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As filed with the Securities and Exchange Commission on June 13, 2000
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. 18 x
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
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Amendment No. 20 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 Public Offering: As soon as practicable after the
effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b)
---
on ______________, 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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x 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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MAGNET DOW JONES TOTAL MARKET GROWTH FUND
INVESTOR SHARES
Prospectus
Dated _________, 2000
THIS PROSPECTUS OFFERS EXCLUSIVELY INVESTOR SHARES OF THE MAGNET DOW JONES TOTAL
MARKET GROWTH FUND. ADVISER SHARES ARE OFFERED BY A SEPARATE PROSPECTUS.
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.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
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Page
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<S> <C>
Investment Objective, Principal Strategies and Risks................................................3
Performance.........................................................................................4
Fees and Expenses of the Fund.......................................................................4
Investment Adviser..................................................................................5
How Do I Invest in the Fund?........................................................................6
Distribution Plan..................................................................................11
Financial Highlights...............................................................................11
Appendix...........................................................................................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 OBJECTIVE -- The Magnet Dow Jones Total Market Growth 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 companies selected from the Dow Jones U.S.
Total Market Index ("DJTMI-US"). The DJTMI-US is discussed in more detail in the
appendix.
In making its stock selections from the DJTMI-US, Revqual Index-Plus Investors,
L.L.C. (the "Adviser") utilizes a proprietary stock selection methodology termed
MAGNET(R) which stands for:
M - Management must be outstanding
Momentum must be increasing
A - Accelerating earnings, revenue and margins
G - Growth rate must exceed current valuation
N - New management, product, industry, etc.
E - Emerging industry, technology, etc.
T - Timing must be technically right
The MAGNET(R) stock selection system utilizes a combination of fundamental and
technical stock evaluation and seeks to identify strong value with current
momentum. Fundamental analysis involves the various financial, business,
management and other attributes of a particular company. Technical analysis is
concerned with the relative strength of the company's stock, its support and
resistance levels, various moving averages and price action for previous
periods. Technical analysis is an inexact science. However, the Adviser feels it
is a good tool to assist in finding stocks that may significantly outperform the
market.
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.
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.
The Statement of Additional Information ("SAI") contains more specific
information about the risks associated with investing in the Fund.
3
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PERFORMANCE
There is no performance information for the Fund because it has not completed a
full calendar year of operations.
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 Investor 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 Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund Assets)
Management Fees (1) %
Distribution (12b-1) Fees .25%
Other Expenses (1) %
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Total Annual Fund Operating Expenses %
Fee Waiver and/or Expense Reimbursement (1) %
--------------------------------------------------------------
Net Annual Fund Operating Expenses (1) %
--------------------------------------------------------------
(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 for Investor Shares will be no more than
____% for the fiscal year ended _________.
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 Investor Shares of 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:
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<TABLE>
<CAPTION>
MAGNET DOW JONES TOTAL
MARKET GROWTH FUND ONE YEAR THREE YEARS
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<S> <C> <C>
Investor Shares
</TABLE>
INVESTMENT ADVISER
Revqual Index-Plus Investors, L.L.C. ("Adviser") acts as the investment adviser
to the Fund and will be paid an advisory fee at an annual rate of ____% of the
average daily net assets of the Fund. The Adviser's address is
___________________. 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.
JORDAN KIMMEL, age 41, is a principal of the Adviser and is responsible for the
portfolio management of the Partnership. He has developed the MAGNET(R) stock
selection strategy, which is the subject of a book, which includes an
introduction by John Downes, co-author of "Beating the Dow."
Prior to launching the Partnership and from 1994, Mr. Kimmel was a First Vice
President at Dean Witter. Earlier in his career he was an account executive at
Paine Webber and A.G. Edwards. A graduate of the State University of New York at
Stony Brook, Mr. Kimmel holds a B.A. in Economics and a M.S. in Urban Policy
Sciences. He is also a graduate of the Bronx High School of Science.
Mr. Kimmel holds the position of Market Strategist for and is a registered
representative of First Montauk Securities Corp., a national brokerage firm
headquartered in Red Bank, NJ, with more than 400 independent brokers.
T. OWEN CARROLL, PH.D., age 51, is a principal of the Adviser and is a Professor
of Finance in the W. Averell Harriman School of Management at the State
University of New York at Stony Brook. He received a B.S. in Engineering Physics
from the University of California at Berkeley and a Ph.D. in Applied Physics and
Electrical Engineering from Cornell University. He was given the Distinguished
Teaching Award in the College of Engineering at Stony Brook, the Chancellor's
Award for Excellence in Teaching from the State University of New York, and was
one of the founding professors of the W. Averell Harriman School of Management.
He has served as a consultant to the governments of Canada and Thailand, as well
as to several corporations, including CITIBANK, Nabisco and PPG.
Dr. Carroll is currently engaged in research and teaching in Computational
Finance, the applications of dynamic systems techniques to financial time
series, and related areas of financial research. He has also been a Director of
Research and consultant to money management firms engaged in aggressive, high
turnover portfolio management and computerized trade implementation.
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HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE?
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MINIMUM INITIAL INVESTMENT
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<S> <C>
New Account $1,000
IRA Account $1,000
Systematic Investment Program $250
Systematic Withdrawal Program $10,000
</TABLE>
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 MAGNET DOW JONES TOTAL MARKET GROWTH
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:
Magnet Dow Jones Total Market Growth Fund
PMB __________
303 16th Street, Suite #016
Denver, CO 80202-5657
BY WIRE. You may purchase shares by wire transfer from your bank account to your
Magnet Dow Jones Total Market Growth Fund account. There is a $1,000 minimum for
purchases by wire. To place a purchase by wire, please call 1-__________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
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Magnet Dow Jones Total Market Growth Fund
Credit DDA#____________
(Account Registration)
(Account Number)
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.
Whether 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
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difficult to make contact by telephone during periods of severe market or
economic change. Shareholders should consider redeeming by mail during such
times.
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-___________. 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.
8
<PAGE> 10
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.
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. 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. 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-____________ 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
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<PAGE> 11
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 requirement must be met for the Class in which you are
investing. Contributions to IRAs are subject to the limits and conditions
established by the Internal Revenue Service. For more information, call the Fund
at 1-____________ or your tax adviser.
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 ___, 303 16th
Street, Suite 016, Denver, Colorado 80202-5657 or call the Fund at
1-____________ 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 each Class of shares in the Fund is determined by
adding the value of each Class' proportional share of the Fund's investments,
cash and other assets, deducting each Class' proportional share of liabilities,
and then dividing that value by the total number of the shares outstanding in
that class. Each Class' 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
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gains realized are normally distributed in December. Income dividends for the
Fund are declared daily and paid monthly.
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 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 Investor Shares of the Fund
(the "Distribution Plan"). The Distribution Plan permits the use of portfolio
assets to compensate ALPS for its services and costs in distributing Investor
Shares and servicing shareholder accounts.
Under the Distribution Plan, ALPS receives an amount up to .25% of the average
net assets of the Fund that are attributable to Investor Shares. 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 Investor 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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APPENDIX
DOW JONES U.S. TOTAL MARKET INDEX
The Dow Jones U.S. Total Market Index is designed to provide 95% representation
of the U.S. stock market by employing the following methodology:
A. UNIVERSE CREATION
1. Aggregated are all stocks from the local stock exchange(s).
2. The following are eliminated:
a. Foreign issues, including ADRs and GDRs.
b. Non-common equity issues such as preferred stocks,
convertible notes, warrants, rights, closed-end funds, trust
receipts, limited liability companies, royalty trusts, units,
limited partnerships, over-the-counter bulletin boards and
"pink sheet" stocks.
c. Companies with 75% or more ownership by another single
entity.
d. Stocks with more than 10 non-trading days during the last
quarter.
e. Stocks with less than six month's trading history.
B. UNIVERSE SEPARATION
1. The 3-month average market capitalization is calculated for each
company in the Universe.
2. The Universe is sorted by 3-month average market capitalization in
descending order.
3. The cumulative percentage of market value coverage is calculated
for each added component using a top-down approach.
4. The Universe is divided into three sub-universes for sub-index
construction as follows:
Large-Cap Universe: The top 70% of the Universe market value
Mid-Cap Universe: The next 20% of the Universe market value
Small-Cap Universe: The remaining 10% of the Universe market
value
C. INDEX CONSTRUCTION
1. Large-Cap Sub-Index
100% of the Large-Cap Universe is included in the index.
2. Mid-Cap Sub-Index
100% of the Mid-Cap Universe is included in the index.
3. Small-Cap Sub-Index
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a. Stocks ranked within the top 25% of the Small-Cap Universe's
aggregated market value are automatically included in the
index.
b. The remaining companies in the Small-Cap Universe are added
based upon an equally weighted combination of 3-month average
market value and R-score (3-month average daily dollar
volume/3-month market value) until 50% of each industry group
is covered. Stocks falling in the bottom 10% of the Small-Cap
Universe are ineligible for selection.
D. PERIODIC REVIEW
The index is reviewed on a quarterly basis.
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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
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TO OBTAIN THE SAI FOR THE FUND FEE 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-___________.
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Investment Company Act File No. 811-8194
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MAGNET DOW JONES TOTAL MARKET GROWTH FUND
ADVISER SHARES
Prospectus
Dated _________, 2000
THIS PROSPECTUS OFFERS EXCLUSIVELY ADVISER SHARES OF THE MAGNET DOW JONES TOTAL
MARKET GROWTH FUND. INVESTOR SHARES ARE OFFERED BY A SEPARATE PROSPECTUS.
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.
<PAGE> 17
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Investment Objective, Principal Strategies and Risks................................................3
Performance.........................................................................................4
Fees and Expenses of the Fund.......................................................................4
Investment Adviser..................................................................................5
How Do I Invest in the Fund?........................................................................6
Distribution Plan..................................................................................11
Financial Highlights...............................................................................12
Appendix...........................................................................................13
</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.
2
<PAGE> 18
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
INVESTMENT OBJECTIVE -- The Magnet Dow Jones Total Market Growth 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 companies selected from the Dow Jones U.S.
Total Market Index ("DJTMI-US"). The DJTMI-US is discussed in more detail in the
appendix.
In making its stock selections from the DJTMI-US, Revqual Index-Plus Investors,
L.L.C. (the "Adviser") utilizes a proprietary stock selection methodology termed
MAGNET(R) which stands for:
M - Management must be outstanding
Momentum must be increasing
A - Accelerating earnings, revenue and margins
G - Growth rate must exceed current valuation
N - New management, product, industry, etc.
E - Emerging industry, technology, etc.
T - Timing must be technically right
The MAGNET(R) stock selection system utilizes a combination of fundamental and
technical stock evaluation and seeks to identify strong value with current
momentum. Fundamental analysis involves the various financial, business,
management and other attributes of a particular company. Technical analysis is
concerned with the relative strength of the company's stock, its support and
resistance levels, various moving averages and price action for previous
periods. Technical analysis is an inexact science. However, the Adviser feels it
is a good tool to assist in finding stocks that may significantly outperform the
market.
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.
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.
The Statement of Additional Information ("SAI") contains more specific
information about the risks associated with investing in the Fund.
3
<PAGE> 19
PERFORMANCE
There is no performance information for the Fund because it has not completed a
full calendar year of operations.
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 Adviser 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 Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund Assets)
Management Fees (1) %
Distribution (12b-1) Fees 1.00%
Other Expenses (1) %
--------------------------------------------------------------
Total Annual Fund Operating Expenses %
Fee Waiver and/or Expense Reimbursement (1) %
--------------------------------------------------------------
Net Annual Fund Operating Expenses (1) %
--------------------------------------------------------------
(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 for Adviser Shares will be no more than ____%
for the fiscal year ended _________.
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 Adviser Shares of 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:
4
<PAGE> 20
<TABLE>
<CAPTION>
MAGNET DOW JONES TOTAL
MARKET GROWTH FUND ONE YEAR THREE YEARS
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
Adviser Shares
</TABLE>
INVESTMENT ADVISER
Revqual Index-Plus Investors, L.L.C. ("Adviser") acts as the investment adviser
to the Fund and will be paid an advisory fee at an annual rate of ____% of the
average daily net assets of the Fund. The Adviser's address is
___________________. 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.
JORDAN KIMMEL, age 41, is a principal of the Adviser and is responsible for the
portfolio management of the Partnership. He has developed the MAGNET(R) stock
selection strategy, which is the subject of a book, which includes an
introduction by John Downes, co-author of "Beating the Dow."
Prior to launching the Partnership and from 1994, Mr. Kimmel was a First Vice
President at Dean Witter. Earlier in his career he was an account executive at
Paine Webber and A.G. Edwards. A graduate of the State University of New York at
Stony Brook, Mr. Kimmel holds a B.A. in Economics and a M.S. in Urban Policy
Sciences. He is also a graduate of the Bronx High School of Science.
Mr. Kimmel holds the position of Market Strategist for and is a registered
representative of First Montauk Securities Corp., a national brokerage firm
headquartered in Red Bank, NJ, with more than 400 independent brokers.
T. OWEN CARROLL, PH.D., age 51, is a principal of the Adviser and is a Professor
of Finance in the W. Averell Harriman School of Management at the State
University of New York at Stony Brook. He received a B.S. in Engineering Physics
from the University of California at Berkeley and a Ph.D. in Applied Physics and
Electrical Engineering from Cornell University. He was given the Distinguished
Teaching Award in the College of Engineering at Stony Brook, the Chancellor's
Award for Excellence in Teaching from the State University of New York, and was
one of the founding professors of the W. Averell Harriman School of Management.
He has served as a consultant to the governments of Canada and Thailand, as well
as to several corporations, including CITIBANK, Nabisco and PPG.
Dr. Carroll is currently engaged in research and teaching in Computational
Finance, the applications of dynamic systems techniques to financial time
series, and related areas of financial research. He has also been a Director of
Research and consultant to money management firms engaged in aggressive, high
turnover portfolio management and computerized trade implementation.
5
<PAGE> 21
HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE?
<TABLE>
<CAPTION>
MINIMUM INITIAL INVESTMENT
------------------------------------------------------------------------
<S> <C>
New Account $1,000
IRA Account $1,000
Systematic Investment Program $250
Systematic Withdrawal Program $10,000
</TABLE>
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 MAGNET DOW JONES TOTAL MARKET GROWTH
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:
Magnet Dow Jones Total Market Growth Fund
PMB __________
303 16th Street, Suite #016
Denver, CO 80202-5657
BY WIRE. You may purchase shares by wire transfer from your bank account to your
Magnet Dow Jones Total Market Growth Fund account. There is a $1,000 minimum for
purchases by wire. To place a purchase by wire, please call 1-__________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
6
<PAGE> 22
Magnet Dow Jones Total Market Growth Fund
Credit DDA#____________
(Account Registration)
(Account Number)
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.
Whether 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
7
<PAGE> 23
difficult to make contact by telephone during periods of severe market or
economic change. Shareholders should consider redeeming by mail during such
times.
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-___________. 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.
8
<PAGE> 24
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.
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. 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. 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-____________ 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
9
<PAGE> 25
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 requirement must be met for the Class in which you are
investing. Contributions to IRAs are subject to the limits and conditions
established by the Internal Revenue Service. For more information, call the Fund
at 1-____________ or your tax adviser.
Additional account level fees are imposed for IRA accounts.
WHAT STATEMENTS 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___, 303 16th
Street, Suite 016, Denver, Colorado 80202-5657 or call the Fund at
1-____________ 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 each Class of shares in the Fund is determined by
adding the value of each Class' proportional share of the Fund's investments,
cash and other assets, deducting each Class' proportional share of liabilities,
and then dividing that value by the total number of the shares outstanding in
that class. Each Class' 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.
10
<PAGE> 26
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 are declared and paid quarterly.
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 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 Adviser Shares of the Fund
(the "Distribution Plan"). The Distribution Plan permits the use of portfolio
assets to compensate ALPS for its services and costs in distributing Adviser
Shares and servicing shareholder accounts.
Under the Distribution Plan, ALPS receives an amount up to 1.00% of the average
net assets of the Fund that are attributable to Adviser Shares. 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 Adviser 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.
11
<PAGE> 27
FINANCIAL HIGHLIGHTS
There are no Financial Highlights for the Fund because it has not completed a
fiscal year of operations.
12
<PAGE> 28
APPENDIX
DOW JONES U.S. TOTAL MARKET INDEX
The Dow Jones U.S. Total Market Index is designed to provide 95% representation
of the U.S. stock market by employing the following methodology:
A. UNIVERSE CREATION
1. Aggregated are all stocks from the local stock exchange(s).
2. The following are eliminated:
a. Foreign issues, including ADRs and GDRs.
b. Non-common equity issues such as preferred stocks,
convertible notes, warrants, rights, closed-end funds, trust
receipts, limited liability companies, royalty trusts, units,
limited partnerships, over-the-counter bulletin boards and
"pink sheet" stocks.
c. Companies with 75% or more ownership by another single
entity.
d. Stocks with more than 10 non-trading days during the last
quarter.
e. Stocks with less than six month's trading history.
B. UNIVERSE SEPARATION
1. The 3-month average market capitalization is calculated for each
company in the Universe.
2. The Universe is sorted by 3-month average market capitalization in
descending order.
3. The cumulative percentage of market value coverage is calculated
for each added component using a top-down approach.
4. The Universe is divided into three sub-universes for sub-index
construction as follows:
Large-Cap Universe: The top 70% of the Universe market value
Mid-Cap Universe: The next 20% of the Universe market value
Small-Cap Universe: The remaining 10% of the Universe market
value
C. INDEX CONSTRUCTION
1. Large-Cap Sub-Index
100% of the Large-Cap Universe is included in the index.
2. Mid-Cap Sub-Index
100% of the Mid-Cap Universe is included in the index.
3. Small-Cap Sub-Index
13
<PAGE> 29
a. Stocks ranked within the top 25% of the Small-Cap Universe's
aggregated market value are automatically included in the
index.
b. The remaining companies in the Small-Cap Universe are added
based upon an equally weighted combination of 3-month average
market value and R-score (3-month average daily dollar
volume/3-month market value) until 50% of each industry group
is covered. Stocks falling in the bottom 10% of the Small-Cap
Universe are ineligible for selection.
D. PERIODIC REVIEW
The index is reviewed on a quarterly basis.
14
<PAGE> 30
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 OBTAIN THE SAI FOR THE FUND FEE 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-___________.
-----------------------------------------------------------
Investment Company Act File No. 811-8194
15
<PAGE> 31
MAGNET DOW JONES TOTAL MARKET GROWTH FUND
ADVISER SHARES
INVESTOR SHARES
370 17th Street, Suite 3100
Denver, Colorado 80202
_______, 2000
General & Account Information: ___________________
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 Magnet Dow Jones Total Market Growth Fund (the "Fund") dated
________, 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.
<PAGE> 32
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INVESTMENT POLICIES AND RISKS............................................................................................1
Common Stocks.......................................................................................................1
Lending of Portfolio Securities.....................................................................................2
Borrowings and Leverage.............................................................................................2
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.....................................................................................................15
Distribution of Fund Shares........................................................................................16
Administrator, Transfer Agent, Bookkeeping and Pricing Agent.......................................................16
Fees and Expenses..................................................................................................16
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......................................................................................................22
Custodian..........................................................................................................22
Performance Information............................................................................................23
Independent Accountants............................................................................................23
Registration Statement.............................................................................................24
</TABLE>
<PAGE> 33
INVESTMENT POLICIES AND RISKS
The Fund is diversified and will invest at least 75% of its total assets in
companies selected from the Dow Jones U.S. Total Market Index ("DJTMI-US"). The
DJTMI-US is discussed in more detail in the appendix of the Prospectus.
In making its stock selections from the DJTMI-US, Revqual Index-Plus Investors,
L.L.C. (the "Adviser") utilizes a proprietary stock selection methodology termed
MAGNET(R) which stands for:
M - Management must be outstanding
Momentum must be increasing
A - Accelerating earnings, revenue and margins
G - Growth rate must exceed current valuation
N - New Management, product, industry, etc.
E - Emerging industry, technology, etc.
T - Timing must be technically right
The MAGNET(R) stock selection system utilizes a combination of fundamental and
technical stock evaluation and seeks to identify strong value with current
momentum. Fundamental analysis involves the various financial, business,
management and other attributes of a particular company. Technical analysis is
concerned with the relative strength of the company's stock, its support and
resistance levels, various moving averages and price action for previous
periods. Technical analysis is an inexact science. However, the Adviser feels it
is a good tool to assist in finding stocks that may significantly outperform the
market.
The Fund is a diversified Fund as defined in the Investment Act of
1940, as amended, ("the 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.
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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.
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
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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 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 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
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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.
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.
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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.
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 Index or the
NYSE Composite Index, or a narrower market index such as the S&P 100 Index.
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,
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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 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.
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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 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);
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(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, 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
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<PAGE> 41
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 believes 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. The Fund will not invest in closed-end funds. As a
shareholder of another investment company, the Fund would bear, along with other
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.
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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.
(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.
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(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.
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.
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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 PRINCIPAL OCCUPATION DURING THE
THE TRUST PAST 5 YEARS**
----------------------------------- ---------------------------- --------------------------------------------------------------
<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.
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.
</TABLE>
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<PAGE> 45
<TABLE>
<CAPTION>
NAME POSITION(S) HELD WITH PRINCIPAL OCCUPATION DURING THE
THE TRUST PAST 5 YEARS**
----------------------------------- ---------------------------- --------------------------------------------------------------
<S> <C> <C>
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.
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.
</TABLE>
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<PAGE> 46
<TABLE>
<CAPTION>
NAME POSITION(S) HELD WITH PRINCIPAL OCCUPATION DURING THE
THE TRUST PAST 5 YEARS**
----------------------------------- ---------------------------- --------------------------------------------------------------
<S> <C> <C>
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.
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 and Mr. Maddaloni are
interested Trustees and receive no compensation from the Trust.
For the Trust's fiscal year ended April 30, 1999, the Trustees were
compensated as follows :
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<PAGE> 47
<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, Trustee $3,000(1) $0 $0 $3,000
John R. Moran, Jr., Trustee $6,500(1) $0 $0 $6,500
</TABLE>
(1) Member of the Audit Committee.
INVESTMENT ADVISER
Revqual Index-Plus Investors, LLC ("Revqual") serves as investment
Adviser to the Fund under an Advisory Agreement dated _____, 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 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 _______, 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 Trust,
Adviser and Distributor. The Adviser is also required to report
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<PAGE> 48
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.
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.
The Trustees of the Trust have adopted a separate Distribution Plan (the
"Plans") on behalf of the Adviser Shares and Investor Shares (the "Shares") of
the Fund pursuant to Rule 12b-1 (the "Rule") under the 1940 Act. The Rule
provides in substance that a mutual fund may not engage directly or indirectly
in financing any activity that is intended primarily to result in the sale of
shares of the fund except pursuant to a plan adopted by the fund under the Rule.
The Trustees have adopted the Plan to allow the Shares to compensate ALPS for
incurring distribution expenses. ALPS receives a Distribution
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<PAGE> 49
and Service fee (12b-1 fee) of up to 1.00% of the average net assets of the
Adviser Shares and up to 0.25% of the average net assets of the Investor Shares,
although the Trustees may limit such fees from time to time for each class of
shares. These fees are in addition to the fees paid to ALPS under the
Partnership Agreement. The Trust, or ALPS, on behalf of the Shares, may enter
into servicing agreements (Service Agreements) with banks, broker-dealers or
other institutions (Agency Institutions).
Each Share's Plan provides that ALPS may use its fees and other
resources to make payments to Agency Institutions for performance of
distribution-related services, including those enumerated above. The Service
Agreements further provide for compensation to broker-dealers for their efforts
to sell shares of the Fund. The distribution-related services include, but are
not limited to, the following: formulation and implementation of marketing and
promotional activities, such as mail promotions and television, radio,
newspaper, magazine and other mass media advertising; preparation, printing and
distribution of sales literature; preparation, printing and distribution of
prospectuses and reports to recipients other than existing shareholders of the
Fund; obtaining such information, analysis and reports with respect to marketing
and promotional activities as ALPS may from time to time, deem advisable.
Each Plan has been approved by the Trustees, including the majority of
disinterested Trustees. As required by the Rule, the Trustees carefully
considered all pertinent factors relating to the implementation of the Plans
prior to their approval, and have determined that there is a reasonable
likelihood that each Plan will benefit the Fund and its shareholders.
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
17
<PAGE> 50
above, 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
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<PAGE> 51
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.
PORTFOLIO TRANSACTIONS
Pursuant to its Advisory Agreement with the Trust, the Adviser 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 o
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<PAGE> 52
ther 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 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
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<PAGE> 53
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.
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 Magnet Dow Jones Total Market Growth Fund is a Fund of Financial
Investors Trust (the "Trust"), an open-end management investment company
organized as a Delaware Business Trust by a Declaration of Trust dated _______
_______, _______. The Trust consists of nine funds including the Magnet Dow
Jones Total Market Growth 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.
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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 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
[Insert Custodian Information]
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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 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 DJTMI-US, 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
23
<PAGE> 56
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.
24
<PAGE> 57
PART C. OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<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> 58
<TABLE>
<S> <C>
****** (8) Investment Advisory Contract between Registrant and Interstate
Advisors, Inc.
(9) Investment Advisory and Management Agreement between Registrant and
Revqual Index-Plus Investors, LLC (to be provided by amendment)
** (e)(1) Distribution Agreement between Registrant and ALPS Mutual Funds
Services, Inc.
(2) Amended Distribution Agreement between Registrant and ALPS Mutual
Funds Services, Inc. (to be provided by amendment)
****** (3) Amended and restated Administration Agreement between Registrant and
ALPS Mutual Funds Services, Inc.
(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.
(5) Custodian Contract between Registrant and [ ] (to be provided
by amendment)
** (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. (to be provided by
amendment)
** (3) Bookkeeping and Pricing Agreement between Registrant and ALPS Mutual
Funds Services, Inc.
</TABLE>
<PAGE> 59
<TABLE>
<S> <C>
(4) Amended Bookkeeping and Pricing Agreement between Registrant and
ALPS Mutual Funds Services, Inc. (to be provided by amendment)
*** (5) Subscription Agreement.
(i) Opinion and Consent of Davis, Graham & Stubbs LLP, counsel to Registrant
(to be provided by amendment).
(j) Consent of Independent Public Accountants Deloitte & Touch, LLP
(to be provided by amendment).
(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.
(4) Distribution Plan - Magnet Dow Jones Total Market Growth Fund (to be provided by
amendment)
(n) Omitted by Rule Change
**** (o) Rule 18f-3 Plan
******(p)(1) Code of Ethics for ALPS Mutual Funds Services, Inc.
****** (2) Code of Ethics for Tempest, Isenhart, Chafee, Lansdowne & Associates, Inc. Code of Ethics.
****** (3) Code of Ethics for National City Bank .
****** (4) Code of Ethics for Interstate Advisors, Inc.
</TABLE>
<PAGE> 60
<TABLE>
<S> <C>
(5) Code of Ethics for Revqual Index-Plus Investors, LLC (to be provided by amendment)
</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.
****** Filed with Post-Effective Amendment 17 to Registrant's Registration
Statement on May 8, 2000.
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 (a)(1) and (a)(2) to the Registration Statement), and
Section 1.10 of the Distribution Agreement (Exhibit (e)(1) and (e)(2) to the
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.
<PAGE> 61
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.
The Registrant hereby undertakes that it will apply the indemnification
provisions of its Declaration of Trust 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 Interstate Advisors, Inc. pursuant to
the Investment Advisers Act of 1940, as amended (SEC File No. 801-57203).
<PAGE> 62
The list required by this Item 28 of officers and directors of Revqual
Index-Plus Investors, LLC ("Revqual") 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 Revqual pursuant to the
Investment Advisers Act of 1940, as amended (SEC File No. [ ]).
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
<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 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.
<PAGE> 63
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.
(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> 64
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and Rule
485(a) thereunder and the Investment Company Act of 1940, the Registrant
certifies that it has duly caused this Post-Effective Amendment No. 18 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 June 13, 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 June 13, 2000
---------------------------------- President
W. Robert Alexander
/s/ ROBERT E. LEE Trustee June 13, 2000
----------------------------------
Robert E. Lee
/s/ MARY K. ANSTINE Trustee June 13, 2000
----------------------------------
Mary K. Anstine
/s/ EDWIN B. CROWDER Trustee June 13, 2000
----------------------------------
Edwin B. Crowder
/s/ JOHN R. MORAN, JR Trustee June 13, 2000
----------------------------------
John R. Moran, Jr.
/s/ MARTIN MADDALONI Trustee June 13, 2000
----------------------------------
Martin Maddaloni
</TABLE>
