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<PAGE> 11
MONITORING COMPLIANCE
Exhibit D
to
INTERSTATE ADVISORS, INC.
CODE OF ETHICS
Personal Security Transaction
Name:
For Quarter Through
<TABLE>
<CAPTION>
Buy/ No. of
Date: Sell Name of Security Shares Price Broker
- ----- ----- ---------------- ------ ----- ------
<S> <C> <C> <C> <C> <C>
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
- --------- ---------- --------------------------------- --------- --------- ---------
</TABLE>
-11-
<PAGE> 12
MONITORING COMPLIANCE
INTERSTATE ADVISORS, INC.
CODE OF ETHICS
Certificate of Receipt
I hereby certify that
1. I have read the Code of Ethics of Interstate Advisors, Inc.
2. I have had the opportunity to ask questions I may have concerning the
meaning and interpretation of such policies and procedures outlined,
3. I understand the obligations set forth therein applicable to me, and
4. I agree to abide by and comply with such Code of Ethics.
Signed:
----------------------------------------
Name (printed):
----------------------------------------
Date:
----------------------------------------
-12-
