-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QZKQHj4eSYFfegwTIqcckNNnnaur5vwnni2HX0jpGMtUH7omx4sBQlUwVLfFxCQT Xa9pbYW4Gpn7hwhdTuu8MA== 0000912057-96-021406.txt : 19960930 0000912057-96-021406.hdr.sgml : 19960930 ACCESSION NUMBER: 0000912057-96-021406 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 43 FILED AS OF DATE: 19960927 EFFECTIVENESS DATE: 19960927 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: WESTCORE TRUST CENTRAL INDEX KEY: 0000357204 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 510263765 STATE OF INCORPORATION: MA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-75677 FILM NUMBER: 96636169 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03373 FILM NUMBER: 96636170 BUSINESS ADDRESS: STREET 1: 370 17TH STREET SUITE 2700 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3036232577 MAIL ADDRESS: STREET 1: 370 17TH STREET SUITE 2700 CITY: DENVER STATE: CO ZIP: 80202 FORMER COMPANY: FORMER CONFORMED NAME: WESTCORE FUNDS INC DATE OF NAME CHANGE: 19860506 FORMER COMPANY: FORMER CONFORMED NAME: SUNMONT WEST FUND INC DATE OF NAME CHANGE: 19820520 485BPOS 1 FORM N-1A As filed with the Securities and Exchange Commission on September 27, 1996. Registration No. 2-75677 - ----------------------------------------------------------------------------- - ----------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES /X/ ACT OF 1933 PRE-EFFECTIVE AMENDMENT NO. __ / / POST-EFFECTIVE AMENDMENT NO. 45 /X/ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY /X/ ACT OF 1940 AMENDMENT NO. 46 /X/ -------------------- WESTCORE TRUST (Exact Name of Registrant as Specified in Charter) 370 Seventeenth Street Suite 2700 Denver, Colorado 80202 Registrant's Telephone Number: (303) 623-2577 W. BRUCE McCONNEL, III Drinker Biddle & Reath Philadelphia National Bank Building 1345 Chestnut Street Philadelphia, Pennsylvania 19107-3496 (Name and Address of Agent for Service) It is proposed that this filing will become effective (check appropriate box): [ ] immediately upon filing pursuant to paragraph (b) [X] on September 30, 1996 pursuant to paragraph (b) [ ] 60 days after filing pursuant to paragraph (a)(1) [ ] on January 1, 1996 pursuant to paragraph (a)(1) [ ] 75 days after filing pursuant to paragraph (a)(2) [ ] on (date) pursuant to paragraph (a)(2) of rule 485. If appropriate, check the following box: [ ] this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Registrant has previously registered an indefinite number of its shares, which include shares of Class B-1, G-1, H-1, I-1, J-1, S and X-1 under the Securities Act of 1933, pursuant to Rule 24f-2 under the Investment Company Act of 1940. Registrant's Rule 24f-2 Notice for its fiscal year ended May 31, 1996 was filed on July 29, 1996. CALCULATION OF REGISTRATION FEE UNDER THE SECURITIES ACT OF 1933 Title of Amount of Proposed Proposed Amount of Securities Shares Maximum Maximum Registration Being Being Offering Aggregate Fee (1) Registered Registered Price/Share Offering Price Shares of Bene- ficial Interest 1,169,897,634 NAV $1,244,110,228 $100 (1) Registrant had actual aggregate redemptions of $2,519,279,835 for its fiscal year ended May 31, 1996; has used $1,264,123,959 for reductions pursuant to Rule 24f-2(c) under the 1940 Act and has previously used no available redemptions for reductions pursuant to Rule 24e-2(a) of the 1940 Act during the current year. Registrant elects to use redemptions in the aggregate amount of $1,243,820,228 (1,169,897,633 shares of beneficial interest) for reductions in its current amendment. While no fee is required to register the 1,169,897,633 shares of beneficial interest, the Registrant has elected to register, for $100, an additional $290,000 of shares of beneficial interest (1 share of beneficial interest). The Registrant has registered an indefinite number of securities under the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 Notice for the Registrant's fiscal year ended May 31, 1996 was filed on July 29, 1996. The Prospectus and Statement of Additional Information for the Cash Reserve Fund is incorporated by reference to Post-Effective Amendment No. 43 to the Registrant's Registration Statement on Form N-1A filed with the Securities and Exchange Commission on July 14, 1995. WESTCORE TRUST MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund Cross Reference Sheet FORM N-1A ITEM PROSPECTUS CAPTION -------------- ------------------ 1. Cover Page. . . . . . . . . Cover Page. 2. Synopsis. . . . . . . . . . Fund Highlights and Expense Information. 3. Condensed Financial Information . . . . . . . . Financial Highlights and Performance Reporting. 4. General Description of Registrant. . . . . . . . . Cover Page, Fund Highlights, The Funds in Detail, Appendix - Information on Investment Policies and Additional Risk Factors, and Management of the Funds. 5. Management of the Fund. . . Management of the Funds. 5A. Management's Discussion of Fund Performance . . . . Information is contained in Registrant's Annual Report. 6. Capital Stock and Other Securities. . . . . . . . . Shareholder's Manual for Investing in the Westcore Funds, Distributions and Taxes, and Management of the Funds. 7. Purchase of Securities Being Offered . . . . . . . Shareholder's Manual for Investing in the Westcore Funds and Management of the Funds. 8. Redemption or Repurchase . . Shareholder's Manual for Investing in the Westcore Funds. 9. Pending Legal Proceedings. . Inapplicable.
WESTCORE TRUST 370 Seventeenth Street Suite 2700 Denver, Colorado 80202 1-800-392-CORE (2673) October 1, 1996 This Prospectus describes seven mutual funds (the "Funds") offered by Westcore Trust ("Westcore" or the "Trust") including four equity funds, two taxable bond funds and one tax-exempt bond fund, each with a different investment objective. All Westcore Funds are no-load investments. This permits you to purchase and sell shares of a Fund without a sales charge. If you enroll in our Automatic Investment Plan, you can open your account for as little as $50 a month. Otherwise, the minimum initial investment is normally $1,000. Denver Investment Advisors LLC ("Denver Investment Advisors" or the "Investment Adviser") serves as investment adviser to each Fund. Denver Investment Advisors and its predecessors have over 38 years of investment management experience and Denver Investment Advisors currently manages over $9.7 billion in assets for clients such as corporations, insurance companies and individuals. ALPS Mutual Funds Services, Inc. ("ALPS") serves as the Westcore Funds' distributor. This Prospectus sets forth information that you should consider before investing. Please read this Prospectus and keep it for future reference. It contains important information including how each Fund invests and shareholder services available to you. Additional information is contained in a Statement of Additional Information ("SAI"), dated October 1, 1996, on file with the Securities and Exchange Commission (the "SEC"). You may obtain a free copy of the SAI by writing or calling Westcore at the address or telephone number shown above. The SAI is incorporated by reference into this Prospectus. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. TABLE OF CONTENTS FUND INFORMATION Fund Highlights ................................................ Expense Information ............................................ Financial Highlights ........................................... Fund Specifics ................................................. Investment Objectives and Policies ............................ Westcore Equity Funds ........................................ Westcore Bond Funds .......................................... Fundamental Investment Limitations ............................. HOW TO INVEST How to Open and Add to Your Account ............................ Minimum Investments ............................................ How to Exchange Fund Shares .................................... How to Redeem Fund Shares ...................................... Price of Fund Shares ........................................... Accounts Opened Through a Service Organization ................. General Account Policies ....................................... OTHER INFORMATION Distributions and Taxes ........................................ Performance Reporting .......................................... Management of the Funds ........................................ Inquiries ...................................................... SUPPLEMENTAL INFORMATION Information on Investment Policies and Additional Risk Factors ..................................... APPENDIX Rating Categories .............................................. A-1 FUND INFORMATION FUND HIGHLIGHTS This section provides you with a brief overview of the Westcore Funds and summarizes each Fund's investment objectives. A detailed discussion of their investment objectives, policies and risks begins on page __ and complete information on how to purchase, exchange and redeem Fund shares begins on page __. WESTCORE EQUITY FUNDS WESTCORE MIDCO GROWTH FUND -- seeks to maximize long-term capital appreciation by investing primarily in medium-sized growth companies. WESTCORE BLUE CHIP FUND -- seeks to maximize long-term total return by investing in stocks of large companies headquartered in the United States. WESTCORE GROWTH AND INCOME FUND -- seeks to maximize long-term total return by investing in equity securities selected for their growth potential and income-producing abilities. WESTCORE SMALL-CAP OPPORTUNITY FUND -- seeks to maximize long-term capital appreciation primarily through investments in domestic and foreign equity securities of small-capitalization companies. WESTCORE BOND FUNDS WESTCORE LONG-TERM BOND FUND -- seeks to maximize long-term total rate of return by investing primarily in investment grade bonds. The Fund expects to have an average dollar-weighted maturity of at least 10 years. WESTCORE INTERMEDIATE-TERM BOND FUND -- seeks current income with less volatility of principal by investing primarily in investment grade bonds. The Fund expects to have an average dollar-weighted maturity between 3 and 6 years. WESTCORE COLORADO TAX-EXEMPT FUND -- seeks to provide income exempt from both federal and Colorado state personal income taxes by emphasizing insured Colorado municipal bonds with intermediate maturities. WESTCORE FUNDS SPECTRUM The spectrum below shows Denver Investment Advisors' current assessment of the potential risk of the Westcore Funds relative to one another. The spectrum is not indicative of the future volatility or performance of the Funds and should not be used to compare the Funds to other mutual funds or types of investments. -3-
- ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------ FUND CONSERVATIVE MODERATE AGGRESSIVE - ------------------------------------------------------------------------------------------------------------ Westcore MIDCO Growth Fund X - ------------------------------------------------------------------------------------------------------------ Westcore Blue Chip Fund X - ------------------------------------------------------------------------------------------------------------ Westcore Growth and Income Fund X - ------------------------------------------------------------------------------------------------------------ Westcore Small-Cap Opportunity X Fund - ------------------------------------------------------------------------------------------------------------ Westcore Long-Term Bond Fund X - ------------------------------------------------------------------------------------------------------------ Westcore Intermediate-Term Bond X Fund - ------------------------------------------------------------------------------------------------------------ Westcore Colorado Tax-Exempt Fund X - ------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------
-4- EXPENSE INFORMATION The tables and example below show you the various costs and expenses you will bear directly or indirectly as an investor in the Westcore Funds. SHAREHOLDER TRANSACTION EXPENSES are charges you pay when buying, exchanging or selling shares of a Westcore Fund. The no-load Westcore Funds do not charge any Shareholder Transaction Expenses. ANNUAL FUND OPERATING EXPENSES, which are based on amounts incurred during the most recent fiscal year, restated to reflect current expenses, are paid out of a Fund's assets and include fees for portfolio management, maintenance of shareholder accounts, general Fund administration, shareholder servicing, accounting and other services. WESTCORE WESTCORE SMALL- WESTCORE INTER- WESTCORE WESTCORE WESTCORE WESTCORE CAP LONG- MEDIATE- COLORADO MIDCO BLUE GROWTH AND OPPOR- TERM TERM TAX- GROWTH CHIP INCOME TUNITY BOND BOND EXEMPT FUND FUND FUND FUND FUND FUND FUND ------- ------- ------- ------ ------- ------- ------ SHAREHOLDER TRANSACTION EXPENSES None None None None None None None ANNUAL OPERATING EXPENSES (as a percentage of average net assets) Management Fees 0.65% 0.65% 0.65% 1.00% 0.45% 0.45% 0.00%(2) 12b-1 Fees None None None None None None None All Other Expenses 0.50% 0.50%(1) 0.50%(1) 0.30%(1) 0.50%(1) 0.40%(1) 0.50%(1) ----- -------- -------- -------- -------- -------- -------- TOTAL OPERATING EXPENSES 1.15% 1.15%(1) 1.15%(1) 1.30%(1) 0.95%(1) 0.85%(1) 0.50%(1) (after fee waivers and ----- -------- -------- -------- -------- -------- -------- expense reimbursements) ----- -------- -------- -------- -------- -------- --------
_________________ EXAMPLE: Assume you invest $1,000, the annual return on each Fund is 5%, and each Fund's annual operating expenses remain as listed above. The example below shows the operating expenses that you would indirectly bear as an investor in the Funds: One Year $12 $12 $12 $13 $10 $ 9 $ 5 Three Years 37 37 37 41 30 27 16 Five Years 64 64 64 72 53 47 28 Ten Years 140 140 140 158 117 105 63
_________________ (1) The Administrators (and the Investment Adviser with respect to the Colorado Tax Exempt Fund) have advised the Trust that they currently intend to waive fees and reimburse expenses for the current fiscal year with respect to each of the Funds so that the Total Operating Expenses of the MIDCO Growth, Blue Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds will not exceed 1.15%, 1.15%, 1.15%, 1.30%, 0.95%, 0.85% and 0.50%, respectively. Without such fee waivers and expense reimbursements, the Total Operating Expenses of the Blue Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Bond Funds would be 1.20% 1.50%, 1.75%, 1.10%, 0.95% and 1.20%, respectively. (2) Without advisory fee waivers, the advisory fee for the Colorado Tax-Exempt Fund would be 0.50% of the Fund's average daily net assets. The fee waivers and expense reimbursements reflected in the table are voluntary and may be modified or terminated at any time without the Funds' consent. If you own shares through certain Service Organizations (as described in the section entitled "How to Invest") you may pay account charges in connection with the maintenance of your account at the Service Organization. These account charges are in addition to the expenses shown above. For more complete descriptions of shareholder transaction expenses and the Funds' operating expenses, see "How to Invest" and "Management Of The Funds" in this Prospectus and the financial statements and related notes included in the Statement of Additional Information. THE EXAMPLE ILLUSTRATES THE EFFECT OF EXPENSES AND SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. -5- FINANCIAL HIGHLIGHTS The tables below provide supplementary information to each Fund's financial statements contained in the Statement of Additional Information and set forth certain information concerning the historic investment results of Fund shares. The financial highlights are based on the financial statements of each Fund, which have been audited by Deloitte & Touche LLP, the Trust's independent auditors, except that the information in the Financial Highlights of the Westcore MIDCO Growth Fund (except for total return) for the period ended May 31, 1987 was audited by other auditors. You should read the tables together with the financial statements and related notes included in the Statement of Additional Information. Further information about the performance of the Funds is available in the Annual Report to Shareholders. You may obtain both the Statement of Additional Information and the Annual Report to Shareholders free of charge by contacting ALPS or the Westcore Trust at 1-800-392-CORE (2673). -6- FINANCIAL HIGHLIGHTS WESTCORE MIDCO GROWTH FUND (For a Fund Share Outstanding Throughout the Periods Indicated.) For the Year Ended May 31, ----------------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989 1988 1987(1) ---- ---- ---- ---- ---- ---- ---- ---- ---- ------- Net asset value - beginning of $17.12 $ 16.09 $15.79 $14.38 $14.00 $11.57 $12.18 $ 9.82 $12.20 $10.00 period - ---------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.08) 0.00 0.00 0.04 0.06 0.07 0.24 0.19 0.03 0.20 Net realized and unrealized gain (loss) on investments 6.58 1.56 1.34 2.48 1.84 3.16 1.32 2.52 (1.47) 2.00 - ---------------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations 6.50 1.56 1.34 2.52 1.90 3.23 1.56 2.71 (1.44) 2.20 - ---------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income 0.00 0.00 0.00 0.00 (0.32) (0.08) (0.24) (0.10) (0.28) 0.00 Distributions from net realized gain on investments (0.72) (0.53) (1.03) (1.11) (1.20) (0.72) (1.93) (0.25) (0.66) 0.00 Return of Capital 0.00 0.00 (0.01) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- Total dividends, distributions and return of capital to shareholders (0.72) (0.53) (1.04) (1.11) (1.52) (0.80) (2.17) (0.35) (0.94) 0.00 - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $22.90 $ 17.12 $16.09 $15.79 $14.38 $14.00 $11.57 $12.18 $9.82 $12.20 - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Total return 38.62% 10.05% 8.37% 18.04% 14.09% 30.44% 15.33% 28.46% (13.09%) 26.53%(3)(4) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 $656,490 $401,760 $335,453 $231,595 $180,681 $131,420 $85,209 $81,948 $557 $439 omitted) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net 1.08% 0.94% 0.84% 0.83% 0.80% 0.78% 0.83% 0.80% 1.33% 0.00%(3) assets - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (0.42%) (0.03%) (0.09%) 0.04% 0.12% 0.58% 2.05% 1.21% 0.02% 2.52%(3) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.10% 0.96% 0.87% 0.85% 0.85% 0.88% 0.88% 0.85% 2.20% 2.20%(3) - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets without (0.44%) (0.05%) (0.12%) 0.02% 0.07% 0.48% 2.00% 1.16% (0.85%) 0.32%(3) fee waivers - ---------------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 62.83% 50.19% 52.05% 56.23% 48.17% 75.43% 86.62% 74.03% 91.57% 54.03%(3) - ---------------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations was on August 1, 1986. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $387,990,462 and $324,571,405, respectively. (3) Annualized. (4) Unaudited. -7- FINANCIAL HIGHLIGHTS WESTCORE BLUE CHIP FUND (formerly the Westcore Modern Value Equity Fund) (For a Fund Share Outstanding Throughout the Periods Indicated.) For the Year Ended May 31, ----------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989(1) Net asset value - beginning of period $14.70 $12.70 $13.87 $13.35 $12.68 $11.74 $11.10 $10.00 - ---------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.25 0.23 0.40 0.34 0.28 0.29 0.44 0.39 Net realized and unrealized gain on investments 4.03 2.12 0.04 1.13 0.95 1.15 0.82 1.02 - ---------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 4.28 2.35 0.44 1.47 1.23 1.44 1.26 1.41 - ---------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.27) (0.16) (0.43) (0.21) (0.35) (0.30) (0.46) (0.31) Distributions from net realized gain on investments (1.30) (0.19) (1.18) (0.74) (0.21) (0.20) (0.16) 0.00 - ---------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (1.57) (0.35) (1.61) (0.95) (0.56) (0.50) (0.62) (0.31) - ---------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $17.41 $14.70 $12.70 $13.87 $13.35 $12.68 $11.74 $11.10 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Total return 30.48% 19.03% 3.12% 11.62% 10.02% 13.08% 11.74% 14.42% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $68,286 $52,545 $36,674 $28,176 $30,572 $27,208 $25,857 $28,088 - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.10% 1.01% 1.06% 0.99% 0.91% 0.84% 0.85% 0.88% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 1.52% 1.78% 2.30% 2.37% 2.17% 2.65% 3.81% 3.54% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.25% 1.06% 1.09% 1.02% 0.97% 0.94% 0.90% 0.93% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 1.38% 1.73% 2.27% 2.34% 2.11% 2.55% 3.76% 3.49% - ---------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 65.11% 61.72% 41.32% 85.53% 123.91% 142.01% 158.54% 175.23% - ---------------------------------------------------------------------------------------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations occurred on the first day of this period. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $37,959,388 and $38,051,658, respectively. -8- FINANCIAL HIGHLIGHTS WESTCORE GROWTH AND INCOME FUND (FORMERLY the Westcore Equity Income Fund) (For a Fund Share Outstanding Throughout the Periods Indicated.) Westcore Equity Income Fund(1) For the Year Ended May 31, ---------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989(2) Net asset value - beginning of period $10.50 $10.62 $11.51 $10.99 $10.10 $ 9.94 $10.43 $10.00 - --------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.15 0.20 0.51 0.32 0.32 0.32 0.36 0.40 Net realized and unrealized gain (loss) on investments 2.57 0.15 (0.30) 0.68 1.05 0.48 1.02 1.05 - --------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 2.72 0.35 0.21 1.00 1.37 0.80 1.38 1.45 - --------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.24) (0.21) (0.54) (0.20) (0.43) (0.33) (0.37) (0.33) Distributions from net realized gain on investments (0.66) (0.26) (0.56) (0.28) (0.05) (0.31) (1.50) (0.69) - --------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.90) (0.47) (1.10) (0.48) (0.48) (0.64) (1.87) (1.02) - --------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $12.32 $10.50 $10.62 $11.51 $10.99 $10.10 $9.94 $10.43 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Total return 27.25% 3.73% 1.71% 9.41% 14.12% 9.07% 14.58% 15.98% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $25,387 $27,029 $42,644 $35,791 $25,128 $19,932 $16,583 $12,594 - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.22% 1.17% 1.03% 0.99% 0.95% 0.90% 0.93% 0.97% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 1.34% 2.09% 4.45% 2.75% 3.03% 3.51% 3.45% 3.75% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.51% 1.22% 1.06% 1.03% 1.02% 1.00% 0.96% 1.02% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 1.05% 2.04% 4.42% 2.71% 2.96% 3.41% 3.40% 3.70% - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(3) 88.31% 81.14% 53.86% 61.24% 68.56% 64.94% 59.36% 100.22% - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
(1) The Westcore Equity Income Fund is the former name of the Westcore Growth and Income Fund. The Fund's name was changed as of January 1, 1996 to reflect a different investment objective and different investment policies. Prior to January 1, 1996, the Fund's investment objective was to seek reasonable income through investments in income-producing securities. As of January 1, 1996, the Fund's investment objective was revised to seek long-term total return through capital appreciation and current income. A new portfolio manager has managed the Fund since October 1995. Past performance is not intended to be indicative or representative of future performance. (2) Commencement of operations was on the first day of this period. (3) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $23,528,402 and $35,671,719, respectively. -9- FINANCIAL HIGHLIGHTS WESTCORE SMALL-CAP OPPORTUNITY FUND (For a Fund Share Outstanding Throughout the Periods Indicated.) For the Year Ended ------------------------------------ May 31, May 31, May 31, 1996 1995 1994(1) ------- ------- ------- Net asset value - beginning of period: $15.95 $14.97 $15.00 - ------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.04 0.09 0.05 Net realized and unrealized gain (loss) on investments 5.86 1.11 (0.05) - ------------------------------------------------------------------------------- Total income from investment operations 5.90 1.20 0.00 - ------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.06) (0.10) (0.03) Distributions from net realized gain on investments (0.44) (0.12) 0.00 - ------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.50) (0.22) (0.03) - ------------------------------------------------------------------------------- Net asset value - end of period $21.35 $15.95 $14.97 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Total Return (3) 37.49% 8.15% (0.07%)(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $23,951 $9,703 $2,159 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.30% 1.27% 1.38%(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Ratio of net investment income to average net assets 0.24% 0.61% 1.00%(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 2.20% 2.77% 6.56%(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets without fee waivers (0.67%) (0.89%) (4.18%)(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- Portfolio turnover rate(2) 47.83% 59.17% 64.31%(3) - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- (1) The Fund commenced operations on December 28, 1993. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $14,769,419 and $7,829,753, respectively. (3) Annualized. -10- FINANCIAL HIGHLIGHTS WESTCORE LONG-TERM BOND FUND (For a Fund Share Outstanding Throughout the Periods Indicated.)
For the Year Ended May 31, --------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989(1) ---- ---- ---- ---- ---- ---- ---- ------- Net asset value - beginning of period $9.87 $9.22 $11.25 $10.60 $10.01 $10.11 $10.36 $10.00 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.61 0.59 0.62 0.77 0.80 1.08 0.93 0.91 Net realized and unrealized gain (loss) on investments (0.27) 0.66 (0.51) 0.99 0.56 0.04 (0.21) 0.33 - ------------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 0.34 1.25 0.11 1.76 1.36 1.12 0.72 1.24 - ------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.62) (0.60) (0.62) (0.78) (0.77) (1.11) (0.93) (0.88) Distributions from net realized gain on investments 0.00 0.00 (1.52) (0.33) 0.00 (0.11) (0.04) 0.00 - ------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.62) (0.60) (2.14) (1.11) (0.77) (1.22) (0.97) (0.88) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $9.59 $9.87 $9.22 $11.25 $10.60 $10.01 $10.11 $10.36 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Total return 3.41% 14.37% (0.25%) 17.40% 14.04% 11.87% 7.06% 13.03% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $25,070 $33,440 $26,962 $26,281 $30,800 $27,448 $18,113 $15,403 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.90% 0.94% 0.89% 0.77% 0.70% 0.65% 0.73% 0.73% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 6.07% 6.54% 5.74% 6.63% 7.59% 8.29% 8.99% 8.93% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.07% 0.99% 0.92% 0.80% 0.74% 0.73% 0.78% 0.78% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 5.90% 6.49% 5.71% 6.60% 7.55% 8.21% 8.94% 8.88% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 33.10% 25.09% 52.82% 79.16% 51.79% 81.13% 40.21% 68.94% - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations occurred on the first day of this period. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $9,489,738 and $17,274,608, respectively. -11- FINANCIAL HIGHLIGHTS WESTCORE INTERMEDIATE-TERM BOND FUND (For a Fund Share Outstanding Throughout the Periods Indicated.)
For the Year Ended May 31, --------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 1990 1989(1) ---- ---- ---- ---- ---- ---- ---- ------- Net asset value - beginning of period $10.27 $10.02 $10.70 $10.14 $9.80 $9.91 $9.99 $10.00 - ------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.60 0.58 0.55 0.67 0.78 0.87 0.84 0.85 Net realized and unrealized gain (loss) on investments (0.17) 0.27 (0.52) 0.53 0.39 (0.10) (0.08) (0.04) - ------------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 0.43 0.85 0.03 1.20 1.17 0.77 0.76 0.81 - ------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.60) (0.60) (0.53) (0.64) (0.83) (0.88) (0.84) (0.82) Distributions from net realized gain on investments 0.00 0.00 (0.18) 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.60) (0.60) (0.71) (0.64) (0.83) (0.88) (0.84) (0.82) - ------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $10.10 $10.27 $10.02 $10.70 $10.14 $9.80 $9.91 $9.99 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Total return 4.26% 8.93% 0.10% 12.16% 12.42% 8.30% 7.82% 8.53% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $83,039 $97,619 $88,965 $99,469 $87,712 $68,958 $107,288 $110,962 - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.81% 0.77% 0.68% 0.65% 0.61% 0.59% 0.59% 0.60% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 5.78% 5.86% 5.03% 6.37% 7.73% 9.01% 8.32% 8.59% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 0.92% 0.80% 0.70% 0.67% 0.65% 0.65% 0.64% 0.65% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 5.67% 5.83% 5.00% 6.35% 7.69% 8.95% 8.27% 8.54% - ------------------------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate(2) 71.97% 60.86% 65.04% 87.17% 53.92% 80.20% 71.42% 63.30% - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
(1) Commencement of operations was on the first day of this period. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $61,945,342 and $78,767,790, respectively. -12- FINANCIAL HIGHLIGHTS WESTCORE COLORADO TAX-EXEMPT FUND (For a Fund Share Outstanding Throughout the Periods Indicated.)
For the Year Ended May 31, ---------------------------------------------- 1996 1995 1994 1993 1992(1) ---- ---- ---- ---- ------- Net asset value - beginning of period $10.70 $10.52 $10.71 $10.25 $10.00 - ------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.52 0.52 0.53 0.57 0.58 Net realized and unrealized gain (loss) on investments (0.10) 0.20 (0.19) 0.46 0.23 - ------------------------------------------------------------------------------------------- Total income from investment operations 0.42 0.72 0.34 1.03 0.81 - ------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.51) (0.54) (0.53) (0.57) (0.56) Distributions from net realized gain on investments 0.00 0.00 0.00 0.00 0.00 - ------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.51) (0.54) (0.53) (0.57) (0.56) - ------------------------------------------------------------------------------------------- Net asset value - end of period $10.61 $10.70 $10.52 $10.71 $10.25 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Total Return 3.97% 7.16% 3.22% 10.27% 8.36% - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000 omitted) $13,922 $10,792 $10,553 $7,326 $4,511 - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.44% 0.42% 0.27% 0.22% 0.11% - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 4.87% 5.03% 4.98% 5.45% 5.84% - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.43% 1.62% 1.59% 1.88% 1.65% - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 3.88% 3.83% 3.65% 3.79% 4.30% - ------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------- Portfolio turnover rate (2) 10.23% 3.15% 9.76% 1.82% 12.95% - ------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------
(1) Commencement of operations was the first day of this period. (2) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $5,353,679 and $1,127,047, respectively. -13- FUND SPECIFICS -- INVESTMENT OBJECTIVES AND POLICIES To help you decide which Westcore Fund is appropriate for you, this section looks more closely at the Funds' investment objectives, policies and securities in which they invest. You should carefully consider your own investment goals, time horizon and risk tolerance before investing in a Fund. You should also review carefully the section entitled "Supplemental Information -- Information on Investment Policies and Additional Risk Factors" for a more detailed discussion of the instruments in which the Funds may invest and their associated risks. There can be no assurance that a Fund will achieve its investment objective. Upon notice to shareholders each Fund's investment objective and policies may be changed by the Trust's Board of Trustees without the approval of shareholders. In the event of a change, you may want to consider whether that Fund remains a suitable investment for you. WESTCORE EQUITY FUNDS The Westcore Equity Funds are designed for long-term investors who can tolerate the risks associated with investments in common stocks. They are most suitable for investors with a long-term investment horizon. The following questions are designed to help you better understand an investment in the Westcore Equity Funds. WHAT IS EACH WESTCORE EQUITY FUND'S INVESTMENT OBJECTIVE AND WHAT ARE ITS PRIMARY INVESTMENTS? - WESTCORE MIDCO GROWTH FUND seeks to maximize long-term capital appreciation (rather than current income) by investing primarily in common stocks. The Investment Adviser uses fundamental research techniques to identify medium-sized growth companies it believes to be attractive. The Investment Adviser believes medium-sized companies' earnings may be greatly impacted by factors such as new products and services, and more entrepreneurial management than those of large companies. Medium-sized companies may also have better opportunities for growth by gaining market share in the Investment Adviser's view and, as a result, medium-sized company securities may tend to be less volatile than the securities of smaller companies, while providing higher returns than larger company stocks. - WESTCORE BLUE CHIP FUND seeks a high level of long-term total return through capital appreciation and current income consistent with investment primarily in a diversified portfolio of large company common stocks. The Investment Adviser uses a value-oriented approach to identify large, established companies that may be underpriced. The Investment Adviser believes that, due to their size, large companies may benefit from attributes such as market dominance, substantial financial resources and the opportunity to be global leaders in their industries. These characteristics, in the Investment Adviser's view, may result in increased stability for the company and a lower-risk investment. The Investment Adviser combines a quantitative approach with a qualitative research discipline to individually select and invest in stocks of larger companies that it believes to be undervalued and to have improving growth prospects, and to seek to avoid investing in companies it believes are mature and lack meaningful opportunities. - WESTCORE GROWTH AND INCOME FUND seeks long-term total return through capital appreciation and current income. The stocks purchased by this Fund are generally large to medium in terms of market capitalization, and are high quality, based on financial characteristics and management capability, in the Investment Adviser's judgment. The Investment Adviser uses fundamental research techniques in an effort to structure the portfolio to generally have a dividend yield close to the yield on the S&P 500 stock index, to have potential earnings growth higher than the S&P 500, and a market risk level approximately equal to the S&P 500. - WESTCORE SMALL-CAP OPPORTUNITY FUND seeks to maximize long-term capital appreciation primarily through diversified investments in equity securities of small-capitalization companies. The Investment Adviser uses a value-oriented style to identify small companies where the stocks are believed to be attractively priced based on valuation measures including lower price-to-earnings and lower price-to-book value ratios. The Investment Adviser believes that this emphasis on valuation produces a portfolio of stocks with strong potential for price appreciation -- and lower volatility than is commonly associated with small company stocks. The investment approach focuses on stock selection and uses quantitative and qualitative research to identify small company stocks which are undervalued where, in the Investment Adviser's view, the fundamental business outlook and earnings potential is becoming more attractive. The following questions are designed to help you better understand an investment in Westcore Funds. IN WHAT TYPES OF SECURITIES DO THE WESTCORE EQUITY FUNDS INVEST? - WESTCORE MIDCO GROWTH FUND primarily invests in medium-sized companies which generally have market capitalizations of $250 million to $5 billion and revenues of $100 million to $6 billion at the time of purchase. The Fund does not invest in companies that, at the time of purchase, are ranked among the largest 100 companies in FORTUNE MAGAZINE'S annual ranking of "The Largest U.S. Industrial and Service Corporations" in terms of revenues or market capitalization. Up to 25% of the Fund's assets may be invested in securities issued by foreign companies, either directly (if the company is listed on a U.S. exchange) or indirectly through American Depository Receipts ("ADRs"). During normal market conditions, the Fund invests at least 65% of its total assets in companies with market capitalizations of at least $250 million. -14- - WESTCORE BLUE CHIP FUND invests primarily in approximately 50 common stocks from a universe of the 300-400 largest dividend-paying companies (ranked by either market capitalization or revenues) headquartered in the United States. During normal market conditions, at least 65% of the Fund's total assets will be invested in securities of these securities. - WESTCORE GROWTH AND INCOME FUND purchases common stocks primarily from a universe of domestic companies that are selected for their growth potential and established dividend-paying histories. During normal market conditions, at least 65% of the Fund's total assets in equity securities selected for their potential for capital appreciation and their ability to produce above average earnings and dividend growth. - WESTCORE SMALL-CAP OPPORTUNITY FUND invests primarily in equity securities of small-capitalization companies. During normal market conditions, the Fund invests at least 65% of its total assets in the equity securities of U.S. and foreign companies with capitalizations of $1 billion or less. Equity securities include common stock, preferred stock and securities convertible into common stock or preferred stock. The remaining portion of the Fund's assets may be invested in securities of companies with larger market capitalizations. WHAT ARE THE OTHER INVESTMENT POLICIES OF THE WESTCORE EQUITY FUNDS? Each Westcore Equity Fund may also invest in options and futures. The Westcore MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds may also invest in preferred stocks, warrants and foreign currency transactions. Additionally, the Westcore MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds may invest up to 15% of their total assets in securities convertible into common stock rated below investment grade (i.e., lower-rated securities) or unrated securities determined to be of comparable quality. The Westcore MIDCO Growth and Growth and Income Funds may also invest, directly or indirectly, up to 25% of their respective total assets in securities issued by foreign companies. There is no limitation on the amount of the Westcore Small-Cap Opportunity Fund's total assets that may be held in foreign securities. Each Westcore Equity Fund may invest in short-term instruments such as U.S. government obligations, money market instruments, repurchase agreements and securities issued by other investment companies (within the limits prescribed by the Investment Company Act of 1940, as amended ("1940 Act")). In addition, each Fund may borrow money from banks and may enter into reverse repurchase agreements for temporary purposes on a limited basis. Each Fund may hold uninvested cash reserves (which would not earn income) pending investment, to meet anticipated redemption requests or during temporary defensive periods. WHAT IS THE MAIN RISK OF INVESTING IN AN EQUITY FUND? The fundamental risk associated with any equity fund is the risk that the value of the stocks it holds might decrease. Stock values may fluctuate in response to the activities of an individual company or in response to general market or economic conditions. Historically, equity securities have provided greater long-term returns and have entailed greater short-term risks than other investment choices. Although smaller or newer issuers are more likely to realize more substantial growth than larger or more established issuers, they are more likely to suffer more significant losses. Investments in such companies can be both more volatile and more speculative. For a discussion of risks related to such investments as lower rated securities or "junk bonds," options and futures, foreign currency exchange transactions and "derivative" instruments in general in which the Funds may invest, see "Supplemental Information - Information on Investment Policies and Additional Risk Factors." WHICH WESTCORE EQUITY FUNDS ARE DIVERSIFIED AND WHAT DOES THAT MEAN? All the Westcore Equity Funds are diversified. Diversification is a means of reducing risk by investing a Fund's assets in a broad range of stocks or other securities in various industries and economic sectors. Diversification does not provide assurance against the possibility of loss. -15- HOW DO THE WESTCORE EQUITY FUNDS TRY TO REDUCE RISK? - Diversification of a Fund's assets reduces the effect of any single holding on its overall portfolio value. - The Funds may adjust the securities they hold to include issues which are believed to involve less risk. - A Fund may use futures, options and similar instruments to attempt to hedge its portfolio against disadvantageous movements in securities prices and interest rates. The Westcore MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds may use various currency hedging techniques, including forward currency contracts, to manage exchange rate risk when investing directly in foreign markets. - To the extent that a Fund holds a large cash position, it may not participate in market declines (or advances) to the same degree as a fund that is more fully invested in common stocks. WHAT IS MEANT BY "MARKET CAPITALIZATION?" Market capitalization is the most commonly used measure of the size and value of a company. It is computed by multiplying the current market price of a share of the company's stock by the total number of its shares outstanding. Market capitalization is an important investment criterion for the Westcore MIDCO Growth, Blue Chip and Small-Cap Opportunity Funds. WESTCORE BOND FUNDS The following questions are designed to help you better understand an investment in the Westcore Bond Funds. WHAT ARE THE INVESTMENT OBJECTIVES OF THE WESTCORE BOND FUNDS? - WESTCORE LONG-TERM BOND FUND seeks a high level of long-term total rate of return (i.e., income plus capital appreciation). - WESTCORE INTERMEDIATE-TERM BOND FUND seeks current income with relatively small volatility of principal through investment in investment grade securities and high quality money market instruments. - WESTCORE COLORADO TAX-EXEMPT FUND seeks to provide investors with income exempt from federal income taxes and Colorado state income taxes consistent with safety and stability of principal. WHAT ARE THE PRIMARY INVESTMENTS OF THE WESTCORE BOND FUNDS? The Westcore Long-Term Bond and Intermediate-Term Bond Funds are diversified funds that invest at least 65% of their total assets in a broad range of debt obligations during normal market conditions. Debt obligations include fixed and variable-rate bonds, asset-backed and mortgage-backed securities, zero coupon bonds, debentures, obligations convertible into common stocks, obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities, dollar-denominated debt obligations of foreign issuers including foreign corporations and foreign governments, municipal obligations and money market instruments. The Westcore Colorado Tax-Exempt Fund is a non-diversified fund that invests substantially all of its assets (i.e., at least 80%) in debt instruments issued by or on behalf of the state of Colorado ("Colorado Obligations"), other states, territories and possessions of the United States, the District of Columbia and their respective authorities, agencies, instrumentalities and political subdivisions ("Municipal Obligations"). The Fund normally -16- will invest at least 65% of its total assets in Colorado Obligations. The Colorado Tax-Exempt Fund currently intends to invest at least 75% of its assets in Municipal Obligations covered by insurance policies. WHAT ARE THE EXPECTED MATURITIES OF THE WESTCORE BOND FUNDS? Except during temporary defensive periods or unusual market conditions, Denver Investment Advisors expects that the average dollar-weighted portfolio maturities of the Westcore Bond Funds will be as follows: FUND AVERAGE DOLLAR-WEIGHTED MATURITY Westcore Long-Term Bond Fund at least 10 years Westcore Intermediate-Term Bond Fund 3-6 years Westcore Colorado Tax-Exempt Fund 7-10 years The following questions are designed to help you better understand an investment in Westcore Funds. WHAT IS THE INVESTMENT QUALITY OF THE ASSETS OF THE WESTCORE BOND FUNDS? Debt obligations acquired by the Westcore Long-Term Bond and Intermediate-Term Bond Funds will be at least investment grade at the time of purchase. Each Fund's dollar-weighted average portfolio quality is expected to be "A" or better. Municipal Obligations acquired by the Colorado Tax-Exempt Fund will be rated in one of the three highest investment grade categories at the time of purchase by one or more rating agencies. The Fund may invest up to 10% of its total assets in Colorado Obligations rated at the time of purchase in the fourth highest investment grade category when acceptable Colorado Obligations with higher ratings are unavailable for investment by the Fund. The Fund may invest in unrated obligations only if Denver Investment Advisors determines they are comparable in quality to instruments that meet the Fund's rating requirements. If the rating of an obligation held by a Fund is reduced below the Fund's rating requirements, the Investment Adviser will sell the obligation when it is in the best interests of the Fund to do so. For a description of ratings, please review the Appendix "Rating Categories." DO THE WESTCORE BOND FUNDS INVEST IN ANY OTHER TYPES OF SECURITIES? The Westcore Long-Term Bond and Intermediate-Term Bond Funds may invest in obligations convertible into common stocks and may acquire common stocks, warrants or other rights to buy shares only if they are attached to a fixed-income obligation. Common stock received through the conversion of convertible debt obligations will normally be sold in an orderly manner as soon as possible. Each Fund may also invest in options and futures. Additionally, each Fund may invest in short-term instruments including repurchase agreements and securities issued by other investment companies (within the limits prescribed by the 1940 Act). The Westcore Colorado Tax-Exempt Fund may invest in short-term taxable money market instruments, securities issued by other investment companies which invest in taxable or tax-exempt money market instruments and U.S. Government obligations. During temporary defensive periods, each Fund may invest without limitation in various short-term investments. The Funds also may borrow money from banks and may enter into reverse repurchase agreements for temporary purposes on a limited basis. -17- IS AN INVESTMENT IN THE WESTCORE COLORADO TAX-EXEMPT FUND A TAX-FREE INVESTMENT? Dividends paid by the Fund which are derived from interest on Colorado Obligations, as well as certain other governmental issuers, will be exempt from regular federal income taxes and Colorado state income taxes. Dividends derived from interest on non-Colorado Obligations will be subject to Colorado state income tax. Because the Fund may invest up to 20% of its net assets in private activity bonds whose interest may be subject to the federal alternative minimum tax, a portion of the dividends paid by the Fund may be treated as a tax preference item for purposes of this tax. See also "Taxes" in "Other Information" on page __. The following questions are designed to help you better understand an investment in Westcore Funds. ARE THERE ANY INVESTMENT RISKS UNIQUE TO THE WESTCORE COLORADO TAX-EXEMPT FUND? Because the Fund concentrates its investments in Colorado Obligations, it is classified as a non-diversified fund for purposes of the 1940 Act. The Fund's performance may be dependent upon fewer securities than is the case with a diversified portfolio and the Fund may experience greater fluctuations in net asset value. In addition, although the Fund does not presently intend to do so on a regular basis, it may invest 25% or more of its NET assets in industrial development bonds and in other Municipal Obligations, the interest on which is paid solely from revenues of similar projects. To the extent that the Fund's assets are concentrated in these types of Municipal Obligations and the Fund is non-diversified, it will be more susceptible to economic, political and legal developments than a diversified Fund with similar objectives whose assets are not so concentrated. HOW DO INTEREST RATES AFFECT THE VALUE OF MY INVESTMENT? A fundamental risk associated with any fund that invests in fixed-income securities is the risk that the value of the securities it holds will rise or fall as interest rates change. Generally, a fixed-income security will increase in value when interest rates fall and decrease in value when interest rates rise. Longer-term securities are generally more sensitive to interest rate changes than shorter-term securities, but they usually offer higher yields to compensate investors for the greater risks. A bond fund's average dollar-weighted maturity is a measure of how the fund will react to interest rate changes. WHAT IS MEANT BY A FUND'S "AVERAGE DOLLAR-WEIGHTED MATURITY?" The stated maturity of a bond is the date when the issuer must repay the bond's entire principal value to an investor, such as a Fund. A bond's term to maturity is the number of years remaining to maturity. A bond fund does not have a stated maturity, but it does have an average dollar-weighted maturity. This is calculated by averaging the terms to maturity of bonds held by a Fund with each maturity "weighted" according to the percentage of net assets it represents. The following questions are designed to help you better understand an investment in Westcore Funds. HOW DO THE WESTCORE BOND FUNDS ATTEMPT TO MANAGE INTEREST RATE RISK? Each Fund may vary the average dollar-weighted maturity of its portfolio to reflect its portfolio manager's analysis of interest rate trends and other factors. A Fund's average dollar-weighted maturity will tend to be shorter when its portfolio manager expects interest rates to rise and longer when its portfolio manager expects interest rates to fall. The Westcore Long-Term Bond and Intermediate-Term Bond Funds may also use futures, options and similar instruments to manage interest rate risk. -18- WHAT IS MEANT BY "CREDIT QUALITY?" Another fundamental risk associated with all bond funds is credit risk -- the risk that an issuer will be unable to make principal and interest payments when due. U.S. government securities are generally considered to be the safest type of investment in terms of credit risk. Municipal Obligations generally rank between U.S. government securities and corporate debt securities in terms of credit safety. Corporate debt securities, particularly those rated below investment grade, may present the highest credit risk. HOW IS CREDIT QUALITY MEASURED? Ratings published by nationally recognized rating agencies ("Rating Agencies"), such as Standard & Poor's Ratings Group ("S&P") and Moody's Investors Service, Inc. ("Moody's"), are widely accepted measures of credit risk. The lower a bond issue is rated by an agency, the more credit risk it is considered to represent. Lower rated bonds generally pay higher yields to compensate investors for the greater risk. IN GENERAL WHAT POTENTIAL RISKS AND REWARDS MAY I EXPERIENCE IF I INVEST IN THE WESTCORE FUNDS? An investment in the Westcore Funds presents the potential rewards and risks common to securities investments. The Westcore MIDCO Growth, Blue Chip, Growth and Income and Small-Cap Opportunity Funds invest primarily in common stocks. Although stocks historically have presented greater potential for capital appreciation than debt obligations, they do not provide the same assurance of income and may carry greater risk of loss. The value of an investment in the Westcore Small-Cap Opportunity Fund, in particular, may experience significant fluctuations over time due to the Fund's investments in smaller companies and in convertible securities rated below investment grade which present greater potential price volatility, i.e., the price may go up or down. The market value of debt obligations held by the Westcore Funds will also fluctuate, normally rising when interest rates fall and falling when interest rates rise. The value of some debt obligations (such as collateralized mortgage obligations, asset-backed securities, municipal leases and structured notes) may be more volatile than other types of instruments. Several of the Funds may invest in foreign securities that are considered attractive by Denver Investment Advisors. In addition to being more costly, foreign securities may be subject to potentially adverse political, governmental and economic developments and changes in foreign currency exchange rates. Each Fund may purchase certain derivative instruments which derive their value from the performance of underlying assets, interest or currency exchange rates, or indices. Derivative instruments present, to varying degrees, special market, volatility, leveraging, liquidity, pricing and operations risks. See "Supplemental Information -- Risk Factors Associated with Derivative Instruments." The Funds may lend their securities and enter into repurchase agreements and reverse repurchase agreements with banks and broker/dealers that could experience financial difficulties, and may make limited investments in illiquid securities. As the Funds' investment adviser, Denver Investment Advisors will evaluate the rewards and risks presented by all securities purchased by the Funds and will determine how they will be used in furtherance of the investment objectives of the Funds. It is possible, however, that Denver Investment Advisors' evaluations will prove to be inaccurate and, even when accurate, it is possible that the Funds will incur losses. -19- FUNDAMENTAL INVESTMENT LIMITATIONS WHAT ARE FUNDAMENTAL INVESTMENT LIMITATIONS? Fundamental investment limitations are those investment limitations that a Fund may not change without the approval of the holders of a majority of the Fund's outstanding shares. Some are summarized in the tables on the facing page (a complete list is set forth in the Statement of Additional Information). The Westcore MIDCO Growth, Blue Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond and Intermediate-Term Bond Funds may not: - Purchase securities if more than 5% of a Fund's total assets will be invested in the securities of any one issuer. However, up to 25% of the Fund's total assets may be invested without regard to this 5% limitation. Certain investments such as U.S. government securities are not subject to this limitation. - Make loans, except that each Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies. Each Fund may also lend portfolio securities in an amount not exceeding 30% of its total assets. The Westcore Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds may not: - Borrow money or issue senior securities except that each Fund may borrow from banks and enter into reverse repurchase agreements for temporary purposes in amounts up to 10% of its total assets at the time of such borrowing. No Fund may mortgage, pledge or hypothecate any assets, unless it is in connection with a permissible borrowing and the amounts do not exceed the lesser of the dollar amounts borrowed or 10% of the Fund's total assets at the time of such borrowing. In addition, the Westcore Colorado Tax-Exempt Fund may not: - Invest less than 80% of its net assets in securities the interest on which is exempt from federal income tax, except during periods of unusual market conditions. For purposes of this limitation only, securities, the interest on which is treated as a specific tax preference item under the federal alternative minimum tax, are considered taxable. - Make loans, except that the Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies. - Purchase securities if more than 5% of its total assets will be invested in the securities of any one issuer. However, up to 50% of the Fund's total assets may be invested without regard to the 5% limitation as long as not more than 25% of the Fund's total assets are invested in the securities of any one issuer. Certain investments such as U.S. government securities are not subject to this limitation. No Fund will purchase securities so long as its outstanding borrowings (including reverse repurchase agreements) exceed 5% of its total assets. If a percentage limitation or other statistical requirement is met at the time a Fund makes an investment, a later change in the percentage due to a change in the value of the Fund's portfolio securities generally will not constitute a violation. HOW TO INVEST This section tells you how to purchase, exchange and redeem your shares. It also explains various services and features offered in connection with your account. -20- PLEASE CALL WESTCORE FUNDS AT 1-800-392-CORE (2673) IF YOU HAVE ANY QUESTIONS OR NEED ANY INFORMATION. ALPS Mutual Fund Services, Inc. is the distributor for Westcore Funds and has its principal office at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202. HOW TO OPEN AND ADD TO YOUR ACCOUNT You may open an account and purchase shares of the Westcore Funds by completing an account application and returning it to Westcore with your check made payable to Westcore/SSB. You may obtain an account application by calling 1-800-392-CORE (2673). - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TO OPEN AN ACCOUNT TO ADD TO AN ACCOUNT - -------------------------------------------------------------------------------- BY MAIL - Send a completed Account - Send a check or money Application and a check order payable in U.S. or money order payable dollars and drawn on a in U.S. dollars and bank located in the drawn on a bank located U.S. to Westcore Trust, in the U.S. to Westcore P.O. Box 8319, Boston, Trust, P.O. Box 8319, MA 02266-8319. Specify Boston, MA 02266-8319. your account number and the name of the Fund(s) in which you are investing. - -------------------------------------------------------------------------------- IN PERSON - Bring your completed - Bring your check or Account Application and money order payable to a check or money order Westcore/SSB, to payable to Westcore/SSB, Westcore Trust, 370 to Westcore Trust, 370 Seventeenth Street, Seventeenth Street, Suite 2700, Denver, CO Suite 2700, Denver, CO 80202. 80202. - -------------------------------------------------------------------------------- AUTOMATICALLY - Complete the Automatic - Complete at any time an (from your Investment Plan Section Automatic Investment bank account) of your new Account Plan application to Application ($50 minimum have $50 or more per transaction) and automatically withdrawn return it to Westcore from your bank account Trust, P.O. Box 8319, monthly , quarterly or Boston, MA 02266-8319. annually. - -------------------------------------------------------------------------------- BY WIRE - Call 1-800-392-CORE - Call 1-800-392-CORE (2673) to receive wiring (2673) to receive instructions. wiring instructions. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- MINIMUM INVESTMENTS To open a new account $1,000 To open a new retirement or certain other accounts 250 To open a new account with an Automatic Investment Plan 0 To add to any type of an account 50 The minimum investment requirements do not apply to reinvested dividends, purchases by Service Organizations acting on behalf of their customers, officers, trustees, directors, employees and retirees of the Trust, Investment Adviser, Administrators or any direct or indirect subsidiary, or any spouse, parent or child of any of these persons. Please Note: Third party checks will not be accepted by Westcore for the purchase of shares of a Fund. -21- HOW TO EXCHANGE FUND SHARES You may exchange your Fund shares for shares of the other Funds or the Compass Capital Money Market Portfolio.* Exchanges must be for at least $1,000 in value per transaction. You should read the Prospectus for the Fund into which you are exchanging. For further information on the exchange privilege, please call a Westcore Investor Service Representative at 1-800-392-CORE (2673). Westcore Trust may modify or terminate the exchange privilege, but will not materially modify or terminate it without giving shareholders 60 days' notice. - ----------------- * Compass Capital Money Market Portfolio is a no-load money market fund advised by PNC Asset Management Group, Inc. and sub-advised by PNC Institutional Management Corporation and distributed by Compass Distributors, Inc. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO EXCHANGE SHARES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BY TELEPHONE - Call 1-800-392-CORE (2673) and give the account name, account number, name of Fund and amount of exchange ($1,000 minimum). - -------------------------------------------------------------------------------- BY MAIL - Send a written request to Westcore Trust, P.O. Box 8319, Boston, MA 02266-8319. Submit any share certificates being exchanged, endorsed for transfer. - YOUR WRITTEN REQUEST MUST: - be signed by each account owner; a signature guarantee is required for exchanges between accounts with unlike registrations. - state the number or dollar amount of shares to be exchanged ($1,000 minimum); - include your account number and tax identification number. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REDEEM FUND SHARES You may redeem your Fund shares on any business day. If you have any questions on how to redeem your shares, please call a Westcore Investor Service Representative at 1-800-392-CORE (2673). -22- Redemption proceeds generally will be sent by check to the shareholder(s) of record at the address of record within 7 days after receipt of a valid redemption request. If you have authorized the wire redemption service, your redemption proceeds will be wired directly into your designated bank account normally within 3 business days after receipt of a valid redemption request. If you have selected the Systematic Withdrawal Plan, your redemption proceeds will be electronically transferred to your designated bank account within 7 days after withdrawal. If the shares being redeemed were purchased by check, telephone or through the Automatic Investment Program, the Trust may delay the mailing of your redemption check for up to 15 days from the date of purchase to allow the purchase to clear. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- HOW TO REDEEM SHARES - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- BY TELEPHONE - Call 1-800-392-CORE (2673) and give the (available only if you account name, account number, name of Fund checked the appropriate and amount of redemption ($1,000 minimum). box on the Account Application) - Not available for retirement accounts - If you do not have and would like to add or shares held in the telephone redemption feature, send a certificate form. written request to Westcore Trust, P.O. Box 8319, Boston, MA 02266-8319. The request must be signed (and signatures guaranteed) by each account owner. - The Trust may impose a dollar limit on telephone redemptions. - -------------------------------------------------------------------------------- IN PERSON - During normal business hours, bring your written request to Westcore Trust, 370 Seventeenth Street, Suite 2700, Denver, CO 80202. - -------------------------------------------------------------------------------- BY MAIL - Send a written request to Westcore Trust, P.O. Box 8319, Boston, MA 02266-8319. Submit any share certificates being redeemed, endorsed for transfer. - Your written request must: - be signed by each account owner; a signature guarantee is required for any redemption over $10,000 or any redemption being mailed to any other address or payee other than that which is on record. - state the number or dollar amount of shares to be redeemed; - include your account number and tax identification number. - -------------------------------------------------------------------------------- BY WIRE - Call 1-800-CORE (2673) or write Westcore (available only if you Trust, P.O. Box 8319, Boston, MA 02266- checked the appropriate 8319. You will need to provide: account box in the Account name and number; name of Fund; and amount Application) of redemption ($1,000 minimum per transaction if made by telephone). - If you have already opened your account and would like to have the wire redemption feature, send a written request to Westcore Trust, P.O. Box 8319, Boston, MA 02266- 8319. The request must be signed (and signatures guaranteed) by each account owner. - -------------------------------------------------------------------------------- BY SYSTEMATIC WITHDRAWAL - Request quarterly or monthly withdrawals in any multiple of $50. Call 1-800-392-CORE (2673) for more information or a form. - Participation requires a minimum of $10,000 in a Fund in order to initiate this Plan. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- -23- PRICE OF FUND SHARES All purchases, redemptions and exchanges will be processed at the net asset value ("NAV") next calculated after your request and payment is received in proper form. A Fund's NAV is determined by the Administrators as of the close of regular trading on the New York Stock Exchange (the "NYSE"), currently 4:00 p.m. (Eastern time), on each day that the NYSE is open. In order to receive a day's price, your order must be received by the close of regular trading on the NYSE on that day. If not, your request will be processed at the Fund's NAV at the close of regular trading on the next day. To be in proper form, your order must include your account number and must state the Fund shares you wish to purchase, redeem or exchange. In the case of participants in certain employee benefit plans investing in certain Funds, their purchase orders will be processed at the NAV next determined after the Service Organization acting on their behalf receives the purchase order. A Fund's NAV is calculated by dividing the total value of its investments and other assets, less liabilities, by the total number of shares outstanding. Each Fund's investments are valued at market value or, where market quotations are not readily available, at fair value as determined in good faith by or under the direction of the Board of Trustees. Debt securities with maturities of 60 days or less are valued at amortized cost, which generally equals market value. ACCOUNTS OPENED THROUGH A SERVICE ORGANIZATION You may purchase or sell Fund shares through an account you have with Denver Investment Advisors, any qualified broker/dealer, any bank or any other institution (your "Service Organization"). Your Service Organization may charge transaction fees on the purchase and/or sale of Fund shares and may require different minimum initial and subsequent investments than Westcore. Service Organizations may also impose other charges, restrictions or cut-off times different from those applicable to shareholders who invest in Westcore directly. A Service Organization may receive fees from the Trust or Denver Investment Advisors for providing services to the Trust or its shareholders. Such services may include, but are not limited to, shareholder assistance and communication, transaction processing and settlement, account set-up and maintenance, tax reporting and accounting. In certain cases, a Service Organization may elect to credit against the fees payable by its customers all or a portion of the fees received from the Trust or Denver Investment Advisors with respect to their customers' assets invested in the Trust. The Service Organization, rather than you, may be the shareholder of record of your Fund shares. Westcore is not responsible for the failure of any Service Organization to carry out its obligations to its customers. GENERAL ACCOUNT POLICIES If your account balance falls below $750 as a result of redemption and you do not increase the amount to at least $750 within 60 days after notice, your account may be closed and the proceeds sent to you. You may choose to initiate certain transactions by telephone. Westcore Funds and their agents will not be responsible for any losses resulting from unauthorized transactions when procedures designed to verify the identity of the caller are followed. It may be difficult to reach the Funds by telephone during periods of unusual market activity. If this happens, you may redeem your shares by mail as described above. Westcore Funds or your Service Organization will send you a statement of your account quarterly and a confirmation after every transaction that affects your share balance or your account registration. A statement with tax information will be mailed to you by January 31 of each year and filed with the Internal Revenue Service. At least twice a year, you will receive financial statements in the form of Annual and Semi-Annual Reports of the Funds. -24 Duplicate mailings of Fund materials to shareholders who reside at the same address may be eliminated. The Funds will issue share certificates upon written request only. OTHER INFORMATION DISTRIBUTIONS AND TAXES A Fund's income from dividends and interest and any net realized short-term capital gains are paid to shareholders as income dividends. A Fund realizes capital gains whenever it sells securities for a higher price than it paid for them. Net realized long-term gains are paid to shareholders as capital gain dividends. A dividend will reduce the net asset value of a Fund share by the amount of the dividend. DISTRIBUTION SCHEDULE When you open an account, you must specify on your Account Application whether you want to receive your distributions in cash or reinvest them in the distributing Fund or another Fund. You may change your distribution option at any time by writing or calling 1-800-392-CORE (2673). INCOME DIVIDENDS CAPITAL GAINS ---------------- ------------- Equity Funds Declared and paid Declared and paid quarterly* in December Bond Funds Declared and paid Declared and paid monthly in December ____________________ * The Westcore MIDCO Growth Fund declares and pays income dividends in December only. TAXES FEDERAL As with any investment, you should consider the tax implications of an investment in the Funds. The following briefly summarizes some of the important tax considerations generally affecting the Funds and their shareholders. You should consult your tax adviser with specific reference to your own tax situation, including the applicability of any state and local taxes. You will be advised at least annually regarding the federal tax treatment of dividends paid to you. Dividends paid by the Westcore Equity Funds and the Westcore Long-Term Bond and Intermediate-Term Bond Funds will be subject to federal income tax, whether they were paid in cash or reinvested in additional shares. Federal income taxes for dividends paid to an IRA or other qualified retirement plan are generally deferred. Income dividends will qualify for the dividends received deduction for corporations to the extent of the total qualifying dividends received by the distributing Fund from domestic corporations for the year. The Colorado Tax-Exempt Fund anticipates that substantially all of its income dividends will be exempt from federal income tax (these dividends are known as "exempt-interest dividends") although any dividends derived from occasional taxable investments will be subject to federal income tax. In addition, shareholders must treat the portion of dividends paid by the Fund derived from interest received on certain private activity bonds as an item of tax preference for purposes of the federal alternative minimum tax. -25- Any capital gain dividend paid by a Fund will be taxable as a long-term capital gain, no matter how long you have held the Fund's shares. Any dividends declared by a Fund in October, November or December and payable to shareholders of record during those months will be deemed to have been paid by the Fund and received by shareholders on December 31 of the same year even if the amounts are actually paid in January of the following year. If you purchase Fund shares before the record date of a dividend, the entire amount of the dividend, although in effect a return of capital, will be subject to federal income taxes. You may realize a taxable gain or loss when you redeem, transfer or exchange shares of a Fund. If you hold shares for six months or less, and during that time you receive a capital gain dividend, any loss you realize on the sale of those shares will be treated as a long-term capital loss to the extent of the earlier distribution. Because each Fund intends to qualify as a "regulated investment company" under the Internal Revenue Code (the "Code"), each Fund generally will not be required to pay federal income taxes on its income and capital gains. COLORADO STATE TAXES Shareholders who are subject to Colorado state income tax will not be subject to such tax on dividends paid by the Westcore Colorado Tax-Exempt Fund to the extent that they qualify as exempt-interest dividends of a regulated investment company under Section 852(b)(5) of the Code and are attributable to any of the following: - obligations of the State of Colorado or its political subdivisions issued on or after May 1, 1980; - obligations of the State of Colorado or its political subdivisions issued prior to May 1, 1980 to the extent such interest is specifically exempt from income taxation under the laws of Colorado authorizing the issuance of such obligations; - obligations of possessions and territories of the United States to the extent federal law exempts such obligations from state taxes; or - obligations of the United States or its possessions to the extent such obligations are subject to federal income tax. However, to the extent distributions are received that are not attributable to the sources described above, such as distributions of short or long-term capital gain, they will not be exempt from Colorado income tax. There are no municipal income taxes in Colorado. Moreover, because shares of the Westcore Colorado Tax-Exempt Fund are intangibles, they are not subject to Colorado property tax. Shareholders of the Westcore Colorado Tax-Exempt Fund should consult their tax advisers about other state and local tax consequences of their investment in the Fund. PERFORMANCE REPORTING This section will help you understand various terms that are commonly used to describe a Fund's performance. You may see references to these terms in newsletters, advertisements and in media articles. Newsletters, advertisements and other publications may include comparisons of a Fund's performance to the performance of various indices and investments for which reliable performance data are available and to averages, performance rankings or other information compiled by recognized mutual fund statistical services. -26- AGGREGATE TOTAL RETURN -- reflects income and capital appreciation/depreciation and establishes a total percentage change in the value of an investment in a Fund over a specified measuring period. AVERAGE ANNUAL TOTAL RETURN -- represents the average annual percentage change in the value of an investment in a Fund over a specified measuring period. It is calculated by taking the aggregate total return for the measuring period and determining what constant annual return would have produced the same aggregate return. Average annual returns for more than one year tend to smooth out variations in a Fund's return and are not the same as actual annual results. Both methods of calculating total return assume that you have reinvested dividends made by a Fund during the period in Fund shares. YIELD -- shows the rate of income a Fund earns on its investments as a percentage of its share price. It is calculated by dividing the Fund's net investment income for a 30-day period by the product of the average daily number of shares entitled to receive dividends and the Fund's NAV per share at the end of the 30-day period. The result is then annualized. This represents the amount you would earn if you remained invested in a Fund for a year and the Fund continued to have the same yield for the year. Yield does not include changes in NAV. TAX-EQUIVALENT YIELD -- of the Westcore Colorado Tax-Exempt Fund shows the level of the taxable yield needed to produce an after-tax yield equivalent to the Fund's tax-free yield. It is calculated by increasing the Fund's yield by the amount necessary to reflect the payment of federal and Colorado personal income taxes at a stated tax rate. The Fund's tax-equivalent yield will always be higher than its yield. Any fees charged by your Service Organization directly to your account in connection with an investment in a Fund will not be included in the Fund's calculations of yield and/or total return. Performance quotations of a Fund represent its past performance, and you should not consider them representative of future results. The investment return and principal value of an investment in a Fund will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost. Since performance will fluctuate, you cannot necessarily compare an investment in Fund shares with bank deposits, savings accounts and similar investment alternatives which often provide an agreed or guaranteed fixed yield for a stated period of time. MANAGEMENT OF THE FUNDS BOARD OF TRUSTEES The business and affairs of each Fund are managed under the direction of the Trust's Board of Trustees. The Statement of Additional Information contains information about the Board of Trustees. INVESTMENT ADVISER Denver Investment Advisors LLC ("Denver Investment Advisors") serves as the investment adviser to the Funds. The Investment Adviser has its principal offices at 1225 17th Street, 26th Floor, Denver, Colorado 80202. As of September 1, 1996, Denver Investment Advisors had approximately $9.7 billion in assets under active management. In addition to the Trust, Denver Investment Advisors also advises or sub-advises two other investment company portfolios, the Blue Chip Value Fund, Inc. and the PaineWebber Managed Assets Trust-PaineWebber Capital Appreciation Fund. Subject to the overall authority of the Trust's Board of Trustees, Denver Investment Advisors has agreed to provide a continuous investment program for the Funds, including investment research and management. These management responsibilities include, among other things, furnishing economic and statistical information as requested by the Trust's trustees and officers. The Investment Adviser makes investment decisions for the Funds and places orders for all purchases and sales of the Funds' portfolio securities. -27- INVESTMENT PERSONNEL Todger Anderson, CFA, President of Denver Investment Advisors, has been primarily responsible for the day-to-day management of Westcore MIDCO Growth Fund since its inception. Mr. Anderson has been a portfolio manager with Denver Investment Advisors and its predecessor, Denver Investment Advisors, Inc., since 1975. He received his B.A. from Colby College and his M.B.A. from the University of Denver. Varilyn K. Schock, CFA, a Vice President and Director of Quantitative Strategies with Denver Investment Advisors, has been primarily responsible for the day-to-day management of Westcore Blue Chip Fund since 1991 and Westcore Small-Cap Opportunity Fund since its inception. Ms. Schock has been with Denver Investment Advisors and its predecessor, Denver Investment Advisors, Inc., since 1984 and has been a portfolio manager with the company since 1987. She received her B.A. from the University of Denver. Milford H. Schulhof, II, a Vice President of Denver Investment Advisors, has been primarily responsible for the day-to-day management of Westcore Growth and Income Fund since October 1995. Mr. Schulhof has been a Vice President and portfolio manager with Denver Investment Advisors and its predecessor, Denver Investment Advisors, Inc. since 1985. He received his B.S.B.A. from Drake University and his M.B.A. from the University of Denver. John R. Cormey, CFA, a Vice President of Denver Investment Advisors, has been primarily responsible for the day-to-day management of Westcore Long-Term Bond Fund and Intermediate-Term Bond Fund since 1991. Prior to managing these Funds, Mr. Cormey was Vice President and Director of Quantitative Research for the Investment Adviser. Mr. Cormey joined the company as a security analyst in 1972. He received his B.S. from the University of Colorado. Robert O. Lindig is a Vice President of Denver Investment Advisors. He has been primarily responsible for the day-to-day management of the Westcore Colorado Tax-Exempt Fund since its inception. Mr. Lindig has 34 years experience in the institutional bond market. Prior to his employment with the Investment Adviser, Mr. Lindig was Vice President and Trust Officer of First Interstate Bank of Denver, N.A. Mr. Lindig received his B.A. degree from Dartmouth College and his M.B.A. from Columbia University. BREAKDOWN OF MANAGEMENT EXPENSES AND EXPENSE LIMITS Each Fund pays the Investment Adviser an advisory fee under the advisory agreement. The fees are set forth below and are expressed as an annual percentage of a Fund's average daily net assets: -28- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EFFECTIVE ADVISORY FEES CONTRACTUAL FOR THE YEAR ADVISORY ENDED FEES MAY 31, 1996 FEE SCHEDULE (%) (%) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Westcore MIDCO Growth Fund .65% .65% - -------------------------------------------------------------------------------- Westcore Blue Chip Fund .65% .55% - -------------------------------------------------------------------------------- Westcore Growth and Income Fund .65% .47% - -------------------------------------------------------------------------------- Westcore Small-Cap Opportunity Fund 1.00%(1) .21% - -------------------------------------------------------------------------------- Westcore Long-Term Bond Fund .45% .36% - -------------------------------------------------------------------------------- Westcore Intermediate-Term Bond Fund .45% .39% - -------------------------------------------------------------------------------- Westcore Colorado Tax-Exempt Fund .50% .00% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (1) Although the fee payable by Westcore Small-Cap Opportunity Fund is higher than the fee payable by the other Funds, the Investment Adviser believes that it is within the range of fees payable by funds with comparable investment objectives and policies. The Investment Adviser may from time to time voluntarily waive all or any portion of these fees and reimburse expenses of a Fund; however, it may modify or discontinue this practice at any time. CO-ADMINISTRATORS ALPS and Denver Investment Advisors serve as co-administrators to the Funds (the "Administrators"). As Administrators, they have agreed to: assist in maintaining the Funds' office; furnish the Funds with clerical and certain other services required by them; compile data for and prepare notices and semi-annual reports to the SEC; prepare filings with state securities commissions; coordinate federal and state tax returns; monitor each Fund's expense accruals; monitor compliance with each Fund's investment policies and limitations; and generally assist in each Fund's operations. The Administrators are entitled to receive a fee from each Fund for administrative services, computed daily and payable monthly, at the aggregate annual rate of .30% of each Fund's average daily net assets. The Administrators may voluntarily waive all or any portion of their administration fees from time to time. Pursuant to a separate agreement, ALPS has agreed to maintain the financial accounts and records of each Fund and to compute the net asset value and certain other financial information relating to each Fund. The Trust has agreed to reimburse Denver Investment Advisors for costs incurred by Denver Investment Advisors for providing recordkeeping and sub-accounting services to persons who beneficially own shares of a Fund through omnibus accounts ("Beneficial Shares"). The amount reimbursed with respect to a Fund will not exceed the lesser of the costs actually borne by Denver Investment Advisors or the effective rate for transfer agency services borne by a Fund without taking into account Beneficial Shares and applying such rate to such Beneficial Shares. The Administrators are also authorized to make payments from their administrative fees or other sources to persons for providing services to a Fund or its shareholders. -29- TRANSFER AGENT State Street Bank and Trust Company, P.O. Box 1713, Boston, Massachusetts 02015, provides the Funds with transfer agency services in return for compensation. OTHER INFORMATION CONCERNING THE TRUST AND ITS SHARES Westcore Trust was originally organized as a Maryland corporation on January 11, 1982. It was reorganized as a Massachusetts business trust on December 10, 1985. The Trust's Amended and Restated Declaration of Trust authorizes the Board of Trustees to classify or reclassify any unissued shares of the Trust into one or more classes of shares. Pursuant to such authority, the Board has authorized the issuance of an unlimited number of shares representing interests in the Funds. No other classes or series of shares are currently offered. SHAREHOLDER MEETINGS Westcore Trust does not presently intend to hold meetings of shareholders except as required by the 1940 Act or other applicable law. Under the 1940 Act, the Board of Trustees is required to call a meeting of shareholders for the purpose of voting upon the removal of any trustee or trustees when requested in writing to do so by the record holders of at least 10% of the outstanding shares. If a shareholders meeting is held, you will be entitled to one vote for each full share you hold and proportionate fractional votes for fractional shares you hold. It is contemplated that the shareholders of each Fund will vote separately by Fund on matters pertaining to its investment advisory agreement and any changes in its fundamental investment limitations. As of August 29, 1996, Wells Fargo Bank and its affiliated banks possessed, on behalf of their underlying customer accounts, voting or investment power with respect to a majority of all of the outstanding shares of Westcore Trust, and the Bank of New York held as Trustee 29.61% of the outstanding shares of the Westcore Small-Cap Opportunity Fund, and, therefore, under the 1940 Act, they may be deemed to be a controlling person of the Trust and Fund, respectively. INQUIRIES Please write or call Westcore Trust at the address or telephone number listed on the cover of this Prospectus with any inquiries you may have regarding the Funds. -30- SUPPLEMENTAL INFORMATION INFORMATION ON INVESTMENT POLICIES AND ADDITIONAL RISK FACTORS Denver Investment Advisors uses a range of different investments and investment techniques in seeking to achieve a Fund's investment objective. All Funds do not use all of the investments and investment techniques described below. The Westcore MIDCO Growth, Blue Chip, Growth and Income and Small-Cap Opportunity Funds are referred to collectively as the "Westcore Equity Funds." The Westcore Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds are referred to collectively as the "Westcore Bond Funds." MUNICIPAL OBLIGATIONS (WESTCORE BOND FUNDS) Municipal Obligations include: (i) "general obligation" securities which are secured by the issuer's full faith, credit and taxing power; (ii) revenue securities which are payable only from the revenues derived from a particular facility or other specific revenue source such as the user of the facility being financed; (iii) "moral obligation" securities which are normally issued by special purpose public authorities; and (iv) private activity bonds (such as bonds issued by industrial development authorities) which are usually revenue securities issued by or for public authorities to finance a privately-operated facility. In many cases, the Internal Revenue Service has not ruled on whether the interest received on a Municipal Obligation is tax-exempt and, accordingly, purchases of these securities are based on the opinion of bond counsel to the issuers at the time of issuance. The Funds and the Investment Adviser rely on these opinions and will not review the bases for them. SPECIAL CONSIDERATIONS REGARDING INVESTMENT IN COLORADO OBLIGATIONS (WESTCORE COLORADO TAX-EXEMPT FUND) The Fund normally invests at least 65% of its total assets in Colorado Obligations. If Colorado or any of its political subdivisions suffers serious financial difficulties such that its ability to pay its obligations might be jeopardized, the ability of such entities to market their securities, and the value of the Fund, could be adversely affected. U.S. GOVERNMENT OBLIGATIONS (ALL WESTCORE FUNDS) Each Fund may invest in obligations issued or guaranteed by the U.S. government, its agencies or instrumentalities. Direct obligations of the U.S. government such as Treasury bills, notes and bonds are supported by its full faith and credit. Indirect obligations issued by federal agencies and government sponsored entities generally are not backed by the full faith and credit of the U.S. Treasury. Some of these indirect obligations may be supported by the right of the issuer to borrow from the Treasury; others are supported by the discretionary authority of the U.S. government to purchase the agency's obligations; still others are supported only by the credit of the instrumentality. MONEY MARKET INSTRUMENTS (ALL WESTCORE FUNDS) Each Fund may invest from time to time in money market instruments such as bank obligations, commercial paper and corporate bonds with remaining maturities of 13 months or less. Bank obligations include bankers' acceptances, certain negotiable certificates of deposit and time deposits such as U.S. dollar-denominated instruments issued or supported by the credit of U.S. or foreign banks. Commercial paper is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations and other borrowers. -31- VARIABLE AND FLOATING RATE INSTRUMENTS (WESTCORE BOND FUNDS) These Funds may purchase variable and floating rate demand instruments, including variable amount master demand notes, issued by corporations, industrial development authorities and governmental entities. REPURCHASE AGREEMENTS AND REVERSE REPURCHASE AGREEMENTS (ALL WESTCORE FUNDS) In a repurchase agreement, a Fund agrees to purchase portfolio securities subject to the seller's agreement to repurchase them at a mutually agreed upon date and price. Repurchase agreements involve the risk that the seller will fail to repurchase the securities, as agreed. In that event, the Fund will bear the risk of possible loss due to adverse market action or delays in liquidating the underlying obligations. Repurchase agreements are considered to be loans under the 1940 Act. Each Fund may borrow money for temporary purposes by entering into reverse repurchase agreements. Under these agreements, a Fund sells portfolio securities to financial institutions and agrees to buy them back later at an agreed upon time and price. Reverse repurchase agreements involve the risk of counterparty default and possible loss of collateral held by the counterparty. LOWER-RATED SECURITIES (WESTCORE MIDCO GROWTH, GROWTH AND INCOME AND SMALL-CAP OPPORTUNITY FUNDS) Investments in issuers of securities rated below investment grade (commonly known as "junk bonds") are considered to be more speculative than securities rated investment grade and higher. There are particular risks associated with these securities, including: (a) the relative youth and growth of the market; (b) their greater sensitivity to interest rate and economic changes which could negatively affect their value and the ability of issuers to make principal and interest payments; (c) the relatively low trading market liquidity for the securities which may adversely affect the price at which they could be sold; (d) a greater risk of default or price changes due to changes in the issuer's creditworthiness; and (e) the adverse impact that legislation restricting lower-rated securities may have on their market. SECURITIES LENDING (ALL WESTCORE FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND) These Funds may lend their portfolio securities to institutional investors as a means of earning additional income. Securities loans present risks of delay in receiving collateral or in recovering the securities loaned or even a loss of rights in the collateral if the borrower of the securities fails financially. A loan will not be made if, as a result, the total amount of a Fund's outstanding loans exceeds 30% of its total assets. RESTRICTED SECURITIES (ALL WESTCORE FUNDS) No Fund will knowingly invest more than 15% of the value of its net assets in securities that are illiquid. Illiquid securities include repurchase agreements, securities loans and time deposits that are not terminable within 7 days, certain municipal leases and certain securities that are not registered under the securities laws. Pursuant to guidelines adopted by the Board of Trustees, the Investment Adviser may determine that certain securities that are not registered under the Securities Act of 1933 are not illiquid and therefore are not subject to this 15% limitation. However, there can be no assurance that a liquid market will exist for any security at a particular time. In addition, the purchase of such securities could have the effect of increasing the level of illiquidity of the Funds during periods that qualified institutional buyers become uninterested in purchasing these restricted securities. -32- CONVERTIBLE SECURITIES (ALL WESTCORE FUNDS, OTHER THAN BLUE CHIP AND COLORADO TAX-EXEMPT FUNDS) These Funds may invest in convertible securities, including bonds and preferred stocks, that may be converted into common stock at a specified price or conversion ratio. The Funds use the same research intensive approach and valuation techniques for selecting convertible securities as are used for the selection of common stocks. The value of a convertible security is influenced by both interest rates and the value of the underlying common stock. Investments in convertible securities, including in particular those with lower ratings, involve the risk that the securities, when converted, may be worth less than the prestated price. ASSET-BACKED SECURITIES (WESTCORE BOND FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND) These Funds may purchase asset-backed securities which are securities backed by installment sale contracts, credit card receivables or other assets. The yield characteristics of asset-backed securities differ from traditional debt securities. A major difference is that the principal amount of the obligations may be prepaid at any time because the underlying assets (I.E., loans) generally may be prepaid at any time. The prepayment rate is primarily a function of current market rates and conditions. In periods of rising interest rates, the rate of prepayment tends to increase. During periods of falling interest rates, the reinvestment of prepayment proceeds by a Fund will generally be at a lower rate than the rate on the prepaid obligation. Prepayments may also result in some loss of a Fund's principal investment if any premiums were paid. As a result of these yield characteristics, some high-yielding asset-backed securities may have less potential for growth in value than conventional bonds with comparable maturities. These characteristics may result in a higher level of price volatility for these assets under certain market conditions. Asset-backed securities are subject to greater risk of default during periods of economic downturn than conventional debt instruments and the holder frequently has no recourse against the entity that originated the security. In addition, the secondary market for certain asset-backed securities may not be as liquid as the market for other types of securities which could result in the Funds' experiencing difficulty in valuing or liquidating such securities. MORTGAGE-RELATED SECURITIES (WESTCORE BOND FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND) These Funds may invest in mortgage-related securities issued or guaranteed by U.S. government agencies and private issuers. They may include mortgage pass-through certificates, which provide the holder with a pro rata interest in the underlying mortgages, and collateralized mortgage obligations ("CMOs"), which provide the holder with a specified interest in the cash flow of a pool of underlying mortgages or other mortgage-backed securities. Issuers of CMOs frequently elect to be taxed as pass-through entities known as real estate mortgage investment conduits ("REMICs"). CMOs are issued in multiple classes, each with a specified fixed or floating interest rate and a final distribution date. Mortgage-related securities involve risks similar to those described above under "Asset-Backed Securities" including prepayment risks. In addition, CMOs may exhibit more price volatility and interest rate risk than other types of mortgage-related obligations. OPTIONS AND FUTURES (ALL WESTCORE FUNDS, OTHER THAN COLORADO TAX-EXEMPT FUND) These Funds may buy put options and call options and write covered call and secured put options on securities and securities indices. A put option gives the buyer the right to sell, and the writer the obligation to buy, the underlying security at the stated exercise price at any time prior to the expiration date of the option. Writing a secured put option means that a Fund maintains in a segregated account with its custodian cash or U.S. Government securities in an amount not less than the exercise price of the option at all times during the option period. A call option gives the buyer the right to buy the underlying security at the stated exercise price at any time prior to the expiration of the option. Writing a covered call option means that a Fund owns or has the -33- right to acquire the underlying security subject to call at the stated exercise price at all times during the option period. Options involving securities indices provide the holder with the right to make or receive a cash settlement upon exercise of the option based on movements in the index. Options purchased by a Fund will not exceed 5%, and options written by a Fund will not exceed 25%, of its net assets. All options will be listed on a national securities exchange and issued by the Options Clearing Corporation. These Funds may also invest to a limited extent in futures contracts and options on futures contracts in order to reduce their exposure to movements of security prices pending investment, for hedging purposes or to maintain liquidity. Futures contracts obligate a Fund, at maturity, to take or make delivery of certain securities or the cash value of a contract or securities index. Each Fund may also purchase and sell call and put options on futures contracts traded on an exchange or board of trade. In accordance with regulations of the Commodity Futures Trading Commission, a Fund's commodities transactions must constitute bona fide hedging or other permissible transactions. In addition, a Fund may not engage in commodities transactions if the sum of the amount of initial margin deposits and premiums paid for related options, other than for bona fide hedging transactions, would exceed 5% of its assets (after certain adjustments). In connection with a position in a futures contract or related option, a Fund will create a segregated account of liquid high-grade assets or will otherwise cover its position in accordance with SEC requirements. Options trading and futures transactions are highly specialized activities and carry greater than ordinary investment risks. The primary risks associated with the use of options and futures contracts are: (1) options and futures may fail as hedging techniques where the price movements of the securities underlying them do not follow the price movements of the portfolio securities subject to the hedge; (2) a Fund will likely be unable to control losses by closing its position in these investments where a liquid secondary market does not exist; (3) losses from investing in futures transactions due to unanticipated market movements are potentially unlimited; and (4) gains and losses on investments in options and futures depend on the Investment Adviser's ability to predict correctly the direction of securities prices, interest rates and other economic factors. FOREIGN CURRENCY EXCHANGE TRANSACTIONS (WESTCORE EQUITY FUNDS, OTHER THAN BLUE CHIP FUND) Because these Funds may buy and sell securities and receive amounts denominated in currencies other than the U.S. dollar, they may enter into currency exchange transactions from time to time. A Fund will purchase foreign currencies on a "spot" or cash basis at the prevailing rate in the foreign currency exchange market or enter into forward foreign currency exchange contracts. Under these contracts the Fund would agree with a financial institution to purchase or sell a stated amount of a foreign currency at a specified price, with delivery to take place at a specified date in the future. Because there is a risk of loss to a Fund if the other party does not complete the transaction, these contracts will be entered into only with parties approved by the Fund's Board of Trustees. A Fund may maintain "short" positions in forward foreign currency exchange transactions whereby the Fund would agree to exchange currency that it currently did not own for another currency at a future date and at a specified price. This would be done in anticipation of a decline in the value of the currency sold short relative to the other currency and not for speculative purposes. In order to ensure that the short position is not used to achieve leverage with respect to a Fund's investments, the Fund would establish with its custodian a segregated account consisting of cash or certain liquid high-grade debt securities equal in value to the market value of the currency involved. WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (ALL WESTCORE FUNDS) Each Fund may purchase or sell securities on a "when-issued" or "forward commitment" basis which involves a commitment by the Fund to purchase or sell particular securities with payment and delivery taking place at a future date. These transactions permit a Fund to lock-in a price or yield on a security it owns or intends to purchase, regardless of future changes in interest rates. The Fund would bear the risk, however, that the price or yield obtained in a transaction may be less favorable than the price or yield available in the market when the -34- delivery occurs. Because a Fund is required to set aside cash or liquid high-grade debt obligations in a segregated account to satisfy these purchase commitments, its liquidity and ability to manage its portfolio might be affected during periods in which its commitments exceed 25% of the value of its assets. The Funds do not intend to engage in when-issued purchases and forward commitments for speculative purposes. SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES (ALL WESTCORE FUNDS) Each Fund may invest in securities issued by other investment companies subject to the requirements of applicable securities laws. When a Fund invests in another investment company, it pays a pro rata portion of the advisory and other expenses of that company as a shareholder of that company. These expenses would be in addition to the Fund's own expenses. FOREIGN SECURITIES (ALL WESTCORE FUNDS, OTHER THAN BLUE CHIP FUND) There are risks and costs involved in investing in securities of foreign issuers (including foreign governments), which are in addition to the usual risks inherent in U.S. investments. Investments in foreign securities may involve higher costs than investments in U.S. securities, including higher transaction costs as well as the imposition of additional taxes by foreign governments. Foreign investments may involve further risks associated with the level of currency exchange rates, less complete financial information about the issuer, less market liquidity and political instability. Future political and economic developments, the possible imposition of withholding taxes on interest income, the possible seizure or nationalization of foreign holdings, the possible establishment of exchange controls or the adoption of other governmental restrictions might adversely affect the payment of principal and interest on foreign obligations. Moreover, foreign banks and foreign branches of domestic banks may be subject to less stringent reserve requirements and to different accounting, auditing and recordkeeping requirements. Investments in foreign securities may be in the form of American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs") and similar securities. These securities may not be denominated in the same currency as the securities they represent. ADRs are receipts typically issued by a United States bank or trust company, and EDRs are receipts issued by a European financial institution evidencing ownership of the underlying foreign securities. STAND-BY COMMITMENTS (WESTCORE COLORADO TAX-EXEMPT FUND) The Fund may acquire stand-by commitments under which a dealer agrees to purchase certain Municipal Obligations at the Fund's option at a price equal to their amortized cost value plus interest. These commitments will be used only to assist in maintaining the Fund's liquidity and not for trading purposes. PORTFOLIO TURNOVER (ALL WESTCORE FUNDS) A Fund may sell a portfolio investment soon after it is purchased if the Investment Adviser believes that a sale is consistent with the Fund's investment objective. A high rate of portfolio turnover involves correspondingly greater brokerage commission expenses, tax consequences (including the possible realization of additional taxable capital gains and income) and other transaction costs, which must be borne directly by the Fund involved and ultimately by its shareholders. RISK FACTORS ASSOCIATED WITH DERIVATIVE INSTRUMENTS (ALL WESTCORE FUNDS) Each Fund may purchase certain "derivative" instruments as described above under various headings. Derivative instruments are instruments that derive value from the performance of underlying assets, interest or currency exchange rates, or indices, and include, but are not limited to, futures contracts, options, forward -35- currency contracts and structured debt obligations (including collateralized mortgage obligations and other types of asset-backed securities and various floating rate instruments, including inverse floaters). Derivative instruments present, to varying degrees, market risk that the performance of the underlying assets, exchange rates or indices will decline; credit risk that the dealer or other counterparty to the transaction will fail to pay its obligations; volatility and leveraging risk that, if interest or exchange rates change adversely, the value of the derivative instrument will decline more rapidly than the assets, rates or indices on which it is based; liquidity risk that a Fund will be unable to sell a derivative instrument when it wants because of lack of market depth or market disruption; pricing risk that the value of a derivative instrument (such as an option) will not correlate exactly to the value of the underlying assets, rates or indices on which it is based or may be difficult to determine because of a lack of reliable objective information and an established secondary market; and operations risk that loss will occur as a result of inadequate systems and controls, human error or otherwise. Many of these instruments are proprietary products that have been recently developed by investment banking firms and it is uncertain how they will perform under different economic and interest rate scenarios. -36- APPENDIX RATING CATEGORIES BOND RATING EXPLANATION - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- STANDARD & POOR'S AAA Highest rating; extremely strong capacity RATINGS GROUP, DIVISION to pay interest and repay principal. OF MCGRAW HILL ---------------------------------------------------- AA High quality; very strong capacity to pay interest and repay principal. ---------------------------------------------------- A Strong capacity to pay interest and repay principal; somewhat more susceptible to the adverse effects of changing circumstances and economic conditions. ---------------------------------------------------- BBB Adequate capacity to pay interest and repay principal; normally exhibit adequate protection parameters, but adverse economic conditions or changing circumstances more likely to lead to a weakened capacity to pay interest and repay principal than for higher rated bonds. ---------------------------------------------------- BB, B, Predominantly speculative with respect to CCC, CC, the issuer's capacity to meeting required C interest and principal payments. BB- lowest degree of speculation; C-the highest degree of speculation. Quality and protective characteristics outweighed by large uncertainties or major risk exposure to adverse conditions. ---------------------------------------------------- D In default. ---------------------------------------------------- ---------------------------------------------------- MOODY'S INVESTORS Aaa Highest quality, smallest degree of SERVICE, INC. investment risk. ---------------------------------------------------- Aa High quality; together with Aaa bonds, they compose the high-grade bond group. ---------------------------------------------------- A Upper medium-grade obligations; some favorable investment attributes. ---------------------------------------------------- Baa Medium-grade obligations; neither highly protected nor poorly secured. Interest and principal payments appear adequate for the present but certain protective elements may be lacking or may be unreliable over any great length of time. Some speculative characteristics. ---------------------------------------------------- Ba More uncertain, with speculative elements. Questionable protection of interest and principal payments. ---------------------------------------------------- B Lack characteristics of desirable investment; potentially low assurance of timely interest and principal payments or maintenance of other contract terms over time. ---------------------------------------------------- Caa Poor standing, may be in default; elements of danger with respect to principal or interest payments. ---------------------------------------------------- Ca Speculative in a high degree; may be in default. ---------------------------------------------------- C Lowest-rated; extremely poor prospects of ever attaining investment standing. ---------------------------------------------------- D In default. ---------------------------------------------------- ---------------------------------------------------- CROSS REFERENCE SHEET MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund Statement of Additional Information FORM N-1A PART B ITEM INFORMATION CAPTION - --------------------- ------------------- 10. Cover Page . . . . . . . . . . . . . . . . . . . Cover Page 11. Table of Contents. . . . . . . . . . . . . . . . Table of Contents 12. General Information and History. . . . . . . . . Description of Shares 13. Investment Objectives and Policies . . . . . . . Investment Objectives, Policies and Risk Factors 14. Management of Registrant . . . . . . . . . . . . Management 15. Control Persons and Principal. . . . . . . . . . Description of Shares Holders of Securities 16. Investment Advisory and Other Services . . . . . Management 17. Brokerage Allocation and other Practices . . . . Investment Objectives, Policies and Risk Factors 18. Capital Stock and Other Securities . . . . . . . Net Asset Value; Additional Purchase and Redemption Information; Description of Shares 19. Purchase, Redemption and Pricing . . . . . . . . Net Asset Value of Securities Being Offered Additional Purchase and Redemption Information 20. Tax Status . . . . . . . . . . . . . . . . . . . Additional Information Concerning Taxes 21. Underwriters . . . . . . . . . . . . . . . . . . Not Applicable 22. Calculation of Performance Data. . . . . . . . . Additional Information on Performance 23. Financial Statements . . . . . . . . . . . . . . Report of Independent Public Accountant; Financial Statements
WESTCORE TRUST Statement of Additional Information for MIDCO Growth Fund Blue Chip Fund Growth and Income Fund Small-Cap Opportunity Fund Long-Term Bond Fund Intermediate-Term Bond Fund Colorado Tax-Exempt Fund October 1, 1996 TABLE OF CONTENTS PAGE ---- THE TRUST. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . NET ASSET VALUE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADDITIONAL PURCHASE AND REDEMPTION INFORMATION . . . . . . . . . . . . . . . . DESCRIPTION OF SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADDITIONAL INFORMATION CONCERNING TAXES. . . . . . . . . . . . . . . . . . . . MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . CUSTODIAN AND TRANSFER AGENT . . . . . . . . . . . . . . . . . . . . . . . . . EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS . . . . . . . . . . . . . . MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1 APPENDIX B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . FS-1 This Statement of Additional Information is meant to be read in conjunction with the Funds' Prospectus dated October 1, 1996, as the same is revised from time to time, and is incorporated by reference in its entirety into the Prospectus. Because this Statement of Additional Information is not itself a prospectus, no investment in shares of the Funds should be made solely based upon the information contained herein. Audited financial statements for the Funds as of May 31, 1996 are attached hereto. Copies of the Funds' Prospectus and financial statements may be obtained by calling 1-800-392-CORE (2673) or by writing ALPS Mutual Funds Services, Inc. at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202. Capitalized terms used but not defined herein have the same meanings as in the Prospectus. THE TRUST Westcore Trust (the "Trust") is a Massachusetts business trust which was organized on December 10, 1985 as an open-end management investment company. The Trust's predecessor was originally incorporated in Maryland on January 11, 1982. The Trust is authorized to issue separate classes of shares representing interests in separate investment portfolios. This Statement of Additional Information pertains to the MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund, Intermediate- Term Bond Fund and Colorado Tax-Exempt Fund (each, a "Fund" and collectively, the "Funds"). The MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund and Small-Cap Opportunity Fund are sometimes referred to as the "Equity Funds." The Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund are sometimes referred to as the "Bond Funds." For information concerning any investment portfolios offered by the Trust, contact ALPS Mutual Fund Services, Inc. ("ALPS") at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202 or call 1-800-392-CORE (2673). INVESTMENT OBJECTIVES AND POLICIES The Prospectus for the Funds describes the Funds' investment objectives. The following information supplements and should be read in conjunction with the description of the investment objective and policies for each Fund in the Prospectus. PORTFOLIO TRANSACTIONS Denver Investment Advisors LLC ("Denver Investment Advisors" or the "Investment Adviser") serves as the investment adviser to the Funds pursuant to an investment advisory agreement (the "Advisory Agreement"). Subject to the general supervision of the Trust's Board of Trustees and the provisions of the Trust's Advisory Agreement relating to the Funds, Denver Investment Advisors makes decisions with respect to and places orders for all purchases and sales of portfolio securities for the Funds. The annualized portfolio turnover rate for each Fund is calculated by dividing the lesser of purchases or sales of portfolio securities for the year by the monthly average value of the portfolio securities. The calculation excludes all securities, including options, that have maturities or expiration dates at the time of acquisition of one year or less. Portfolio turnover may vary greatly from year to year as well as within a particular year, and may be affected by cash requirements for redemption of shares and by requirements which enable the Funds to receive favorable tax treatment. Portfolio turnover will not be a limiting factor in making portfolio decisions, and each Fund may engage in short-term trading to achieve its investment objective. Transactions on U.S. stock exchanges involve the payment of negotiated brokerage commissions. On exchanges on which commissions are negotiated, the cost of transactions may vary among different brokers. During the fiscal years ended May 31, 1996, 1995 and 1994, the Funds paid the following amounts in brokerage commissions: -2- BROKERAGE COMMISSIONS PAID Year Ended Year Ended Year Ended May 31, May 31, May 31, Fund 1996 1995 1994 ---- ---------- ---------- ---------- MIDCO Growth Fund $ 674,234 $ 394,695 $ 283,999 Blue Chip Fund 86,601 68,775 42,353 Growth and Income Fund 61,996 100,312 58,385 Intermediate-Term Bond Fund 2,343 0 0 Small-Cap Opportunity Fund 48,650 30,619 4,918 --------- --------- --------- Aggregate Commissions $ 873,824 $ 594,401 $ 582,274 --------- --------- --------- --------- --------- --------- For the same periods the Long-Term Bond Fund and Colorado Tax-Exempt Fund did not pay any brokerage commissions. During the fiscal years ended May 31,1996, 1995 and 1994, no brokerage commissions were paid by any Funds to an affiliated broker of the Trust. There is generally no stated commission in the case of portfolio securities traded in the over-the-counter market, but the price includes an undisclosed commission or mark-up. Securities purchased and sold by the Funds are generally traded in the over-the-counter market on a net basis (i.e., without commission) through dealers, or otherwise involve transactions directly with the issuer of an instrument. Transactions in the over-the-counter market are generally principal transactions with dealers and the costs of such transactions involve dealer spreads rather than brokerage commissions. With respect to over-the-counter transactions, Denver Investment Advisors will normally deal directly with the dealers who make a market in the securities involved, except in those circumstances where better prices and execution terms are available elsewhere or as described below. The cost of securities purchased from underwriters includes an underwriting commission or concession, and the prices at which securities are purchased from and sold to dealers include a dealer's mark-up or mark-down. The Funds may participate, if and when practicable, in bidding for the purchase of portfolio securities directly from an issuer in order to take advantage of the lower purchase price available to members of a bidding group. A Fund will engage in this practice, however, only when the Investment Adviser, in its sole discretion, believes such practice to be otherwise in the Fund's interests. The Advisory Agreement for the Funds provides that the Investment Adviser will seek to obtain the best overall terms available in executing portfolio transactions and selecting brokers or dealers. In assessing the best overall terms available for any transaction, Denver Investment Advisors will consider all factors it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In addition, the Advisory Agreement authorizes Denver Investment Advisors to cause any of the Funds to pay a broker-dealer that furnishes brokerage and research services a higher commission than that charged by another broker-dealer for effecting the same transaction, provided that Denver Investment Advisors determines in good faith that the commission is reasonable in relation to the value of the brokerage and research services provided by the broker-dealer, viewed in terms of that particular transaction or the overall responsibilities of Denver Investment Advisors to the Fund. Such brokerage and research services might consist of reports and statistics of specific companies or industries, -3- general summaries of groups of stocks or bonds and their comparative earnings and yields, or broad overviews of the stock, bond and government securities markets and the economy. Supplemental research information so received is in addition to, and not in lieu of, services required to be performed by the Investment Adviser and does not reduce the advisory fees payable by the Funds. The Trustees will periodically review the commissions paid by the Funds to consider whether the commissions paid over representative periods of time appear to be reasonable in relation to the benefits inuring to the Funds. It is possible that certain of the supplementary research or other services received will primarily benefit one or more other investment companies or other accounts for which investment discretion is exercised by the Investment Adviser. Conversely, a Fund may be the primary beneficiary of the research or services received as a result of portfolio transactions effected for such other account or investment company. The Funds may from time to time purchase securities issued by the Trust's regular broker/dealers (as defined in Rule 10b-1 under the Investment Company Act of 1940, as amended (the "1940 Act") or their parents. As of May 31, 1996, the Intermediate-Term Bond Fund held securities of the Trust's regular broker/dealers (or their parents) that derive more than 15% of their gross revenues from securities-related activities. As of that date, the Fund's aggregate holdings of securities of Merrill Lynch & Co. was $1,101,305. Also as of May 31, 1996, the MIDCO Growth, Blue Chip, Growth and Income, Small-Cap Opportunity, Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds held securities of the Provident Institutional Funds in the amounts of $25,039,069, $547,243, $812,281, $966,615, $19,360, $3,301,665 and $623,906, respectively. Portfolio securities will not be purchased from or sold to (and savings deposits will not be made in and repurchase and reverse repurchase agreements will not be entered into with) the Investment Adviser, ALPS or an affiliated person (as the term is defined in the 1940 Act) acting as principal, except to the extent permitted by the Securities and Exchange Commission (the "SEC"). However, Denver Investment Advisors is authorized in allocating purchase and sale orders for portfolio securities to broker/dealers and other financial institutions (including institutions that are affiliated with the Investment Adviser or principal underwriter) to take into account the sale of Fund shares if Denver Investment Advisors believes that the quality of the transaction and the amount of the commission are comparable to those of other qualified brokerage firms. In addition, the Colorado Tax-Exempt Fund will not purchase securities during the existence of any underwriting group or related selling group of which ALPS, the Investment Adviser, or any affiliated person of any of them, is a member, except to the extent permitted by the SEC. In certain circumstances, the Funds may be at a disadvantage because of these limitations in comparison with other investment companies which have similar investment objectives but are not subject to such limitations. Investment decisions for each Fund are made independently from those for the other Funds and investment companies and accounts advised or managed by the Investment Adviser. Such other investment companies and accounts also may invest in the same securities as the Funds. When a purchase or sale of the same security is made at substantially the same time on behalf of a Fund and another investment company or account, the available securities will be allocated between the Fund and the other purchaser in a manner which Denver Investment Advisors believes to be equitable to both. In some instances, this may adversely affect the price paid or received by a Fund or the size of the position obtained by or disposed of by the Fund. To the extent permitted by law, Denver Investment Advisors may aggregate the securities to be sold or purchased for a Fund with those to be sold or purchased for other investment companies or accounts in executing transactions. MOODY'S AND S&P RATINGS The ratings of ratings agencies represent their opinions as to the quality of debt securities. It should be emphasized, however, that ratings are general and are not absolute standards of quality, and debt securities with the same maturity, interest rate and rating may have different yields while debt securities of the -4- same maturity and interest rate with different ratings may have the same yield. Subsequent to purchase by a Fund, an issue of debt securities may cease to be rated or its rating may be reduced below the minimum rating required for purchase by a Fund. Denver Investment Advisors will consider such an event in determining whether the Fund involved should continue to hold the obligation. The payment of principal and interest on most debt securities purchased by the Funds will depend upon the ability of the issuers to meet their obligations. An issuer's obligations under its debt securities are subject to the provisions of bankruptcy, insolvency, and other laws affecting the rights and remedies of creditors, such as the Federal Bankruptcy Code, and laws, if any, which may be enacted by federal or state legislatures extending the time for payment of principal or interest, or both, or imposing other constraints upon enforcement of such obligations or, in the case of governmental entities, upon the ability of such entities to levy taxes. The power or ability of an issuer to meet its obligations for the payment of interest and principal of its debt securities may be materially adversely affected by litigation or other conditions. MUNICIPAL OBLIGATIONS (BOND FUNDS) Municipal Obligations include "general obligation" securities, "revenue" securities, private activity bonds and "moral obligation" securities. General obligation securities are secured by the issuer's pledge of its full faith, credit and taxing power. Revenue securities are payable only from the revenues derived from a particular facility, the proceeds of a special excise tax or another specific revenue source such as the user of the facility being financed. Private activity bonds (E.G., bonds issued by industrial development authorities) are issued by or on behalf of public authorities to finance various privately-operated facilities. Such bonds are included within the term "Municipal Obligations" only if the interest paid thereon is exempt from regular federal income tax and, for the Colorado Tax-Exempt Fund, not treated as a specific tax preference item under the federal alternative minimum tax. Private activity bonds are in most cases revenue securities and are not payable from the unrestricted revenues of the issuer. The credit quality of such bonds is usually directly related to the credit standing of the corporate user of the facility involved. Moral obligation securities are normally issued by special purpose public authorities. If the issuer is unable to meet its debt service obligations from current revenues, it may draw on a reserve fund, the restoration of which is a moral commitment but not a legal obligation of the state or municipality which created the issuer. Certain of the Municipal Obligations held by the Colorado Tax-Exempt Fund may be insured as to the timely payment of principal and interest. There is no guarantee, however, that the insurer will meet its obligations in the event of the issuer's default. In addition, such insurance will not protect against market fluctuations caused by changes in interest rates and other factors. Although the Colorado Tax-Exempt Fund will invest most of its assets, under normal circumstances, in intermediate-term Municipal Obligations, the Fund may also purchase short-term General Obligation Notes, Tax Anticipation Notes, Bond Anticipation Notes, Revenue Anticipation Notes, Tax-Exempt Commercial Paper, Construction Loan Notes and other forms of short-term tax-exempt loans. Such instruments are issued with a short-term maturity in anticipation of the receipt of tax funds, the proceeds of bond placements or other revenues. Within the types of Municipal Obligations described above there are other categories, including municipal leases, which are often sold in the form of certificates of participation. These obligations are issued by state and local governments or authorities to finance the acquisition of equipment and facilities. Certain of these obligations present the risk that a municipality may not appropriate funds for the lease payments. Moreover, lease obligations may be limited by municipal charter or other provisions that do not permit acceleration of the lease obligation upon default. Because certificates of participation are generally subject to redemption by the issuing municipal entity under specified circumstances, they are not as liquid or marketable as other types of Municipal Obligations and are generally valued at par or less than par in the open market. -5- There are variations in the quality of Municipal Obligations both within a particular classification and between classifications, and the yields on Municipal Obligations depend upon a variety of factors, including general money market conditions, the financial condition of the issuer, general conditions of the municipal bond market, the size of a particular offering, the maturity of the obligation and the rating of the issue. Payment on Municipal Obligations relating to certain projects may be secured by mortgages or deeds of trust. In the event of a default, enforcement of the mortgages or deeds of trust will be subject to statutory enforcement procedures and limitations. In the event of a foreclosure, collection of proceeds may be delayed and may not be sufficient to pay the principal or accrued interest on the defaulted Municipal Obligations. STAND-BY COMMITMENTS (COLORADO TAX-EXEMPT FUND) The Fund may acquire stand-by commitments with respect to Municipal Obligations held in its portfolio. Under a stand-by commitment, a dealer or bank agrees to purchase from the Fund, at the Fund's option, specified Municipal Obligations at a specified price. The amount payable to the Fund upon its exercise of a stand-by commitment is normally (i) the Fund's acquisition cost of the Municipal Obligations (excluding any accrued interest which the Fund paid on their acquisition), less any amortized market premium plus any amortized market or original issue discount during the period the Fund owned the securities, plus (ii) all interest accrued on the securities since the last interest payment date during that period. Stand-by commitments may be sold, transferred or assigned by the Fund only with the underlying instrument. The Fund intends to enter into stand-by commitments only with dealers, banks and broker-dealers which, in the Investment Adviser's opinion, present minimal credit risks. The Fund's reliance upon the credit of these dealers, banks and broker-dealers will be secured by the value of the underlying Municipal Obligations that are subject to the commitment. In evaluating the creditworthiness of the issuer of a stand-by commitment, the Investment Adviser will review periodically the issuer's assets, liabilities, contingent claims and other relevant financial information. The Fund will acquire stand-by commitments solely to facilitate portfolio liquidity and does not intend to exercise its rights thereunder for trading purposes. The acquisition of a stand-by commitment would not affect the valuation or assumed maturity of the underlying Municipal Obligations, which would continue to be valued in accordance with the Fund's normal method of valuation. Stand-by commitments acquired by the Fund would be valued at zero in determining net asset value. SPECIAL CONSIDERATIONS REGARDING INVESTMENTS IN COLORADO OBLIGATIONS (COLORADO TAX-EXEMPT FUND) The concentration of the Colorado Tax-Exempt Fund in securities issued by governmental units of only one state exposes the Fund to risks greater than those of a more diversified portfolio holding securities issued by governmental units of different states and different regions of the country. The Fund believes the information summarized below describes some of the more significant developments relating to securities of (i) municipalities or other political subdivisions or instrumentalities of the State of Colorado (the "State") which rely, in whole or in part, on AD VALOREM real property taxes and other general funds of such municipalities or political subdivisions or (ii) the State. The sources of such information include the official publications of the State, as well as other publicly available documents. The Fund has not independently verified any of the information contained in such official publications and other publicly available documents, but is not aware of any facts which would render such information inaccurate. -6- ECONOMIC FACTORS. Based on data published by the State of Colorado, Office of State Planning and Budgeting as presented in the COLORADO ECONOMIC PERSPECTIVE, FOURTH QUARTER, FISCAL YEAR 1966, JUNE 20, 1996 (the "Economic Report"), nearly 55% of non-agricultural employment in Colorado in 1995 was concentrated in the retail and wholesale trade and service sectors, reflecting the importance of tourism to the State's economy and of Denver as a regional economic and transportation hub. The government and manufacturing sectors followed as the next largest employment sectors in the State, representing approximately 16.5% and 10.4%, respectively, of non-agricultural employment in the State in 1995. The Office of Planning and Budgeting projects similar concentrations for calendar years 1996 and 1997. According to the Economic Report, the unemployment rate remained unchanged with an average of 4.2% during both 1994 and 1995. Total retail sales increased by 5.1% during 1995. Colorado continued to surpass the employment growth rate of the U.S. with a 4.7% rate of growth for Colorado in 1995, as compared with 2.3% for the nation as a whole. However, the rate of job growth in Colorado is projected in the Economic Report to be lower in 1996 than 1995 as a result of layoffs at various employers. Personal income rose 7.7% in Colorado during 1995, as compared with an increase of 6.1% for the nation as a whole. RESTRICTIONS OF APPROPRIATIONS AND REVENUES. The State Constitution requires that expenditures for any fiscal year not exceed revenues for such fiscal year. By statute, the amount of State General Fund revenues available for appropriation is based upon revenue estimates which, together with other available resources, must exceed annual appropriations by the amount of the unappropriated reserve (the "Unappropriated Reserve"). The Unappropriated Reserve requirement for fiscal years 1991, 1992 and 1993 was set at 3% of total appropriations from the General Fund. For fiscal years 1994 and thereafter, the Unappropriated Reserve requirement is set at 4%. In addition to the Unappropriated Reserve, a constitutional amendment approved by Colorado voters in 1992 requires the State and each local government to reserve a certain percentage of its fiscal year spending (excluding bonded debt service) for emergency use (the "Emergency Reserve"). The minimum Emergency Reserve was set at 1% for 1993 and 2% for 1994 and is set at 3% for 1995 and later years. For fiscal year 1992 and thereafter, General Fund appropriations are also limited by statute to an amount equal to the cost of performing certain required reappraisals of taxable property plus an amount equal to the lesser of (i) 5% of Colorado personal income or (ii) 106% of the total General Fund appropriations for the previous fiscal year. This restriction does not apply to any General Fund appropriations which are required as a result of a new federal law, a final state or federal court order or moneys derived from the increase in the rate or amount of any tax or fee approved by a majority of the registered electors of the State voting at any general election. In addition, the statutory limit on the level of General Fund appropriations may be exceeded for a given fiscal year upon the declaration of a State fiscal emergency by the State General Assembly. According to the Economic Report, the fiscal year 1995 ending General Fund balance was $488.5 million, which was $262.4 million over the combined Unappropriated Reserve and Emergency Reserve requirement. The 1994 fiscal year ending General Fund balance was $405.1 million, or $234.0 million over the required Unappropriated Reserve and Emergency Reserve. Based on the 1996 Economic Report estimates, the fiscal year 1996 ending General Fund balance is expected to be approximately $315.2 million, or $158.6 million over the required Unappropriated Reserve and Emergency Reserve. On November 3, 1992, voters in Colorado approved a constitutional amendment (the "Amendment") which, in general, became effective December 31, 1992, and restricts the ability of the State and local governments to increase revenues and impose taxes. The Amendment applies to the State and all local governments, including home rule entities ("Districts"). Enterprises, defined as government-owned businesses -7- authorized to issue revenue bonds and receiving under 10% of annual revenue in grants from all Colorado state and local governments combined, are excluded from the provisions of the Amendment. The provisions of the Amendment are unclear and have required judicial interpretation. Among other provisions, the Amendment requires voter approval prior to tax increases, imposition of a new tax, creation of debt, or mill levy or valuation for assessment ratio increases or a change of tax policy resulting in a net revenue gain. The Amendment also limits increases in government spending and property tax revenues to specified percentages. The Amendment requires that District property tax revenues yield no more than the prior year's revenues adjusted for inflation, voter approved changes, and (except with regard to school districts) local growth in property values according to a formula set forth in the Amendment. School districts are allowed to adjust property tax revenue levies for changes in student enrollment. Pursuant to the Amendment, local government spending is to be limited by the same formula as the limitation for property tax revenues. The Amendment limits increases in expenditures from the State General Fund and program revenues (cash funds) to the growth in inflation plus the percentage change in State population in the prior calendar year. The bases for initial spending and revenue limits are fiscal year 1992 spending and 1991 property taxes collected in 1992. The bases for spending and revenue limits for fiscal year 1994 and later years will be the prior fiscal year's spending and property taxes collected in the prior calendar year. Debt service changes, reductions and voter-approved revenue changes are excluded from the calculation bases. The Amendment also prohibits new or increased real property transfer tax rates, new State real property taxes and local District income taxes. Litigation concerning several issues relating to the Amendment has been brought in the Colorado courts. The litigation has dealt with three principal issues: (i) whether Districts can increase mill levies to pay debt service on general obligation bonds without obtaining voter approval; (ii) whether a multi-year lease-purchase agreement subject to annual appropriation is an obligation which requires voter approval prior to execution of the agreement; and (iii) what constitutes an "enterprise" which is excluded from the provisions of the Amendment. In September 1994, the Colorado Supreme Court held that Districts can increase mill levies to pay debt service on voter approved general obligation bonds issued after the effective date of the Amendment; in June 1995, the Colorado Supreme Court validated mill levy increases to pay general obligation bonds issued prior to the Amendment provided that such bonds or bonds issued to refund such bonds were voter approved. In late 1994, the Colorado Court of Appeals held that multi-year lease-purchase agreements subject to annual appropriation do not require voter approval. The time to file an appeal in that case has expired. Finally, in May 1995, the Colorado Supreme Court ruled that entities with the power to levy taxes may not themselves be "enterprises" for purposes of the Amendment; however, the Court did not address the issue of how valid enterprises may be created. Many Colorado local governments interpret this decision to mean that a government with taxing power cannot be an enterprise but that a business activity (such as a utility) owned by such a government can be. Additional litigation in the "enterprise" arena may be filed in the future to clarify these issues. Litigation is currently pending before the Colorado Supreme Court as to whether voters can authorize a government to keep and spend all revenues received in excess of the spending limits. Other aspects of the spending limit are being litigated in district court actions. According to the Economic Report, for fiscal year 1994, general fund revenues (adjusted for cash funds that are exempt from the Amendment) were $3,681.4 million and program revenues (cash funds) were $1,703.7 million, for revenues totaling $5,385.1 million. During calendar year 1994, population and inflation grew at rates of 4.2% and 2.9%, respectively, for a combined total limit of 7.1%. Accordingly, under the Amendment, increases in State expenditures during the 1995 fiscal year could not exceed $5,767.5 million and the actual 1995 general fund and program revenues of $5,757.3 million were under the limit. The limitation for fiscal year 19965 is 7.0% over revenues during the 1995 fiscal year; accordingly, 1996 fiscal year revenues cannot exceed $6,160.3 million. Fiscal year 1996 revenues are -8- estimated to be $6,087.2 million which is $73.2 million under the limitation. The limitation for the 1997 fiscal year is currently projected to be 6.6% which translates to a revenue limit of approximately $6,488.9 million for fiscal year 1997. There is also a statutory restriction on the amount of annual increases in taxes that the various taxing jurisdictions in Colorado can levy without electoral approval. This restriction does not apply to taxes levied to pay general obligation debt. COLORADO STATE FINANCES. As the State experienced revenue shortfalls in the mid-1980s, it adopted various measures, including impoundment of funds by the Governor, reduction of appropriations by the General Assembly, a temporary increase in the sales tax, deferral of certain tax reductions and inter-fund borrowings. According to State of Colorado Audited Finance Reports, under generally accepted accounting principles, the State had unrestricted General Fundending balances at June 30 of approximately $133.3 million in fiscal year 1992, $326.8 million in fiscal year 1993, $320.4 million in fiscal year 1994, and $408.0 million in fiscal year 1995. For fiscal year 1995, the following tax categories generated the following percentages of the State's $3,996.4 million total revenues (accrual basis): individual income taxes represented 52.7% of gross fiscal year 1995 receipts; sales, use, and other excise taxes represented 32.9% of gross fiscal year 1995 receipts; and corporate income taxes represented 4.8% of gross fiscal year 1995 receipts. For fiscal year 1996, General Fund revenues of approximately $4,239.9 million and appropriations of approximately $4,413.2 million are projected. The percentages of General Fund revenue generated by type of tax for fiscal year 1996 are not expected to be significantly different from fiscal year 1995 percentages. DEBT. Under its constitution, the State of Colorado is not permitted to issue general obligation bonds secured by the full faith and credit of the State. However, certain agencies and instrumentalities of the State are authorized to issue bonds secured by revenues from specific projects and activities. The State enters into certain lease transactions which are subject to annual renewal at the option of the State. In addition, the State is authorized to issue short-term revenue anticipation notes. Local government units in the State are also authorized to incur indebtedness. The major source of financing for such local government indebtedness is an AD VALOREM property tax. In addition, in order to finance public projects, local governments in the State can issue revenue bonds payable from the revenues of a utility or enterprise or from the proceeds of an excise tax, or assessment bonds payable from special assessments. Colorado local governments can also finance public projects through leases which are subject to annual appropriation at the option of the local government. Local governments in Colorado also issue tax anticipation notes. The Amendment requires prior voter approval for the creation of any multiple fiscal year debt or other financial obligation whatsoever, except for refundings at a lower rate or obligations of an enterprise. Economic conditions in the State may have continuing effects on other governmental units within the State (including issuers of the Colorado obligations in the Fund), which, to varying degrees, have also experienced reduced revenues as a result of recessionary conditions and other factors. U.S. GOVERNMENT OBLIGATIONS (ALL FUNDS) Each Fund may invest in obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities. Examples of the types of U.S. Government obligations that may be held by a Fund include, in addition to U.S. Treasury bonds, notes and bills, the obligations of Federal Home Loan Banks, Federal Farm Credit Banks, Federal Land Banks, the Federal Housing Administration, Farmers Home Administration, Export-Import Bank of the United States, Small Business Administration, Government National Mortgage Association, Federal National Mortgage Association, General Services Administration, Student Loan -9- Marketing Association, Central Bank for Cooperatives, Federal Home Loan Mortgage Corporation, Federal Intermediate Credit Banks and Maritime Administration. Obligations of certain agencies and instrumentalities of the U.S. Government, such as those of the Government National Mortgage Association, are supported by the full faith and credit of the U.S. Treasury; others, such as those of the Export-Import Bank of the United States, are supported by the right of the issuer to borrow from the Treasury; others, such as those of the Federal National Mortgage Association, are supported by the discretionary authority of the U.S. Government to purchase the agency's obligations; still others, such as those of the Student Loan Marketing Association, are supported only by the credit of the instrumentality. No assurance can be given that the U.S. Government would provide financial support to U.S. Government-sponsored instrumentalities if it is not obligated to do so by law. MONEY MARKET INSTRUMENTS (ALL FUNDS) Each Fund may invest from time to time in "money market instruments" such as bank obligations, commercial paper and corporate bonds with remaining maturities of 13 months or less. For the Equity funds, bank obligations include bankers' acceptances and negotiable certificates of deposit issued by a U.S. bank, savings bank or savings association that is a member of the Federal Reserve System or insured by the Federal Deposit Insurance Corporation. For the Bond Funds, bank obligations include bankers' acceptances, negotiable certificates of deposit and non- negotiable time deposits, including U.S. dollar-denominated instruments issued or supported by the credit of U.S. or foreign banks. Although the Bond Funds will invest in obligations of foreign banks or foreign branches of U.S. banks only where the Investment Adviser deems the instrument to present minimal credit risks, these investments nevertheless entail risks that are different from those of investments in domestic obligations of U.S. banks due to differences in political, regulatory and economic systems and conditions. Investments in bank obligations are limited to the obligations of financial institutions having more than $1 billion in total assets at the time of purchase. Investments by the Bond Funds in the obligations of foreign banks and foreign branches of U.S. banks will not exceed 20% and 25%, respectively, of the Funds' total assets at the time of purchase. Commercial paper is a short-term debt obligation with a maturity ranging from 1 to 270 days issued by banks, corporations and other borrowers. Investments by a Fund in commercial paper and similar corporate obligations will consist of issues that are rated within the highest rating category by one or more Rating Agencies at the time of purchase and unrated paper determined by the Investment Adviser at the time of purchase to be of comparable quality. For the Colorado Tax-Exempt Fund, investments in money market instruments, together with investments in other instruments (such as U.S. Government obligations and repurchase agreements) that are subject to federal income tax, will not exceed 20% of the total assets of the Fund except when made for temporary defensive purposes. The Colorado Tax-Exempt Fund may also hold uninvested cash reserves which do not earn income pending investment, during temporary defensive periods or if, in the opinion of its Investment Adviser, suitable tax-exempt obligations are unavailable. There is no percentage limitation on the amount of assets which may be held uninvested by the Colorado Tax-Exempt Fund. VARIABLE AND FLOATING RATE INSTRUMENTS (BOND FUNDS) These Funds may purchase variable and floating rate obligations as described in the Prospectus. The Investment Adviser will consider the earning power, cash flows and other liquidity ratios of the issuers and guarantors of such obligations and, if the obligation is subject to a demand feature, will monitor the issuer's financial ability to meet payment on demand. Variable and floating rate demand instruments acquired by a Fund may include participations in Municipal Obligations purchased from and owned by financial institutions, primarily banks. Participation interests provide a Fund with a specified undivided interest (up to 100%) in the underlying obligation and the -10- right to demand payment of the unpaid principal balance plus accrued interest on the participation interest from the institution upon a specified number of days' notice, not to exceed thirty days. Each participation interest is backed by an irrevocable letter of credit or guarantee of a bank that the Investment Adviser has determined meets the prescribed quality standards for the Fund. The bank typically retains fees out of the interest paid on the obligation for servicing the obligation, providing the letter of credit and issuing the repurchase commitment. While there may be no active secondary market with respect to a particular variable or floating rate instrument purchased by the Funds, the Funds may, from time to time as specified in the instrument, demand payment in full of the principal or may resell the instrument to a third party. The absence of an active secondary market, however, could make it difficult for a Fund to dispose of an instrument if the issuer defaulted on its payment obligation or during periods that the Fund is not entitled to exercise its demand rights, and the Fund could, for these or other reasons, suffer a loss. Variable and floating rate instruments with no active secondary market will be included in the calculation of a Fund's illiquid assets. See "Restricted Securities." REPURCHASE AGREEMENTS (ALL FUNDS) A Fund will enter into repurchase agreements only with financial institutions deemed to be creditworthy by the Investment Adviser, pursuant to guidelines established by the Trust's Board of Trustees. During the term of any repurchase agreement, the Investment Adviser will monitor the creditworthiness of the seller and the seller must maintain the value of the securities subject to the agreement and held by the Fund as collateral at 101% of the repurchase price. Although the securities subject to repurchase agreements may bear maturities exceeding 13 months, each Fund does not presently intend to enter into repurchase agreements with deemed maturities in excess of seven days after notice by the Fund. If in the future a Fund were to enter into repurchase agreements with deemed maturities in excess of seven days, the Fund would do so only if such investment, together with other illiquid securities, did not exceed 15% of the value of the Fund's net assets. The repurchase price under repurchase agreements entered into by a Fund generally equals the price paid by the Fund plus interest negotiated on the basis of current short-term rates (which may be more or less than the rate on the securities underlying the repurchase agreement). Securities subject to repurchase agreements are held by the Funds' custodian or in the Federal Reserve/Treasury book-entry system. Repurchase agreements involve the risk that the seller will fail to repurchase the securities, as agreed. In that event, the Fund will bear the risk of possible loss due to adverse market action or delays in liquidating the underlying obligations. REVERSE REPURCHASE AGREEMENTS (ALL FUNDS) When a Fund enters into a reverse repurchase agreement, it maintains in a separate custodial account cash, U.S. Government obligations or other liquid high-grade debt obligations that have a value at least equal to the repurchase price. Reverse repurchase agreements involve the risk that the value of portfolio securities a Fund sells may decline below the price it must pay when the transaction closes. As reverse repurchase agreements are deemed to be borrowings by the SEC, each Fund is required to maintain continuous asset coverage of 300%. Should the value of a Fund's assets decline below 300% of borrowings, a Fund may be required to sell portfolio securities within three days to reduce the Fund's debt and restore 300% asset coverage. -11- LOWER-RATED SECURITIES (MIDCO GROWTH, GROWTH AND INCOME AND SMALL-CAP OPPORTUNITY FUNDS) While any investment carries some risk, certain risks associated with lower-rated securities (commonly referred to as "junk bonds") are different than those for investment grade securities. The risk of loss through default is greater because lower-rated securities are usually unsecured and are often subordinate to an issuer's other obligations. If an issuer of a security held by a Fund defaults, the Fund may incur additional expenses to seek recovery. Additionally, the issuers of these securities frequently have high debt levels and are thus more sensitive to difficult economic conditions, individual corporate developments and rising interest rates. Consequently, the market price of these securities may be quite volatile and may result in wider fluctuations in a Fund's net asset value per share. In certain circumstances it may be difficult to determine a security's fair value due to a lack of reliable objective information. This may occur where there is no established secondary market for the security or the security is thinly traded. As a result, a Fund's valuation of a security and the price it is actually able to obtain when it sells the security could differ. Adverse publicity and investor perceptions, whether or not based on fundamental analysis, may adversely affect the value and liquidity of lower-rated securities held by the Funds, especially in a thinly-traded market. Illiquid or restricted securities held by the Funds may involve special registration responsibilities, liabilities, costs and valuation difficulties. The ratings of Rating Agencies evaluate the safety of a lower-rated security's principal and interest payments, but do not address market value risk. Because the ratings of the Rating Agencies may not always reflect current conditions and events, the Investment Adviser continuously monitors the issuers of lower-rated securities held in a Fund's portfolio for their ability to make required principal and interest payments. If a security undergoes a rating revision, the Fund involved may continue to hold the security if the Investment Adviser decides this is appropriate. SECURITIES LENDING (EQUITY AND BOND FUNDS) Each of these Funds may lend its portfolio securities to institutional investors as a means of earning additional income. Such loans must be continuously secured by certain liquid, high-grade collateral equal at all times to at least the market value of the securities loaned. Securities loans will be made only to borrowers deemed by the Investment Adviser to present minimal credit risks and when, in its judgment, the income to be earned from the loan justifies the possible risks. When a Fund lends its securities, it continues to receive interest or dividends on the securities loaned and may simultaneously earn interest on the collateral received from the borrower or from the investment of cash collateral in readily marketable, high-quality, short-term obligations. Although voting rights, or rights to consent, attendant to securities on loan pass to the borrower, these loans may be called at any time and will be called if a material event affecting the investment were to occur. RESTRICTED SECURITIES (ALL FUNDS) No Fund will knowingly invest more than 15% of the value of its net assets in securities that are illiquid. Securities that are not registered under the Securities Act of 1933 but that may be purchased by institutional buyers under Rule 144A are subject to this limitation unless the Investment Adviser under the supervision of the Board determines that a liquid trading market exists. Rule 144A allows for a broader institutional trading market for securities otherwise subject to restriction on resale to the general public. Rule 144A establishes a "safe harbor" from the registration requirements of the Securities Act of 1933 for resales of certain securities to qualified institutional buyers. The -12- Investment Adviser believes that the market for certain restricted securities such as institutional commercial paper may expand further as a result of this regulation and the development of automated systems for the trading, clearance and settlement of unregistered securities of domestic and foreign issuers, such as the PORTAL System sponsored by the NASD. The Investment Adviser monitors the liquidity of restricted securities in each of the Funds' portfolios under the supervision of the Board of Trustees. In reaching liquidity decisions, the Investment Adviser will consider such factors as: (a) the frequency of trades and quotes for the security; (b) the number of dealers wishing to purchase or sell the security and the number of other potential purchasers; (c) dealer undertakings to make a market in the security; and (d) the nature of the security and the nature of the marketplace trades (E.G., the time needed to dispose of the security, the method of soliciting offers and the mechanics of the transfer). RIGHTS OFFERINGS AND WARRANTS TO PURCHASE (EQUITY AND BOND FUNDS) These Funds may participate in rights offerings and may purchase warrants. These instruments are privileges enabling the owners to subscribe to and purchase a specified number of shares of the issuing corporation at a specified price during a specified period of time. Subscription rights normally have a short life span to expiration. The purchase of rights or warrants involves the risk that the Fund involved could lose the purchase value of a right or warrant if the right to subscribe to additional shares is not exercised prior to the expiration of the rights and warrants. Also, the purchase of rights or warrants involves the risk that the effective price paid for them, when added to the subscription price of the related security, may exceed the value of the subscribed security's market price. This could occur when there is no movement in the level of the underlying security. A Fund will not invest more than 5% of its total assets in rights or warrants, or more than 2% of its total assets in rights or warrants not listed on the New York or American Stock Exchanges. Rights or warrants acquired by a Fund in units or attached to other securities are not subject to this restriction. ASSET-BACKED SECURITIES (BOND FUNDS) These Funds may purchase asset-backed securities issued by either governmental or non-governmental entities which represent a participation in, or are secured by and payable from, a stream of payments generated by particular assets, most often a pool of assets similar to one another. Primarily, these securities do not have the benefit of the same security interest in the underlying collateral. Payment on asset-backed securities of private issues is typically supported by some form of credit enhancement, such as a letter of credit, surety bond, limited guaranty, or subordination. Assets generating such payments will consist of such instruments as motor vehicle installment purchase obligations and credit card receivables. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer laws, many of which have given debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. The Funds may also invest in other types of asset-backed securities that may be available in the future. The calculation of the average weighted maturity of asset-backed securities is based on estimates of average life. Asset-backed securities are generally issued as pass-through certificates, which represent undivided fractional ownership interests in an underlying pool of assets, or as debt instruments, which are also known as collateralized obligations, and are generally issued as the debt of a special purpose entity organized solely for the purpose of owning such assets and issuing such debt. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. Payments of both interest and principal on the securities are typically made monthly, thus in effect "passing through" monthly payments made -13- by the individual borrowers on the assets that underlie the securities, net of any fees paid to the issuer or guarantor of the securities. Asset-backed securities are considered an industry for industry concentration purposes. In general, the collateral supporting asset-backed securities is of shorter maturity than mortgage-related securities. Like other fixed-income securities, when interest rates rise the value of an asset-backed security generally will decline; however, when interest rates decline, the value of an asset-backed security with prepayment features may not increase as much as that of other fixed-income securities. MORTGAGE-RELATED SECURITIES (BOND FUNDS) MORTGAGE BACKED SECURITIES GENERALLY. Mortgage backed securities held by the Bond Funds represent an ownership interest in a pool of residential mortgage loans. These securities are designed to provide monthly payments of interest and principal to the investor. The mortgagor's monthly payments to his lending institution are "passed-through" to an investor such as the Funds. Most issuers or poolers provide guarantees of payments, regardless of whether or not the mortgagor actually makes the payment. The guarantees made by issuers or poolers are supported by various forms of credit, collateral, guarantees or insurance, including individual loan, title, pool and hazard insurance purchased by the issuers or poolers so that they can meet their obligations under the policies. Mortgage backed securities issued by private issuers or poolers, whether or not such securities are subject to guarantees, may entail greater risk than securities directly or indirectly guaranteed by the U.S. Government. Interests in pools of mortgage backed securities differ from other forms of debt securities, which normally provide for periodic payment of interest in fixed amounts with principal payments at maturity or specified call dates. Instead, these securities provide a monthly payment which consists of both interest and principal payments. In effect, these payments are a "pass-through" of the monthly payments made by the individual borrowers on their residential mortgage loans, net of any fees paid. Additional payments are caused by repayments resulting from the sale of the underlying residential property, refinancing or foreclosure net of fees or costs which may be incurred. Some mortgage backed securities are described as "modified pass-through". These securities entitle the holders to receive all interest and principal payments owed on the mortgages in the pool, net of certain fees, regardless of whether or not the mortgagors actually make the payments. The Bond Funds may purchase mortgage-related securities that are secured by entities such as Government National Mortgage Association ("GNMA"), Federal National Mortgage Association ("FNMA"), Federal Home Loan Mortgage Corporation ("FHLMC"), commercial banks, trusts, financial companies, finance subsidiaries of industrial companies, savings and loan associations, mortgage banks and investment banks. There are a number of important differences among the agencies and instrumentalities of the U.S. Government that issue mortgage-related securities and among the securities that they issue. Mortgage-related securities include GNMA Mortgage Pass-Through Certificates (also known as "Ginnie Maes") which are guaranteed as to the timely payment of principal and interest by GNMA and such guarantee is backed by the full faith and credit of the United States. GNMA is a wholly-owned U.S. Government corporation within the Department of Housing and Urban Development. GNMA certificates also are supported by the authority of GNMA to borrow funds from the U.S. Treasury to make payments under its guarantee. Mortgage-related securities also include FNMA guaranteed Mortgage Pass-Through Certificates (also known as "Fannie Maes") which are solely the obligations of the FNMA, are not backed by or entitled to the full faith and credit of the United States and are supported by the right of the issuer to borrow from the Treasury. FNMA is a government-sponsored organization owned entirely by private stockholders. Fannie Maes are guaranteed as to timely payment of principal and interest by FNMA. Mortgage-related securities include FHLMC Mortgage -14- Participation Certificates (also known as "Freddie Macs" or "Pcs"). FHLMC is a corporate instrumentality of the United States, created pursuant to an Act of Congress, which is owned entirely by Federal Home Loan Banks. Freddie Macs are not guaranteed and do not constitute a debt or obligation of the United States or of any Federal Home Loan Bank. Freddie Macs entitle the holder to timely payment of interest, which is guaranteed by the FHLMC. FHLMC guarantees either ultimate collection or timely payment of all principal payments on the underlying mortgage loans. When FHLMC does not guarantee timely payment of principal, FHLMC may remit the amount due on account of its guarantee of ultimate payment of principal at any time after default on an underlying mortgage, but in no event later than one year after it becomes payable. UNDERLYING MORTGAGES. Pools consist of whole mortgage loans or participations in loans. The majority of these loans are made to purchasers of one to four family homes. The terms and characteristics of the mortgage instruments are generally uniform within a pool but may vary among pools. For example, in addition to fixed-rate, fixed-term mortgages, the Bond Funds may purchase pools of variable rate mortgages ("VRM"), growing equity mortgages ("GEM"), graduated payment mortgages ("GPM") and other types where the principal and interest payment procedures vary. VRM's are mortgages which reset the mortgage's interest rate periodically with changes in open market interest rates. To the extent that a Portfolio is actually invested in VRM's, its interest income will vary with changes in the applicable interest rate on pools of VRM's. GPM and GEM pools maintain constant interest rates, with varying levels of principal repayment over the life of the mortgage. These different interest and principal payment procedures should not impact the Portfolios' net asset value since the prices at which these securities are valued will reflect the payment procedures. All poolers apply standards for qualification to local lending institutions which originate mortgages for the pools. Poolers also establish credit standards and underwriting criteria for individual mortgages included in the pools. In addition, some mortgages included in pools are insured through private mortgage insurance companies. Each Fund may invest in multiple class pass-through securities, including CMOs and REMIC Certificates. These multiple class securities may be issued or guaranteed by U.S. Government agencies or instrumentalities, including GNMA, FNMA and FHLMC, or issued by trusts formed by private originators of, or investors in, mortgage loans. In general, CMOs and REMICs are debt obligations of a legal entity that are collateralized by, and multiple class pass-through securities represent direct ownership interests in, a pool of residential mortgage loans or mortgage pass-through securities (the "Mortgage Assets"), the payments on which are used to make payments on the CMOs or multiple pass-through securities. Investors may purchase beneficial interests in REMICs, which are known as "regular" interests or "residual" interests, which in general are junior and more volatile than regular interests. The Funds do not intend to purchase residual interests. Pools created by non-governmental issuers generally offer a higher rate of interest than government and government-related pools because there are no direct or indirect government guarantees of payments in the former pools. However, timely payment of interest and principal of these pools is supported by various forms of insurance or guarantees, including individual loan, title, pool and hazard insurance purchased by the issuer. The insurance and guarantees are issued by governmental entities, private insurers and the mortgage poolers. There can be no assurance that the private insurers or mortgage poolers can meet their obligations under the policies. Although certain mortgage-related securities are guaranteed by a third party or are otherwise similarly secured, the market value of the security, which may fluctuate, is not so secured. If a Fund purchases a mortgage-related security at a premium, that amount may be lost if there is a decline in the market value of the security whether resulting from increases in interest rates or prepayment of the underlying mortgage collateral. As with other interest-bearing securities, the prices of such securities are inversely affected by changes in interest rates. However, though the value of a mortgage-related security may decline when interest rates rise, the converse is not necessarily true because mortgages underlying securities are prone to prepayment in periods of declining interest rates. For this and other reasons, a mortgage-related security's maturity may be shortened by unscheduled prepayments on underlying mortgages and, therefore, it is not possible to accurately predict the security's return to a Fund. Mortgage-related securities provide regular payments consisting of -15- interest and principal. No assurance can be given as to the return a Fund will receive when these amounts are reinvested. The compounding effect from reinvestment of monthly payments received by the Funds will increase their respective yields to shareholders, compared to bonds that pay interest semi-annually. CMOs may involve additional risks other than those found in other types of mortgage-related obligations. During periods of rising interest rates, CMOs may lose their liquidity as CMO market makers may choose not to repurchase, or may offer prices, based on current market conditions, which are unacceptable to the Fund based on the Fund's analysis of the market value of the security. As new types of mortgage-backed securities are developed and offered in the market, the Trust may consider making investments in such new types of securities. OPTIONS (EQUITY AND BOND FUNDS) Each Fund, other than the Colorado Tax-Exempt Fund, may purchase put and call options and may write covered call and secured put options issued by the Options Clearing Corporation which are traded over-the-counter or are listed on a national securities exchange. Such options may relate to particular securities or to various stock or bond indexes, except that a Fund may not write covered call options on an index. A Fund may also invest in index futures contracts and options on index futures contracts for hedging purposes. A Fund may not purchase options or purchase or sell futures contracts or options on futures contracts unless immediately after any such transaction the aggregate amount of premiums paid for put options and the amount of margin deposits on its existing futures positions do not exceed 5% of its total assets. Purchasing options is a specialized investment technique that may entail the risk of a complete loss of the amounts paid as premiums to the writer of the option. In order to close out call or put option positions, the Fund will be required to enter into a "closing purchase transaction" -- the purchase of a call or put option (depending upon the position being closed out) on the same security with the same exercise price and expiration date as the option that it previously wrote. When a portfolio security subject to a call option is sold, a Fund will effect a closing purchase transaction to close out any existing call option on that security. If a Fund is unable to effect a closing purchase transaction, it will not be able to sell the underlying security until the option expires or a Fund delivers the underlying security upon exercise. By writing a covered call option, a Fund forgoes the opportunity to profit from an increase in the market price of the underlying security above the exercise price except insofar as the premium represents a profit. In addition, a Fund is not able to sell the underlying security until the option expires or is exercised or the Fund effects a closing purchase transaction by purchasing an option of the same series. If a Fund writes a secured put option, it assumes the risk of loss should the market value of the underlying security decline below the exercise price of the option. The use of covered call and secured put options will not be a primary investment technique of a Fund. If the Investment Adviser is incorrect in its forecast for the underlying security or other factors when writing options, a Fund would be in a worse position than it would have been had the options not been written. In contrast to an option on a particular security, an option on an index provides the holder with the right to make or receive a cash settlement upon exercise of the option. The amount of this settlement will be equal to the difference between the closing price of the index at the time of exercise and the exercise price of the option expressed in dollars, times a specified multiple. When a Fund purchases a put or call option, the premium paid by it is recorded as an asset of the Fund. When a Fund writes an option, an amount equal to the net premium (the premium less the commission) received by the Fund is included in the liability section of the Fund's statement of assets and liabilities as a deferred credit. The amount of this asset or deferred credit will be subsequently marked-to- -16- market to reflect the current value of the option purchased or written. The current value of the traded option is the last sale price or, in the absence of a sale, the average of the closing bid and asked prices. If an option purchased by a Fund expires unexercised, the Fund realizes a loss equal to the premium paid. If a Fund enters into a closing sale transaction on an option purchased by it, the Fund will realize a gain if the premium received by the Fund on the closing transaction is more than the premium paid to purchase the option, or a loss if it is less. If an option written by a Fund expires on the stipulated expiration date or if a Fund enters into a closing purchase transaction, it will realize a gain (or loss if the cost of a closing purchase transaction exceeds the net premium received when the option is sold) and the deferred credit related to such option will be eliminated. If an option written by a Fund is exercised, the proceeds of the sale will be increased by the net premium originally received and the Fund will realize a gain or loss. As noted in the Prospectus, there are several risks associated with transactions in options on securities. For example, there are significant differences between the securities and options markets which could result in an imperfect correlation between the markets, causing a given transaction not to achieve its objectives. In addition, a liquid secondary market for particular options, whether traded over-the-counter or on a national securities exchange ("National Securities Exchange") may be absent for reasons which include the following: there may be insufficient trading interest in certain options; restrictions may be imposed by a National Securities Exchange on opening transactions, closing transactions or both; trading halts, suspensions or other restrictions may be imposed with respect to particular classes or series of options or underlying securities; unusual or unforeseen circumstances may interrupt normal operations on a National Securities Exchange; the facilities of a National Securities Exchange or the Options Clearing Corporation may not at all times be adequate to handle current trading volume; or one or more National Securities Exchanges could, for economic or other reasons, decide or be compelled at some future date to discontinue the trading of options (or a particular class or series of options), in which event the secondary market on that National Securities Exchange (or in that class or series of options) would cease to exist, although outstanding options that had been issued by the Options Clearing Corporation as a result of trades on that National Securities Exchange would continue to be exercisable in accordance with their terms. A Fund will likely be unable to control losses by closing its position where a liquid secondary market does not exist. Moreover, regardless of how much the market price of the underlying security increases or decreases, the option buyer's risk is limited to the amount of the original investment for the purchase of the option. However, options may be more volatile than their underlying securities, and therefore, on a percentage basis, an investment in options may be subject to greater fluctuation than an investment in the underlying securities. A decision as to whether, when and how to use options involves the exercise of skill and judgment, and even a well-conceived transaction may be unsuccessful to some degree because of market behavior or unexpected events. FUTURES AND RELATED OPTIONS (EQUITY AND BOND FUNDS) These Funds may invest in futures contracts and related options (including, but not limited to, interest rate futures contracts and index futures contracts). For a detailed description of futures contracts and related options, see Appendix B to this Statement of Additional Information. FOREIGN CURRENCY EXCHANGE TRANSACTIONS (MIDCO GROWTH, GROWTH AND INCOME AND SMALL-CAP OPPORTUNITY FUNDS) A forward foreign currency exchange contract is an obligation by the Fund to purchase or sell a specific currency at a specified price and future date, which may be any fixed number of days from the date of the contract. These contracts establish an exchange rate at a future date and are transferable in the interbank market conducted directly between currency traders (usually large commercial banks) and their customers. These contracts generally have no deposit requirement and are traded at a net price without commission. Neither spot transactions nor forward foreign currency exchange contracts eliminate fluctuations in the prices of -17- a Fund's portfolio securities or in foreign exchange rates or prevent loss if the prices of these securities should decline. Forward foreign currency exchange contracts allow a Fund to hedge the currency risk of portfolio securities denominated in a foreign currency. This technique permits the assessment of the merits of a security to be considered separately from the currency risk. It is thereby possible to focus on the opportunities presented by the security apart from the currency risk. Although these contracts are of short duration, generally between one and twelve months, they frequently are rolled over in a manner consistent with a more long-term currency decision. Although foreign currency hedging transactions tend to minimize the risk of loss due to a decline in the value of the hedged currency, at the same time they tend to limit any potential gain that might be realized should the value of the hedged currency increase. The precise matching of the forward contract amounts and the value of the securities involved will not generally be possible because the future value of these securities in foreign currencies will change as a consequence of market movements in the value of those securities between the date the forward contract is entered into and the date it matures. The projection of currency market movements is extremely difficult, and the successful execution of a hedging strategy is highly uncertain. WHEN-ISSUED PURCHASES AND FORWARD COMMITMENTS (ALL FUNDS) When a Fund agrees to purchase securities on a when-issued basis or enters into a forward commitment to purchase securities, its custodian will set aside cash or certain liquid high-grade debt obligations equal to the amount of the purchase or the commitment in a separate account. Normally, the custodian will set aside portfolio securities to meet this requirement. The market value of the separate account will be monitored and in the event of a decline, the Fund will be required to place additional assets in the separate account in order to ensure that the value of the account remains equal to the amount of the Fund's commitments. In the case of a forward commitment to sell portfolio securities, the Fund's custodian will hold the portfolio securities themselves in a segregated account while the commitment is outstanding. The Funds will enter into these transactions only with the intention of completing them and actually purchasing or selling the securities involved. However, if deemed advisable as a matter of investment strategy, a Fund may dispose of or renegotiate a commitment after it is entered into, and may sell securities it has committed to purchase before those securities are delivered to the Fund on the settlement date. In these cases the Fund may realize a capital gain or loss. When a Fund engages in when-issued and forward commitment transactions, it relies on the other party to consummate the trade. Failure of the other party to do so may result in the Fund's incurring a loss or missing an opportunity to obtain a price considered to be advantageous. The value of the securities underlying a when-issued or forward commitment transaction, and any subsequent fluctuations in their value, are taken into account when determining a Fund's net asset value starting on the day the Fund agrees to purchase the securities. The Fund does not earn interest on the securities until they are paid for and delivered on the settlement date. When a Fund makes a forward commitment to sell securities it owns, the proceeds to be received upon settlement are included in the Fund's assets, and fluctuations in the value of the underlying securities are not reflected in the Fund's net asset value as long as the commitment remains in effect. SECURITIES ISSUED BY OTHER INVESTMENT COMPANIES (ALL FUNDS) Each Fund may invest up to 10% of its total assets in securities issued by other investment companies; however, the Colorado Tax-Exempt Fund may only invest in investment companies which invest in high-quality, short-term taxable instruments or tax-exempt instruments and which determine their net asset value -18- per share on the amortized cost or penny-rounding method. Securities issued by other investment companies may be acquired by the Funds within the limits prescribed by the 1940 Act. INVESTMENT LIMITATIONS A Fund may not change the following investment limitations without the approval of a majority of the holders of the Fund's outstanding shares (as defined under "Miscellaneous" below). No Fund may: 1. Purchase or sell real estate, except that each Fund may purchase securities of issuers which deal in real estate and may purchase securities which are secured by interests in real estate. 2. Purchase securities of companies for the purpose of exercising control. 3. Acquire any other investment company or investment company security except in connection with a merger, consolidation, reorganization or acquisition of assets or where otherwise permitted by the 1940 Act. 4. Act as an underwriter of securities within the meaning of the Securities Act of 1933 except insofar as the Fund might be deemed to be an underwriter upon disposition of portfolio securities acquired within the limitation on purchases of restricted securities and except to the extent that the purchase of obligations directly from the issuer thereof in accordance with the Fund's investment objective, policies and limitations may be deemed to be underwriting. 5. Write or sell put options, call options, straddles, spreads, or any combination thereof, except for transactions in options on securities, futures contracts and options on futures contracts. (This exception does not apply to the Colorado Tax-Exempt Fund). 6. Borrow money or issue senior securities, except that each Fund may borrow from banks and enter into reverse repurchase agreements for temporary purposes in amounts up to 10% of the value of its total assets at the time of such borrowing; or mortgage, pledge or hypothecate any assets, except in connection with any such borrowing and in amounts not in excess of the lesser of the dollar amounts borrowed or 10% of the value of a Fund's total assets at the time of such borrowing. No Fund will purchase securities while its borrowings (including reverse repurchase agreements) in excess of 5% of its total assets are outstanding. Securities held in escrow or separate accounts in connection with a Fund's investment practices described in this Statement of Additional Information or the Prospectus are not deemed to be pledged for purposes of this limitation. None of the Equity or Bond Funds may: 1. Purchase securities of any one issuer (other than securities issued or guaranteed by the U.S. Government, its agencies or instrumentalities) if, immediately after such purchase, more than 5% of the value of the Fund's total assets would be invested in the securities of such issuer, or more than 10% of the issuer's outstanding voting securities would be owned by the Fund or the Trust, except that up to 25% of the value of the Fund's total assets may be invested without regard to these limitations. 2. Make loans, except that each Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies and may lend portfolio securities in an amount not exceeding 30% of its total assets. -19- 3. Purchase securities on margin, make short sales of securities or maintain a short position, except that (a) this investment limitation shall not apply to each Fund's transactions in futures contracts and related options, and (b) each Fund may obtain short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. 4. Purchase or sell commodity contracts, or invest in oil, gas or mineral exploration or development programs, except that each Fund may, to the extent appropriate to its investment objective, purchase publicly traded securities of companies engaging in whole or in part in such activities, and may enter into futures contracts and related options. 5. Purchase any securities that would cause 25% or more of the Fund's total assets at the time of purchase to be invested in the securities of one or more issuers conducting their principal business activities in the same industry, provided that (a) there is no limitation with respect to obligations issued or guaranteed by the U.S. Government, its agencies or instrumentalities; (b) wholly-owned finance companies will be considered to be in the industries of their parents if their activities are primarily related to financing the activities of the parents; and (c) utilities will be divided according to their services, for example, gas, gas transmission, electric and gas, electric and telephone will each be considered a separate industry. The Colorado Tax-Exempt Fund may not: 1. Invest less than 80% of its net assets in securities the interest on which is exempt from federal income tax, except during periods of unusual market conditions. For purposes of this investment limitation, securities the interest on which is treated as a specific tax preference item under the federal alternative minimum tax are considered taxable. 2. Make loans, except that the Fund may purchase and hold debt instruments and enter into repurchase agreements in accordance with its investment objective and policies. 3. Purchase securities of any one issuer if, immediately after such purchase, more than 5% of the value of the Fund's total assets would be invested in the securities of such issuer, except that (a) up to 50% of the value of the Fund's total assets may be invested without regard to this 5% limitation provided that no more than 25% of the value of the Fund's total assets are invested in the securities of any one issuer and (b) this 5% limitation does not apply to securities issued or guaranteed by the U.S. Government, its agencies, authorities, instrumentalities or political subdivisions. For purposes of this limitation, a security is considered to be issued by the governmental entity (or entities) whose assets and revenues back the security, or, with respect to a private activity bond that is backed only by the assets and revenues of a nongovernmental user, such nongovernmental user. In certain circumstances, the guarantor of a guaranteed security may also be considered to be an issuer in connection with such guarantee, except that a guarantee of a security shall not be deemed to be a security issued by the guarantor when the value of all securities issued and guaranteed by the guarantor, and owned by the Fund, does not exceed 10% of the value of the Fund's total assets. 4. Purchase any securities, except securities issued (as defined in the preceding investment limitation) or guaranteed by the United States, any state, territory or possession of the United States, the District of Columbia or any of their authorities, agencies, instrumentalities or political sub-divisions, which would cause 25% or more of the value of the Fund's total assets at the time of purchase to be invested in the securities of issuers conducting their principal business activities in the same industry. 5. Purchase securities on margin, make short sales of securities or maintain a short position, except that the Fund may obtain short-term credit as may be necessary for the clearance of purchases and sales of portfolio securities. -20- 6. Purchase or sell commodity contracts (including futures contracts) or invest in oil, gas or mineral exploration or development programs, except that the Fund may, to the extent appropriate to its investment objective, purchase publicly traded securities of companies engaging in whole or in part in such activities. * * * In order to permit the sale of shares of a Fund in certain states, the Trust may make commitments with respect to that Fund that are more restrictive than its investment policies listed above and in the Prospectus. To permit the sale of shares of the Equity and Bond Funds in Ohio, Texas and Wisconsin and the sale of shares of the Equity funds in Arkansas and Vermont, the Trust has agreed to the following additional restrictions with respect to those Funds: 1. None of the Equity and Bond Funds will purchase securities in excess of 5% of its respective total assets of unseasoned issuers, including their predecessors, which have been in operation for less than three years, and equity securities of issuers which are not readily marketable. 2. None of the Equity and Bond Funds will purchase securities in excess of 10% of its respective total assets in securities of issuers which that Fund is restricted from selling to the public without registration under the Securities Act of 1933, excluding restricted securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 that have been determined to be liquid by the Trust's Board of Trustees based upon the trading markets for the securities. 3. None of the Equity and Bond Funds will effect any brokerage transaction in its respective portfolio securities with any broker-dealer affiliated directly or indirectly with its investment adviser or manager, unless the transactions, including the frequency thereof, the receipt of commissions payable in connection therewith, and the selection of the affiliated broker-dealer effecting the transactions, is not unfair or unreasonable to the shareholders of the Fund. Each Fund will comply with SEC Rule 17e-1 under the 1940 Act relating to transactions with affiliated broker-dealers. 4. None of the Equity and Bond Funds will invest more than 5% of its net assets in warrants, of which not more than 2% may be warrants which are not listed on the New York or American Stock Exchange. 5. None of the Equity and Bond Funds will lend portfolio securities unless collateral values are continuously maintained at no less than 100% by "marking to market" daily and the practice is fair, just and equitable as determined by a finding that adequate provision has been made for margin calls, termination of the loan, reasonable servicing fees (including finders' fees), voting rights, dividend rights, shareholder approval and disclosure, and the loan is within the limitations approved by the SEC. 6. None of the Equity and Bond Funds will invest in oil, gas or mineral leases. 7. None of the Equity and Bond Funds will invest in real estate limited partnership interests. 8. None of the Equity and Bond Funds will invest more than 5% of its net assets in options, and they will only purchase put and call options listed on a national securities exchange and issued by the Options Clearing Corporation. Each Fund will write only covered options. 9. The MIDCO Growth, Growth and Income and Small-Cap Opportunity Funds will not invest more than 15% of their respective net assets in lower-rated convertible securities. -21- In order to permit the sale of shares of the Equity and Bond Funds in Ohio, the Trust has also agreed that no Equity or Bond Fund will purchase or retain the securities of any issuer if the officers or trustees of the Trust, the Investment Adviser, or managers owning beneficially one-half of one percent of the securities of such issuer together own beneficially more than 5% of the securities of that issuer. In order to permit the sale of shares of the Equity and Bond Funds in Wisconsin, the Trust has also agreed that no Equity or Bond Fund will invest in restricted securities, excluding restricted securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933, that have been determined to be liquid by the issuer's board of directors or trustees based upon the trading markets for the securities, if by reason thereof the value of the Fund's investment in such securities would exceed 5% of its total assets. To permit the sale of shares of the Bond Funds in Arkansas, the Trust has agreed that no Bond Fund will purchase securities in excess of 10% of its total assets in securities of issuers which the Fund is restricted from selling to the public without registration under the Securities Act of 1933, excluding restricted securities eligible for resale pursuant to Rule 144A under the Securities Act of 1933 that have been determined to be liquid by the Trust's Board of Trustees based upon the trading markets for the securities. Should the Trust determine that the above commitments or any other commitment made to permit the sale of a Fund's shares in any state are no longer in the best interests of that Fund, the Trust will revoke the commitment by terminating sales of that Fund's shares in the state involved. NET ASSET VALUE The net asset value per share of each Fund is calculated as set forth in the Prospectus and is calculated separately from the net asset value of the other Funds. For purposes of such calculation, "assets belonging to" a Fund consist of the consideration received upon the issuance of shares of the particular Fund together with all income, earnings, profits and proceeds derived from the investment thereof, including any proceeds from the sale, exchange, or liquidation of such investments, any funds or payments derived from any reinvestment of such proceeds, and a portion of any general assets of the Trust not belonging to a particular investment portfolio that are allocated to that Fund by the Trust's Board of Trustees. The Board of Trustees may allocate such general assets in any manner it deems fair and equitable. Each Fund is charged with the direct liabilities and expenses of that Fund and with a share of the general liabilities and expenses of the Trust. Allocations of general assets and general liabilities and expenses of the Trust to a particular Fund will be made in accordance with generally accepted accounting principles. Subject to the provisions of the Declaration of Trust, determinations by the Board of Trustees as to the direct and allocable liabilities, and the allocable portion of any general assets, with respect to a particular Fund are conclusive. Securities that are traded on a recognized stock exchange are valued at the last sale price occurring prior to the close of regular trading on the New York Stock Exchange (currently 4:00 Eastern Time). Securities for which there were no transactions are valued at the mean of the bid and asked prices. Securities that are traded on the NASDAQ National Market and the Over-the-counter market, where last sales prices are available are valued at the last sales price. If no last sale price is available, then the securities are valued at the mean of the bid and asked prices. Foreign securities that are traded on a foreign stock exchange are valued at the official closing price on the principal exchange. In instances where the official closing price is not available, the foreign securities are valued at the last sale price occurring prior to the valuation time determined by a portfolio pricing service approved by the Board of Trustees to value such types of securities. Long-term instruments, including corporate, government and mortgage-backed securities, having a remaining maturity of greater than 60 days are valued at the evaluated mean between the bid and ask prices as determined on the valuation date by a portfolio pricing service approved by the Board of Trustees to value such types of securities. Municipal securities are valued at the evaluated bid price as determined on the valuation date by a portfolio pricing service approved by the Board of Trustees to value such types of securities. Restricted securities, securities for which market quotations are not readily available from the portfolio pricing service, and other assets are valued at fair value by the Co-Administrators under the supervision of the Board of Trustees. In computing net asset value, the Co-Administrators will "mark to market" the current value of a Fund's open futures contracts and options. Securities have a remaining maturity of 60 days or less are valued at amortized cost which approximates market value. ADDITIONAL PURCHASE AND REDEMPTION INFORMATION Shares in the Funds are sold on a continuous basis by ALPS. -22- Under the 1940 Act, a Fund may suspend the right of redemption or postpone the date of payment for shares during any period when (a) trading on the New York Stock Exchange (the "Exchange") is restricted by applicable rules and regulations of the SEC; (b) the Exchange is closed for other than customary weekend and holiday closings; (c) the SEC has by order permitted such suspension; or (d) an emergency exists as determined by the SEC. (The Funds may also suspend or postpone the recordation of the transfer of their shares upon the occurrence of any of the foregoing conditions.) Each Fund may redeem shares involuntarily if it appears appropriate to do so in light of its responsibilities under the 1940 Act or to reimburse the Fund for any loss sustained by reason of the failure of a shareholder to make full payment for shares purchased by the shareholder or to collect any charge relating to a transaction effected for the benefit of a shareholder which is applicable to Fund shares as provided in the Prospectus from time to time. The Trust has filed an election pursuant to Rule 18f-1 under the 1940 Act which provides that each portfolio of the Trust is obligated to redeem shares solely in cash up to $250,000 or 1% of such portfolio's net asset value, whichever is less, for any one shareholder within a 90-day period. Any redemption beyond this amount may be made in proceeds other than cash. A Fund may make payment for redemption in securities or other property if it appears appropriate to do so in light of the Fund's responsibilities under the 1940 Act. Shareholders who receive a redemption in kind may incur additional costs when they convert the securities or property received to cash and may receive less than the redemption value of their shares, particularly where the securities are sold prior to maturity. RETIREMENT PLANS -- EQUITY FUNDS AND BOND FUNDS PROFIT-SHARING PLAN. The Trust has available a profit-sharing plan (including a 401(k) option) (the "Profit-Sharing/401(k) Plan") for use by both self-employed individuals (sole proprietorships and partnerships) and corporations who wish to use shares of the Funds as a funding medium for a retirement plan qualified under the Internal Revenue Code ("Code"). The Code provides certain tax benefits for contributions by a self-employed individual or corporation to the Profit-Sharing/401(k) Plan. For example, contributions to the Plan are deductible (subject to certain limits) and the contributions and earnings thereon are not taxed until distributed. However, distribution of amounts from the Profit-Sharing/401(k) Plan to a participant before the participant attains age 59 1/2 will (with certain exceptions) result in an additional 10% tax on the amount included in the participant's gross income. INDIVIDUAL RETIREMENT ACCOUNT. The Trust has available a plan (the "IRA") for use by individuals with compensation for services rendered (including earned income from self-employment) who wish to use shares of the Funds as a funding medium for individual retirement saving. However, except for rollover contributions, an individual who has attained, or will attain, age 70 1/2 before the end of the taxable year may only contribute to an IRA for his or her nonworking spouse under age 70 1/2. The individual's IRA assets (and earnings thereon) may generally not be withdrawn (without the individual's incurring an additional 10% tax on the amount included in the individual's gross income) until age 59 1/2. Earnings on amounts contributed to the IRA are not taxed until distributed. The Funds also permit certain employers (including self-employed individuals) to make contributions to employees' IRAs if the employer establishes a Simplified Employee Pension ("SEP") plan and/or a Salary Reduction SEP ("SARSEP"). A SEP permits an employer to make discretionary contributions to all of its employees' IRAs (employees who have not met certain eligibility criteria may be excluded) equal to -23- a uniform percentage of each employees' compensation (subject to certain limits). If an employer (including a self-employed individual) establishes a SARSEP, employees may defer a percentage of their compensation --pre-tax -- to IRAs (subject to certain limits). The Code provides certain tax benefits for contributions by an employer, pursuant to a SEP and/or SARSEP, to an employee's IRA. For example, contributions to an employee's IRA pursuant to a SEP and/or SARSEP are deductible (subject to certain limits) and the contributions and earnings thereon are not taxed until distributed. In both the Profit-Sharing/401(k) Plan and the IRA, distributions of net investment income and capital gains will be automatically reinvested. The foregoing brief descriptions are not complete or definitive explanations of the Profit-Sharing/401(k) Plan or IRA available for investment in the Funds. Any person who wishes to establish a retirement plan account may do so by contacting ALPS directly. The complete Plan documents and applications will be provided to existing or prospective shareholders upon request, without obligation. The Trust recommends that investors consult their attorneys or tax advisors to determine if the retirement programs described herein are appropriate for their needs. DESCRIPTION OF SHARES The Trust is a Massachusetts business trust. Under the Trust's Declaration of Trust, the beneficial interest in the Trust may be divided into an unlimited number of full and fractional transferable shares. The Amended and Restated Declaration of Trust authorizes the Board of Trustees to classify or reclassify any unissued shares of the Trust into one or more additional classes by setting or changing in any one or more respects, their respective designations, preferences, conversion or other rights, voting powers, restrictions, limitations, qualifications and terms and conditions of redemption. Pursuant to such authority, the Board of Trustees has authorized the issuance of twenty-four classes of shares, each class representing interests in a separate investment portfolio. The Trustees may similarly classify or reclassify any particular class of shares into one or more series. Each share of the Trust has no par value, represents an equal proportionate interest in a Fund, and is entitled to such dividends and distributions of the income earned on the Fund's assets as are declared at the discretion of the Trustees. Shares of the Funds have no preemptive rights and only such conversion or exchange rights as the Board of Trustees may grant in its discretion. When issued for payment as described in the Prospectus, a Fund's shares will be fully paid and nonassessable by the Trust. In the event of a liquidation or dissolution of the Trust or an individual Fund, shareholders of a particular Fund would be entitled to receive the assets available for distribution belonging to the Fund, and a proportionate distribution, based upon the relative net asset values of the Trust's respective investment portfolios, of any general assets not belonging to any particular portfolio which are available for distribution. Shareholders of a Fund are entitled to participate in the net distributable assets of the Fund on liquidation, based on the number of shares of the Fund they hold. Shareholders of the Funds will vote together in the aggregate and not separately on a Fund-by-Fund basis, except as otherwise required by law or when the Board of Trustees determines that the matter to be voted upon affects only the interests of the shareholders of a particular Fund. Rule 18f-2 under the 1940 Act provides that any matter required to be submitted to the holders of the outstanding voting securities of an investment company such as the Trust shall not be deemed to have been effectively acted upon unless approved by the holders of a majority of the outstanding shares of each Fund affected by the matter. A Fund is affected by a matter unless it is clear that the interests of each Fund in the matter are substantially identical or that the matter does not affect any interest of the Fund. Under the Rule, the approval of an investment advisory agreement or any change in a fundamental investment policy would be effectively acted upon with respect to a Fund only if approved by a majority of the outstanding shares of such Fund. However, the Rule also provides that the ratification of the appointment of independent public accountants, the approval of principal underwriting -24- contracts and the election of trustees may be effectively acted upon by shareholders of the Trust voting without regard to particular Funds. There will normally be no meetings of shareholders for the purpose of electing trustees unless and until such time as less than a majority of the trustees holding office have been elected by shareholders, at which time the trustees then in office will call a shareholders meeting for the election of trustees. Shares of the Trust have noncumulative voting rights and, accordingly, the holders of more than 50% of the Trust's outstanding shares (irrespective of class) may elect all of the trustees. The Amended and Restated Declaration of Trust provides that meetings of the shareholders of the Trust shall be called by the Trustees upon the written request of shareholders owning at least 10% of the outstanding shares entitled to vote. Except as set forth above, the Trustees shall continue to hold office and may appoint successor trustees. The Amended and Restated Declaration of Trust authorizes the Board of Trustees, without shareholder approval (unless otherwise required by applicable law), to: (a) sell and convey the assets belonging to a class of shares to another management investment company for consideration which may include securities issued by the purchaser and, in connection therewith, to cause all outstanding shares of such class to be redeemed at a price which is equal to their net asset value and which may be paid in cash or by distribution of the securities or other consideration received from the sale and conveyance; (b) sell and convert the assets belonging to a class of shares into money and, in connection therewith, to cause all outstanding shares of such class to be redeemed at their net asset value; or (c) combine the assets belonging to a class of shares with the assets belonging to one or more other classes of shares if the Board of Trustees reasonably determines that such combination will not have a material adverse effect on the shareholders of any class participating in such combination and, in connection therewith, to cause all outstanding shares of any such class to be redeemed or converted into shares of another class of shares at their net asset value. However, the exercise of such authority may be subject to certain restrictions under the 1940 Act. The Board of Trustees may authorize the termination of any class of shares after the assets belonging to such class have been distributed to its shareholders. ADDITIONAL INFORMATION CONCERNING TAXES The following summarizes certain additional tax considerations generally affecting the Funds and their shareholders that are not described in the Funds' Prospectus. No attempt is made to present a detailed explanation of the tax treatment of the Funds or their shareholders, and the discussion here and in the Funds' Prospectus are not intended as a substitute for careful tax planning and is based on tax laws and regulations which are in effect on the date hereof; such laws and regulations may be changed by legislative or administrative action. Investors should consult their tax advisors with reference to their own situation. FEDERAL - ALL FUNDS Each Fund is treated as a separate corporate entity under the Code and intends to qualify as a regulated investment company for each of its taxable years. Qualification as a regulated investment company requires, among other things, that a Fund distribute to its shareholders an amount equal to at least the sum of 90% of its investment company taxable income (if any) and 90% of its tax-exempt interest income (if any) net of certain deductions for a taxable year. In general, a Fund's investment company taxable income will be its taxable income (including interest and short-term capital gains) subject to certain adjustments and excluding the excess of any net long-term capital gain for the taxable year over the net short-term capital loss, if any, for such year. Each Fund intends to distribute substantially all of its investment company taxable income and net tax-exempt income each taxable year. Such distributions by the Equity and Bond Funds will be taxable as ordinary income to their shareholders who are not currently exempt from federal income taxes, whether such income is received in cash or reinvested in additional shares. (Federal income taxes for distributions to an IRA or to a qualified retirement plan are deferred under the Code.) -25- In addition, in order to qualify as a regulated investment company, each Fund must satisfy certain requirements with respect to the source of its income for a taxable year. At least 90% of the gross income of each 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 a Fund from a partnership or trust is treated for this purpose as derived with respect to the Fund's business of investing in 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. Another requirement for qualification as a regulated investment company under the Code is that less than 30% of a Fund's gross income for a taxable year must be derived from gains realized on the sale or other disposition of the following investments held for less than three months: (1) stock and securities (as defined in Section 2(a)(36) of the 1940 Act); (2) options, futures and forward contracts other than those on foreign currencies; and (3) foreign currencies (and options, futures and forward contracts on foreign currencies) that are not directly related to a Fund's principal business of investing in stock and securities (and options and futures with respect to stocks and securities). Interest (including original issue discount and accrued market discount) received by a Fund upon maturity or disposition of a security held for less than three months will not be treated as gross income derived from the sale or other disposition of such security within the meaning of this requirement. However, any other income which is attributable to realized market appreciation will be treated as gross income from the sale or other disposition of securities for this purpose. See Appendix B -- "Accounting and Tax Treatment" for a general discussion of the federal tax treatment of futures contracts, related options thereon and other financial instruments, including their treatment under the 30% test. Substantially all of each Fund's net realized long-term capital gains, if any, will be distributed at least annually to Fund shareholders. A Fund will generally have no tax liability with respect to such gains and the distributions will be taxable to Fund shareholders who are not currently exempt from federal income taxes as long-term capital gains, regardless of how long the shareholders have held Fund shares and whether such gains are received in cash or reinvested in additional shares. Each Fund will designate any distribution of long-term capital gains as a capital gain dividend in a written notice mailed to shareholders within 60 days after the close of its taxable year. Shareholders should note that, upon the sale or exchange of Fund shares, if the shareholder has not held such shares for more than six months, any loss on the sale or exchange of those shares will be treated as long term capital loss to the extent of the capital gain dividends received with respect to the shares. Ordinary income of individuals is taxable at a maximum nominal rate of 39.6%, but because of limitations on itemized deductions otherwise allowable and the phase-out of personal exemptions, the maximum effective marginal rate of tax for some taxpayers may be higher. An individual's long term capital gains are taxable at a maximum nominal rate of 28%. For corporations, long term capital gains and ordinary income are both taxable at a maximum average rate of 35% (a maximum effective marginal rate of 39% applies in the case of corporations having taxable income between $100,000 and $335,000). 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). Each Fund intends to make sufficient distributions or deemed distributions of its ordinary taxable income and any capital gain net income prior to the end of each calendar year to avoid liability for this excise tax. -26- If for any taxable year a Fund does not qualify for tax treatment as a regulated investment company, all of the taxable income of the Fund will be subject to tax at regular corporate rates, without any deduction for distributions to shareholders, and the Fund's distributions to shareholders (whether or not derived from interest on Municipal Obligations) will be taxable as ordinary dividends to the extent of the current and accumulated earnings and profits of the particular Fund. Such distributions will be eligible for the dividends received deduction in the case of corporate shareholders. STATE - ALL FUNDS Depending upon the extent of each Fund's activities in states and localities in which its offices are maintained, in which its agents or independent contractors are located or in which they are otherwise deemed to be conducting business, a Fund may be subject to the tax laws of such states or localities. In addition, in those states and localities which have income tax laws, the treatment of the Funds and their shareholders under such laws may differ from their treatment under federal income tax laws. ADDITIONAL FEDERAL TAX CONSIDERATIONS FOR THE COLORADO TAX-EXEMPT FUND As described above and in the Prospectus, the Colorado Tax-Exempt Fund is designed to provide investors with income exempt from regular federal income tax and Colorado personal income tax. See above for general federal income tax considerations. The Fund is not intended to constitute a balanced investment program and is not designed for investors seeking capital appreciation or maximum tax-exempt income irrespective of fluctuations in principal. Shares of the Fund would not be suitable for tax-exempt institutions and may not be suitable for retirement plans qualified under Section 401 of the Code, H.R. 10 plans and IRAs, because such plans and accounts are generally tax-exempt and, therefore, not only would not gain any additional benefit from the Fund's dividends being tax-exempt, but those dividends would be ultimately taxable to the beneficiaries when distributed to them. In addition, the Fund may not be an appropriate investment for entities which are "substantial users" of facilities financed by private activity bonds or "related persons" thereof. "Substantial user" is defined under Treasury Regulations to include a non-exempt person who regularly uses a part of such facilities in his trade or business and whose gross revenues derived with respect to the facilities financed by the issuance of bonds are more than 5% of the total revenues derived by all users of such facilities, or who occupies more than 5% of the usable area of such facilities or for whom such facilities or a part thereof were specifically constructed, reconstructed or acquired. "Related persons" include certain related natural persons, affiliated corporations, a partnership and its partners and an S Corporation and its shareholders. In accordance with the Code, the Fund intends to distribute substantially all of its net tax-exempt income (such distributions are known as "exempt-interest dividends") and investment company taxable income (if any) each taxable year. Exempt-interest dividends may be treated by shareholders as items of interest excludable from their gross income under Section 103(a) of the Code. The percentage of total dividends paid by the Fund with respect to any taxable year which qualify as exempt-interest dividends will be the same for all shareholders receiving dividends during the year. In order for the Fund to pay exempt-interest dividends with respect to any taxable year, among other things, at least 50% of the aggregate value of the Fund's portfolio at the close of each quarter of its taxable year must consist of exempt-interest obligations. After the close of its taxable year, each Fund will notify each shareholder of the portion of the dividends paid by the Fund to the shareholder with respect to such year which constitutes an exempt-interest dividend. However, the aggregate amount of dividends so designated cannot exceed the excess of the amount of interest exempt from tax under Section 103 of the Code received by the Fund during the taxable year over any amounts disallowed as deductions under Sections 265 and 171(a)(2) of the Code. If a shareholder holds Fund shares for six months or less, any loss on the sale or exchange of those shares will be disallowed to the extent of the amount of exempt-interest dividends received with respect to the shares. The Treasury Department, however, is authorized to issue regulations reducing the period to not less than the greater of 31 days or the period between regular distributions where the investment company -27- regularly distributes at least 90% of its net tax-exempt interest. No such regulations had been issued as of the date of this Statement of Additional Information. If the Fund should hold certain private activity bonds issued after August 7, 1986, shareholders must include, as an item of tax preference, the portion of dividends paid by the Fund that is attributable to interest on such bonds in their federal alternative minimum taxable income for purposes of determining liability (if any) for the alternative minimum tax applicable to individuals and corporations and the environmental tax applicable to corporations. Corporate shareholders must also take all exempt-interest dividends into account in determining certain adjustments for federal alternative minimum and environmental tax purposes. Shareholders receiving Social Security benefits should note that all exempt-interest dividends will be taken into account in determining the taxability of such benefits. MANAGEMENT OF THE FUNDS TRUSTEES AND OFFICERS The names of the trustees and officers of the Trust, their ages, addresses, principal occupations during the past five years and other affiliations are set forth below: Principal Occupations Position with During Past 5 Years and Name, Age and Address the Trust Other Affiliations - --------------------- ------------- ----------------------- JACK D. HENDERSON, 69 (1) Chairman, Trustee Attorney, Jack D. Henderson, 1600 Broadway Attorney-at-Law; prior thereto Suite 1410 partner of the law firm of Denver, Colorado 80202 Clanahan, Tanner, Downing & Knowlton, P.C., Denver, Colorado from July 1990 through October 1995; Trustee of Pacifica Funds Trust through August 1996; Trustee, Pacific American Fund through September 1994. McNEIL S. FISKE, 62 Trustee Chairman of the Board, MacCourt P.O. Box 6154 Products; Director, Principal Littleton, Colorado 80121 Occupations Scientific Software Corporation through December 31, 1994. JAMES B. O'BOYLE, 68 Trustee Business Consultant; Trustee of 6115 West Mansfield Pacific American Fund through Avenue, #239 September 1994. Denver, Colorado 80235 -28- Principal Occupations Position with During Past 5 Years and Name, Age and Address the Trust Other Affiliations - --------------------- ------------- ----------------------- ROBERT L. STAMP, 64 Trustee Retired since April, 1995; 6855 So. Depew Street prior thereto Vice President Littleton, Colorado 80217 of Finance, Treasurer and Assistant Secretary, The Gates Corporation; Vice President, The Gates Rubber Company; Director of Gates Credit Union; Trustee of Pacific American Fund through September 1994. LYMAN E. SEELY, 78 Trustee Retired. 14795 Northeast Lawnview Circle Aurora, Oregon 97002 KENNETH V. PENLAND, 54 President Chairman and Chief Executive Denver Investment Advisors LLC Officer, Denver Investment 1225 17th Street- 26th Fl. Advisors LLC (and its Denver, CO 80202 predecessor) since March 1985; Chairman, Blue Chip Value Fund. MARK POUGNET, 35 Treasurer Chief Financial Officer for ALPS ALPS Mutual Funds Services, Inc. Mutual Funds Services, Inc.; 370 17th Street Vice President, Assistant Suite 2700 Secretary and Assistant Denver, Colorado 80202 Treasurer of the Sefton Funds; Treasurer, First Funds. W. BRUCE McCONNEL, III, 53 Secretary Partner of the law firm of Drinker Biddle & Reath Drinker Biddle & Reath, 1345 Chestnut Street Philadelphia, Pennsylvania. Philadelphia, Pennsylvania 19107-3496 _____________ 1 Mr. Henderson is considered to be an "interested person" of the Trust as defined in the 1940 Act. ------------ The trustees are responsible for major decisions relating to each Fund's objective, policies and techniques. The trustees also supervise the operation of the Funds by their officers and review the investment decisions of the officers although they do not actively participate on a regular basis in making such decisions. Each trustee receives an annual fee of $12,000 plus $500 for each Board meeting attended and reimbursement of expenses incurred in attending meetings. The Chairman of the Board is entitled to receive an additional $4,000 per annum for services in such capacity. The following chart provides certain information about the trustee fees paid by the Trust for the fiscal year ended May 31, 1996: -29- - ----------------------------------------------------------------------------- PENSION OR RETIREMENT ESTIMATED AGGREGATE BENEFITS ANNUAL AGGREGATE COMPENSATION ACCRUED AS BENEFITS COMPENSATION NAME OF PERSON/ FROM THE PART OF FUND UPON FROM THE FUND POSITION TRUST EXPENSES RETIREMENT COMPLEX* - ----------------------------------------------------------------------------- JACK D. HENDERSON, $20,500 $0 $0 $20,500 Chairman - ----------------------------------------------------------------------------- McNEIL S. FISKE, $15,500** $0 $0 $15,500 Trustee - ----------------------------------------------------------------------------- JAMES B. O'BOYLE, $16,500 $0 $0 $16,500 Trustee - ----------------------------------------------------------------------------- ROBERT L. STAMP, $16,500** $0 $0 $16,500 Trustee - ----------------------------------------------------------------------------- LYMAN E. SEELY, $15,500 $0 $0 $15,500 Trustee - ----------------------------------------------------------------------------- * Fund Complex includes funds with a common investment adviser or an adviser which is an affiliated person. ** All of this amount has been deferred at the election of Messrs. Fiske and Stamp . Denver Investment Advisors, of which Mr. Penland, President of the Trust, is a member, receives compensation as Adviser and co-administrator. ALPS, of which Mr. Pougnet, Treasurer of the Trust, is employed as Chief Financial Officer, receives compensation from the Trust as Distributor and co- administrator. Drinker Biddle & Reath, of which Mr. McConnel, Secretary of the Trust, is a partner, receives legal fees as counsel to the Trust. The trustees and officers of the Trust, as a group, owned less than 1% of the outstanding shares of each Fund as of June 30, 1996. SHAREHOLDER AND TRUSTEE LIABILITY Under Massachusetts law, shareholders of a business trust may, under certain circumstances, be held personally liable as partners for the obligations of the trust. However, the Amended and Restated Declaration of Trust provides that shareholders shall not be subject to any personal liability in connection with the assets of the Trust for the acts or obligations of the Trust, and that every note, bond, contract, order or other undertaking made by the Trust shall contain a provision to the effect that the shareholders are not personally liable thereunder. The Amended and Restated Declaration of Trust provides for indemnification out of the trust property of any shareholder held personally liable solely by reason of his or her being or having been a shareholder and not because of his or her acts or omissions or some other reason. The Amended and Restated Declaration of Trust also provides that the Trust shall, upon request, assume the defense of any claim made against any shareholder for any act or obligation of the Trust, and shall satisfy any judgment thereon. -30- Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which the Trust itself would be unable to meets its obligations. The Amended and Restated Declaration of Trust further provides that all persons having any claim against the trustees or the Trust shall look solely to the Trust property for payment; that no trustee, officer or agent of the Trust shall be personally liable for or on account of any contract, debt, tort, claim, damage, judgment or decree arising out of or connected with the administration or preservation of the Trust property or the conduct of any business of the Trust; and that no trustee shall be personally liable to any person for any action or failure to act except by reason of his or her own bad faith, willful misfeasance, gross negligence or reckless disregard of his or her duties as trustee. With the exception stated, the Amended and Restated Declaration of Trust provides that a trustee is entitled to be indemnified against all liabilities and expense reasonably incurred by him in connection with the defense or disposition of any proceeding in which he may be involved or with which he may be threatened by reason of his being or having been trustee, and that the trustees will indemnify representatives and employees of the Trust to the same extent that trustees are entitled to indemnification. INVESTMENT ADVISER Denver Investment Advisors serves as investment adviser to the Funds pursuant to an Advisory Agreement. In the Advisory Agreement, the Investment Adviser has agreed to provide a continuous investment program for each Fund and to pay all expenses incurred by it in connection with its advisory activities, other than the cost of securities and other investments, including brokerage commissions and other transaction charges, if any, purchased or sold for the Funds. As indicated in the Prospectus, Denver Investment Advisors permits investment and other personnel to purchase and sell securities for their own accounts, including securities that may be held by the Funds, in accordance with Denver Investment Advisors' policy regarding personal investing by principals, officers and employees of Denver Investment Advisors. The Denver Investment Advisors' policy requires all principals, officers and employees to pre-clear all transactions in securities not otherwise exempt under the policy. In addition to pre-clearance, the policy subjects principals, officers and employees of Denver Investment Advisors to various trading restrictions and reporting obligations. All reportable transactions are reviewed for compliance with Denver Investment Advisors' policy. The provisions of the policy are administered by and subject to exceptions authorized by Denver Investment Advisors. Prior to March 31, 1996, First Interstate of Denver, N.A. served as investment adviser, and Denver Investment Advisors served as sub-adviser, to the MIDCO Growth, Blue Chip, Growth and Income, Long-Term Bond, Intermediate-Term Bond and Colorado Tax-Exempt Funds. Prior to March 31, 1996, First Interstate Capital Management, Inc. ("FICM") served as investment adviser and Denver Investment Advisors served as sub-adviser to the Growth and Income and Intermediate-Term Bond Funds. The following table summarizes the advisory fees paid by the Funds and any advisory fee waivers for the last three fiscal years of each Fund: -31- - ------------------------------------------------------------------------------------------------ Year Ended Year Ended Year Ended May 31, 1996 May 31, 1995 May 31, 1994 - ------------------------------------------------------------------------------------------------ Advisory Waiver of Advisory Waiver of Advisory Waiver of Fund Name Fees Fees Fees Fees Fees Fees - ------------------------------------------------------------------------------------------------ MIDCO Growth Fund $3,558,326 $0 $2,529,123 $0 $1,963,711 $0 Blue Chip Fund 339,161 59,499 271,890 0 210,009 0 Growth and 129,876 49,319 271,513 0 277,664 0 Income Fund Small-Cap 36,740 136,791 0 73,894 0(1) 7,275(1) Opportunity Fund Long-Term Bond Fund 102,736 32,618 124,337 0 133,451 0 Intermediate-Term 350,333 58,864 407,813 0 499,968 0 Bond Fund Colorado Tax- 0 56,823 0 51,298 0 45,269 Exempt Fund - ------------------------------------------------------------------------------------------------
(1) The Fund commenced investment operations on December 28, 1993. For the fiscal years ended May 31,1996, 1995 and 1994, the investment advisers reimbursed additional expenses for the Funds as follows: Year Ended Year Ended Year Ended Fund Name May 31, 1996 May 31, 1995 May 31, 1994 --------- ------------ ------------ ------------ Small-Cap Opportunity Fund $0 $20,200 $22,115(1) Colorado Tax-Exempt Fund $22,238 65,533 68,401 _______________ (1) The Fund commenced investment operations on December 28, 1993. First Interstate Bank of Denver, N.A. and FICM each paid 90% of the advisory fees received by them for the Growth and Income Fund and Intermediate- Term Bond Fund to Denver Investment Advisors pursuant to the Sub-Advisory Agreements each formerly had in effect with respect to such Funds. The Investment Adviser has agreed that if, in any fiscal year, the expenses borne by a Fund exceed the applicable expense limitations imposed by the securities regulations of any state in which shares of -32- the Fund are registered or qualified for sale to the public, it will reimburse the Fund for any excess to the extent required by such regulations. To the Trust's knowledge, as of the date of this Statement of Additional Information the most restrictive expense limitations for any fiscal year imposed by state securities regulations which were applicable to the Funds were as follows: two and one-half percent of the first $30 million of average net assets, two percent of the next $70 million of average net assets, and one and one-half percent of the remaining average net assets. During the fiscal year ended May 31, 1996, no expense reimbursement was required. Denver Investment Advisors also performs investment advisory services for the Blue Chip Value Fund, Inc. and the Paine Webber Managed Assets Trust- Paine Webber Capital Appreciation Fund, two other investment company portfolios. Investment decisions for each account managed by Denver Investment Advisors, including the Funds, are made independently from those for any other account that is or may in the future become managed by Denver Investment Advisors or its affiliates. If, however, a number of accounts managed by Denver Investment Advisors are contemporaneously engaged in the purchase or sale of the same security, the available securities or investments may be allocated in a manner believed by Denver Investment Advisors to be equitable to each account. In some cases, this procedure may adversely affect the price paid or received by a Fund or the size of the position obtainable for or disposed of by a Fund. Each account managed by Denver Investment Advisors has its own investment objective and policies and is managed accordingly by a particular portfolio manager or team of portfolio managers. As a result, from time to time two or more different managed accounts may pursue divergent investment strategies with respect to investments or categories of investments. The current Advisory Agreement for the MIDCO Growth, Blue Chip, Growth and Income, Small-Cap Opportunity and Long Term Bond Funds became effective on March 31, 1995, and the current Advisory Agreement for the Colorado Tax-Exempt Fund became effective on October 1, 1995. The Advisory Agreement will continue in effect until September 30, 1997 and thereafter from year to year so long as such continuance is approved annually by a majority of the Funds' Trustees who are not parties to the Advisory Agreement or interested persons of any such party, and by either a majority of the outstanding voting shares or the trustees of the Funds. The Advisory Agreement i) may be terminated without the payment of any penalty by the Fund or Denver Investment Advisors on 60 days' written notice; ii) terminates automatically in the event of its assignment; and iii) generally, may not be amended without the approval by vote of a majority of the outstanding voting securities of such Fund. The Agreement provides that the Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Funds in connection with its performance of services pursuant to the Advisory Agreement, except a loss resulting from a breach of fiduciary duty with respect to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Investment Adviser in the performance of its duties or from its reckless disregard of its duties and obligations under the Advisory Agreement. Denver Investment Advisors, as co-administrator, also provides administrative services to the Funds pursuant to an Administration Agreement and has agreed to pay all expenses incurred by it in connection with its administrative activities. DISTRIBUTOR ALPS acts as the distributor of the Funds' shares pursuant to a Distribution Agreement with the Trust (the "Distributor"). Shares are sold on a continuous basis by ALPS as agent of the Funds, and ALPS has agreed to use its best efforts to solicit orders for the sale of Fund shares, although it is not obliged to sell any particular amount of shares. As Distributor, ALPS pays the cost of printing and distributing prospectuses -33- to persons who are not shareholders of the Funds (excluding preparation and printing expenses necessary for the continued registration of the Funds' shares) and of printing and distributing all sales literature. ALPS is not entitled to any compensation for its services as Distributor. For the fiscal years ended May 31, 1996, 1995 and 1994, ALPS received $10,614.23, $108,459 and $296,811.77, respectively, in underwriting commissions with respect to all the investment portfolios offered by the Trust. ADMINISTRATORS, BOOKKEEPING AND PRICING AGENT ALPS and Denver Investment Advisors, as co-administrators (the "Administrators"), provide administrative services to the Funds as described in the Prospectus pursuant to an Administration Agreement, and have agreed to pay all expenses they incur in connection with their administrative activities. Under the Administration Agreement, the Administrators are not liable for any error of judgment or mistake of law or for any loss suffered by the Funds in connection with the performance of the agreement, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Administrators in the performance of their duties or from their reckless disregard of their duties and obligations under the agreement. Prior to the current Administration Agreement, which became effective on October 1, 1995, ALPS served as sole Administrator to the Funds. In addition to the services it provides as co-administrator, ALPS has agreed, pursuant to a separate Bookkeeping and Pricing Agreement, to maintain the financial accounts and records of the Funds and to compute the net asset value and certain other financial information of the Funds. Under the Bookkeeping and Pricing Agreement, ALPS is not liable for any error of judgment or mistake of law or for any loss suffered by the Funds, except for a loss resulting from willful misfeasance, bad faith or negligence on the part of ALPS in the performance of its duties under the Agreement. The following table summarizes the administration fees paid by the Funds and any administration fee waivers for the last three fiscal years: -34- - ------------------------------------------------------------------------------------------------------- Year Ended Year Ended Year Ended May 31, 1996 May 31, 1995 May 31, 1994 - ------------------------------------------------------------------------------------------------------- Administration Waiver Administration Waiver Administration Waiver Fund Name Fees of Fees Fees of Fees Fees of Fees - ------------------------------------------------------------------------------------------------------- MIDCO Growth $1,230,673 $ 0 $194,548 $ 0 $151,055 $ 0 Fund Blue Chip Fund 133,355 4,948 20,914 0 16,155 0 Growth and 52,174 4,873 20,885 0 21,359 0 Income Fund Small-Cap Opportunity Fund 39,056 1,806 2,787 908 0(1) 364(1) Long-Term Bond 58,951 3,520 13,815 0 14,828 0 Fund Intermediate-Term 178,366 10,539 45,313 0 55,552 0 Bond Fund Colorado Tax- 467 24,766 3,624 1,506 744 3,890 Exempt Fund - -------------------------------------------------------------------------------------------------------
(1) The Fund commenced operations on December 28, 1993. CUSTODIAN AND TRANSFER AGENT Wells Fargo (the "Custodian") serves as custodian of the assets of each of the Funds pursuant to a custody agreement (the "Custody Agreement"). Under the Custody Agreement, the Custodian has agreed to hold the Funds' assets in safekeeping and collect and remit the income thereon, subject to the instructions of each Fund. The Custodian may, at its own expense, open and maintain a custody account or accounts on behalf of any Fund with other banks or trust companies, provided that the Custodian shall remain liable for the performance of all of its duties under the Custody Agreement notwithstanding any delegation. For its services as custodian, the Custodian is entitled to receive compensation based on the aggregate market value of the portfolio securities of the Funds that are held by Wells Fargo as custodian: .02% on the first $50 million of average net assets; .018% on the next $50 million; .013% on the next $100 million; .01% on the next $300 million; and .005% on assets in excess of $500 million. The minimum annual custody fee payable by each Fund is $500. In addition, the Custodian, as custodian, is entitled to certain transaction charges at the rate of $20 for each transaction involving a domestic security, $25 for each transaction involving a foreign security, $45 per option (including issuance of an escrow receipt), and to reimbursement for its out-of-pocket expenses in connection with the above services. For the fiscal years ended May 31,1996, 1995 and 1994 the Custodian waived all of its custodial fees in the following amounts: -35- - ------------------------------------------------------------------------------- Year Ended Year Ended Year Ended Fund Name May 31, 1996 May 31, 1995 May 31, 1994 - ------------------------------------------------------------------------------- MIDCO Growth Fund $131,399 $87,850 $85,151 Blue Chip Fund 24,180 20,142 9,302 Growth and Income 22,966 24,014 12,174 Fund Small Cap 18,793 16,558 6,045 Opportunity Fund Long-Term Bond 14,196 13,006 9,091 Fund Intermediate-Term Bond 30,844 28,132 25,119 Fund Colorado Tax-Exempt 8,353 5,552 2,511 Fund - ------------------------------------------------------------------------------- State Street Bank and Trust Company ("State Street") serves as Transfer Agent for each Fund. As Transfer Agent, State Street has, among other things, agreed to: (a) issue and redeem shares of the Funds; (b) make dividend and other distributions to shareholders of the Funds; (c) effect transfers of shares; (d) mail communications to shareholders of the Funds, including reports to shareholders, dividend and distribution notices, and proxy materials for meetings of shareholders; and (e) maintain shareholder accounts. Under the Transfer Agency Agreement, State Street receives from the Trust a fee based upon each shareholder account and is reimbursed for out-of-pocket expenses. EXPENSES Operating expenses borne by the Funds include taxes, interest, fees and expenses of its trustees and officers, SEC fees, state securities qualification fees, advisory fees, administrative fees, charges of the Funds' custodian, shareholder services agent and accounting services agent, certain insurance premiums, outside auditing and legal expenses, costs of preparing and printing prospectuses for regulatory purposes and for distribution to existing shareholders, costs of shareholder reports and meetings and any extraordinary expenses. The Funds also pay for brokerage fees, commissions and other transaction charges (if any) in connection with the purchase and sale of portfolio securities. AUDITORS Deloitte & Touche LLP, 555 Seventeenth Street, Suite 3600, Denver, Colorado 80202, serves as independent auditors for the Funds. The financial statements contained herein are so included in reliance upon the report of Deloitte & Touche LLP given upon their authority as experts in accounting and auditing. COUNSEL -36- Drinker Biddle & Reath (of which Mr. McConnel, Secretary of the Trust, is a partner), 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496, serves as counsel to the Trust and will pass upon certain legal matters relating to the Funds. ADDITIONAL INFORMATION ON PERFORMANCE CALCULATIONS From time to time, the yields, tax-equivalent yields, effective yields and the total return of a Fund may be quoted in advertisements, shareholder reports or other communications to shareholders. Performance information is generally available by calling ALPS at 1-800-392-CORE (2673). YIELD CALCULATIONS - BOND FUNDS Each yield is calculated by dividing the net investment income per share (as described below) earned by a Fund during a 30-day (or one month) period by the net asset value per share on the last day of the period and annualizing the result on a semi-annual basis by adding one to the quotient, raising the sum to the power of six, subtracting one from the result and then doubling the difference. A Fund's net investment income per share earned during the period is based on the average daily number of shares outstanding during the period entitled to receive dividends and includes dividends and interest earned during the period minus expenses accrued for the period, net of reimbursements. This calculation can be expressed as follows: a-b 6 Yield = 2 [(----- + 1) - 1] cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = net asset value per share on the last day of the period. For the purpose of determining net investment income earned during the period (variable "a" in the formula), dividend income on equity securities held by a Fund is recognized by accruing 1/360 of the stated dividend rate of the security each day that the security is in the Fund. Interest earned on any debt obligations held by a Fund is calculated by computing the yield to maturity of each obligation held by the Fund based on the market value of the obligation (including actual accrued interest) at the close of business on the last business day of each month, or, with respect to obligations purchased during the month, the purchase price (plus actual accrued interest), and dividing the result by 360 and multiplying the quotient by the market value of the obligation (including actual accrued interest) in order to determine the interest income on the obligation for each day of the subsequent month that the obligation is held by the Fund. For purposes of this calculation, it is assumed that each month contains 30 days. The maturity of an obligation with a call provision is the next call date on which the obligation reasonably may be expected to be called or, if none, the maturity date. With respect to debt obligations purchased at a discount or premium, the formula generally calls for amortization of the discount or premium. The amortization schedule will be adjusted monthly to reflect changes in the market values of such debt obligations. Interest earned on tax-exempt obligations that are issued without original issue discount and have a current market discount is calculated by using the coupon rate of interest instead of the yield to maturity. In the case of tax-exempt obligations that are issued with original issue discount but which have discounts based on current market value that exceed the then-remaining portion of the original issue discount (market discount), -37- the yield to maturity is the imputed rate based on the original issue discount calculation. On the other hand, in the case of tax-exempt obligations that are issued with original issue discount but which have discounts based on current market value that are less than the then-remaining portion of the original issue discount (market premium), the yield to maturity is based on the market value. With respect to mortgage or other receivables-backed obligations which are expected to be subject to monthly payments of principal and interest ("pay downs"), (a) gain or loss attributable to actual monthly pay downs are accounted for as an increase or decrease to interest income during the period; and (b) a Fund may elect either (i) to amortize the discount and premium or the remaining security, based on the cost of the security, to the weighted average maturity date, if such information is available, or to the remaining term of the security, if any, if the weighted average date is not available, or (ii) not to amortize discount or premium on the remaining security. Undeclared earned income will be subtracted from the net asset value per share (variable "d" in the formula). Undeclared earned income is the net investment income which, at the end of the base period, has not been declared as a dividend, but is reasonably expected to be and is declared as a dividend shortly thereafter. Based on the foregoing calculations, the yields of the Funds for the 30-day period ended May 31, 1996 (after fee waivers) were as follows: Fund 30-Day Yield ---- ------------ Long-Term Bond Fund 6.35% Intermediate-Term Bond Fund 5.53% Colorado Tax-Exempt Fund 4.72% "TAX-EQUIVALENT" YIELD CALCULATIONS - COLORADO TAX-EXEMPT FUND The Fund's "tax-equivalent" yield is computed by: (a) dividing the portion of the Fund's yield that is exempt from both federal and Colorado state income taxes by one minus a stated combined federal and state income tax rate; (b) dividing the portion of the Fund's yield that is exempt from federal income tax only by one minus a stated federal income tax rate, and (c) adding the figures resulting from (a) and (b) above to that portion, if any, of the Fund's yield that is not exempt from federal income tax. Based on the foregoing calculations, the yield and tax-equivalent yield of the Fund for the 30-day period ended May 31, 1996 (after fee waivers) were 4.72% and 7.08%, respectively. Tax-Equivalent Yield is based upon the combined state and federal tax rate assumptions of 33% (assuming a 28% federal tax rate and a 5% Colorado tax rate) for the Colorado Tax-Exempt Fund. TOTAL RETURN CALCULATIONS Each Fund computes its average annual total returns by determining the average annual compounded rates of return during specified periods that equate the initial amount invested to the ending redeemable value of such investment. This is done by dividing the ending redeemable value of a hypothetical -38- $1,000 initial payment by $1,000 and raising the quotient to a power equal to one divided by the number of years (or fractional portion thereof) covered by the computation and subtracting one from the result. This calculation can be expressed as follows: ERV 1/n T = [(-----) - 1] P Where: ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. P = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. The Funds compute their aggregate total return by determining the aggregate rates of return during specified periods that likewise equate the initial amount invested to the ending redeemable value of such investment. The formula for calculating aggregate total return is as follows: ERV T = [(----- - 1)] P The calculations of average annual total return and aggregate total return assume the reinvestment of all dividends and capital gain distributions on the reinvestment dates during the period and includes all recurring fees charged by the Trust to all shareholder accounts. The ending redeemable value (variable "ERV" in each formula) is determined by assuming complete redemption of the hypothetical investment and the deduction of all nonrecurring charges at the end of the period covered by the computations. Based on the foregoing calculations, the average annual total return (after fee waivers) for the year ended May 31, 1996, for the five year period ended May 31, 1996 and for the periods since commencement of the Funds' respective operations were as follows: Five Since Inception Year Ended Years Ended to Fund May 31, 1996 May 31, 1996 May 31, 1996 ---- ------------ ------------ --------------- MIDCO Growth Fund (1) 38.62% 17.35% 16.69% Blue Chip Fund(2) 30.48% 14.48% 13.95% Growth and Income Fund(2)(5) 27.25% 10.88% 11.73% Small-Cap Opportunity Fund(3) 37.49% N/A 17.76% Long-Term Bond Fund(2) 3.41% 9.57% 9.96% -39- Intermediate-Term Bond Fund(2) 4.26% 7.46% 7.74% Colorado Tax-Exempt Fund(4) 3.97% 6.56% 6.56% ________________________ (1) Commenced Operations on August 1, 1986. (2) Commenced Operations on June 1, 1988. (3) Commenced Operations on January 3, 1994. (4) Commenced Operations on June 1, 1991. (5) The Growth and Income Fund was formerly known as the Equity Income Fund. The Fund's name was changed on January 1, 1996 to reflect a different objective and policies. Prior to January 1, 1996, the Fund's objective was to seek reasonable income through investments in income-producing securities. On January 1, 1996, the Fund's objective was revised to seek long-term total return through capital appreciation and current income through investments in equity securities. A new portfolio manager has managed the Fund since October 1995. Past performance is not intended to be indicative or representative of future performance. The Funds may also from time to time include in advertisements, sales literature, communications to shareholders and other materials (collectively, "Materials") a total return figure that more accurately compares a Fund's performance with other measures of investment return. For example, in comparing a Fund's total return with data published by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. or Weisenberger Investment Company Service, or with the performance of an index, a Fund may calculate its aggregate total return for the period of time specified in the Materials by assuming the investment of $10,000 in shares of a Fund and assuming the reinvestment of all dividends and distributions. Percentage increases are determined by subtracting the initial value of the investment from the ending value and by dividing the remainder by the beginning value. The Funds may also from time to time include discussions or illustrations of the effects of compounding in Materials. "Compounding" refers to the fact that, if dividends or other distributions on an investment in a Fund are paid in the form of additional shares of the Fund, any future income or capital appreciation of the Fund would increase the value, not only of the original investment, but also of the additional shares received through reinvestment. As a result, the value of the investment in the Fund would increase more quickly than if dividends or other distributions had been paid in cash. In addition, the Funds may also include in Materials discussions and/or illustrations of the potential investment goals of a prospective investor, investment management strategies, techniques, policies or investment suitability of a Fund (such as value investing, market timing, dollar cost averaging, asset allocation, constant ratio transfer, automatic account rebalancing, the advantages and disadvantages of investing in tax-deferred and taxable investments), economic conditions, the relationship between sectors of the economy and the economy as a whole, various securities markets, the effects of inflation and historical performance of various asset classes, including but not limited to, stocks, bonds and Treasury securities. From time to time, Materials may summarize the substance of information contained in shareholder reports (including the investment composition of a Fund), as well as the views of the adviser as to current market, economic, trade and interest rate trends, legislative, regulatory and monetary developments, investment strategies and related matters believed to be of relevance to a Fund. The Funds may also include in Materials charts, graphs or drawings which compare the investment objective, return potential, relative stability and/or growth possibilities of the -40- Funds and/or other mutual funds, or illustrate the potential risks and rewards of investment in various investment vehicles, including but not limited to, stocks, bonds, Treasury securities and shares of a Fund and/or other mutual funds. Materials may include a discussion of certain attributes or benefits to be derived by an investment in a Fund and/or other mutual funds, shareholder profiles and hypothetical investor scenarios, timely information on financial management, tax and retirement planning and investment alternatives to certificates of deposit and other financial instruments. Such Materials may include symbols, headlines or other material which highlight or summarize the information discussed in more detail therein. MISCELLANEOUS As used in this Statement of Additional Information and the Funds' Prospectus, a "majority of the outstanding shares" of a Fund or a class of shares means, with respect to the approval of an investment advisory agreement, a distribution plan or as a change in a fundamental investment policy, the lesser of (1) 67% of the shares of the particular Fund or class represented at a meeting at which the holders of more than 50% of the outstanding shares of such Fund or class are present in person or by proxy, or (2) more than 50% of the outstanding shares of such Fund or class. As of August 29, 1996, the following shareholders owned more than 5% of the outstanding shares of the Funds listed below: MIDCO GROWTH FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div & Co. 39.72% 11,454,654.6730 $246,733,261.66 Reinvest Account c/o Wells Fargo Bank Attn: Mutual Fund Group P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Northern Trust Company 5.44% 1,569,120.3240 $33,798,851.78 FBO The E-Systems Inc Unique Asse P.O.Box 92956 Chicago, IL 60675-2956 BLUE CHIP FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div & Co. - Reinvest Account 72.13% 2,633,258.4280 $45,292,044.96 c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Tanfir & Co. 11.58% 422,656.4240 $ 7,269,690.49 Fiaz Trust Controllers P.O. Box 53437, Dept. 972 Phoenix, AZ 85072-3437
-41- GROWTH AND INCOME FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div. & Co. 26.99% 546,419.5770 $ 6,671,783.04 Reinvest Account c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Dake & Co. 14.71% 297,748.5250 $ 3,635,509.49 Cash Account c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 5825 Denver, CO 80217-5825 Wells Fargo Bank 11.40% 230,790.2900 $ 2,817,949.44 ChoiceMaster 401K Plan Omnibus Account P.O. Box 9800 Calabasas, CA 91372-0800 Tanfir & Co. 8.17% 165,393.4290 $ 2,019,453.77 Attn: Mutual Fund Desk P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 SMALL-CAP OPPORTUNITY FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Bank of New York as TTEE 29.61% 338,465.0640 $ 6,938,533.81 for Brooklyn Union Gas Employee Benefit Trust One Wall Street New York, NY 10286-0001 Trussal & Co. 16.95% 193,766.7120 $ 3,972,217.60 FBO Sinai Hospital Pension Plan 415794505 P.O. Box 771072 Detroit, MI 48277-1072 Div & Co. - Reinvest Account 15.66% 178,996.3470 $ 3,669,425.11 c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433
-42- Tanfir & Co. 6.95% 79,449.1890 $ 1,628,708.37 Fiaz Trust Controllers P.O. Box 53437, Dept. 972 Phoenix, AZ 85072-3437 Wells Fargo Bank 5.98% 68,382.6860 $ 1,401,845.06 ChoiceMaster 401K Plan Omnibus Account P.O. Box 9800 Calabasas, CA 91372-0800 LONG-TERM BOND FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div. & Co. 82.97% 2,254,416.7590 $21,574,768.38 Reinvest Account c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 INTERMEDIATE-TERM BOND FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div & Co Reinvest Account 67.97% 5,517,137.8570 $55,723,092.36 c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Tanfir & Co. 13.24% 1,074,443.1530 $10,851,875.85 Attn: Mutual Fund Desk P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Dake & Co. Cash Account 5.48% 444,618.9310 $ 4,490,651.20 c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 5825 Denver, CO 80217-5825
-43- COLORADO TAX-EXEMPT FUND Name and Address of Shareholder % of Fund Held Share Balance Asset Balance ------------------------------- -------------- ------------- ------------- Div & Co. 15.33% 226,392.7770 $ 2,422,402.71 Wells Fargo Bank Attn: Shirley Williams P.O. Box 53433, Dept. 959 Phoenix, AZ 85072-3433 Dake & Co. 14.10% 208,278.1290 $ 2,228,575.98 Cash Account c/o Wells Fargo Bank Attn: Shirley Williams P.O. Box 5825 Denver, CO 80217-5825 Colorado National Bank 8.88% 131,099.0480 $ 1,402,759.81 FBO Joe Bishop Mutual Fund Department P.O. Box 64010 St. Paul, MN 55164-0010 Dennis E. Larkin 7.52% 111,085.9350 $ 1,188,619.50 Constance M. Larkin 3233 So. Niagara St. Denver, CO 80224-2825 Charles Schwab & Co., Inc. 7.31% 107,897.6440 $ 1,154,504.79 Special Account for the Exclusive Benefit of Customers Attn: Mutual Funds 101 Montgomery Street San Francisco, CA 94104-4122 John E. Fuller 6.05% 89,387.2450 $ 956,443.52 c/o Fuller & Co. 1515 Arapahoe St., Suite 1600 Denver, CO 80202-2116 Tanfir & Co. 5.56% 82,124.5470 $ 878,732.65 Attn: Mutual Fund Desk P.O. Box 53436, Dept. 959 Phoenix, AZ 85072-3436 Cherry Trust & Co. 5.14% 75,869.3010 $ 811,801.52 3033 E. 1st Ave. Denver, CO 80206-5617
___________________________ * All above-listed shares of the MIDCO Growth Fund, Blue Chip Fund, Growth and Income Fund, Small-Cap Opportunity Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund and Colorado Tax-Exempt Fund were beneficially owned by the record owners named above, except that the shares owned of record by Tanfir & Co. and Div & Co. were beneficially owned by First Interstate Bank of Arizona, N.A., the shares owned of record by Firnap & Co. were beneficially owned by First Interstate Bank of Oregon, N.A., and the shares owned of record by Dake & Co. were beneficially owned by First Interstate Bank of Denver, N.A. -44- APPENDIX A COMMERCIAL PAPER RATINGS A Standard & Poor's commercial paper rating is a current assessment of the likelihood of timely payment of debt considered short-term in the relevant market. The following summarizes the rating categories used by Standard and Poor's for commercial paper: "A-1" - Issue's degree of safety regarding timely payment is strong. Those issues determined to possess extremely strong safety characteristics are denoted "A-1+." "A-2" - Issue's capacity for timely payment is satisfactory. However, the relative degree of safety is not as high as for issues designated "A-1." "A-3" - Issue has an adequate capacity for timely payment. It is, however, somewhat more vulnerable to the adverse effects of changes and circumstances than an obligation carrying a higher designation. "B" - Issue has only a speculative capacity for timely payment. "C" - Issue has a doubtful capacity for payment. "D" - Issue is in payment default. Moody's commercial paper ratings are opinions of the ability of issuers to repay punctually promissory obligations not having an original maturity in excess of 9 months. The following summarizes the rating categories used by Moody's for commercial paper: "Prime-1" - Issuer or related supporting institutions are considered to have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: leading market positions in well established industries; high rates of return on funds employed; conservative capitalization structures with moderate reliance on debt and ample asset protection; broad margins in earning coverage of fixed financial charges and high internal cash generation; and well established access to a range of financial markets and assured sources of alternate liquidity. "Prime-2" - Issuer or related supporting institutions are considered to have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternative liquidity is maintained. "Prime-3" - Issuer or related supporting institutions have an acceptable capacity for repayment of short-term promissory obligations. The effects of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained. "Not Prime" - Issuer does not fall within any of the Prime rating categories. A-1 The three rating categories of Duff & Phelps for investment grade commercial paper and short-term debt are "D-1," "D-2" and "D-3." Duff & Phelps employs three designations, "D-1+," "D-1" and "D-1-," within the highest rating category. The following summarizes the rating categories used by Duff & Phelps for commercial paper: "D-1+" - Debt possesses highest certainty of timely payment. Short-term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding, and safety is just below risk-free U.S. Treasury short-term obligations. "D-1" - Debt possesses very high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. "D-1-" - Debt possesses high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small. "D-2" - Debt possesses good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small. "D-3" - Debt possesses satisfactory liquidity, and other protection factors qualify issue as investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. "D-4" - Debt possesses speculative investment characteristics. Liquidity is not sufficient to ensure against disruption in debt service. Operating factors and market access may be subject to a high degree of variation. "D-5" - Issuer has failed to meet scheduled principal and/or interest payments. Fitch short-term ratings apply to debt obligations that are payable on demand or have original maturities of up to three years. The following summarizes the rating categories used by Fitch for short-term obligations: "F-1+" - Securities possess exceptionally strong credit quality. Issues assigned this rating are regarded as having the strongest degree of assurance for timely payment. "F-1" - Securities possess very strong credit quality. Issues assigned this rating reflect an assurance of timely payment only slightly less in degree than issues rated "F-1+." "F-2" - Securities possess good credit quality. Issues assigned this rating have a satisfactory degree of assurance for timely payment, but the margin of safety is not as great as the "F-1+" and "F-1" categories. "F-3" - Securities possess fair credit quality. Issues assigned this rating have characteristics suggesting that the degree of assurance for timely payment is adequate; however, near-term adverse changes could cause these securities to be rated below investment grade. "F-S" - Securities possess weak credit quality. Issues assigned this rating have characteristics suggesting a minimal degree of assurance for timely payment and are vulnerable to near-term adverse changes in financial and economic conditions. "D" - Securities are in actual or imminent payment default. Fitch may also use the symbol "LOC" with its short-term ratings to indicate that the rating is based upon a letter of credit issued by a commercial bank. A-2 Thomson BankWatch short-term ratings assess the likelihood of an untimely or incomplete payment of principal or interest of unsubordinated instruments having a maturity of one year or less which is issued by United States commercial banks, thrifts and non-bank banks; non-United States banks; and broker-dealers. The following summarizes the ratings used by Thomson BankWatch: "TBW-1" - This designation represents Thomson BankWatch's highest rating category and indicates a very high degree of likelihood that principal and interest will be paid on a timely basis. "TBW-2" - This designation indicates that while the degree of safety regarding timely payment of principal and interest is strong, the relative degree of safety is not as high as for issues rated "TBW-1." "TBW-3" - This designation represents the lowest investment grade category and indicates that while the debt is more susceptible to adverse developments (both internal and external) than obligations with higher ratings, capacity to service principal and interest in a timely fashion is considered adequate. "TBW-4" - This designation indicates that the debt is regarded as non-investment grade and therefore speculative. IBCA assesses the investment quality of unsecured debt with an original maturity of less than one year which is issued by bank holding companies and their principal bank subsidiaries. The following summarizes the rating categories used by IBCA for short-term debt ratings: "A1+" - Obligations supported by the highest capacity for timely repayment. "A1" - Obligations are supported by a strong capacity for timely repayment. "A2" - Obligations are supported by a satisfactory capacity for timely repayment, although such capacity may be susceptible to adverse changes in business, economic or financial conditions. "A3" - Obligations are supported by a satisfactory capacity for timely repayment. Such capacity is more susceptible to adverse changes in business, economic or financial conditions than for obligations in higher categories. "B" - Obligations for which the capacity for timely repayment is susceptible to adverse changes in business, economic or financial conditions. "C" - Obligations for which there is an inadequate capacity to ensure timely repayment. "D" - Obligations which have a high risk of default or which are currently in default. CORPORATE AND MUNICIPAL LONG-TERM DEBT RATINGS The following summarizes the ratings used by Standard & Poor's for corporate and municipal debt: "AAA" - This designation represents the highest rating assigned by Standard & Poor's to a debt obligation and indicates an extremely strong capacity to pay interest and repay principal. "AA" - Debt is considered to have a very strong capacity to pay interest and repay principal and differs from AAA issues only in small degree. A-3 "A" - Debt is considered to have a strong capacity to pay interest and repay principal although such issues are somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher-rated categories. "BBB" - Debt is regarded as having an adequate capacity to pay interest and repay principal. Whereas such issues normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher-rated categories. "BB," "B," "CCC," "CC" and "C" - Debt is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" indicates the lowest degree of speculation and "C" the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. "BB" - Debt has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB-" rating. "B" - Debt has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or "BB-" rating. "CCC" - Debt has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The "CCC" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "B" or "B-" rating. "CC" - This rating is typically applied to debt subordinated to senior debt that is assigned an actual or implied "CCC" rating. "C" - This rating is typically applied to debt subordinated to senior debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. "CI" - This rating is reserved for income bonds on which no interest is being paid. "D" - Debt is in payment default. This rating is used when interest payments or principal payments are not made on the date due, even if the applicable grace period has not expired, unless S & P believes such payments will be made during such grace period. "D" rating is also used upon the filing of a bankruptcy petition if debt service payments are jeopardized. PLUS (+) OR MINUS (-) - The ratings from "AA" through "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major rating categories. "r" - This rating is attached to highlight derivative, hybrid, and certain other obligations that S & P believes may experience high volatility or high variability in expected returns due to non-credit risks. Examples of such obligations are: securities whose principal or interest return is indexed to equities, commodities, or currencies; certain swaps and options; and interest only and principal only mortgage securities. A-4 The following summarizes the ratings used by Moody's for corporate and municipal long-term debt: "Aaa" - Bonds are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edged." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. "Aa" - Bonds are judged to be of high quality by all standards. Together with the "Aaa" group they comprise what are generally known as high-grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in "Aaa" securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long-term risks appear somewhat larger than in "Aaa" securities. "A" - Bonds possess many favorable investment attributes and are to be considered as upper medium-grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. "Baa" - Bonds considered medium-grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. "Ba," "B," "Caa," "Ca," and "C" - Bonds that possess one of these ratings provide questionable protection of interest and principal ("Ba" indicates some speculative elements; "B" indicates a general lack of characteristics of desirable investment; "Caa" represents a poor standing; "Ca" represents obligations which are speculative in a high degree; and "C" represents the lowest rated class of bonds). "Caa," "Ca" and "C" bonds may be in default. Con. (---) - Bonds for which the security depends upon the completion of some act or the fulfillment of some condition are rated conditionally. These are bonds secured by (a) earnings of projects under construction, (b) earnings of projects unseasoned in operation experience, (c) rentals which begin when facilities are completed, or (d) payments to which some other limiting condition attaches. Parenthetical rating denotes probable credit stature upon completion of construction or elimination of basis of condition. Moody's applies numerical modifiers 1, 2 and 3 in each generic classification from "Aa" to "B" in its bond rating system. The modifier 1 indicates that the issuer ranks in the higher end of its generic rating category; the modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the issuer ranks at the lower end of its generic rating category. The following summarizes the long-term debt ratings used by Duff & Phelps for corporate and municipal long-term debt: "AAA" - Debt is considered to be of the highest credit quality. The risk factors are negligible, being only slightly more than for risk-free U.S. Treasury debt. "AA" - Debt is considered of high credit quality. Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. "A" - Debt possesses protection factors which are average but adequate. However, risk factors are more variable and greater in periods of economic stress. "BBB" - Debt possesses below average protection factors but such protection factors are still considered sufficient for prudent investment. Considerable variability in risk is present during economic cycles. A-5 "BB," "B," "CCC," "DD," and "DP" - Debt that possesses one of these ratings is considered to be below investment grade. Although below investment grade, debt rated "BB" is deemed likely to meet obligations when due. Debt rated "B" possesses the risk that obligations will not be met when due. Debt rated "CCC" is well below investment grade and has considerable uncertainty as to timely payment of principal, interest or preferred dividends. Debt rated "DD" is a defaulted debt obligation, and the rating "DP" represents preferred stock with dividend arrearages. To provide more detailed indications of credit quality, the "AA," "A," "BBB," "BB" and "B" ratings may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within these major categories. The following summarizes the highest four ratings used by Fitch for corporate and municipal bonds: "AAA" - Bonds considered to be investment grade and of the highest credit quality. The obligor has an exceptionally strong ability to pay interest and repay principal, which is unlikely to be affected by reasonably foreseeable events. "AA" - Bonds considered to be investment grade and of very high credit quality. The obligor's ability to pay interest and repay principal is very strong, although not quite as strong as bonds rated "AAA." Because bonds rated in the "AAA" and "AA" categories are not significantly vulnerable to foreseeable future developments, short-term debt of these issuers is generally rated "F-1+." "A" - Bonds considered to be investment grade and of high credit quality. The obligor's ability to pay interest and repay principal is considered to be strong, but may be more vulnerable to adverse changes in economic conditions and circumstances than bonds with higher ratings. "BBB" - Bonds considered to be investment grade and of satisfactory credit quality. The obligor's ability to pay interest and repay principal is considered to be adequate. Adverse changes in economic conditions and circumstances, however, are more likely to have an adverse impact on these bonds, and therefore, impair timely payment. The likelihood that the ratings of these bonds will fall below investment grade is higher than for bonds with higher ratings. "BB," "B," "CCC," "CC," "C," "DDD," "DD," and "D" - Bonds that possess one of these ratings are considered by Fitch to be speculative investments. The ratings "BB" to "C" represent Fitch's assessment of the likelihood of timely payment of principal and interest in accordance with the terms of obligation for bond issues not in default. For defaulted bonds, the rating "DDD" to "D" is an assessment of the ultimate recovery value through reorganization or liquidation. To provide more detailed indications of credit quality, the Fitch ratings from and including "AA" to "C" may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within these major rating categories. IBCA assesses the investment quality of unsecured debt with an original maturity of more than one year which is issued by bank holding companies and their principal bank subsidiaries. The following summarizes the rating categories used by IBCA for long-term debt ratings: "AAA" - Obligations for which there is the lowest expectation of investment risk. Capacity for timely repayment of principal and interest is substantial such that adverse changes in business, economic or financial conditions are unlikely to increase investment risk substantially. "AA" - Obligations for which there is a very low expectation of investment risk. Capacity for timely repayment of principal and interest is substantial. Adverse changes in business, economic or financial conditions may increase investment risk albeit not very significantly. A-6 "A" - Obligations for which there is a low expectation of investment risk. Capacity for timely repayment of principal and interest is strong, although adverse changes in business, economic or financial conditions may lead to increased investment risk. "BBB" - Obligations for which there is currently a low expectation of investment risk. Capacity for timely repayment of principal and interest is adequate, although adverse changes in business, economic or financial conditions are more likely to lead to increased investment risk than for obligations in higher categories. "BB," "B," "CCC," "CC," and "C" - Obligations are assigned one of these ratings where it is considered that speculative characteristics are present. "BB" represents the lowest degree of speculation and indicates a possibility of investment risk developing. "C" represents the highest degree of speculation and indicates that the obligations are currently in default. IBCA may append a rating of plus (+) or minus (-) to a rating to denote relative status within major rating categories. Thomson BankWatch assesses the likelihood of an untimely repayment of principal or interest over the term to maturity of long term debt and preferred stock which are issued by United States commercial banks, thrifts and non-bank banks; non-United States banks; and broker-dealers. The following summarizes the rating categories used by Thomson BankWatch for long-term debt ratings: "AAA" - This designation represents the highest category assigned by Thomson BankWatch to long-term debt and indicates that the ability to repay principal and interest on a timely basis is extremely high. "AA" - This designation indicates a very strong ability to repay principal and interest on a timely basis with limited incremental risk compared to issues rated in the highest category. "A" - This designation indicates that the ability to repay principal and interest is strong. Issues rated "A" could be more vulnerable to adverse developments (both internal and external) than obligations with higher ratings. "BBB" - This designation represents Thomson BankWatch's lowest investment grade category and indicates an acceptable capacity to repay principal and interest. Issues rated "BBB" are, however, more vulnerable to adverse developments (both internal and external) than obligations with higher ratings. "BB," "B," "CCC," and "CC," - These designations are assigned by Thomson BankWatch to non-investment grade long-term debt. Such issues are regarded as having speculative characteristics regarding the likelihood of timely payment of principal and interest. "BB" indicates the lowest degree of speculation and "CC" the highest degree of speculation. "D" - This designation indicates that the long-term debt is in default. PLUS (+) OR MINUS (-) - The ratings from "AAA" through "CC" may include a plus or minus sign designation which indicates where within the respective category the issue is placed. Municipal Note Ratings A Standard and Poor's rating reflects the liquidity concerns and market access risks unique to notes due in three years or less. The following summarizes the ratings used by Standard & Poor's Ratings Group for municipal notes: A-7 "SP-1" - The issuers of these municipal notes exhibit very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics are given a plus (+) designation. "SP-2" - The issuers of these municipal notes exhibit satisfactory capacity to pay principal and interest. "SP-3" - The issuers of these municipal notes exhibit speculative capacity to pay principal and interest. Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade ("MIG") and variable rate demand obligations are designated Variable Moody's Investment Grade ("VMIG"). Such ratings recognize the differences between short-term credit risk and long-term risk. The following summarizes the ratings by Moody's Investors Service, Inc. for short-term notes: "MIG-1"/"VMIG-1" - Loans bearing this designation are of the best quality, enjoying strong protection by established cash flows, superior liquidity support or demonstrated broad-based access to the market for refinancing. "MIG-2"/"VMIG-2" - Loans bearing this designation are of high quality, with margins of protection ample although not so large as in the preceding group. "MIG-3"/"VMIG-3" - Loans bearing this designation are of favorable quality, with all security elements accounted for but lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. "MIG-4"/"VMIG-4" - Loans bearing this designation are of adequate quality, carrying specific risk but having protection commonly regarded as required of an investment security and not distinctly or predominantly speculative. "SG" - Loans bearing this designation are of speculative quality and lack margins of protection. Fitch and Duff & Phelps use the short-term ratings described under Commercial Paper Ratings for municipal notes. A-8 APPENDIX B As stated in the Prospectus, the Equity and Bond Funds may enter into futures contracts and options for hedging purposes. Such transactions are described in this Appendix. I. INTEREST RATE FUTURES CONTRACTS. USE OF INTEREST RATE FUTURES CONTRACTS. Bond prices are established in both the cash market and the futures market. In the cash market, bonds are purchased and sold with payment for the full purchase price of the bond being made in cash, generally within five business days after the trade. In the futures market, only a contract is made to purchase or sell a bond in the future for a set price on a certain date. Historically, the prices for bonds established in the futures markets have tended to move generally in the aggregate in concert with the cash market prices and have maintained fairly predictable relationships. Accordingly, the Funds may use interest rate futures as a defense, or hedge, against anticipated interest rate changes and not for speculation. As described below, this would include the use of futures contract sales to protect against expected increases in interest rates and futures contract purchases to offset the impact of interest rate declines. The Funds presently could accomplish a similar result to that which it hopes to achieve through the use of futures contracts by selling bonds with long maturities and investing in bonds with short maturities when interest rates are expected to increase, or conversely, selling short-term bonds and investing in long-term bonds when interest rates are expected to decline. However, because of the liquidity that is often available in the futures market the protection is more likely to be achieved, perhaps at a lower cost and without changing the rate of interest being earned by the Funds, through using futures contracts. DESCRIPTION OF INTEREST RATE FUTURES CONTRACTS. An interest rate futures contract sale would create an obligation by a Fund, as seller, to deliver the specific type of financial instrument called for in the contract at a specific future time for a specified price. A futures contract purchase would create an obligation by a Fund, as purchaser, to take delivery of the specific type of financial instrument at a specific future time at a specific price. The specific securities delivered or taken, respectively, at settlement date, would not be determined until at or near that date. The determination would be in accordance with the rules of the exchange on which the futures contract sale or purchase was made. Although interest rate futures contracts by their terms call for actual delivery or acceptance of securities, in most cases the contracts are closed out before the settlement date without the making or taking of delivery of securities. Closing out a futures contract sale is effected by a Fund entering into a futures contract purchase for the same aggregate amount of the specific type of financial instrument and the same delivery date. If the price of the sale exceeds the price of the offsetting purchase, a Fund is immediately paid the difference and thus realizes a gain. If the offsetting purchase price exceeds the sale price, a Fund pays the difference and realizes a loss. Similarly, the closing out of a futures contract purchase is effected by the Fund entering into a futures contract sale. If the offsetting sale price exceeds the purchase price, a Fund realizes a gain, and if the purchase price exceeds the offsetting sale price, a Fund realizes a loss. Interest rate futures contracts are traded in an auction environment on the floors of several exchanges -principally, the Chicago Board of Trade and the Chicago Mercantile Exchange and the New York Futures Exchange. The Fund would deal only in standardized contract's on recognized exchanges. Each exchange guarantees performance under contract provisions through a clearing corporation, a nonprofit organization managed by the exchange membership. A public market now exists in futures contracts covering various financial instruments including long-term Treasury Bonds and Notes; Government National Mortgage Association (GNMA) modified pass-through mortgage-backed securities; three-month Treasury Bills; and ninety-day commercial paper. A Fund may trade in any futures contract for which there exists a public market, including, without limitation, the foregoing instruments. B-1 II. STOCK INDEX FUTURES CONTRACTS. GENERAL. A stock index assigns relative values to the stocks included in the index and the index fluctuates with changes in the market values of the stocks included. Some stock index futures contracts are based on broad market indexes, such as the Standard & Poor's 500 or the New York Stock Exchange Composite Index. In contrast, certain exchanges offer futures contracts on narrower market indexes, such as the Standard & Poor's 100 or indexes based on an industry or market segment, such as oil and gas stocks. Futures contracts are traded on organized exchanges regulated by the Commodity Futures Trading Commission. Transactions on such exchanges are cleared through a clearing corporation, which guarantees the performance of the parties to each contract. A Fund will sell index futures contracts in order to offset a decrease in market value of its securities that might otherwise result from a market decline. A Fund may do so either to hedge the value of its portfolio as a whole, or to protect against declines, occurring prior to sales of securities, in the value of the securities to be sold. Conversely, a Fund will purchase index futures contracts in anticipation of purchases of securities. In a substantial majority of these transactions, a Fund will purchase such securities upon termination of the long futures position, but a long futures position may be terminated without a corresponding purchase of securities. In addition, a Fund may utilize stock index futures contracts in anticipation of changes in the composition of its holdings. For example, in the event that a Fund expects to narrow the range of industry groups represented in its holdings it may, prior to making purchases of the actual securities, establish a long futures position based on a more restricted index, such as an index comprised of securities of a particular industry group. A Fund may also sell futures contracts in connection with this strategy, in order to protect against the possibility that the value of the securities to be sold as part of the restructuring of its portfolio will decline prior to the time of sale. III. FUTURES CONTRACTS ON FOREIGN CURRENCIES. A futures contract on foreign currency creates a binding obligation on one party to deliver, and a corresponding obligation on another party to accept delivery of, a stated quantity of a foreign currency, for an amount fixed in U.S. dollars. Foreign currency futures may be used by a Fund to hedge against exposure to fluctuations in exchange rates between the U.S. dollar and other currencies arising from multinational transactions. IV. MARGIN PAYMENTS. Unlike when a Fund purchases or sells a security, no price is paid or received by a Fund upon the purchase or sale of a futures contract. Initially, a Fund will be required to deposit with the broker or in a segregated account with a Fund's custodian an amount of cash or cash equivalents, the value of which may vary but is generally equal to 10% or less of the value of the contract. This amount is known as initial margin. The nature of initial margin in futures transactions is different from that of margin in security transactions in that futures contract margin does not involve the borrowing of funds by the customer to finance the transactions. Rather, the initial margin is in the nature of a performance bond or good faith deposit on the contract which is returned to a Fund upon termination of the futures contract assuming all contractual obligations have been satisfied. Subsequent payments, called variation margin, to and from the broker, will be made on a daily basis as the price of the underlying instrument fluctuates making the long and short positions in the futures contract more or less valuable, a process known as "marking-to-market." For example, when a Fund has purchased a futures contract and the price of the contract has risen in response to a rise in the underlying instruments, that position will have increased in value and a Fund will be entitled to receive from the broker a variation margin payment equal to that increase in value. Conversely, where a Fund has purchased a futures contract and the price of the futures contract has declined in response to a decrease in the underlying instruments, the position would be less valuable and a Fund would be required to make a variation margin payment to the broker. At any time prior to expiration of the futures contract, Denver Investment Advisors may elect to close the position by taking an opposite position, subject to the availability of a secondary market, which will operate to terminate a Fund's position in the futures contract. A final determination of variation margin is then made, additional cash is required to be paid by or released to a Fund, and a Fund realizes a loss or gain. B-2 V. RISKS OF TRANSACTIONS IN FUTURES CONTRACTS. There are several risks in connection with the use of futures by a Fund as a hedging device. One risk arises because of the imperfect correlation between movements in the price of the future and movements in the price of the securities which are the subject of the hedge. The price of the future may move more than or less than the price of the securities being hedged. If the price of the future moves less than the price of the securities which are the subject of the hedge, the hedge will not be fully effective but, if the price of the securities being hedged has moved in an unfavorable direction, a Fund would be in a better position than if it had not hedged at all. If the price of the securities being hedged has moved in a favorable direction, this advantage will be partially offset by the loss on the future. If the price of the future moves more than the price of the hedged securities, a Fund involved will experience either a loss or gain on the future which will not be completely offset by movements in the price of the securities which are the subject of the hedge. To compensate for the imperfect correlation of movements in the price of securities being hedged and movements in the price of futures contracts, a Fund may buy or sell futures contracts in a greater dollar amount than the dollar amount of securities being hedged if the volatility over a particular time period of the prices of such securities has been greater than the volatility over such time period of the future, or if otherwise deemed to be appropriate by Denver Investment Advisors. Conversely, a Fund may buy or sell fewer futures contracts if the volatility over a particular time period of the prices of the securities being hedged is less than the volatility over such time period of the futures contract being used, or if otherwise deemed to be appropriate by Denver Investment Advisors. It is also possible that, where a Fund has sold futures to hedge its portfolio against a decline in the market, the market may advance and the value of securities held by a Fund may decline. If this occurred, a Fund would lose money on the future and also experience a decline in value in its portfolio securities. Where futures are purchased to hedge against a possible increase in the price of securities or a currency before a Fund is able to invest its cash (or cash equivalents) in securities (or options) in an orderly fashion, it is possible that the market may decline instead; if a Fund then concludes not to invest in securities or options at that time because of concern as to possible further market decline or for other reasons, a Fund will realize a loss on the futures contract that is not offset by a reduction in the price of securities purchased. In addition to the possibility that there may be an imperfect correlation, or no correlation at all, between movements in the futures and the securities being hedged, the price of futures may not correlate perfectly with movement in the cash market due to certain market distortions. Rather than meeting additional margin deposit requirements, investors may close futures contracts through off-setting transactions which could distort the normal relationship between the cash and futures markets. Second, with respect to financial futures contracts, the liquidity of the futures market depends on participants entering into off-setting transactions rather than making or taking delivery. To the extent participants decide to make or take delivery, liquidity in the futures market could be reduced thus producing distortions. Third, from the point of view of speculators, the deposit requirements in the futures market are less onerous than margin requirements in the securities market. Therefore, increased participation by speculators in the futures market may also cause temporary price distortions. Due to the possibility of price distortion in the futures market, and because of the imperfect correlation between the movements in the cash market and movements in the price of futures, a correct forecast of general market trends or interest rate movements by Denver Investment Advisors may still not result in a successful hedging transaction over a short time frame. Positions in futures may be closed out only on an exchange or board of trade which provides a secondary market for such futures. Although the Funds intend to purchase or sell futures only on exchanges or boards of trade where there appear to be active secondary markets, there is no assurance that a liquid secondary market on any exchange or board of trade will exist for any particular contract or at any particular time. In such event, it may not be possible to close a futures investment position, and in the event of adverse price movements, the Funds would continue to be required to make daily cash payments of variation margin. However, in the event futures contracts have been used to hedge portfolio securities, such securities will not be sold until the futures contract can be terminated. In such circumstances, an increase in the price of the securities, if any, may partially or completely offset losses on the futures contract. However, as described above, there is no guarantee that the price of the securities will in fact correlate with the price movements in the futures contract and thus provide an offset on a futures contract. B-3 Further, it should be noted that the liquidity of a secondary market in a futures contract may be adversely affected by "daily price fluctuation limits" established by commodity exchanges which limit the amount of fluctuation in a futures contract price during a single trading day. Once the daily limit has been reached in the contract, no trades may be entered into at a price beyond the limit, thus preventing the liquidation of open futures positions. The trading of futures contracts is also subject to the risk of trading halts, suspensions, exchange or clearing house equipment failures, government intervention, insolvency of a brokerage firm or clearing house or other disruptions of normal trading activity, which could at times make it difficult or impossible to liquidate existing positions or to recover excess variation margin payments. Successful use of futures by the Funds is also subject to Denver Investment Advisor's ability to predict correctly movements in the direction of the market. For example, if a Fund has hedged against the possibility of a decline in the market adversely affecting securities held in its portfolio and securities prices increase instead, a Fund will lose part or all of the benefit to the increased value of its securities which it has hedged because it will have offsetting losses in its futures positions. In addition, in such situations, if a Fund has insufficient cash, it may have to sell securities to meet daily variation margin requirements. Such sales of securities may be, but will not necessarily be, at increased prices which reflect the rising market. A Fund may have to sell securities at a time when it may be disadvantageous to do so. VI. OPTIONS ON FUTURES CONTRACTS. The Funds may purchase options on the futures contracts described above. A futures option gives the holder, in return for the premium paid, the right to buy (call) from or sell (put) to the writer of the option a futures contract at a specified price at any time during the period of the option. Upon exercise, the writer of the option is obligated to pay the difference between the cash value of the futures contract and the exercise price. Like the buyer or seller of a futures contract, the holder, or writer, of an option has the right to terminate its position prior to the scheduled expiration of the option by selling, or purchasing, an option of the same series, at which time the person entering into the closing transaction will realize a gain or loss. Investments in futures options involve some of the same considerations that are involved in connection with investments in futures contracts (for example, the existence of a liquid secondary market). In addition, the purchase or sale of an option also entails the risk that changes in the value of the underlying futures contract will not be fully reflected in the value of the option purchased. Depending on the pricing of the option compared to either the futures contract upon which it is based, or upon the price of the securities being hedged, an option may or may not be less risky than ownership of the futures contract or such securities. In general, the market prices of options can be expected to be more volatile than the market prices on the underlying futures contract. Compared to the purchase or sale of futures contracts, however, the purchase of call or put options on futures contracts may frequently involve less potential risk to the Funds because the maximum amount at risk is the premium paid for the options (plus transaction costs). The writing of an option on a futures contract involves risks similar to those risks relating to the sale of futures contracts. Although permitted by their fundamental investment policies, the Funds do not currently intend to write futures options during the current fiscal year, and will not do so in the future absent any necessary regulatory approvals. VII. ACCOUNTING AND TAX TREATMENT. Accounting for futures contracts and options will be in accordance with generally accepted accounting principles. Generally, futures contracts held by the Funds at the close of the Funds' taxable year will be treated for federal income tax purposes as sold for their fair market value on the last business day of such year, a process known as "mark-to-market." Forty percent of any gain or loss resulting from such constructive sale will be treated as short-term capital gain or loss and sixty percent of such gain or loss will be treated as long-term capital gain or loss without regard to the length of time a Fund holds the futures contract ("the 40-60 rule"). The amount of any capital gain or loss actually realized by a Fund in a subsequent sale or other disposition of those futures contracts will be adjusted to reflect any capital gain or loss taken into account by a Fund in a prior year as a result of the constructive sale of the contracts. With respect to B-4 futures contracts to sell, which will be regarded as parts of a "mixed straddle" because their values fluctuate inversely to the values of specific securities held by a Fund, losses as to such contracts to sell will be subject to certain loss deferral rules which limit the amount of loss currently deductible on either part of the straddle to the amount thereof which exceeds the unrecognized gain (if any) with respect to the other part of the straddle, and to certain wash sales regulations. Under short sales rules, which will also be applicable, the holding period of the securities forming part of the straddle will (if they have not been held for the long-term holding period) be deemed not to begin prior to termination of the straddle. With respect to certain futures contracts, deductions for interest and carrying charges will not be allowed. Notwithstanding the rules described above, with respect to futures contracts to sell which are properly identified as such, a Fund may make an election which will exempt (in whole or in part) those identified futures contracts from being treated for federal income tax purposes as sold on the last business day of a Fund's taxable year, but gains and losses will be subject to such short sales, wash sales, loss deferral rules and the requirement to capitalize interest and carrying charges. Under temporary regulations, a Fund would be allowed (in lieu of the foregoing) to elect either (1) to offset gains or losses from portions which are part of a mixed straddle by separately identifying each mixed straddle to which such treatment applies, or (2) to establish a mixed straddle account for which gains and losses would be recognized and offset on a periodic basis during the taxable year. Under either election, the 40-60 rule will apply to the net gain or loss attributable to the futures contracts, but in the case of a mixed straddle account election, no more than 50% of any net gain may be treated as long-term and no more than 40% of any net loss may be treated as short-term. Options on futures contracts generally receive federal tax treatment similar to that described above. Certain foreign currency contracts entered into by the Funds may be subject to the "mark-to-market" process. If the Fund makes a Capital Asset Election with respect to such contracts, the contracts will be subject to the 40-60 rule, described above. Otherwise, such gain or loss will be treated as 100% ordinary gain or loss. To receive such federal income tax treatment, a foreign currency contract must meet the following conditions: (1) the contract must require delivery of a foreign currency of a type in which regulated futures contracts are traded or upon which the settlement value of the contract depends; (2) the contract must be entered into at arm's length at a price determined by reference to the price in the interbank market; and (3) the contract must be traded in the interbank market. The Treasury Department has broad authority to issue regulations under the provisions respecting foreign currency contracts. As of the date of this Statement of Additional Information, the Treasury has not issued any such regulations. Foreign currency contracts entered into by a Fund may result in the creation of one or more straddles for federal income tax purposes, in which case certain loss deferral, short sales, and wash sales rules and the requirement to capitalize interest and carrying charges may apply. Some investments may be subject to special rules which govern the federal income tax treatment of certain transactions denominated in terms of a currency other than the U.S. dollar or determined by reference to the value of one or more currencies other than the U.S. dollar. The types of transactions covered by the special rules include the following: (i) the acquisition of, or becoming the obligor under, a bond or other debt instrument (including, to the extent provided in Treasury regulations, preferred stock); (ii) the accruing of certain trade receivables and payables; and (iii) the entering into or acquisition of any forward contract, futures contract, option and similar financial instrument. However, regulated futures contracts and non-equity options are generally not subject to the special currency rules if they are or would be treated as sold for their fair market value at year-end under the "mark-to-market" rules, unless an election is made to have such currency rules apply. The disposition of a currency other than the U.S. dollar by a U.S. taxpayer is also treated as a transaction subject to the special currency rules. With respect to transactions covered by the special rules, foreign currency gain or loss is calculated separately from any gain or loss on the underlying transaction and is normally taxable as ordinary gain or loss. A taxpayer may elect to treat as capital gain or loss foreign currency gain or loss arising from certain identified forward contracts, futures contracts and options that are capital assets in the hands of the taxpayer and which are not part of a straddle. In accordance with Treasury regulations, certain transactions subject to the special currency rules that are part of a "section 988 hedging transaction" (as defined in the Code and the Treasury regulations) will be integrated and treated as a single transaction or otherwise treated consistently for purposes of the Code. "Section 988 hedging transactions" are not subject to the mark-to-market or loss deferral rules under the Code. It is anticipated that some of the non-U.S. dollar denominated investments and foreign currency contracts that a Fund may make or may enter into will be subject to the special currency rules described above. Gain or loss attributable to the foreign currency component of transactions engaged B-5 in by the Funds which are not subject to special currency rules (such as foreign equity investments other than certain preferred stocks) will be treated as capital gain or loss and will not be segregated from the gain or loss on the underlying transaction. Under the federal income tax provisions applicable to regulated investment companies, less than 30% of a company's gross income must be derived from gains realized on the sale or other disposition of securities held for less than three months. With respect to futures contracts and other financial instruments subject to the "mark-to-market" rules, the Internal Revenue Service has ruled in private letter rulings that a gain realized from such a futures contract or financial instrument will be treated as being derived from a security held for three months or more (regardless of the actual period for which the contract or instrument is held) if the gain arises as a result of a constructive sale under the "mark-to-market" rules, and will be treated as being derived from a security held for less than three months only if the contract or instrument is terminated (or transferred) during the taxable year (other than by reason of the mark-to-market rules) and less than three months have elapsed between the date the contract or instrument is acquired and the termination date. In determining whether the 30% test is met for a taxable year, increases and decreases in the value of the Funds' futures contracts and other investments that qualify as part of a "designated hedge," as defined in the Code, may be netted. B-6 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES MAY 31, 1996
MIDCO Blue Small-Cap Growth Intermediate- Long-Term Colorado Growth Chip Opportunity and Income Term Bond Bond Tax-Exempt Fund Fund Fund Fund Fund Bond Fund Fund ------ ------ ----------- ---------- ------------ ----------- ----------- ASSETS Investments, at value (cost-see below) $656,390,094 $64,866,114 $24,419,849 $25,124,097 $81,973,963 $23,720,558 $14,127,978 -see accompanying statements Receivable for investments sold 1,869,370 3,264,256 0 335,479 0 935,733 0 Dividends and interest receivable 237,048 146,036 30,925 66,313 1,196,046 424,990 286,217 Shares of beneficial interest sold 1,869,463 85,379 150 20,002 100,606 21,366 0 Organizational costs, net of accumulated amortization 0 0 44,988 0 0 0 0 Prepaid and other assets 18,805 9,504 135,484 6,637 7,971 7,258 228 ---------------------------------------------------------------------------------------------------------------------------------- Total Assets 660,384,780 68,371,289 24,631,396 25,552,528 83,278,586 25,109,905 14,414,423 ---------------------------------------------------------------------------------------------------------------------------------- LIABILITIES Investments purchased 2,323,824 0 646,210 108,435 0 0 477,556 Accrued investment advisory fee 358,675 19,087 6,850 6,657 23,857 4,263 0 Shares of beneficial interest redeemed 735,548 5,495 0 3,583 136,684 2,610 0 Other payables 477,007 61,135 27,324 46,450 79,409 32,773 15,127 ---------------------------------------------------------------------------------------------------------------------------------- Total Liabilities 3,895,054 85,717 680,384 165,125 239,950 39,646 492,683 ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740 ---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- COMPOSITION OF NET ASSETS Paid-in capital $400,526,857 $46,689,253 $18,314,380 $19,256,535 $85,686,095 $24,576,997 $13,764,214 (Over)/Undistributed net investment income (3,130,644) 184,414 478 (143,956) 85,280 29,351 11,725 Accumulated net realized gain (loss) from investment transactions 34,853,163 4,515,794 488,710 1,137,541 (1,801,911) 336,455 (9,885) Net unrealized appreciation (depreciation) of investments 224,240,350 16,896,111 5,147,444 5,137,283 (930,828) 127,456 155,686 ---------------------------------------------------------------------------------------------------------------------------------- NET ASSETS $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740 ---------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------------------- NET ASSET VALUE PER SHARE Net Assets $656,489,726 $68,285,572 $23,951,012 $25,387,403 $83,038,636 $25,070,259 $13,921,740 ---------------------------------------------------------------------------------------------------------------------------------- Shares of beneficial interest outstanding 28,664,400 3,921,359 1,121,773 2,060,170 8,224,633 2,615,248 1,311,574 ---------------------------------------------------------------------------------------------------------------------------------- Net asset value and redemption price per share $22.90 $17.41 $21.35 $12.32 $10.10 $9.59 $10.61 ---------------------------------------------------------------------------------------------------------------------------------- COST OF INVESTMENTS $432,149,744 $47,970,003 $19,272,405 $19,986,814 $82,904,791 $23,593,102 $13,972,292 ---------------------------------------------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- FS-1 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- MIDCO GROWTH FUND STATEMENT OF INVESTMENTS May 31, 1996 Shares Market Value* - ---------------- ------------- COMMON STOCKS 96.17% - ----------------------------------------------------------------- CAPITAL GOODS 17.40% - ----------------------------------------------------------------- AEROSPACE & DEFENSE 0.94% - ----------------------------------------------------------------- 101,800 General Motors Corp Class H $6,184,350 ------------ COMPUTER HARDWARE 0.93% - ----------------------------------------------------------------- 97,200 Sun Microsystems Inc 6,087,150 ------------ COMPUTER SERVICES & SOFTWARE 7.22% - ----------------------------------------------------------------- 21,000 American Management Systems Inc 598,500 79,000 Broderbund Software Inc ** 3,327,875 102,000 Compuserve Corp 2,524,500 126,607 First Data Corp 10,096,908 4,800 Harbinger Corp 115,200 162,900 Informix Corp** 3,705,975 38,400 Intuit ** 1,996,800 84,300 Macromedia Inc 3,593,288 42,000 McAfee Associates Inc 1,554,000 334,425 Oracle Systems Corp ** 11,077,828 57,200 PSINet Inc 829,400 50,400 Sterling Commerce Inc 2,211,300 43,000 Sybase Inc 994,375 49,700 Synopsys Inc ** 2,224,075 72,100 Technology Solutions Co 2,550,538 ------------ 47,400,562 ------------ ELECTRONICS 3.72% - ----------------------------------------------------------------- 104,325 Analog Devices Inc ** 2,881,978 99,200 MEMC Electronics Materials Inc** 4,910,400 98,000 Microchip Technology Inc** 2,523,500 78,100 Millipore Corp 3,426,638 92,800 SCI Systems Inc** 4,176,000 83,900 Sierra Semi-Conductor Corp 1,237,525 60,800 Solectron Corp 2,637,200 75,800 Xilinx Inc ** 2,634,050 ------------ 24,427,291 ------------ ENGINEERING & CONSTRUCTION 1.40% - ----------------------------------------------------------------- 105,100 Foster Wheeler Corp 4,676,950 91,200 Ionics Inc 4,514,400 ------------ 9,191,350 ------------ NETWORKING 2.51% - ----------------------------------------------------------------- 207,100 3 Com Corp ** 10,199,675 35,200 Ascend Communications Inc 2,354,000 135,850 Bay Networks Inc** 3,939,650 ------------ 16,493,325 ------------ OTHER-CAPITAL GOODS 0.68% - ----------------------------------------------------------------- 56,500 Greenfield Industries Inc $2,132,875 45,000 OEA Inc** 1,845,000 22,350 Wabash National Corp 455,381 ------------ 4,433,256 ------------ TOTAL CAPITAL GOODS (Cost $81,315,760) 114,217,284 ------------ CONSUMER CYCLICAL 43.79% - ----------------------------------------------------------------- AUTOMOTIVE 0.67% - ----------------------------------------------------------------- 50,200 APS Holdings Corp Class A** 1,104,400 72,200 Gentex Corp ** 3,267,050 ------------ 4,371,450 ------------ BUILDING RELATED 0.76% - ----------------------------------------------------------------- 56,800 Fleetwood Enterprises Inc 1,711,100 110,200 Newell Co 3,306,000 ------------ 5,017,100 ------------ CONSUMER PRODUCTS 1.08% - ----------------------------------------------------------------- 143,300 Callaway Golf Co 4,316,913 59,000 Duracell International Inc 2,750,875 ------------ 7,067,788 ------------ CONSUMER SERVICES 6.24% - ----------------------------------------------------------------- 504,255 CUC International Inc ** 18,657,435 333,700 Loewen Group Inc 9,593,875 95,300 Sylvan Learning Systems Inc 3,692,875 236,900 USA Waste Services Inc** 6,988,550 36,700 United Waste Systems Inc** 2,023,088 ------------ 40,955,823 ------------ CONSUMER SOFT GOODS 0.51% - ----------------------------------------------------------------- 118,300 Warnaco Group Inc Class A 3,356,763 ------------ HOTELS/LEISURE 8.24% - ----------------------------------------------------------------- 203,900 Brinker International Inc 3,415,325 516,800 HFS Inc 32,235,400 165,600 La Quinta Inns Inc 5,216,400 74,300 MGM Grand Inc 3,380,650 94,200 Mirage Resorts Inc** 5,357,625 282,100 Prime Hospitality Corp ** 4,513,600 ------------ 54,119,000 ------------ ----------------------------------------------------------------------------- FS-2 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- MIDCO GROWTH FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ---------------- ------------- MEDIA-PUBLISHING 6.40% - ----------------------------------------------------------------- 160,700 Evergreen Media Corp Class A $6,428,000 389,900 Home Shopping Network Inc 5,604,813 479,625 Infinity Broadcasting Co Class A** 13,069,781 416,600 National Education Corp 7,759,175 25,000 Scholastic Corp 1,556,250 78,050 Tele Communications Liberty Media 2,341,500 299,100 Westwood One Inc** 5,234,250 ------------ 41,993,769 ------------ RETAIL 8.70% - ----------------------------------------------------------------- 216,200 AutoZone Inc ** 7,594,025 190,800 Bed Bath & Beyond Inc** 5,366,250 44,800 Caseys General Stores Inc 1,058,400 216,100 Consolidated Stores Corp ** 8,184,788 46,400 Discount Auto Parts Inc** 1,194,800 348,733 Dollar General Corp 9,677,341 256,600 General Nutrition Cos 3,977,300 84,500 Intimate Brands Inc 1,827,313 146,600 Kohls Corp ** 4,856,125 113,500 Lowes Companies Inc 3,887,375 54,600 Nordstrom Inc 2,784,600 169,375 Office Depot Inc ** 4,340,234 7,900 Pier 1 Imports Inc 124,425 75,800 Sports Authority Inc ** 2,255,050 ------------ 57,128,026 ------------ TELECOMMUNICATIONS 10.63% - ----------------------------------------------------------------- 52,600 ADC Telecommunications Inc ** 2,419,600 39,300 Adtran Inc** 2,716,613 88,100 Comcast Corp Class A 1,530,738 44,000 Fore Systems Inc** 3,564,000 155,600 Intelcom Group Inc 4,123,400 22,900 Intermedia Communication Co 801,500 35,000 LCI International Inc** 1,115,625 288,200 MFS Communications Inc ** 10,014,950 29,400 Nokia Corp 1,278,900 105,000 Paging Network Inc ** 2,362,500 32,800 QUALCOMM Inc 1,785,550 79,000 Spectrian Corp** 1,560,250 114,400 Stratacom Inc 6,220,500 28,900 Sync Research Inc 505,750 87,400 U.S. Robotics Corp** 8,018,950 7,800 Uniphase Corp 508,950 40,500 Vodafone Group PLC ADR 1,604,813 402,380 WorldCom Inc** 19,666,322 ------------ 69,798,911 ------------ OTHER-CONSUMER CYCLICAL 0.56% - ----------------------------------------------------------------- 133,150 Unifi Inc 3,694,913 ------------ TOTAL CONSUMER CYCLICAL (Cost $175,820,950) 287,503,543 ------------ - ----------------------------------------------------------------- CONSUMER STAPLES 18.75% - ----------------------------------------------------------------- DRUGS & HEALTHCARE 6.87% - ----------------------------------------------------------------- 65,700 Arrow International Inc $2,669,062 57,100 Biochemical Pharmaceuticals Inc** 2,626,600 55,500 Biogen Inc 3,357,750 35,800 Biomet Inc 501,200 90,900 Centocor Inc** 3,215,587 130,100 Guidant Corp 7,545,800 68,200 IDEXX Labs Corp 2,966,700 56,700 Nellcor Puritan Bennet** 3,090,150 162,000 North American Vaccine Inc ** 3,665,250 54,800 Northfield Labs Inc** 924,750 88,800 Physio-Controls Intl 1,720,500 122,200 Sequus Pharmaceuticals** 2,612,025 221,700 Sybron Corp Del ** 6,013,612 93,732 Watson Pharmaceuticals Inc ** 4,217,940 ------------ 45,126,926 ------------ FOOD, BEVERAGES, & TOBACCO 0.26% - ----------------------------------------------------------------- 50,900 Richfood Holdings Inc 1,705,150 ------------ HEALTHCARE SERVICES 11.62% - ----------------------------------------------------------------- 65,100 Access Health Inc 3,547,950 37,100 American Oncology Resources Corp** 1,743,700 48,700 HBO & Co 6,081,412 29,100 HCIA Inc 1,884,225 247,700 Health Management Association Inc Class A 8,545,650 74,000 Healthsource Inc 1,674,250 112,500 Healthsouth Corp 3,937,500 131,300 MedPartners\Mullikin 3,069,137 676,400 Oxford Health Plans Inc ** 31,959,900 116,650 Phycor Inc** 6,328,262 37,900 Physician Reliance Network 1,989,750 45,600 Total Renal Care Holdings 1,881,000 37,200 U.S. Healthcare Inc 2,018,100 29,300 United Healthcare Corp 1,607,838 ------------ 76,268,674 ------------ TOTAL CONSUMER STAPLES (Cost $74,114,137) 123,100,750 ------------ CREDIT SENSITIVE 6.13% - ----------------------------------------------------------------- BANKS 0.46% - ----------------------------------------------------------------- 28,000 Cullen Frost Bankers Inc 1,442,000 45,900 Norwest Corp 1,600,762 ------------ 3,042,762 ------------ - ----------------------------------------------------------------- - ----------------------------------------------------------------------------- FS-3 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- MIDCO GROWTH FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ---------------- ------------- FINANCIAL SERVICES 3.66% - ----------------------------------------------------------------- 96,050 Advanta Corp Class B $4,994,600 45,800 Credit Acceptance Corp** 916,000 55,100 MGIC Investment Corp Wisconsin 3,237,125 488,513 Mercury Financial Co 6,106,413 153,400 Olympic Financial Ltd** 3,624,075 141,000 Schwab Charles Corp 3,419,250 188,300 World Acceptance Corp ** 1,694,700 ------------ 23,992,163 ------------ INSURANCE 1.45% - ----------------------------------------------------------------- 84,988 AFLAC Inc 2,560,248 90,405 Frontier Insurance Group Inc 3,107,672 95,050 Mutual Risk Management Ltd 3,813,881 ------------ 9,481,801 ------------ UTILITIES-ELECTRIC 0.56% - ----------------------------------------------------------------- 133,497 AES Corp 3,704,543 ------------ TOTAL CREDIT SENSITIVE (Cost $26,304,553) 40,221,269 ------------ INTERMEDIATE GOODS & SERVICES 10.10% - ----------------------------------------------------------------- BUSINESS SERVICES 1.59% - ----------------------------------------------------------------- 56,600 Accustaff Inc 1,782,900 49,300 Alternative Resources Corp** 1,898,050 179,600 Medaphis Corp ** 6,779,900 ------------ 10,460,850 ------------ CHEMICAL 2.66% - ----------------------------------------------------------------- 152,800 Airgas Inc ** 3,189,700 34,200 Cytec Industries Inc** 3,060,900 43,100 IMC Global Inc 1,578,537 36,100 Olin Corp 3,339,250 79,700 Praxair Inc 3,237,812 71,000 Union Carbide Corp 3,061,875 ------------ 17,468,074 ------------ ENERGY EQUIPMENT & SERVICES 2.58% - ----------------------------------------------------------------- 236,700 Input/Output Inc ** 9,556,762 213,600 Philip Environmental Inc 1,869,000 62,900 Production Operators Corp 2,295,850 77,400 Tidewater Inc 3,192,750 ------------ 16,914,362 ------------ ENERGY PRODUCERS 1.90% - ----------------------------------------------------------------- 201,500 Apache Corp 5,767,937 275,200 Parker & Parsley Petroleum Co 6,708,000 ------------ 12,475,937 ------------ PAPER & PACKAGING 0.25% - ----------------------------------------------------------------- 41,000 Bowater Inc $1,614,375 ------------ TRANSPORTATION 1.12% - ----------------------------------------------------------------- 165,075 Comair Holdings Inc 4,333,219 111,100 Southwest Airlines Co 3,041,362 ------------ 7,374,581 ------------ TOTAL INTERMEDIATE GOODS & SERVICES (Cost $49,555,275) 66,308,179 ------------ TOTAL COMMON STOCKS (Cost $407,110,675) 631,351,025 ------------ WARRANTS 0.00% - ----------------------------------------------------------------- 71 WESTWOOD ONE INC WARRANTS (Cost $0) 0 ------------ MUTUAL FUNDS 3.81% - ----------------------------------------------------------------- 24,953,323 PROVIDENT INSTITUTIONAL TEMP FUND (Cost $25,039,069) 25,039,069 ------------ TOTAL INVESTMENTS (Cost $432,149,744) 99.98% $656,390,094 Other Assets in Excess of Liabilities 0.02% 99,632 ------------------------- NET ASSETS 100.00% $656,489,726 ------------------------- ------------------------- * SEE NOTE 1 TO FINANCIAL STATEMENTS. ** DENOTES NON-INCOME PRODUCING SECURITY. ----------------------------------------------------------------------------- FS-4 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- BLUE CHIP FUND STATEMENT OF INVESTMENTS May 31, 1996 Shares Market Value* - ---------------- ------------- COMMON STOCKS 94.19% - ----------------------------------------------------------------- CAPITAL GOODS 8.51% - ----------------------------------------------------------------- AEROSPACE & DEFENSE 4.23% - ----------------------------------------------------------------- 14,850 McDonnell Douglas Corp $1,499,850 12,700 United Technologies Corp 1,389,063 ------------ 2,888,913 ------------ COMPUTER - SYSTEMS 2.03% - ----------------------------------------------------------------- 13,010 International Business Machines 1,388,818 ------------ COMPUTER - SOFTWARE & SERVICES 2.25% - ----------------------------------------------------------------- 21,135 Computer Associates International Inc 1,537,571 ------------ TOTAL CAPITAL GOODS (Cost $3,038,000) 5,815,302 ------------ CONSUMER CYCLICAL 15.93% - ----------------------------------------------------------------- ENTERTAINMENT 2.03% - ----------------------------------------------------------------- 46,600 Carnival Corp Class A 1,386,350 ------------ HARDWARE & TOOLS 2.04% - ----------------------------------------------------------------- 33,800 Black & Decker Corp 1,390,025 ------------ HOTELS - MOTELS 2.49% - ----------------------------------------------------------------- 15,800 Hilton Hotels Corp 1,702,450 ------------ RETAIL STORES - GENERAL MERCHANDISE 7.12% - ----------------------------------------------------------------- 16,100 Dayton Hudson Corp 1,642,200 51,000 Gap Stores Inc 1,714,875 29,550 Sears Roebuck & Co 1,503,356 ------------ 4,860,431 ------------ RETAIL STORES - SPECIALTY APPAREL 2.25% - ----------------------------------------------------------------- 37,900 Melville Corp 1,539,688 ------------ TOTAL CONSUMER CYCLICALS (Cost $7,716,765) 10,878,944 ------------ CONSUMER STAPLES 22.77% - ----------------------------------------------------------------- BEVERAGES - SOFT DRINKS 2.37% - ----------------------------------------------------------------- 48,660 Pepsico Inc 1,617,945 ------------ DRUGS 4.35% - ----------------------------------------------------------------- 22,100 Pfizer Inc 1,563,575 24,000 Schering Plough Corp 1,407,000 ------------ 2,970,575 ------------ FOOD 6.02% - ----------------------------------------------------------------- 36,100 Dole Food Inc $1,362,775 50,200 IBP Inc 1,374,225 41,200 Sara Lee Corp 1,375,050 ------------ 4,112,050 ------------ HEALTHCARE DIVERSIFIED 2.12% - ----------------------------------------------------------------- 16,990 Bristol Myers Squibb Co 1,450,521 ------------ HEALTHCARE (HMO'S) 2.01% - ----------------------------------------------------------------- 25,300 US Healthcare Inc 1,372,525 ------------ RETAIL STORES - DRUG 2.14% - ----------------------------------------------------------------- 49,700 Rite Aid Corp 1,459,938 ------------ RETAIL STORES - FOOD CHAINS 1.72% - ----------------------------------------------------------------- 34,030 Giant Food Inc Class A 1,174,035 ------------ TOBACCO 2.04% - ----------------------------------------------------------------- 42,240 UST Inc 1,393,920 ------------ TOTAL CONSUMER STAPLES (Cost $11,478,636) 15,551,509 ------------ CREDIT SENSITIVE 26.81% - ----------------------------------------------------------------- INVESTMENT BANKING/ BROKERAGE 2.17% - ----------------------------------------------------------------- 35,750 Traveler's Group Inc 1,483,625 ------------ MAJOR REGIONAL BANKS 8.70% - ----------------------------------------------------------------- 28,600 Bank of Boston Corp 1,426,425 29,450 Bank of New York Inc 1,527,719 24,240 First Union Corp 1,481,670 18,600 Nationsbank Corp 1,508,925 ------------ 5,944,739 ------------ MONEY CENTER BANKS 2.17% - ----------------------------------------------------------------- 21,150 Chase Manhattan Corp 1,480,500 ------------ NATURAL GAS 2.18% - ----------------------------------------------------------------- 36,350 Coastal Corp 1,490,350 ------------ PROPERTY - CASUALTY INSURANCE 1.99% - ----------------------------------------------------------------- 84,800 USF&G Corp 1,356,800 ------------ TELECOMMUNICATIONS 2.21% - ----------------------------------------------------------------- 35,560 Sprint Corp 1,506,855 ------------ UTILITIES-ELECTRIC 7.39% - ----------------------------------------------------------------- 45,100 Central & South West Corp 1,245,887 73,850 Edison International 1,218,525 43,030 General Public Utilities Corp 1,441,505 52,020 Ohio Edison Co 1,137,938 ------------ 5,043,855 ------------ TOTAL CREDIT SENSITIVE (Cost $14,752,434) 18,306,724 ------------ - ----------------------------------------------------------------------------- FS-5 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- BLUE CHIP FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ------ ------------- INTERMEDIATE GOODS & SERVICES 20.16% - ----------------------------------------------------------------- ALUMINUM 1.88% - ----------------------------------------------------------------- 20,820 Aluminum Co of America $1,283,032 ------------- CHEMICALS 3.64% - ----------------------------------------------------------------- 17,350 Eastman Chemical Co 1,162,450 23,250 Hercules Inc 1,319,437 ------------- 2,481,887 ------------- CHEMICALS - DIVERSIFIED 2.24% - ----------------------------------------------------------------- 29,560 PPG Industries Inc 1,529,730 ------------- MISCELLANEOUS 4.17% - ----------------------------------------------------------------- 21,890 Harris Corp 1,414,641 18,000 Loew's Corp 1,435,500 ------------- 2,850,141 ------------- OIL (INTEGRATED - DOMESTIC) 2.12% - ----------------------------------------------------------------- 29,300 Tosco Corp 1,450,350 ------------- OIL (INTEGRATED - INTERNATIONAL) 4.15% - ----------------------------------------------------------------- 17,040 Exxon Corp 1,444,140 12,300 Mobil Corp 1,388,362 ------------- 2,832,502 ------------- PHOTOGRAPHY/IMAGERY 1.96% - ----------------------------------------------------------------- 18,000 Eastman Kodak Co 1,338,750 ------------- TOTAL INTERMEDIATE GOODS & SERVICES (Cost $10,436,925) 13,766,392 ------------- TOTAL COMMON STOCKS (Cost $47,422,760) 64,318,871 ------------- MUTUAL FUNDS 0.80% - ----------------------------------------------------------------- 542,519 Provident Institutional Temp Fund (Cost $547,243) 547,243 ------------- TOTAL INVESTMENTS (COST $47,970,003) 94.99% $64,866,114 Other Assets in Excess of Liabilities 5.01% 3,419,458 --------------------------- NET ASSETS 100.00% $68,285,572 SMALL-CAP OPPORTUNITY FUND STATEMENT OF INVESTMENTS May 31, 1996 Shares Market Value* - ------ ------------- COMMON STOCKS 93.76% - ----------------------------------------------------------------- BASIC INDUSTRIES 6.09% - ----------------------------------------------------------------- COMMERCIAL CONSTRUCTION 1.61% - ----------------------------------------------------------------- 17,495 Granite Construction Inc $387,077 ----------- PAPER & WOOD 1.29% - ----------------------------------------------------------------- 8,240 Rayonier Inc 309,000 ----------- RUBBER & PLASTICS 1.73% - ----------------------------------------------------------------- 12,900 Tredegar Industries Inc 412,800 STEEL 1.46% - ----------------------------------------------------------------- 5,570 Texas Industries Inc 348,821 ----------- TOTAL BASIC INDUSTRIES (Cost $1,044,197) 1,457,698 ----------- CAPITAL GOODS 8.22% - ----------------------------------------------------------------- CONSTRUCTION EQUIPMENT 3.75% - ----------------------------------------------------------------- 12,820 AGCO Corp 386,202 6,460 JLG Industries Inc 511,147 ----------- 897,349 ----------- MISCELLANOUS PRODUCTION GOODS 4.47% - ----------------------------------------------------------------- 12,416 Commercial Metals Co 389,552 7,670 Pittway Corp Class A 370,078 11,660 Smith A O Corp 311,905 ----------- 1,071,535 ----------- TOTAL CAPITAL GOODS (Cost $1,207,720) 1,968,884 ----------- CONSUMER CYCLICAL 10.68% - ----------------------------------------------------------------- APPAREL 1.45% - ----------------------------------------------------------------- 7,480 Springs Industries Inc 346,885 ----------- CONSUMER DURABLES 1.60% - ----------------------------------------------------------------- 35,200 Interco Inc New 382,800 ----------- MISCELLANEOUS 4.75% - ----------------------------------------------------------------- 13,400 Anthony Industries Inc 400,325 21,170 Oneida Ltd 367,829 21,200 Russ Berrie & Co 368,350 ----------- 1,136,504 ----------- RESIDENTIAL CONSTRUCTION 2.89% - ----------------------------------------------------------------- 13,980 Continental Homes Holding Corp 344,257 32,670 NVR Inc 347,119 ----------- 691,376 ----------- TOTAL CONSUMER CYCLICAL (Cost $2,227,853) 2,557,565 ----------- *See note 1 to financial statements. ----------------------------------------------------------------------------- FS-6 - ----------------------------------------------------------------- WESTCORE ANNUAL REPORT - ----------------------------------------------------------------- SMALL-CAP OPPORTUNITY FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ------ ------------- CONSUMER STAPLES 10.42% - ----------------------------------------------------------------- DRUGS & MEDICAL PRODUCTS 5.71% - ----------------------------------------------------------------- 7,380 Bio Radiology Labs Inc Class A** $380,070 12,420 Datascope Corp** 220,455 42,100 Health Images Inc 405,212 12,020 Sola International Inc 363,605 ------------ 1,369,342 ------------ FOOD/AGRICULTURE 2.96% - ----------------------------------------------------------------- 21,750 Ben & Jerrys Homemade Inc Class A 348,000 27,455 J&J Snack Foods Corp** 360,347 ------------ 708,347 ------------ MISCELLANEOUS 1.75% - ----------------------------------------------------------------- 17,000 Paragon Trade Brands 418,625 ------------ TOTAL CONSUMER STAPLES (Cost $2,157,637) 2,496,314 ------------ ENERGY 5.21% - ----------------------------------------------------------------- OIL & NATURAL GAS 5.21% - ----------------------------------------------------------------- 10,630 Diamond Shamrock Inc 349,461 18,150 Global Industrial Technologies Inc 335,775 32,660 Pride Petroleum Services Inc** 563,385 ------------ TOTAL ENERGY (Cost $826,880) 1,248,621 ------------ FINANCIALS 12.22% - ----------------------------------------------------------------- BANKS/SAVINGS & LOANS 4.72% - ----------------------------------------------------------------- 2,980 Baybanks Inc 321,840 7,630 Deposit Guaranty Corp 345,257 5,365 MAF Bancorp 130,766 13,710 North Fork Bancorporation Inc 334,181 ------------ 1,132,044 ------------ INSURANCE 5.56% - ----------------------------------------------------------------- 14,450 Fremont General Corp 344,994 13,370 PXRE Corp 334,250 14,510 Paul Revere Corp 397,211 8,050 Selective Insurance Group Inc 255,588 ------------ 1,332,043 ------------ MISCELLANEOUS 1.94% - ----------------------------------------------------------------- 17,675 Money Store Inc 463,969 ------------ TOTAL FINANCIALS (Cost $2,045,722) 2,928,056 ------------ INTERMEDIATE GOODS & SERVICES 22.03% - ----------------------------------------------------------------- BUSINESS SERVICES 6.31% - ----------------------------------------------------------------- 29,620 Aviall Inc $296,200 16,555 Bell Industries Inc** 364,218 15,160 Comdisco Inc 416,900 15,520 Standard Register CO 434,560 ------------ 1,511,878 ------------ MEDICAL & DENTAL 3.07% - ----------------------------------------------------------------- 20,870 Bindley Western Industries Inc 357,399 14,560 Universal Health Services Inc** 378,560 ------------ 735,959 ------------ RETAIL 7.44% - ----------------------------------------------------------------- 63,273 General Host Corp 213,546 8,100 Long's Drug Stores Corp 347,288 13,288 Proffitt's Inc 488,334 24,030 Shopko Stores Inc 363,454 13,800 Waban Inc 369,150 ------------ 1,781,772 ------------ SANITATION 2.23% - ----------------------------------------------------------------- 18,135 USA Waste Services Inc** 534,983 ------------ TRAVEL/RECREATION 2.98% - ----------------------------------------------------------------- 11,100 Marcus Corp 288,600 26,460 Prime Hospitality Corp** 423,360 ------------ 711,960 ------------ TOTAL INTERMEDIATE GOODS & SERVICES (Cost $3,929,007) 5,276,552 ------------ TECHNOLOGY 12.03% - ----------------------------------------------------------------- AEROSPACE 4.72% - ----------------------------------------------------------------- 30,570 ECC International Corp 275,130 9,310 Tech System Corp 317,704 7,610 Thiokol Corp 312,961 7,360 Watkins Johnson Co 225,400 ------------ 1,131,195 ------------ COMPUTER & OFFICE 4.53% - ----------------------------------------------------------------- 14,050 Evans & Sutherland Computers 330,175 11,200 Marshall Industries 351,400 15,510 Western Digital Corp** 403,260 ------------ 1,084,835 ------------ - ----------------------------------------------------------------------------- FS-7 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- SMALL-CAP OPPORTUNITY FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ------ ------------- COMMUNICATION 2.78% - ------------------------------------------------------------------ 30,060 Digital Systems International Inc $665,077 ------------ TOTAL TECHNOLOGY (Cost $2,269,507) 2,881,107 ------------ TRANSPORTATION 2.46% - ------------------------------------------------------------------ AIR TRANSPORTATION 2.46% - ------------------------------------------------------------------ 16,620 Harper Group Inc 340,710 31,940 Worldcorp Inc 247,535 ------------ TOTAL TRANSPORTATION (Cost $647,413) 588,245 ------------ UTILITIES 4.40% - ------------------------------------------------------------------ ELECTRIC & GAS 4.40% - ------------------------------------------------------------------ 11,440 Central Hudson Gas & Electric Corp 341,770 8,200 Cilcorp Inc 349,525 20,960 Southwest Gas Corp 361,560 ------------ TOTAL UTILITIES (Cost $952,517) 1,052,855 ------------ TOTAL COMMON STOCKS (Cost $17,308,453) 22,455,897 ------------ MUTUAL FUNDS 4.04% - ------------------------------------------------------------------ 962,344 Provident Institutional Temp Fund, (Cost $966,615) 966,615 ------------ Face Amount SHORT- TERM U.S. GOVERNMENT TREASURIES 4.16% - ------------------------------------------------------------------ $1,000,000 U.S. Treasury Bill, 5.045%, 06/20/96 (Cost $997,337) 997,337 ------------ TOTAL INVESTMENTS 101.96% $24,419,849 (Cost $19,272,405) Liabilities in Excess of Other Assets -1.96% (468,837) ------------------------------- TOTAL NET ASSETS 100.00% $23,951,012 ------------------------------- GROWTH AND INCOME FUND STATEMENT OF INVESTMENTS May 31, 1996 Shares Market Value* - ------ ------------- COMMON STOCKS 83.17% - ------------------------------------------------------------------ CAPITAL GOODS 15.91% - ------------------------------------------------------------------ AEROSPACE/DEFENSE 3.16% - ------------------------------------------------------------------ 5,400 General Motors Corp Class H $328,050 12,000 Goodrich B F & Co 475,500 ------------ 803,550 ------------ COMPUTER HARDWARE 1.47% - ------------------------------------------------------------------ 3,500 Hewlett Packard Co 373,625 ------------ COMPUTER SERVICES 2.38% - ------------------------------------------------------------------ 10,700 General Motors Corp Class E 603,212 ------------ CONSTRUCTION 1.12% - ------------------------------------------------------------------ 6,400 Foster Wheeler Corp 284,800 ------------ ELECTRICAL EQUIPMENT 2.48% - ------------------------------------------------------------------ 7,600 General Electric Co 628,900 ------------ ELECTRONICS 1.66% - ------------------------------------------------------------------ 1,800 Intel Corp 135,900 6,500 Millipore Corp 285,187 ------------ 421,087 ------------ OTHER- CAPITAL GOODS 3.64% - ------------------------------------------------------------------ 9,700 Greenfield Industries Inc 366,175 13,600 OEA Inc 557,600 ------------ 923,775 ------------ TOTAL CAPITAL GOODS 4,038,949 (Cost $ 2,979,127) ------------ CONSUMER CYCLICALS 17.46% - ------------------------------------------------------------------ BUILDING RELATED 0.47% - ------------------------------------------------------------------ 4,000 Fleetwood Enterprises 120,500 ------------ BUSINESS SERVICES 2.83% - ------------------------------------------------------------------ 5,100 Manpower Inc 196,350 12,000 Omnicom Group Inc 523,500 ------------ 719,850 ------------ CONSUMER PRODUCTS 2.95% - ------------------------------------------------------------------ 2,600 Duracell International Inc 121,225 6,900 Gillette Co 407,962 2,500 Procter & Gamble Inc 219,687 ------------ 748,874 ------------ CONSUMER SERVICES 1.45% - ------------------------------------------------------------------ 12,800 Loewen Group Inc 368,000 ------------ *See note 1 to financial statements. **Denotes non-income producing security. ----------------------------------------------------------------------------- FS-8 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- GROWTH AND INCOME FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ------ ------------- CONSUMER SOFT GOODS 0.84% - ------------------------------------------------------------------ 7,500 Warnaco Group Inc $212,812 ------------- HOTELS/LEISURE 1.70% - ------------------------------------------------------------------ 1,200 Hilton Hotels Inc 129,300 9,600 La Quinta Inns Inc 302,400 ------------- 431,700 ------------- RETAIL 5.30% - ------------------------------------------------------------------ 8,600 Caseys General Stores Inc 203,175 14,625 Dollar General Corp 405,844 5,400 Home Depot Inc 276,075 9,000 Intimate Brands 194,625 5,200 Nordstrom Inc 265,200 ------------- 1,344,919 ------------- TELECOMMUNICATIONS 1.15% - ------------------------------------------------------------------ 1,700 Nokia Corp ADR 73,950 5,500 Vodafone Group PLC ADR 217,937 ------------- 291,887 ------------- OTHER- CONSUMER CYCLICAL 0.77% - ------------------------------------------------------------------ 6,500 Newell Co 195,000 ------------- TOTAL CONSUMER CYCLICAL (Cost $ 3,795,383) 4,433,542 ------------- CONSUMER STAPLES 7.14% - ------------------------------------------------------------------ DRUGS & HEALTHCARE 1.93% - ------------------------------------------------------------------ 4,500 Guidant Corp 261,000 3,900 Schering Plough Corp 228,638 ------------- 489,638 ------------- FOOD, BEVERAGE & TOBACCO 5.21% - ------------------------------------------------------------------ 3,700 CPC International Inc 255,763 11,000 Coca Cola Co 506,000 14,800 Pepsico Inc 492,100 2,100 Richfood Holdings Inc 70,350 ------------- 1,324,213 ------------- TOTAL CONSUMER STAPLES 1,813,851 (Cost $ 1,387,843) ------------- CREDIT SENSITIVE 31.18% - ------------------------------------------------------------------ BANKS 4.34% - ------------------------------------------------------------------ 7,600 Charter One Financial Inc 276,450 7,700 Cullen Frost Bankers Inc 396,550 12,300 Norwest Corp 428,963 ------------- 1,101,963 ------------- FINANCIAL SERVICES 8.15% - ------------------------------------------------------------------ 7,000 Advanta Corp Class B $364,000 6,600 Household International Inc 457,050 9,300 MBNA Corp 284,813 4,600 MGIC Investment Corp Wisconsin 270,250 55,350 Mercury Financial Co 691,875 ------------- 2,067,988 ------------- HEALTHCARE SERVICES 1.18% - ------------------------------------------------------------------ 5,500 U.S. Healthcare Inc 298,375 ------------- INSURANCE 3.19% - ------------------------------------------------------------------ 15,400 Frontier Insurance Group Inc 529,375 11,000 GCR Holdings LTD 280,500 ------------- 809,875 ------------- REAL ESTATE INVESTMENT TRUST 1.39% - ------------------------------------------------------------------ 15,500 Healthcare Realty Trust 352,625 ------------- UTILITIES- ELECTRIC 3.19% - ------------------------------------------------------------------ 13,496 AES Corp 374,514 16,600 Illinova Corp 435,750 ------------- 810,264 ------------- UTILITIES- GAS 4.91% - ------------------------------------------------------------------ 8,800 Enron Corp 352,000 7,800 KN Energy Inc 263,250 12,100 Panenergy Corp 388,713 7,400 Questar Corp 242,350 ------------- 1,246,313 ------------- UTILITIES- TELEPHONE 4.83% - ------------------------------------------------------------------ 12,000 Cincinnati Bell Inc 637,500 13,800 GTE Corp 589,950 ------------- 1,227,450 ------------- TOTAL CREDIT SENSITIVE (Cost $ 6,150,255) 7,914,853 ------------- INTERMEDIATE GOODS & SERVICES 11.47% - ------------------------------------------------------------------ AIRLINES 1.10% - ------------------------------------------------------------------ 5,400 Comair Holdings Inc 141,750 5,000 Southwest Airlines 136,875 ------------- 278,625 ------------- CHEMICALS 1.76% - ------------------------------------------------------------------ 5,800 PPG Industries Inc 300,150 3,400 Union Carbide Corp 146,625 ------------- 446,775 ------------- - ----------------------------------------------------------------------------- FS-9 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- GROWTH AND INCOME FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Shares Market Value* - ------ ------------- ENERGY PRODUCERS 3.58% - ---------------------------------------------------------------------- 7,000 Apache Corp $200,375 4,600 Mobil Corp 519,225 7,800 Parker & Parsley Petroleum Co 190,125 ----------- 909,725 ----------- ENERGY EQUIPMENT 1.89% - ---------------------------------------------------------------------- 7,700 Production Operators Corp 281,050 4,800 Tidewater Inc 198,000 ----------- 479,050 ----------- TRANSPORTATION 3.14% - ---------------------------------------------------------------------- 3,400 Burlington Northern Santa Fe 288,150 5,500 CSX Corp 272,250 3,400 Union Pacific Corp 238,425 ----------- 798,825 ----------- TOTAL INTERMEDIATE GOODS & SERVICES (Cost $ 2,592,277) 2,913,000 ----------- TOTAL COMMON STOCKS (Cost $ 16,904,885) 21,114,195 ----------- Face Amount - ----------- CONVERTIBLE DEBENTURES 12.59% - ---------------------------------------------------------------------- COMPUTER SERVICES/SOFTWARE 2.96% - ---------------------------------------------------------------------- $400,000 First Financial Management Corp, ** 5.00%, 12/15/99 751,808 ----------- HEALTHCARE SERVICES 1.09% - ---------------------------------------------------------------------- 250,000 Phycor Inc SDCV, ** 4.50%, 2/15/03 277,188 ----------- ELECTRONICS 1.16% - ---------------------------------------------------------------------- 250,000 Analog Devices SDCV, ** 3.50%, 12/1/00 295,000 ----------- ENERGY EQUIPMENT 1.13% - ---------------------------------------------------------------------- 200,000 Philip Environmental Inc SDCV, ** 6.00%, 10/15/00 286,000 ----------- HOTELS 4.42% - ---------------------------------------------------------------------- 200,000 HFS Inc, ** 4.50%, 10/01/99 689,500 300,000 Prime Hospitality, **7.00%, 4/15/02 433,125 ----------- 1,122,625 ----------- MEDIA-PUBLISHING 1.83% - ---------------------------------------------------------------------- 500,000 National Education Corp, ** 6.50%, 5/15/11 465,000 ----------- TOTAL CONVERTIBLE DEBENTURES (Cost $ 2,269,648) 3,197,621 ----------- MUTUAL FUNDS 3.20% - ---------------------------------------------------------------------- 810,186 Provident Institutional Temp Fund (Cost $ 812,281) $812,281 ----------- TOTAL INVESTMENTS 98.96% $25,124,097 (Cost $ 19,986,814) Assets in Excess of Other Liabilities 1.04% 263,306 ---------------------------- NET ASSETS 100.00% $25,387,403 ---------------------------- *See note 1 to financial statements. **Convertible to common stock. ----------------------------------------------------------------------------- FS-10 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- INTERMEDIATE-TERM BOND FUND STATEMENT OF INVESTMENTS May 31, 1996 Face Amount Market Value* - ----------- ------------- CORPORATE BONDS 47.79% - --------------------------------------------------------------------------- ASSET BACKED 4.48% - --------------------------------------------------------------------------- $405,293 ALPS 94 1 Pass-Through Certificates Ser A, 7.150%, 09/15/04 $408,004 750,000 Conti Mortgage Home Equity Loan Trust, 7.95%, 04/15/10 763,777 812,395 Equicredit Corp Home Equity Loan Trust Ser 1994-1, 5.80%, 03/15/09 787,511 1,000,000 Premier Auto Trust Ser 95-2-A5, 7.15%, 02/04/99 1,012,629 750,000 World Omni Auto Ser 95-A 6.05%, 11/25/01 749,549 ----------- TOTAL ASSET BACKED (Cost $3,754,517) 3,721,470 ----------- FINANCIAL 12.79% - --------------------------------------------------------------------------- OPERATORS OF NON-RESIDENTIAL BUILDINGS 1.14% - --------------------------------------------------------------------------- Kimco Realty Corp MTN, 1,000,000 6.83%, 11/14/05 946,100 ----------- PERSONAL CREDIT INSTITUTIONS 1.19% - --------------------------------------------------------------------------- 1,000,000 General Motors Acceptance Corp MTN, 6.65%, 05/24/00 986,653 ----------- REAL ESTATE INVESTMENT TRUST 5.25% - --------------------------------------------------------------------------- 550,000 Camden Property Trust, 6.625%, 05/15/01 518,136 700,000 Developers Diversified Realty Corp, 7.625%, 05/15/00 695,392 420,000 Nationwide Health Properties MTN, 6.93%, 12/18/01 403,146 1,000,000 New Plan Realty Trust, 7.75%, 04/06/05 1,003,986 800,000 Price REIT Inc, 7.25%, 11/01/00 771,707 1,000,000 Weingarten Realty Investors Trust MTN, 7.22%, 06/01/05 969,800 ----------- 4,362,167 ----------- SAVINGS & LOAN HOLDING COMPANIES - FEDERALLY CHARTERED 2.53% - --------------------------------------------------------------------------- 1,500,000 Golden West Financial Corp, 8.375%, 04/15/02 1,580,085 500,000 World Savings and Loan, 10.25%, 10/01/97 523,239 ----------- 2,103,324 ----------- SECURITIES BROKERS, DEALERS & FLOTATION COS 1.33% - --------------------------------------------------------------------------- $1,130,000 Merrill Lynch Corp MTN, 6.50%, 04/01/01 $1,101,305 ----------- STATE COMMERCIAL BANKS 1.35% - --------------------------------------------------------------------------- 1,150,000 Chemical Bank NY NY, 7.00%, 6/01/05 1,117,751 ----------- TOTAL FINANCIAL (Cost $10,795,085) 10,617,300 ----------- INDUSTRIAL 23.72% - --------------------------------------------------------------------------- BOOKS - PUBLISHING OR PUBLISHING & PRINTING 1.02% - --------------------------------------------------------------------------- 1,000,000 Golden Books Publishing Co, 7.65%, 09/15/02 847,500 ----------- BROADCAST - MEDIA 3.30% - --------------------------------------------------------------------------- 1,100,000 Cox Communications Inc, 6.375%, 06/15/00 1,076,633 1,500,000 TKR Cable I Cable Notes, 10.50%, 10/30/07, Callable 10/30/99 @ 105.25 1,665,000 ----------- 2,741,633 ----------- CABLE & OTHER PAY TELEVISION SERVICES 2.77% - --------------------------------------------------------------------------- 2,375,000 Telecommunications Inc, 8.00%, 08/01/05 2,301,468 ----------- COOKIES & CRACKERS 1.19% - --------------------------------------------------------------------------- 1,000,000 RJR Nabisco Inc, 8.00%, 07/15/01 986,160 ----------- ELECTRONIC & OTHER ELECTRICAL EQUIPTMENT 1.33% - --------------------------------------------------------------------------- 1,150,000 Rockwell International Corp, 6.625%, 06/01/05 1,102,089 ----------- INDUSTRIAL ORGANIC CHEMICALS 0.94% - --------------------------------------------------------------------------- 750,000 International Specialty Products, Inc., 9.00%, 03/01/99 777,019 ----------- METALS - MISC 1.16% - --------------------------------------------------------------------------- 1,000,000 CSR America Inc, 6.875%, 07/21/05 967,190 ----------- - ---------------------------------------------------------------------------- FS-11 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- INTERMEDIATE-TERM BOND FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Face Amount Market Value* - ----------- -------------- MOTION PICTURE & VIDEO TAPE PRODUCTION 2.59% - --------------------------------------------------------------------------- Time Warner Entertainment Co: $1,000,000 9.625%, 05/01/02 $1,096,376 1,000,000 8.875%, 10/01/12 1,055,304 ----------- 2,151,680 ----------- NEWSPAPER - PUBLISHING OR PUBLISHING & PRINTING 2.83% - --------------------------------------------------------------------------- 1,500,000 News America Holdings, Inc 8.625%, 02/01/03 1,587,103 750,000 The New York Times Co, 7.625%, 03/15/05 764,567 ----------- 2,351,670 ----------- PHARMACEUTICAL PREPARATIONS 3.19% - --------------------------------------------------------------------------- 1,700,000 Bayer Corp, 6.50%, 10/01/02 (1) 1,648,490 1,000,000 Upjohn Co MTN Ser-A, 6.25%, 02/02/98 996,793 ----------- 2,645,283 ----------- RETAIL DEPARTMENT STORES 1.03% - --------------------------------------------------------------------------- 1,000,000 K Mart Corp, 8.125%, 12/01/06 857,500 ----------- SEARCH, DETECTION, NAVIGATION, GUIDANCE AERONAUTICAL SYSTEMS 0.90% - --------------------------------------------------------------------------- 790,000 Raytheon Co, 6.50%, 07/15/05 749,084 ----------- SERVICES - MISCELLANEOUS, AMUSEMENT & RECREATION 1.47% - --------------------------------------------------------------------------- 1,250,000 Walt Disney Co, 6.375%, 03/30/01 1,220,616 ----------- TOTAL INDUSTRIAL (Cost $19,957,486) 19,698,892 ----------- TRANSPORTATION 4.26% - --------------------------------------------------------------------------- AIR TRANSPORTATION, SCHEDULED 4.26% - --------------------------------------------------------------------------- 896,208 American Airlines, 9.71%, 01/02/07 976,509 500,000 Continental Airlines, 7.75%, 07/02/15 503,350 1,060,740 Jet Equipment Trust Ser 95-B, 7.83%, 02/15/15 (1) 1,049,071 962,137 United Airlines Pass Through Certificates 95-A1, 9.02%, 04/19/12 1,011,003 ----------- TOTAL TRANSPORTATION (Cost $3,431,949) 3,539,933 ----------- UTILITIES 2.54% - --------------------------------------------------------------------------- ELECTRIC SERVICES 1.47% - --------------------------------------------------------------------------- $1,250,000 Central Maine Power Co, 6.25%, 11/01/98 $1,222,530 ----------- ELECTRIC & OTHER SERVICES COMBINED 1.07% - --------------------------------------------------------------------------- 1,000,000 Long Island Lighting Co, 7.125%, 06/01/05 883,380 ----------- TOTAL UTILITIES (Cost $2,221,628) 2,105,910 ----------- TOTAL CORPORATE BONDS (Cost $40,160,665) 39,683,505 ----------- MORTGAGE-BACKED SECURITIES 0.72% - --------------------------------------------------------------------------- 577,587 Collateralized Mortgage Securities Corp, 8.75%, 04/20/19 (Cost $567,842) 596,162 ----------- U.S. GOVERNMENT TREASURIES 46.23% - --------------------------------------------------------------------------- U.S. Treasury Notes: 3,000,000 8.00%, 01/15/97 3,043,125 1,000,000 7.875%, 01/15/98 1,025,936 4,000,000 7.875%, 04/15/98 4,115,000 3,000,000 6.125%, 05/15/98 2,994,375 5,000,000 6.875%, 08/31/99 5,053,125 4,000,000 7.75%, 11/30/99 4,148,744 3,000,000 7.125%, 02/29/00 3,052,500 3,300,000 6.875%, 03/31/00 3,331,964 2,200,000 6.75%, 04/30/00 2,211,000 2,000,000 6.125%, 09/30/00 1,963,122 1,000,000 5.625%, 11/30/00 961,875 2,000,000 7.75%, 02/15/01 2,088,122 3,000,000 6.25%, 02/15/03 2,919,375 500,000 6.50%, 08/15/05 487,031 U.S. Treasury Bills: 1,000,000 06/20/96 997,337 ----------- TOTAL U.S. GOVERNMENT TREASURIES (Cost $38,874,619) 38,392,631 ----------- Shares - ------ MUTUAL FUNDS 3.98% - --------------------------------------------------------------------------- 3,286,473 Provident Institutional Temp Fund (Cost $3,301,665) 3,301,665 ----------- TOTAL INVESTMENTS 98.72% $81,973,963 (Cost $82,904,791) Other Assets in Excess of Other Liabilities 1.28% 1,064,673 -------------------------- NET ASSETS 100.00% $83,038,636 -------------------------- -------------------------- *See note 1 to financial statements. (1) Restricted security- see Note 6 of Notes to Financial Statements ----------------------------------------------------------------------------- FS-12 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- LONG-TERM BOND FUND STATEMENT OF INVESTMENTS May 31, 1996 Face Amount Market Value* - ----------- -------------- CORPORATE BONDS 48.36% - --------------------------------------------------------------------------- FINANCIAL 17.73% - --------------------------------------------------------------------------- FINANCIAL SERVICES 0.91% - --------------------------------------------------------------------------- $250,000 Leucadia National Corp, 7.75%, 08/15/13 $227,356 ----------- FIRE MARINE & CASUALTY INSURANCE 2.14% - --------------------------------------------------------------------------- 600,000 Zurich Reinsurance Center Holdings, 7.125%, 10/15/23 536,517 ----------- LIFE INSURANCE 3.14% - --------------------------------------------------------------------------- 500,000 Lincoln National Insurance Co, 9.125%, 10/01/24 534,784 250,000 Security Benefit Life, 8.75%, 05/15/16 252,325 ----------- 787,109 ----------- MULTI LINE INSURANCE 0.91% - --------------------------------------------------------------------------- 250,000 Principal Mutual Life Insurance Co, 7.875%, 03/01/24(1) 228,958 ----------- OPERATORS OF NON-RESIDENTIAL BUILDINGS 5.40% - --------------------------------------------------------------------------- 400,000 Kimco Realty Corp, 6.83%, 11/14/05 378,440 250,000 New Plan Realty Trust, 7.75%, 04/06/05 250,997 500,000 Property Trust of America, 6.875%, 02/15/08 470,111 250,000 Rouse Co, 8.50%, 01/15/03 255,455 ----------- 1,355,003 ----------- REAL ESTATE INVESTMENT TRUSTS 3.13% - --------------------------------------------------------------------------- 150,000 Camden Property Trust, 6.625%, 05/15/01 141,310 140,000 Nationwide Health Property Mtn, 6.93%, 12/18/01 134,382 275,000 Price REIT Inc, 7.25%, 11/01/00 265,274 250,000 Weingarten Realty Investors Trust MTN, 7.22%, 06/01/05 242,450 ----------- 783,416 ----------- SAVINGS INSTITUTIONS- FEDERALLY CHARTED 2.10% - --------------------------------------------------------------------------- 500,000 Golden West Financial Corp, 8.375%, 04/15/02 526,695 ----------- TOTAL FINANCIAL (Cost $4,523,687) 4,445,054 ----------- INDUSTRIAL 23.98% - --------------------------------------------------------------------------- BOOKS, PUBLISHING OR PUBLISHING & PRINTING 0.85% - --------------------------------------------------------------------------- $250,000 Golden Books Publishing, 7.65%, 09/15/02 $211,875 ----------- BROADCAST MEDIA 1.54% - --------------------------------------------------------------------------- 400,000 Cox Communications Inc, 7.625%, 06/15/25 386,516 ----------- CABLE & OTHER PAY TELEVISION SERVICES 3.09% - --------------------------------------------------------------------------- Telecommunications Inc, 800,000 8.00%, 08/01/05 775,231 ----------- DAIRY PRODUCTS 1.61% - --------------------------------------------------------------------------- 500,000 Borden Inc, 7.875%, 02/15/23 404,115 ----------- INDUSTRIAL ORGANIC CHEMICALS 2.07% - --------------------------------------------------------------------------- 500,000 International Specialty Products, Inc., 9.00%, 03/01/99 518,012 ----------- SERVICES - MISCELLANEOUS, AMUSEMENT & RECREATION 2.11% - --------------------------------------------------------------------------- 550,000 Walt Disney Co, 6.75%, 03/30/06 528,559 ----------- MISCELLANEOUS CHEMICAL PRODUCTS 1.52% - --------------------------------------------------------------------------- 400,000 Lubrizol Corp, 7.25%, 06/15/25 382,196 ----------- NATURAL GAS TRANSMISSION 1.24% - --------------------------------------------------------------------------- 250,000 Coastal Corp, 10.75%, 10/01/10 311,382 ----------- NEWSPAPERS - PUBLISHING OR PUBLISHING & PRINTING 2.17% - --------------------------------------------------------------------------- 500,000 News America Holdings Inc, 9.25%, 02/01/13 543,308 ----------- PERIODICALS - PUBLISHING OR PUBLISHING & PRINTING 3.11% - --------------------------------------------------------------------------- 750,000 Time Warner Inc, 9.125%, 01/15/13 780,026 ----------- PHARMACEUTICAL PREPARATIONS 2.13% - --------------------------------------------------------------------------- 550,000 Bayer Corp, 6.50%, 10/01/02(1) 533,335 ----------- - ---------------------------------------------------------------------------- FS-13 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- LONG-TERM BOND FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Face Amount Market Value* - ----------- -------------- RETAIL - DEPARTMENT STORES 1.56% - --------------------------------------------------------------------------- $500,000 Kmart Corp, 7.95%, 02/01/23 $391,250 ----------- SEARCH, DETECTION, NAVIGATION, GUIDENCE, AERONAUTICAL SYSTEMS 0.98% - --------------------------------------------------------------------------- 260,000 Raytheon Co, 6.50%, 07/15/05 246,534 ----------- TOTAL INDUSTRIAL (Cost $6,155,170) 6,012,339 ----------- TRANSPORTATION 4.71% - --------------------------------------------------------------------------- AIR TRANSPORTATION - SCHEDULED 4.71% - --------------------------------------------------------------------------- 500,000 AMR Corp, 10.00%, 04/15/21 588,523 343,758 Jet Equipment Trust 95-B, 7.83%, 02/15/15(1) 339,977 240,534 United Airlines Pass-Through Certificates, 9.02%, 04/19/12 252,751 ----------- TOTAL TRANSPORTATION (Cost $1,082,392) 1,181,251 ----------- UTILITIES 1.94% - --------------------------------------------------------------------------- ELECTRIC AND OTHER SERVICES COMBINED 1.94% - --------------------------------------------------------------------------- 550,000 Long Island Lighting Co, 7.125%, 06/01/05 485,859 ----------- TOTAL UTILITIES (Cost $537,640) 485,859 ----------- TOTAL CORPORATE BONDS (Cost $12,298,889) 12,124,503 ----------- U.S. GOVERNMENT TREASURIES 46.18% - --------------------------------------------------------------------------- U.S. TREASURY BONDS/NOTES/BILLS 34.69% - --------------------------------------------------------------------------- U.S. Treasury Bonds: 1,000,000 9.375%, 02/15/06 1,176,250 1,000,000 7.50%, 11/15/16 1,035,311 1,000,000 8.875%, 02/15/19 1,188,750 1,000,000 8.50%, 02/15/20 1,149,375 1,500,000 7.875%, 02/15/21 1,620,000 1,400,000 8.125%, 08/15/21 1,553,125 U.S. Treasury Notes, 1,000,000 6.25%, 02/15/03 973,125 ----------- 8,695,936 ----------- U.S. GOVERNMENT ZERO COUPON STRIPS 11.49% - --------------------------------------------------------------------------- $2,000,000 02/15/04 $1,187,104 5,000,000 08/15/11 1,693,655 ----------- 2,880,759 ----------- TOTAL U.S. GOVERNMENT TREASURIES (Cost $11,274,853) 11,576,695 ----------- Shares ------ MUTUAL FUNDS 0.08% - --------------------------------------------------------------------------- 16,532 Provident Institutional Temp Fund 19,360 (Cost $19,360)) ----------- TOTAL INVESTMENTS (Cost $23,593,102) 94.62% $23,720,558 Other Assets in Excess of Liabilities 5.38% 1,349,701 ------------------------- NET ASSETS 100.00% $25,070,259 ------------------------- ------------------------- * See Note 1 to financial statements (1) Restricted Security- See Note 6 of Notes to Financial Statements ----------------------------------------------------------------------------- FS-14 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- COLORADO TAX-EXEMPT FUND STATEMENT OF INVESTMENTS May 31, 1996 Bond Rating Market Face Amount Moody's/S&P(+) Value* - ----------- --------------------------- CERTIFICATES OF PARTICIPATION 2.23% - --------------------------------------------------------------------------- $100,000 Colorado State Board of Agriculture Certificate of Participation CSU Research Foundation Master Lease Purchase Agreement, 6.45%, 11/01/01, Optional 05/01/99 @ 101.00, MBIA Aaa/AAA $105,195 100,000 State of Colorado Certificate of Participation Master Lease Purchase Agreement, 5.25%, 11/01/99, AMBAC Aaa/AAA 102,283 100,000 Lakewood, Jefferson County, Public Building Authority, Certificate of Participation, Lease Purchase Agreement 5.625%, 12/01/99, MBIA Aaa/AAA 102,597 ----------- TOTAL CERTIFICATES OF PARTICIPATION (Cost $300,771) 310,075 ----------- GENERAL OBLIGATION BONDS 62.17% - --------------------------------------------------------------------------- COUNTY/CITY/SPECIAL DISTRICT/ SCHOOL DISTRICT 62.17% - --------------------------------------------------------------------------- 100,000 Adams & Arapahoe Counties School District 29-J 5.40%, 12/01/09, Optional 12/01/06 @ 100.00, MBIA Aaa/AAA 98,625 100,000 Adams & Arapahoe Counties School District 28J 5.75%, 12/01/06, MBIA Aaa/AAA 103,751 100,000 Adams County School District 12, 7.25%, 12/15/09, Prerefunded 12/15/99 @ 100.00 NR/A+ 108,697 225,000 Alamosa & Conejos Counties School District Re-11J 4.9%, 12/01/07, Optional 12/01/05 @ 100.00, MBIA Aaa/AAA 214,159 100,000 Arapahoe County School District 1, 4.85%, 11/01/04, F5A Aaa/AAA 98,128 125,000 Arapahoe County School District 2, 6.75%, 12/01/04, Optional 12/01/99 @ 101.00 A/NR 132,336 250,000 Arapahoe County School District 6, 5.50%, 12/01/06 Aa/AA 254,995 250,000 Basalt & Rural Fire Protection District, Eagle & Pitkin Counties, 5.20%, 12/01/15, Optional 12/01/06 @ 100.00, AMBAC Aaa/AAA 233,172 250,000 Brighton, Adams County, 6.625%, 12/01/11, Optional 12/01/01 @ 101.00, MBIA Aaa/AAA 266,395 25,000 Boulder & Gilpin Counties Valley School District Re-2, 5.55%, 12/01/03 A-1/AA 25,693 $150,000 Boulder Library, 7.30%, 10/01/08, Prerefunded 10/01/98 @ 100.00 Aaa/AA $160,051 Boulder, Larimer & Weld Counties, St. Vrain Valley, School District Re-1J: 100,000 5.50%, 12/15/04, Optional 12/15/02 @ 101.00, MBIA Aaa/AAA 102,878 175,000 5.80%, 12/15/07, Optional 12/15/02 @ 101.00, MBIA Aaa/AAA 180,579 100,000 6.00%, 12/15/10, Optional 12/15/02 @ 101.00, MBIA Aaa/AAA 102,819 125,000 Colorado Springs, El Paso County 6.60%, 09/01/00, Prerefunded 09/01/99 @ 100.00 NR/AAA 132,797 250,000 Clear Creek County School District Re-1, 5.40%, 12/01/11, Optional 12/01/05 @ 100.00, MBIA Aaa/AAA 243,200 250,000 Douglas & Elbert Counties School District Re-1, 6.15%, 12/15/08, Optional 12/15/04 @ 101.00, MBIA Aaa/AAA 263,257 250,000 Douglas & Elbert Counties School District Re-1, 5.75%, 12/15/05, Optional 12/15/01 @ 101.00, FGIC Aaa/AAA 259,215 Eagle, Garfield & Routt Counties School District 50-J: 125,000 6.60%, 12/01/99, Prerefunded 12/01/98 @ 100.00, FGIC Aaa/AAA 131,806 85,000 5.60%, 12/01/01, FGIC Aaa/AAA 88,544 200,000 5.75%, 12/01/03, Optional 12/01/02 @ 100.00, FGIC Aaa/AAA 209,026 125,000 El Paso County School District 3, 6.20%, 12/15/00, Optional 12/15/98 @ 101.00, MBIA Aaa/AAA 130,607 125,000 El Paso County School District 49, 6.75%, 12/01/04, Optional 12/01/00 @ 100.00, MBIA Aaa/AAA 133,252 125,000 Fruita, Mesa County, 6.40%, 10/01/00, Optional 10/01/97 @ 100.00, AMBAC Aaa/AAA 127,727 250,000 Garfield, Eagle & Pitkin Counties School District Re-1, 6.60%, 12/15/14, Prerefunded 06/15/04 @ 101.00, MBIA Aaa/AAA 276,978 625,000 Goldsmith Metropolitan District Arapahoe & Denver Counties, 6.50%, 12/01/03, Optional 12/01/99 @ 101.00, MBIA Aaa/AAA 660,225 100,000 Gunnison & Saquache Counties School District Re-1J, 5.15%, 12/01/10, Optional 12/15/06 @ 100.00, MBIA Aaa/AAA 94,925 - ---------------------------------------------------------------------------- FS-15 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- COLORADO TAX-EXEMPT FUND STATEMENT OF INVESTMENTS May 31, 1996 (continued) Bond Rating Market Face Amount Moody's/S&P(+) Value* - ----------- --------------------------- Jefferson County School District R-1: $100,000 5.10%, 12/15/99, AMBAC Aaa/AAA $102,072 100,000 5.75%, 12/15/03, Optional 12/15/02 @ 101.00, AMBAC Aaa/AAA 105,109 500,000 5.90%, 12/15/04, Optional 12/15/02 @ 101.00, AMBAC Aaa/AAA 526,160 125,000 Larimer County Poudre School District R-1, 7.00%, 12/15/08, Prerefunded 12/15/01 @ 101.00 NR/NR 138,873 250,000 Larimer, Weld & Boulder Counties, Thompson School District R-2J 6.05%, 12/15/08, Optional 12/15/04 @ 100.00, MBIA Aaa/AAA 262,563 100,000 Longmont, Boulder County, 5.15%, 09/01/99, MBIA Aaa/AAA 101,787 105,000 Morgan County School District Re-3, 6.45%, 12/01/98 A/NR 110,195 Northglenn, Adams County Water: 150,000 6.70%, 11/01/01, Optional 11/01/96 @ 101.00, MBIA Aaa/AAA 152,772 250,000 5.50%, 12/01/06, Optional 12/01/04 @ 101.00, FSA Aaa/AAA 255,400 100,000 Otero County, East Otero School District R-1 5.05%, 12/15/09, Optional 12/15/05 @ 100.00, FSA Aaa/AAA 94,617 100,000 Pitkin County School District Re-1, 5.50%, 11/15/00, AMBAC Aaa/AAA 103,180 125,000 Poudre Valley Hospital District, Larimer County, 6.80%, 11/15/02, Prerefunded 11/15/98 @ 101.00 NR/AAA 133,443 250,000 Pueblo, Pueblo County Limited Tax, 6.00%, 06/01/16, Optional 06/01/06 @ 100.00, MBIA Aaa/AAA 250,185 75,000 Routt County School District Re-2, 5.00%, 12/01/05, Optional 12/01/03 @ 100.00, FGIC Aaa/AAA 73,667 375,000 San Miguel County School District R-1, 5.50%, 12/01/12, Optional 12/01/05 @ 101.00, MBIA Aaa/AAA 364,706 100,000 Summit County School District Re-1 5.20%, 12/01/12, Optional 12/01/06 @ 101.00, FGIC Aaa/AAA 94,168 125,000 Thornton, Adams County, 5.75%, 12/01/04, Optional 12/01/02 @ 101.00, FGIC Aaa/AAA 130,843 Thornton, Adams County Water: 25,000 7.40%, 12/01/98, FGIC Aaa/AAA 26,836 125,000 7.40%, 12/01/98, Prerefunded 12/01/96 @ 102.00, FGIC Aaa/AAA 129,749 $100,000 Thorton, Adams County Water, 5.20%, 12/01/99, FGIC Aaa/AAA $102,374 135,000 Three Lakes Water & Sanitation District, Grand County Limited Tax, 6.00%, 06/01/00 Optional 06/01/97 @ 101.00, MBIA Aaa/AAA 137,931 100,000 Willows Water District, Arapahoe County, 6.40%, 12/01/98, Optional 12/01/96 @ 100.00, MBIA Aaa/AAA 100,168 100,000 Windsor & Severance Library District, Weld County, 5.30%, 12/15/15, Optional 12/15/06 @ 100.00, AMBAC Aaa/AAA 93,753 100,000 Woodland Park, Teller County, 6.30%, 07/01/08, Optional 07/01/00 @ 101.00, FGIC Aaa/AAA 104,244 125,000 Woodmoor Water & Sanitation District 1 El Paso County, 6.20%, 12/01/00, Optional 12/01/96 @ 100.00, MBIA Aaa/AAA 126,398 ----------- TOTAL GENERAL OBLIGATION BONDS (Cost $8,549,601) 8,655,030 ----------- REVENUE BONDS 32.60% - ---------------------------------------------------------------------------- EDUCATION 2..70% - ---------------------------------------------------------------------------- 100,000 Auraria Higher Education Center Student Fee, 5.25%, 05/01/10, Optional 05/01/06 @ 101.00, AMBAC Aaa/AAA 96,083 70,000 Colorado State Board of Agriculture CSU Auxiliary Facilities 7.70%, 09/01/06, Optional 09/01/96 @ 101.00, MBIA Aaa/AAA $71,317 100,000 State of Colorado Department of Higher Education State Board for Community Colleges & Occupational Education, 5.20%, 11/01/03, Optional 11/01/02 @ 100.00, AMBAC Aaa/AAA 101,137 100,000 University of Colorado Board of Regents Auxiliary Facilities, 6.50%, 06/01/01, Prerefunded 06/01/00 @ 101.00 A1/NR 107,249 ---------- 375,786 ---------- ----------------------------------------------------------------------------- FS-16 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- COLORADO TAX-EXEMPT FUND STATEMENT OF INVESTMENTS May 31, 1996 Bond Rating Market Face Amount Moody's/S&P(+) Value* - ----------- --------------------------- HOSPITALS 2.47% - --------------------------------------------------------------------------- $100,000 Poudre Valley Hospital District, Larimer County, 5.80%, 12/01/98, ETM, AMBAC Aaa/AAA $103,611 250,000 Poudre Valley Hospital District, Larimer County, 4.75%, 12/01/05, Optional 12/01/03 @ 101.00, AMBAC Aaa/AAA 240,743 ---------- 344,354 ---------- PUBLIC FACILITES 1.54% - --------------------------------------------------------------------------- 200,000 Denver Metropolitan Major League Baseball Stadium District Sales Tax, 6.25%, 10/01/02, Prerefunded 10/01/01 @ 101.00, FGIC Aaa/AAA 215,040 ---------- SPECIAL TAX 13.15% - ---------------------------------------------------------------------------- 250,000 Boulder Urban Renewal Authority Tax Increment, 6.00%, 03/01/02, Optional 03/01/00 @ 101.00, MBIA Aaa/AAA 261,992 250,000 Breckenridge, Summit County Excise Tax, 5.20%, 12/01/01, Optional 12/01/00 @ 100.00, MBIA Aaa/AAA 255,632 100,000 Commerce City, Adams County Sales Tax, 5.375%, 08/01/07, Optional 08/01/03 @ 101.00, MBIA Aaa/AAA 100,243 150,000 Delta County Sales Tax Revenue, 4.75%, 06/01/01, FSA Aaa/AAA 149,735 500,000 Fort Collins, Larimer County Sales & Use Tax, 4.90%, 06/01/01, FGIC Aaa/AAA 502,420 150,000 Lafayette, Boulder County, Sales & Use Tax, 6.40%, 11/15/04, Prerefunded 11/15/01 @ 100.00, AMBAC Aaa/AAA 163,685 250,000 Silverthorne, Summit County Sales Tax, 5.625%, 04/15/13, Optional 04/15/05 @ 100.00, FSA Aaa/AAA 247,965 Thornton, Adams County, Sales and Use Tax: 100,000 4.95%, 09/01/04, Optional 09/01/02 @ 101.00, FGIC Aaa/AAA 99,458 50,000 5.15%, 09/01/06, Optional 09/01/03 @ 100.00, FGIC Aaa/AAA 49,662 ---------- 1,830,792 ---------- TRANSPORTATION 4.25% - --------------------------------------------------------------------------- Regional Transportation District RTD Sales Tax: $100,000 7.00%, 11/01/98, FGIC Aaa/AAA $106,224 500,000 5.375%, 11/01/10, Optional 11/01/03 @ 101.00, FGIC Aaa/AAA 485,100 ---------- 591,324 ---------- UTILITY 8.49% - --------------------------------------------------------------------------- 75,000 Boulder Water & Sewer, 5.75%, 12/01/06, Optional 12/01/02 @ 100.00 Aa/AA 76,919 250,000 Central Weld County Water District, 5.25%, 12/01/05, Optional 12/01/03 @ 100.00, MBIA Aaa/AAA 251,848 100,000 Colorado Springs Utilities Systems, 6.40%, 11/15/02, Optional 11/15/01 @ 102.00 Aa/AA 108,466 250,000 Fort Collins, Larimer County Wastewater Utility Enterprise, 5.375%, 12/01/09, Optional 12/01/05 @ 100.00, FGIC Aaa/AAA 245,883 100,000 Glenwood Springs, Garfield County Water & Sewer, 4.70%, 12/01/05, Optional 12/01/01 @ 100.00, AMBAC Aaa/AAA 96,245 200,000 Lafayette, Boulder County Sewer, 4.95%, 09/01/05, FGIC Aaa/AAA 198,084 Metropolitan Denver Sewer Disposal District 1: 100,000 6.10%, 04/01/99, Optional 10/01/96 @ 101.00 A1/AA 101,782 50,000 6.10%, 04/01/99, Prerefunded 10/01/96 @ 101.00 A1/AA 50,884 50,000 Ute Water Conservancy District, Mesa County, 7.60%, 06/15/01, Prerefunded 06/15/97 @ 100.00, AMBAC Aaa/AAA 51,560 ---------- 1,181,671 ---------- TOTAL REVENUE BONDS (Cost $4,498,014) 4,538,967 ---------- Shares ------ MUTUAL FUNDS 4.48% - --------------------------------------------------------------------------- 622,574 Provident Institutional Municipal Fund (Cost $623,906) 623,906 ---------- TOTAL INVESTMENTS (Cost $13,972,292) 101.48% $14,127,978 Liabilities in Excess of Other Assets (1.48%) (206,238) ------------------------- NET ASSETS 100.00% $13,921,740 ------------------------- *See note 1 to financial statements. (+) Unaudited - ---------------------------------------------------------------------------- FS-17 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF OPERATIONS FOR THE YEAR ENDED MAY 31, 1996
MIDCO Blue Small-Cap Growth Intermediate- Long-Term Colorado Growth Chip Opportunity and Income Term Bond Tax-Exempt Fund Fund Fund Fund Bond Fund Fund Fund ---------- ---------- ----------- ---------- ----------- ----------- ---------- INVESTMENT INCOME Dividends $1,930,771 $1,476,810 $204,711 $650,651 $0 $0 $0 Interest 1,736,446 134,234 62,123 60,928 5,992,888 2,096,493 603,936 - ---------------------------------------------------------------------------------------------------------------------------------- Total Income 3,667,217 1,611,044 266,834 711,579 5,992,888 2,096,493 603,936 - ---------------------------------------------------------------------------------------------------------------------------------- EXPENSES Investment advisory fee 3,558,326 398,660 173,531 179,195 409,197 135,354 56,823 Administrative fee 1,230,673 138,303 40,862 57,047 188,905 62,471 25,233 Fund accounting 177,787 30,483 32,387 31,712 42,767 32,660 33,289 Legal 164,604 29,770 8,362 9,828 37,522 13,435 2,956 Audit 13,821 8,751 7,813 8,813 12,313 7,750 3,179 Custodian 131,399 24,180 18,793 22,966 30,844 14,196 8,353 Amortization of organization costs 0 0 17,759 0 0 0 10,829 Transfer agency 335,745 45,546 38,465 61,864 42,346 24,395 13,575 Printing 117,473 26,332 10,233 7,099 14,096 5,831 1,040 Insurance 23,602 2,083 517 1,446 3,938 1,398 429 Registration 47,563 17,460 20,274 15,023 25,889 5,886 857 Trustee fee 25,517 3,413 1,049 1,506 4,913 4,989 399 Reorganization 150,451 14,753 5,114 12,725 17,864 6,892 4,850 Distribution/administration assistance - retail 21,061 0 704 2,601 1,677 0 0 Other 64,607 25,600 7,657 6,726 5,681 6,916 770 - ---------------------------------------------------------------------------------------------------------------------------------- Total Expenses 6,062,629 765,334 383,520 418,551 837,952 322,173 162,582 Expenses waived by: Investment advisor 0 (59,499) (136,791) (49,319) (58,864) (32,618) (56,823) Custodian (131,399) (24,180) (18,793) (22,966) (30,844) (14,196) (8,353) Administrator 0 (4,948) (1,806) (4,873) (10,539) (3,520) (24,766) Expenses reimbursed by Investment advisor 0 0 0 0 0 0 (22,238) - ---------------------------------------------------------------------------------------------------------------------------------- Net Expenses 5,931,230 676,707 226,130 341,393 737,705 271,839 50,402 - ---------------------------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (2,264,013) 934,337 40,704 370,186 5,255,183 1,824,654 553,534 - ---------------------------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Net realized gain (loss) from investment transactions 53,405,690 8,541,198 1,021,344 3,440,453 849,471 810,714 (7,226) - ---------------------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of investments: Beginning of period 97,968,007 10,123,581 693,860 2,440,998 1,160,831 1,519,743 295,433 End of period 224,240,350 16,896,111 5,147,444 5,137,283 (930,828) 127,456 155,686 - ---------------------------------------------------------------------------------------------------------------------------------- Net change in unrealized appreciation (depreciation) 126,272,343 6,772,530 4,453,584 2,696,285 (2,091,659) (1,392,287) (139,747) - ---------------------------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 179,678,033 15,313,728 5,474,928 6,136,738 (1,242,188) (581,573) (146,973) - ---------------------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $177,414,020 $16,248,065 $5,515,632 $6,506,924 $4,012,995 $1,243,081 $406,561 - ----------------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS ---------------------------------------------------------------------------- FS-18 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
MIDCO Growth Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 ------------------- --------------------- FROM INVESTMENT ACTIVITIES Net investment loss $(2,264,013) $(169,107) Net realized gain on investments 53,405,690 1,443,760 Net unrealized appreciation 126,272,343 37,597,019 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 177,414,020 38,871,672 - --------------------------------------------------------------------------------------------------------------------- Distributions to shareholders from net realized gain on investments Institutional class (19,218,923) (11,450,951) Retail class 0 (685,566) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities 158,195,097 26,735,155 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets derived from institutional class beneficial interest transactions - Note 2 101,245,432 41,013,312 - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets derived from retail class beneficial interest transactions - Note 2 (30,387,017) 7,925,300 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 229,053,512 75,673,767 NET ASSETS: Beginning of period 427,436,214 351,762,447 - --------------------------------------------------------------------------------------------------------------------- End of period (including over distributed net investment income of ($3,130,644) and ($866,631), respectively) $656,489,726 $427,436,214 - --------------------------------------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS Blue Chip Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 ------------------- --------------------- FROM INVESTMENT ACTIVITIES Net investment income $934,337 $743,795 Net realized gain on investments 8,541,198 1,045,955 Net unrealized appreciation 6,772,530 6,095,272 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 16,248,065 7,885,022 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (976,769) (498,807) Distributions to shareholders from net realized gain on investments (4,826,591) (622,592) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities 10,444,705 6,763,623 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Shares sold 17,435,317 21,451,091 Shares issued in reinvestment of dividends 5,209,936 1,004,437 - --------------------------------------------------------------------------------------------------------------------- 22,645,253 22,455,528 Shares redeemed (17,349,667) (13,348,260) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from beneficial interest transactions 5,295,586 9,107,268 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 15,740,291 15,870,891 NET ASSETS: Beginning of period 52,545,281 36,674,390 - --------------------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $184,414 and $226,846, respectively) $68,285,572 $52,545,281 - ---------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS - ---------------------------------------------------------------------------- FS-19 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
Small-Cap Opportunity Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 ------------------- --------------------- FROM INVESTMENT ACTIVITIES Net investment income $40,704 $43,350 Net realized gain (loss) on investments 1,021,344 (111,091) Net unrealized appreciation 4,453,584 680,840 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 5,515,632 613,099 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income Institutional class (48,100) (35,513) Retail class (895) (2,821) Distributions to shareholders from net realized gain on investments Institutional class (421,504) (66,448) Retail class 0 (6,502) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities 5,045,133 501,815 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Net increase in net assets derived from institutional class beneficial interest transactions - Note 2 9,334,752 7,089,788 - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets derived from retail class beneficial interest transactions - Note 2 (1,065,766) 389,185 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 13,314,119 7,980,788 NET ASSETS: Beginning of period 10,636,893 2,656,105 - --------------------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $478 and $8,769, respectively) $23,951,012 $10,636,893 - --------------------------------------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS Growth and Income Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ FROM INVESTMENT ACTIVITIES 1996 1995 ------------------- --------------------- Net investment income $370,186 $863,093 Net realized gain (loss) on investments 3,440,453 (1,036,420) Net unrealized appreciation 2,696,285 779,981 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 6,506,924 606,654 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income Institutional class (518,985) (834,009) Retail class (21,581) (70,652) Distributions to shareholders from net realized gain on investments Institutional class (1,458,171) (1,003,450) Retail class 0 (94,567) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities 4,508,187 (1,396,024) - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Net decrease in net assets derived from institutional class beneficial interest transactions - Note 2 (5,892,042) (14,255,191) - --------------------------------------------------------------------------------------------------------------------- Net decrease in net assets derived from retail class beneficial interest transactions - Note 2 (4,128,687) (118,398) - --------------------------------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS (5,512,542) (15,769,613) NET ASSETS: Beginning of period 30,899,945 46,669,558 - --------------------------------------------------------------------------------------------------------------------- End of period (including (over)/undistributed net investment income of ($143,956) and $26,424, respectively) $25,387,403 $30,899,945 - ---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------- FS-20 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
Intermediate-Term Bond Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 ------------------- -------------------- FROM INVESTMENT ACTIVITIES Net investment income $5,255,183 $5,308,012 Net realized gain (loss) on investments 849,471 (1,790,451) Net unrealized appreciation (depreciation) (2,091,659) 4,569,545 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 4,012,995 8,087,106 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income Institutional class (5,220,333) (5,349,712) Retail class (52,026) (140,002) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities (1,259,364) 2,597,392 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Net increase (decrease) in net assets derived from institutional class beneficial interest transactions - Note 2 (13,314,494) 6,124,220 - --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets derived from retail class beneficial interest transactions - Note 2 (2,577,091) 562,082 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (17,150,949) 9,283,694 NET ASSETS: Beginning of period 100,189,585 90,905,891 - --------------------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $85,280 and $102,456, respectively) $83,038,636 $100,189,585 - --------------------------------------------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS Long-Term Bond Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 -------------------- -------------------- FROM INVESTMENT ACTIVITIES Net investment income $1,824,654 $1,808,619 Net realized gain (loss) on investments 810,714 (307,479) Net unrealized appreciation (depreciation) (1,392,287) 2,584,530 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 1,243,081 4,085,6701 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (1,851,721) (1,816,108) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities (608,640) 2,269,562 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Shares sold 6,252,499 10,155,539 Shares issued in reinvestment of dividends 1,672,703 1,662,861 - --------------------------------------------------------------------------------------------------------------------- 7,925,202 11,818,400 Shares redeemed (15,686,515) (7,609,598) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from beneficial interest transactions (7,761,313) 4,208,802 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (8,369,953) 6,478,364 NET ASSETS: Beginning of period 33,440,212 26,961,848 - --------------------------------------------------------------------------------------------------------------------- End of period (including undistributed net investment income of $29,351 and $56,418, respectively) $25,070,259 $33,440,212 - ---------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS - ---------------------------------------------------------------------------- FS-21 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- STATEMENT OF CHANGES IN NET ASSETS
Colorado Tax-Exempt Fund ------------------------------------------ For the Year Ended May 31, ------------------------------------------ 1996 1995 --------------------- ------------------- FROM INVESTMENT ACTIVITIES Net investment income $553,534 $516,588 Net realized loss on investments (7,226) (12) Net unrealized appreciation (depreciation) (139,747) 213,154 - --------------------------------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 406,561 729,730 - --------------------------------------------------------------------------------------------------------------------- Dividends to shareholders from net investment income (540,156) (535,461) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from investment activities (133,595) 194,269 - --------------------------------------------------------------------------------------------------------------------- FROM BENEFICIAL INTEREST TRANSACTIONS Shares sold 3,597,527 1,234,996 Shares issued in reinvestment of dividends 347,227 324,646 - --------------------------------------------------------------------------------------------------------------------- 3,944,754 1,559,642 Shares redeemed (681,115) (1,515,481) - --------------------------------------------------------------------------------------------------------------------- Change in net assets derived from beneficial interest transactions 3,263,639 44,161 - --------------------------------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 3,130,044 238,430 NET ASSETS: Beginning of period 10,791,696 10,553,266 - --------------------------------------------------------------------------------------------------------------------- End of period (including (over)/undistributed net investment income of $11,725 and ($1,653), respectively) $13,921,740 $10,791,696 - ---------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS ---------------------------------------------------------------------------- FS-22 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
MIDCO Growth Fund -------------------------------------------------- Institutional Shares -------------------------------------------------- For the Period Ended May 31, -------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- ---------- Net asset value - beginning of period $17.12 $16.09 $15.79 $14.38 $14.00 - ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.08) 0.00 0.00 0.04 0.06 Net realized and unrealized gain (loss) on investments 6.58 1.56 1.34 2.48 1.84 - ------------------------------------------------------------------------------------------------------ Total income (loss) from investment operations 6.50 1.56 1.34 2.52 1.90 - ------------------------------------------------------------------------------------------------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income 0.00 0.00 0.00 0.00 (0.32) Distributions from net realized gain on investments (0.72) (0.53) (1.03) (1.11) (1.20) Return of Capital (0.00) (0.00) (0.01) (0.00) (0.00) - ------------------------------------------------------------------------------------------------------ Total dividends, distributions, and return of capital to shareholders (0.72) (0.53) (1.04) (1.11) (1.52) - ------------------------------------------------------------------------------------------------------ Net asset value - end of period $22.90 $17.12 $16.09 $15.79 $14.38 - ------------------------------------------------------------------------------------------------------ Total return (2) 38.62% 10.05% 8.37% 18.04% 14.09% - ------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $656,490 $401,760 $335,453 $231,595 $180,681 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 1.08% 0.94% 0.84% 0.83% 0.80% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets (0.42%) (0.03%) (0.09%) 0.04% 0.12% - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets without fee waivers 1.10% 0.96% 0.87% 0.85% 0.85% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income (loss) to average net assets without fee waivers (0.44%) (0.05%) (0.12%) 0.02% 0.07% - ------------------------------------------------------------------------------------------------------ Portfolio turnover rate (1) 62.83% 50.19% 52.05% 56.23% 48.17% - ------------------------------------------------------------------------------------------------------ MIDCO Growth Fund -------------------------------- Retail Shares -------------------------------- For the Period Ended May 31 -------------------------------- 1996** 1995 1994* ---------- -------- ---------- Net asset value - beginning of period $17.10 $16.10 $17.33 - ---------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) (0.01) (0.03) (0.01) Net realized and unrealized gain (loss) on investments 3.12 1.56 (0.19) - ---------------------------------------------------------------------------------- Total income (loss) from investment operations 3.11 1.53 (0.20) - ---------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.00) (0.00) 0.00 Distributions from net realized gain on investments (0.00) (0.53) (1.02) Return of Capital (0.00) (0.00) (0.01) - ---------------------------------------------------------------------------------- Total dividends, distributions, and return of capital to shareholders (0.00) (0.53) (1.03) - ---------------------------------------------------------------------------------- Net asset value - end of period $20.21 $17.10 $16.10 - ---------------------------------------------------------------------------------- Total return (2) 18.19% 9.78% (1.88%)(3) - ---------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $30,827 $25,677 $16,309 - ---------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.16%(3) 1.19% 1.10%(3) - ---------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets (0.24%)(3)(0.28%) (0.37%)(3) - ---------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.17%(3) 1.21% 1.13%(3) - ---------------------------------------------------------------------------------- Ratio of net investment income (loss) to average net assets without fee waivers (0.26%)(3)(0.30%) (0.40%)(3) - ---------------------------------------------------------------------------------- Portfolio turnover rate (1) 62.83% 50.19% 52.05% - ----------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $387,990,462 and $324,571,405, respectively. (2) Sales charges are not reflected in total return. (3) Annualized. * For the period October 11, 1993 (inception of offering) to May 31, 1994. ** For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS - ---------------------------------------------------------------------------- FS-23 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Blue Chip Fund --------------------------------------------------------------------------------------- For the Year Ended May 31, --------------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 ---------- ---------- ---------- ---------- ---------- ------------ Net asset value - beginning of period $14.70 $12.70 $13.87 $13.35 $12.68 $11.74 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS Net investment income 0.25 0.23 0.40 0.34 0.28 0.29 Net realized and unrealized gain on investments 4.03 2.12 0.04 1.13 0.95 1.15 - ------------------------------------------------------------------------------------------------------------------------------------ Total income from investment operations 4.28 2.35 0.44 1.47 1.23 1.44 - ---------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.27) (0.16) (0.43) (0.21) (0.35) (0.30) Distributions from net realized gain on investments (1.30) (0.19) (1.18) (0.74) (0.21) (0.20) - ---------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (1.57) (0.35) (1.61) (0.95) (0.56) (0.50) - ---------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $17.41 $14.70 $12.70 $13.87 $13.35 $12.68 - ---------------------------------------------------------------------------------------------------------------------------------- Total return 30.48% 19.03% 3.12% 11.62% 10.02% 13.08% - ---------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $68,286 $52,545 $36,674 $28,176 $30,572 $27,208 - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.10% 1.01% 1.06% 0.99% 0.91% 0.84% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 1.52% 1.78% 2.30% 2.37% 2.17% 2.65% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.25% 1.06% 1.09% 1.02% 0.97% 0.94% - ---------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 1.38% 1.73% 2.27% 2.34% 2.11% 2.55% - ---------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (1) 65.11% 61.72% 41.32% 85.53% 123.91% 142.01% - ----------------------------------------------------------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the period ended May 31, 1996 were $37,959,388 and $38,051,658, respectively. SEE NOTES TO FINANCIAL STATEMENTS ---------------------------------------------------------------------------- FS-24 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Small-Cap Opportunity Fund ------------------------------------------------------------------------------------- Institutional Shares Retail Shares -------------------------------------------------------------------------------------- For the For the Period Ended Period Ended May 31 May 31 -------------------------------------------------------------------------------------- 1996 1995 1994* 1996** 1995 1994* ---------- ---------- ---------- ---------- ---------- ----------- Net asset value - beginning of period $15.95 $14.97 $15.00 $15.95 $14.96 $15.00 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.04 0.09 0.05 0.01 0.06 0.03 Net realized and unrealized gain (loss) on investments 5.86 1.11 (0.05) 2.25 1.11 (0.04) - ----------------------------------------------------------------------------------------------------------------------------------- Total income (loss) from investment operations 5.90 1.20 0.00 2.26 1.17 (0.01) - ----------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.06) (0.10) (0.03) (0.02) (0.06) (0.03) Distributions from net realized gain on investments (0.44) (0.12) 0.00 0.00 (0.12) 0.00 - ----------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.50) (0.22) (0.03) (0.02) (0.18) (0.03) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $21.35 $15.95 $14.97 $18.19 $15.95 $14.96 - ----------------------------------------------------------------------------------------------------------------------------------- Total return (2) 37.49% 8.15% (0.07%)(3) 14.14% 7.96% (0.22%)(3) - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $23,951 $9,703 $2,159 $1,072 $934 $497 - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.30% 1.27% 1.38%(3) 1.48%(3) 1.51% 1.63%(3) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 0.24% 0.61% 1.00%(3) 0.16%(3) 0.37% 0.64%(3) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 2.20% 2.77% 6.56%(3) 2.53%(3) 3.10% 6.81%(3) - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers (0.67%) (0.89%) (4.18%)(3) (0.89%)(3) (1.22%) (4.54%)(3) - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (1) 47.83% 59.17% 64.31%(3) 47.83% 59.17% 64.31%(3) - -----------------------------------------------------------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $14,769,419 and $7,829,753, respectively. (2) Sales charges are not reflected in total return. (3) Annualized. * For the period December 28, 1993 (inception of Fund) to May 31, 1994. ** For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS - ---------------------------------------------------------------------------- FS-25 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Growth and Income Fund ----------------------------------------------------------- Institutional Shares ----------------------------------------------------------- For the Year Ended May 31, ----------------------------------------------------------- 1996 1995 1994 1993 1992 ---------- -------- -------- -------- ---------- Net asset value - beginning of period: $10.50 $10.62 $11.51 $10.99 $10.10 ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS Net investment income 0.15 0.20 0.51 0.32 0.32 Net realized and unrealized gain (loss) on investments 2.57 0.15 (0.30) 0.68 1.05 ------------------------------------------------------------------------------------------------------ Total income (loss) from investment operations 2.72 0.35 0.21 1.00 1.37 ------------------------------------------------------------------------------------------------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.24) (0.21) (0.54) (0.20) (0.43) Distributions from net realized gain on investments (0.66) (0.26) (0.56) (0.28) (0.05) ------------------------------------------------------------------------------------------------------ Total dividends and distributions to shareholders (0.90) (0.47) (1.10) (0.48) (0.48) ------------------------------------------------------------------------------------------------------ Net asset value - end of period $12.32 $10.50 $10.62 $11.51 $10.99 ------------------------------------------------------------------------------------------------------ Total return (2) 27.25% 3.73% 1.71% 9.41% 14.12% ------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $25,387 $27,029 $42,644 $35,791 $25,128 ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 1.22% 1.17% 1.03% 0.99% 0.95% ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets 1.34% 2.09% 4.45% 2.75% 3.03% ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets without fee waivers 1.51% 1.22% 1.06% 1.03% 1.02% ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets without fee waivers 1.05% 2.04% 4.42% 2.71% 2.96% ------------------------------------------------------------------------------------------------------ Portfolio turnover rate (1) 88.31% 81.14% 53.86% 61.24% 68.56% ------------------------------------------------------------------------------------------------------ - -------------------------------------------------------------------------------- Retail Shares -------------------------- For the Period Ended May 31, -------------------------- 1996** 1995 1994* ------ ------- ------- Net asset value - beginning of period: $10.51 $10.63 $11.65 - -------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.05 0.19 0.15 Net realized and unrealized gain (loss) on investments 0.72 0.14 (0.45) - -------------------------------------------------------------------------------- Total income (loss) from investment operations 0.77 0.33 (0.30) - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.06) (0.19) (0.16) Distributions from net realized gain on investments 0.00 (0.26) (0.56) - -------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.06) (0.45) (0.72) - -------------------------------------------------------------------------------- Net asset value - end of period $11.22 $10.51 $10.63 - -------------------------------------------------------------------------------- Total return (2) 7.35% 3.48% (4.20%)(3) - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: - -------------------------------------------------------------------------------- Net assets, end of period (000) $3,921 $3,871 $4,026 - -------------------------------------------------------------------------------- Ratio of expenses to average net assets 1.58%(3) 1.41% 1.25%(3) - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets 1.40%(3) 1.86% 2.12%(3) - -------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.61%(3) 1.47% 1.27%(3) - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 1.37%(3) 1.80% 2.09%(3) - -------------------------------------------------------------------------------- Portfolio turnover rate (1) 88.31% 81.14% 53.86% - --------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $23,528,402 and $35,671,719, respectively. (2) Sales charges are not reflected in total return. (3) Annualized. * For the period October 11, 1993 (inception of offering) to May 31, 1994. ** For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS ---------------------------------------------------------------------------- FS-26 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Intermediate-Term Bond Fund -------------------------------------------------- Institutional Shares -------------------------------------------------- For the Year Ended May 31, -------------------------------------------------- 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- Net asset value - beginning of period $10.27 $10.02 $10.70 $10.14 $9.80 - ------------------------------------------------------------------------------------------------------ INCOME FROM INVESTMENT OPERATIONS Net investment income 0.60 0.58 0.55 0.67 0.78 Net realized and unrealized gain (loss) on investments (0.17) 0.27 (0.52) 0.53 0.39 - ------------------------------------------------------------------------------------------------------ Total income from investment operations 0.43 0.85 0.03 1.20 1.17 - ------------------------------------------------------------------------------------------------------ DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.60) (0.60) (0.53) (0.64) (0.83) Distributions from net realized gain on investments 0.00 0.00 (0.18) 0.00 0.00 - ------------------------------------------------------------------------------------------------------ Total dividends and distributions to shareholders (0.60) (0.60) (0.71) (0.64) (0.83) - ------------------------------------------------------------------------------------------------------ Net asset value - end of period $10.10 $10.27 $10.02 $10.70 $10.14 - ------------------------------------------------------------------------------------------------------ Total return (2) 4.26% 8.93% 0.10% 12.16% 12.42% - ------------------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $83,039 $97,619 $88,965 $99,469 $87,712 - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets 0.81% 0.77% 0.68% 0.65% 0.61% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets 5.78% 5.86% 5.03% 6.37% 7.73% - ------------------------------------------------------------------------------------------------------ Ratio of expenses to average net assets without fee waivers 0.92% 0.80% 0.70% 0.67% 0.65% - ------------------------------------------------------------------------------------------------------ Ratio of net investment income to average net assets without fee waivers 5.67% 5.83% 5.00% 6.35% 7.69% - ------------------------------------------------------------------------------------------------------ Portfolio turnover rate (1) 71.97% 60.86% 65.04% 87.17% 53.92% - ------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------ Retail Shares ------------------------------------------------ For the Period Ended May 31, -------------------------- 1996** 1995 1994* ------ ------- ------- Net asset value - beginning of period: $10.27 $10.03 $10.97 - -------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.20 0.56 0.34 Net realized and unrealized gain (loss) on investments 0.04 0.26 (0.77) - -------------------------------------------------------------------------------- Total income (loss) from investment operations 0.24 0.82 (0.43) - -------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.21) (0.58) (0.33) Distributions from net realized gain on investments 0.00 0.00 (0.18) - -------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.21) (0.58) (0.51) - -------------------------------------------------------------------------------- Net asset value - end of period $10.30 $10.27 $10.03 - -------------------------------------------------------------------------------- Total return (2) 2.34% 8.53% (6.33%)(3) - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $2,781 $2,571 $1,941 - -------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.95%(3) 0.99% 0.95%(3) - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets 5.74%(3) 5.64% 4.65%(3) - -------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 0.97%(3) 1.02% 0.97%(3) - -------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 5.72%(3) 5.61% 4.63%(3) - -------------------------------------------------------------------------------- Portfolio turnover rate (1) 71.97% 60.86% 65.04% - --------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $61,945,342 and $78,767,790, respectively. (2) Sales charges are not reflected in total return. (3) Annualized. * For the period October 11, 1993 (inception of offering) to May 31, 1994. ** For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS - ---------------------------------------------------------------------------- FS-27 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated:
Long-Term Bond Fund ---------------------------------------------------------------------------------- For the Year Ended May 31, ---------------------------------------------------------------------------------- 1996 1995 1994 1993 1992 1991 ---------- ----------- ---------- ----------- ---------- -------- Net asset value - beginning of period $9.87 $9.22 $11.25 $10.60 $10.01 $10.11 - ----------------------------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.61 0.59 0.62 0.77 0.80 1.08 Net realized and unrealized gain (loss) on investments (0.27) 0.66 (0.51) 0.99 0.56 0.04 - ----------------------------------------------------------------------------------------------------------------------------------- Total income from investment operations 0.34 1.25 0.11 1.76 1.36 1.12 - ----------------------------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.62) (0.60) (0.62) (0.78) (0.77) (1.11) Distributions from net realized gain on investments 0.00 0.00 (1.52) (0.33) 0.00 (0.11) - ----------------------------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.62) (0.60) (2.14) (1.11) (0.77) (1.22) - ----------------------------------------------------------------------------------------------------------------------------------- Net asset value - end of period $9.59 $9.87 $9.22 $11.25 $10.60 $10.01 - ----------------------------------------------------------------------------------------------------------------------------------- Total return 3.41% 14.37% (.25%) 17.40% 14.04% 11.87% - ----------------------------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $25,070 $33,440 $26,962 $26,281 $30,800 $27,448 - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.90% 0.94% 0.89% 0.77% 0.70% 0.65% - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 6.07% 6.54% 5.74% 6.63% 7.59% 8.29% - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.07% 0.99% 0.92% 0.80% 0.74% 0.73% - ----------------------------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 5.90% 6.49% 5.71% 6.60% 7.55% 8.21% - ----------------------------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (1) 33.10% 25.09% 52.82% 79.16% 51.79% 81.13% - -----------------------------------------------------------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the year ended May 31, 1996 were $9,489,738 and $17,274,608, respectively. SEE NOTES TO FINANCIAL STATEMENTS ---------------------------------------------------------------------------- FS-28 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS Selected data for a share of beneficial interest outstanding throughout the periods indicated: Colorado Tax-Exempt Fund ---------------------------------------------- For the Year Ended May 31, ---------------------------------------------- 1996 1995 1994 1993 1992 ------ ------ ------ ------ ------ Net asset value - beginning of period $10.70 $10.52 $10.71 $10.25 $10.00 - -------------------------------------------------------------------------------------------------------------- INCOME FROM INVESTMENT OPERATIONS Net investment income 0.52 0.52 0.53 0.57 0.58 Net realized and unrealized gain (loss) on investments (0.10) 0.20 (0.19) 0.46 0.23 - -------------------------------------------------------------------------------------------------------------- Total income from investment operations 0.42 0.72 0.34 1.03 0.81 - -------------------------------------------------------------------------------------------------------------- DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS Dividends from net investment income (0.51) (0.54) (0.53) (0.57) (0.56) Distributions from net realized gain on investments 0.00 0.00 0.00 0.00 0.00 - -------------------------------------------------------------------------------------------------------------- Total dividends and distributions to shareholders (0.51) (0.54) (0.53) (0.57) (0.56) - -------------------------------------------------------------------------------------------------------------- Net asset value - end of period $10.61 $10.70 $10.52 $10.71 $10.25 - -------------------------------------------------------------------------------------------------------------- Total return 3.97% 7.16% 3.22% 10.27% 8.36% - -------------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (000) $13,922 $10,792 $10,553 $7,326 $4,511 - -------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets 0.44% 0.42% 0.27% 0.22% 0.11% - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets 4.87% 5.03% 4.98% 5.45% 5.84% - -------------------------------------------------------------------------------------------------------------- Ratio of expenses to average net assets without fee waivers 1.43% 1.62% 1.59% 1.88% 1.65% - -------------------------------------------------------------------------------------------------------------- Ratio of net investment income to average net assets without fee waivers 3.88% 3.83% 3.65% 3.79% 4.30% - -------------------------------------------------------------------------------------------------------------- Portfolio turnover rate (1) 10.23% 3.15% 9.76% 1.82% 12.95% - --------------------------------------------------------------------------------------------------------------
(1) A portfolio turnover rate is, in general, the percentage computed by taking the lesser of purchases or sales of portfolio securities (excluding securities with a maturity date of one year or less at the time of acquisition) for a period and dividing it by the monthly average of the market value of such securities during the period. Purchases and sales of investment securities (excluding short-term securities) for the period ended May 31, 1996 were $5,353,679 and $1,127,047, respectively. SEE NOTES TO FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- FS-29 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Westcore Trust ("the Trust") is registered under the Investment Company Act of 1940, as amended, as an open ended management investment company. Interests in the MIDCO Growth, Blue Chip (formerly the Modern Value Equity), Small-Cap Opportunity, Growth and Income (formerly the Equity Income), Intermediate -Term Bond, Long-Term Bond and Colorado Tax-Exempt Funds ("the Funds") are represented by separate classes of beneficial interest of the Trust, which is organized as a Massachusetts business trust. The Funds, for book and tax purposes, have a fiscal year of May 31, 1996. From October 11, 1993 to September 30, 1995, MIDCO Growth, Small-Cap Opportunity, the Growth and Income and Intermediate-Term Bond Funds offered Institutional and Retail classes of shares with a front-end load and their own distribution/administrative service plan. On October 1, 1995 the Retail class was merged into the Institutional class at the respective net asset value per share. The distribution/administrative service plan on the Retail class was discontinued. The front-end sales load on all the Funds was also discontinued. The following is a summary of significant accounting policies consistently followed by each Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. The actual results could differ from those estimates. INVESTMENT VALUATION - Securities of the Funds are valued at 4:00 p.m. (Eastern time) on each trading day. Listed and unlisted securities for which such information is regularly reported are valued at the last sales price of the day or, in the absence of sales, at values based on the average closing bid and asked price. Securities for which market quotations are not readily available are valued under procedures established by the Board of Trustees to determine fair value in good faith. Short term securities having a remaining maturity of 60 days or less are valued at amortized cost which approximates market value. FEDERAL INCOME TAXES - It is the Funds' policy to continue to comply with the provisions of the Internal Revenue Code applicable to regulated investment companies and to distribute all of their taxable income to shareholders. Therefore, no federal income tax provision is required. At May 31, 1996 the Intermediate-Term Bond and Colorado Tax-Exempt Funds had available for federal income tax purposes unused capital loss carryovers of approximately $1,783,000 and $4,500, respectively, which will expire through 2003. DISTRIBUTIONS - Distributions of net investment income are distributed annually for the MIDCO Growth Fund, quarterly for the Blue Chip, Small-Cap Opportunity and Growth and Income Funds and monthly for the Intermediate-Term Bond, Long-Term Bond and Colorado Tax-Exempt Funds. Distributions of net realized gains, if any, are declared at least once each year. Distributions to shareholders are recorded on the ex-dividend date. ORGANIZATION COSTS - Costs incurred in connection with the organization, initial registration and public offering of shares have been paid by the Funds. These costs are being amortized over the period of benefit, but not to exceed sixty (60) months, from the Funds' commencement of operations. ALLOCATION OF INCOME, EXPENSES AND GAINS AND LOSSES - From October 11, 1993 to September 30, 1995 the MIDCO Growth, Small-Cap Opportunity, Growth and Income and Intermediate-Term Bond Funds allocated income, expenses (other than the class specific expenses) and gains and losses daily to each class of shares based upon their relative proportion of net assets represented by each class. Operating expenses directly attributable to a specific class were charged against the operations of that class. OTHER - Investment transactions are accounted for on the date the investments are purchased or sold (trade date). Dividend income is recorded on the ex-dividend date. Interest income, which includes amortization of premiums and accretion of discount, is accrued and recorded daily. Realized gains and losses from investment transactions and unrealized appreciation and depreciation of investments are reported on an identified cost basis which is the same basis the Funds use for federal income tax purposes. ----------------------------------------------------------------------------- FS-30 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST On May 31, 1996, there was an unlimited number of no par value shares of beneficial interest authorized for each fund. Transactions in shares of beneficial interest were as follows:
MIDCO Growth Fund - -------------------------------------------------------------------------------------------------------------------------------- For the Year For the Year Ended May 31, 1996 Ended May 31, 1995 --------------------------------------------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS: Shares sold 7,169,895 $142,973,591 7,023,125 $114,412,350 Shares issued in reinvestment of dividends 949,284 18,492,060 698,545 10,911,274 Shares exchanged from retail class into institutional class 1,521,981 30,820,114 0 0 - ------------------------------------------------------------------------------------------------------------------------------- Total 9,641,160 192,285,765 7,721,670 125,323,624 Shares redeemed (4,438,468) (91,040,333) (5,109,370) (84,310,312) - ------------------------------------------------------------------------------------------------------------------------------- Net increase 5,202,692 $101,245,432 2,612,300 $41,013,312 - ------------------------------------------------------------------------------------------------------------------------------- RETAIL CLASS: Shares sold 101,559 $1,926,763 807,820 $13,203,520 Shares issued in reinvestment of dividends 0 0 43,618 681,314 - ------------------------------------------------------------------------------------------------------------------------------- Total 101,559 1,926,763 851,438 13,884,834 Shares redeemed (78,351) (1,493,666) (362,309) (5,959,534) Shares exchanged from retail class into institutional class (1,524,993) (30,820,114) 0 0 - ------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase (1,501,785) $(30,387,017) 489,129 $7,925,300 - ------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------
Blue Chip Fund - --------------------------------------------------------------------------------------------------------------------------- For the Year For the year Ended May 31, Ended May 31, -------------------------------------------------- 1996 1995 ---------------------- ------------------------ Shares sold 1,073,492 1,616,124 Shares issued in reinvestment of dividends 333,778 78,963 - --------------------------------------------------------------------------------------------------------------------------- Total 1,407,270 1,695,087 Shares redeemed (1,059,656) (1,007,962) - --------------------------------------------------------------------------------------------------------------------------- Net increase in shares 347,614 687,125 - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------- FS-31 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
Small-Cap Opportunity Fund - -------------------------------------------------------------------------------------------------------------------------------- For the Year For the Year Ended May 31, 1996 Ended May 31, 1995 --------------------------------------------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS: Shares sold 497,964 $9,077,026 486,557 $7,428,629 Shares issued in reinvestment of dividends 24,014 444,359 6,861 99,590 Shares exchanged from retail class into institutional class 58,947 1,071,652 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Total 580,925 10,593,037 493,418 7,528,219 Shares redeemed (67,659) (1,258,285) (29,115) (438,431) - -------------------------------------------------------------------------------------------------------------------------------- Net increase 513,266 $9,334,752 464,303 $7,089,788 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- RETAIL CLASS: Shares sold 2,359 $40,334 40,377 $610,631 Shares issued in reinvestment of dividends 49 886 641 9,286 - -------------------------------------------------------------------------------------------------------------------------------- Total 2,408 41,220 41,018 619,917 Shares redeemed (2,064) (35,334) (15,699) (230,732) Shares exchanged from retail class into institutional class (58,914) (1,071,652) 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase (58,570) $(1,065,766) 25,319 $389,185 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- Growth and Income Fund - -------------------------------------------------------------------------------------------------------------------------------- For the Year For the Year Ended May 31, 1996 Ended May 31, 1995 --------------------------------------------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS: Shares sold 497,475 $5,580,398 947,656 $9,727,032 Shares issued in reinvestment of dividends 150,670 1,624,668 160,970 1,558,375 Shares exchanged from retail into institutional class 349,815 3,921,431 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Total 997,960 11,126,497 1,108,626 11,285,407 Shares redeemed (1,511,113) (17,018,539) (2,549,105) (25,540,598) - -------------------------------------------------------------------------------------------------------------------------------- Net decrease (513,153) $(5,892,042) (1,440,479) $(14,255,191) - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- RETAIL CLASS: Shares sold 13,368 $145,165 137,072 $1,414,084 Shares issued in reinvestment of dividends 1,911 21,221 16,645 161,116 - -------------------------------------------------------------------------------------------------------------------------------- Total 15,279 166,386 153,717 1,575,200 Shares redeemed (34,087) (373,642) (164,093) (1,693,598) Shares exchanged from retail into institutional class (349,504) (3,921,431) 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Net decrease (368,312) $(4,128,687) (10,376) $(118,398) - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------- FS-32 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 2. SHARES OF BENEFICIAL INTEREST (CONTINUED)
Intermediate-Term Bond Fund - -------------------------------------------------------------------------------------------------------------------------------- For the Year For the Year Ended May 31, 1996 Ended May 31, 1995 --------------------------------------------------------------- Shares Amount Shares Amount - -------------------------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS: Shares sold 1,832,976 $18,925,545 2,870,047 $28,408,983 Shares issued in reinvestment of dividends 401,174 4,126,393 429,337 4,247,744 Shares exchanged from retail class into institutional class 270,324 2,781,631 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Total 2,504,474 25,833,569 3,299,384 32,656,727 Shares redeemed (3,786,468) (39,148,063) (2,669,887) (26,532,507) - -------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) (1,281,994) $(13,314,494) 629,497 $6,124,220 - -------------------------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------------------------- RETAIL CLASS: Shares sold 39,293 $404,991 133,381 $1,326,611 Shares issued in reinvestment of dividends 4,402 45,023 12,418 122,850 - -------------------------------------------------------------------------------------------------------------------------------- Total 43,695 450,014 145,799 1,449,461 Shares redeemed (23,810) (245,474) (89,216) (887,379) Shares exchanged from retail class into institutional class (270,061) (2,781,631) 0 0 - -------------------------------------------------------------------------------------------------------------------------------- Net (decrease) increase (250,176) $(2,577,091) 56,583 $562,082 - -------------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------------
Long-Term Bond Fund - --------------------------------------------------------------------------------------------------------------------------- For the Year For the year Ended May 31, Ended May 31, -------------------------------------------------- 1996 1995 ---------------------- ------------------------ Shares sold 628,595 1,114,253 Shares issued in reinvestment of dividends 168,046 183,017 - --------------------------------------------------------------------------------------------------------------------------- Total 796,641 1,297,270 Shares redeemed (1,570,539) (833,904) - --------------------------------------------------------------------------------------------------------------------------- Net decrease in shares (773,898) (463,366) - --------------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------------------------------------------- Colorado Tax-Exempt Fund - --------------------------------------------------------------------------------------------------------------------------- For the Year For the year Ended May 31, Ended May 31, -------------------------------------------------- 1996 1995 ---------------------- ------------------------ Shares sold 334,258 120,163 Shares issued in reinvestment of dividends 32,305 31,410 - --------------------------------------------------------------------------------------------------------------------------- Total 366,563 151,573 Shares redeemed (63,463) (146,459) - --------------------------------------------------------------------------------------------------------------------------- Net increase in shares 303,100 5,114 - --------------------------------------------------------------------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- FS-33 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 3. UNREALIZED GAINS AND LOSSES ON INVESTMENTS
MIDCO Blue Small-Cap Growth and Growth Chip Opportunity Income Fund Fund Fund Fund ---- ---- ---- ---- As of May 31, 1996 Gross appreciation (excess of value over cost) 234,951,327 16,899,760 5,559,895 5,225,579 Gross depreciation (excess of cost over value) (10,710,977) (3,649) (412,451) (88,296) - ----------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation 224,240,350 16,896,111 5,147,444 5,137,283 - -----------------------------------------------------------------------------------------------------------------------
Intermediate- Long-Term Colorado Term Bond Bond Tax-Exempt Fund Fund Fund ---- ---- ---- As of May 31, 1996 Gross appreciation (excess of value over cost) 605,558 821,806 269,789 Gross depreciation (excess of cost over value) (1,536,386) (694,350) (114,103) - ----------------------------------------------------------------------------------------------------------------------- Net unrealized appreciation (930,828) 127,456 155,686 - -----------------------------------------------------------------------------------------------------------------------
4. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER RELATED PARTY TRANSACTIONS The Trust has entered into an advisory agreement with Denver Investment Advisors LLC, ("DIA") for all Funds. DIA succeeded First Interstate Capital Management, Inc. ("FICM") as investment advisor to the Long-Term Bond and the Colorado Tax-Exempt Fund on October 1, 1995. The advisory agreements have been approved by the Trust's Board of Trustees and shareholders and contain terms and conditions similar to those which were in these Funds' former advisory agreement. Pursuant to its advisory agreement with the Trust, DIA is entitled to an investment advisory fee, computed daily and payable monthly of 0.65%, 0.65%, 1.00%, 0.65%, 0.45%, 0.45% and 0.50% of the average net assets for MIDCO Growth, Blue Chip, Small-Cap Opportunity, Growth and Income, Intermediate-Term Bond, Long-Term Bond and Colorado Tax-Exempt Funds, respectively. First Interstate Bank of Denver, N.A. ("Denver") is the custodian of the Funds. All custodial fees were waived by Denver for the year ended May 31, 1996. In addition, DIA waived all of its advisory fees and voluntarily reimbursed some of the expenses of the Colorado Tax-Exempt Fund. DIA also waived a portion of its advisory fees on the Blue Chip, Small-Cap Opportunity, Growth and Income, Intermediate-Term Bond and Long-Term Bond Funds. Certain officers of the Funds are also officers of DIA and ALPS Mutual Funds Services, Inc., ("ALPS"). All affiliated and access persons, as defined in the 1940 Act, follow strict guidelines and policies on personal trading as outlined in the Trust's Code of Ethics. ----------------------------------------------------------------------------- FS-34 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 5. INVESTMENT ADVISORY FEES, ADMINISTRATIVE FEES AND OTHER RELATED PARTY TRANSACTIONS (CONTINUED) Effective October 1, 1995, ALPS and DIA entered into a co-administration agreement to serve as the Funds co-administrators. ALPS and DIA are entitled to receive a fee from each Fund for its administrative services computed daily and payable monthly, at the annual rate of 0.30% of the Funds' average net assets. For the period ended May 31, 1996, ALPS and DIA voluntarily waived a portion of their co-administration fee payable by certain Funds. Expenses for the Funds include legal fees paid to Drinker, Biddle & Reath. A partner of that firm is secretary of the Trust. Each of the MIDCO Growth, Small-Cap Opportunity, Growth and Income and Intermediate-Term Bond Funds had an approved plan of distribution/administrative services ("the Plan") for the Retail class of each Fund until the exchange from Retail class shares to Institutional class shares occurred on September 29, 1995. The plan allowed for up to 0.35%, 0.35%, 0.35% and 0.30%, respectively, of net assets annually to reimburse for costs incurred in distributing Retail shares of the Funds including amounts paid to brokers, dealers, banks and other institutions. During the period ended September 29, 1995, the Funds accrued to participants under the plan 0.25% on an annual basis of the average net asset value of the Retail shares. Shareholders holding more than 5% of the Funds constituted 45.62% of MIDCO Growth, 87.04% of Blue Chip, 74.97% of Small-Cap Opportunity, 62.15% of Growth and Income, 83.10% of Intermediate-Term Bond, 86.50% of Long-Term Bond and 62.49% of Colorado Tax-Exempt Funds' average net assets. 6. RESTRICTED SECURITIES The Intermediate-Term Bond and Long-Term Bond Funds own restricted securities purchased pursuant to Rule 144A of the Securities Act of 1933 (the Act). Rule 144A securities amount to 3.25% and 4.40% of the Intermediate-Term Bond and Long-Term Bond Funds Net Assets, respectively, at May 31, 1996 and are listed below.
Acquisition Cost Valuation per Unit as Fair Value as Security Date per Unit of May 31, 1996 of May 31, 1996 -------- ---- -------- --------------- --------------- Intermediate-Term Bond Fund - --------------------------- Bayer Corp, 6.50%, 10/01/02 09/26/95 $99.38 $96.97 $1,648,490 Jet Equipment Trust Ser. 95-B, 7.83%, 02/15/15 07/01/95 $100.00 $98.90 1,049,071 ----------- Total $2,697,561 ----------- ----------- Long-Term Bond Fund - ------------------- Bayer Corp, 6.50%, 10/01/02 09/26/95 $99.38 $96.97 $533,335 Jet Equipment Trust Ser. 95-B, 7.83%, 02/15/15 07/01/95 $100.00 $98.90 339,977 Principal Mutual Life Insurance, 7.875%, 03/01/24 03/03/94 $99.32 $91.58 228,958 ----------- Total $1,102,270 ----------- -----------
- ----------------------------------------------------------------------------- FS-35 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. ALLOCATION OF CLASS EXPENSES
Institutional Retail MIDCO GROWTH FUND EXPENSES Shares(1) Shares(2) Total --------- --------- ----- Investment advisory fee $3,496,172 $62,154 $3,558,326 Administrative fee 1,225,892 4,781 1,230,673 Fund accounting 174,730 3,057 177,787 Legal 162,818 1,786 164,604 Audit 13,538 283 13,821 Custodian 129,734 1,665 131,399 Transfer agency 329,185 6,560 335,745 Printing 112,273 5,200 117,473 Distribution/administration assistance - retail shares 0 21,061 21,061 Insurance 23,266 336 23,602 Registration 47,205 358 47,563 Trustee fee 25,127 390 25,517 Reorganization 146,023 4,428 150,451 Other 64,148 459 64,607 - ------------------------------------------------------------------------------------------------------------------------------------ Total 5,950,111 112,518 6,062,629 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses waived by Custodian (129,734) (1,665) (131,399) - ------------------------------------------------------------------------------------------------------------------------------------ Net Expenses $5,820,377 $110,853 $5,931,230 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Institutional Retail SMALL-CAP OPPORTUNITY FUND EXPENSES Shares(1) Shares(2) Total --------- --------- ----- Investment advisory fee $170,199 $3,332 $173,531 Administrative fee 40,695 167 40,862 Fund accounting 31,606 781 32,387 Legal 8,265 97 8,362 Audit 7,655 158 7,813 Custodian 18,707 86 18,793 Amortization of organization costs 17,316 443 17,759 Transfer agency 37,262 1,203 38,465 Printing 9,450 783 10,233 Distribution/administration assistance - retail shares 0 704 704 Insurance 512 5 517 Registration 19,796 478 20,274 Trustee fee 1,027 22 1,049 Reorganization 4,911 203 5,114 Other 7,638 19 7,657 - ------------------------------------------------------------------------------------------------------------------------------------ Total 375,039 8,481 383,520 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses waived by Investment advisor (133,369) (3,422) (136,791) Custodian (18,707) (86) (18,793) Administrator (1,806) 0 (1,806) - ------------------------------------------------------------------------------------------------------------------------------------ Net Expenses $221,157 $4,973 $226,130 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
(1) For the year ended May 31, 1996. (2) For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS ----------------------------------------------------------------------------- FS-36 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 7. ALLOCATION OF CLASS EXPENSES (CONTINUED)
Institutional Retail GROWTH AND INCOME FUND EXPENSES Shares(1) Shares(2) Total --------- --------- ----- Investment advisory fee $170,717 $8,478 $179,195 Administrative fee 56,395 652 57,047 Fund accounting 30,473 1,239 31,712 Legal 9,559 269 9,828 Audit 8,487 326 8,813 Custodian 22,600 366 22,966 Transfer agency 58,943 2,921 61,864 Printing 5,150 1,949 7,099 Distribution/administration assistance - retail shares 0 2,601 2,601 Insurance 1,375 71 1,446 Registration 14,269 754 15,023 Trustee fee 1,432 74 1,506 Reorganization 11,543 1,182 12,725 Other 6,651 75 6,726 - ------------------------------------------------------------------------------------------------------------------------------------ Total 397,594 20,957 418,551 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses waived by: Investment advisor (49,319) 0 (49,319) Custodian (22,600) (366) (22,966) Administrator (4,873) 0 (4,873) - ------------------------------------------------------------------------------------------------------------------------------------ Net Expenses $320,802 $20,591 $341,393 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ Institutional Retail INTERMEDIATE-TERM BOND FUND EXPENSES Shares(1) Shares(2) Total --------- --------- ----- Investment advisory fee $405,357 $3,840 $409,197 Administrative fee 188,478 427 188,905 Fund accounting 42,383 384 42,767 Legal 37,284 238 37,522 Audit 12,218 95 12,313 Custodian 30,638 206 30,844 Transfer agency 41,822 524 42,346 Printing 13,862 234 14,096 Distribution/administration assistance - retail shares 0 1,677 1,677 Insurance 3,915 23 3,938 Registration 25,619 270 25,889 Trustee fee 4,877 36 4,913 Reorganization 17,582 282 17,864 Other 5,641 40 5,681 - ------------------------------------------------------------------------------------------------------------------------------------ Total 829,676 8,276 837,952 - ------------------------------------------------------------------------------------------------------------------------------------ Expenses waived by: Investment advisor (58,864) 0 (58,864) Custodian (30,635) (209) (30,844) Administrator (10,539) 0 (10,539) - ------------------------------------------------------------------------------------------------------------------------------------ Net Expenses $729,638 $8,067 $737,705 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
(1) For the year ended May 31, 1996. (2) For the period June 1, 1995 to September 29, 1995. SEE NOTES TO FINANCIAL STATEMENTS - ----------------------------------------------------------------------------- FS-37 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (CONTINUED) 8. REORGANIZATION A special meeting of the Westcore Board of Trustees was held on June 14, 1995, at which an Agreement ("Agreement") and Plan of Reorganization ("Reorganization") with Pacifica Funds Trust ("Pacifica") was approved subject to shareholder approval. On August 21, 1995, Westcore Trust and Pacifica entered into the Agreement, which contemplated the transfer to Pacifica of assets and liabilities of fifteen of the twenty-two funds constituting the Westcore Trust. The Growth Fund, Short-Term Government Bond Fund, Bonds Plus Fund, GNMA Fund, Arizona Intermediate Tax-Free Fund, Oregon Tax-Exempt Fund, Quality Tax-Exempt Income Fund, California Intermediate Tax-Free Fund, Basic Value Fund, Balanced Investment Fund, Cash Reserve Fund, Treasury Money Market Fund, Money Market Fund, Government Money Market Fund and Prime Money Market Fund were included in the Reorganization. A special meeting of the shareholders was held on September 28, 1995, at which shareholder approval of the Reorganization was obtained on the Growth Fund, Short-Term Government Bond Fund, Bonds Plus Fund, Arizona Intermediate Tax-Free Fund, Quality Tax-Exempt Income Fund, Basic Value Fund, Balanced Investment Fund, Cash Reserve Fund, Treasury Money Market Fund, Money Market Fund, Government Money Market Fund and Prime Money Market Fund. On September 30, 1995, shareholder approval was obtained from shareholders of the California Intermediate Tax-Free Fund. On October 11, 1995, shareholder approval was obtained from shareholders of the the Oregon Tax-Exempt Fund. On November 15, 1995, shareholder approval was obtained from shareholders of the the GNMA Fund. The Reorganization resulted in the conveyance of the assets and liabilities of the fifteen funds to corresponding portfolios of Pacifica. The MIDCO Growth, Blue Chip, Small-Cap Opportunity, Growth and Income, Intermediate-Term Bond, Long-Term Bond and Colorado Tax-Exempt Funds remain with the Trust and are advised by DIA. SHAREHOLDER TAX INFORMATION (UNAUDITED) Certain tax information regarding the Westcore Funds Trust is required to be provided to shareholders based upon each Fund's income and distribution for the taxable year ended May 31, 1996. The information and distributions reported herein may differ from information and distributions taxable to the shareholders for the calendar year ended December 31, 1995. During the fiscal year ended May 31, 1996, 100% of the dividends paid by the Colorado Tax-Exempt Fund from net investment income should be treated as tax-exempt dividends and 100% of the dividends paid by the Blue Chip, Small-Cap Opportunity and Growth and Income Funds from net investment income qualify for the corporate dividends received deduction. During the fiscal year ended May 31, 1996, the Westcore Funds paid the following distributions:
Ordinary Capital Total Income Dividends Gains Distributions Distributions MIDCO Growth Fund Institutional Class $0.00 $0.72 $0.72 Retail Class 0.00 0.00 0.00 Blue Chip Fund Institutional Class 0.49 1.08 1.57 Small-Cap Opportunity Fund Institutional Class 0.23 0.27 0.50 Fund Retail Class 0.02 0.00 0.02 Growth and Income Fund Institutional Class 0.24 0.66 0.90 Retail Class 0.06 0.00 0.06
----------------------------------------------------------------------------- FS-38 - -------------------------------------------------------------------------------- WESTCORE ANNUAL REPORT - -------------------------------------------------------------------------------- [LETTERHEAD] INDEPENDENT AUDITORS' REPORT TO THE BOARD OF TRUSTEES AND SHAREHOLDERS, WESTCORE TRUST: We have audited the accompanying statements of assets and liabilities, including the statements of investments, of the MIDCO Growth Fund, Blue Chip Fund, Small-Cap Opportunity Fund, Growth and Income Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund as of May 31, 1996, the related statements of operations for the year then ended and the statements of changes in net assets and financial highlights for each of the periods indicated. These financial statements and financial highlights are the responsibility of the Trust's Management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit also includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at May 31, 1996, by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of the MIDCO Growth Fund, Blue Chip Fund, Small-Cap Opportunity Fund, Growth and Income Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund of the Westcore Funds Trust as of May 31 1996, and the results of their operations, the changes in their net assets and financial highlights for each of the periods indicated in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP - --------------------- DELOITTE & TOUCHE LLP DENVER, COLORADO JUNE 28, 1996 - --------------------- FS-39 PART C - OTHER INFORMATION Item 24. FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements: (1) Financial Highlights for the Colorado Tax-Exempt Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Blue Chip Fund, Growth and Income Fund, MIDCO Growth Fund and Small-Cap Opportunity Fund are included in Part A. (2) Registrant's audited Annual Reports to Shareholders for the fiscal year ended May 31, 1996 for the Colorado Tax-Exempt Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Blue Chip Fund, Growth and Income Fund, MIDCO Growth Fund and Small-Cap Opportunity Fund are included in Part B. (b) Exhibits (1) (a) Amended and Restated Declaration of Trust of the Registrant dated November 19, 1987 is incorporated herein by reference to Exhibit (1) to Post-Effective Amendment No. 21 to Registrant's Registration Statement. (b) Amendment to Amended and Restated Declaration of Trust of the Registrant dated July 16, 1990 is incorporated herein by reference to Exhibit (1)(b) to Post-Effective Amendment No. 23 to Registrant's Registration Statement ("Post-Effective Amendment No. 23"). (2) (a) Registrant's Code of Regulations is incorporated herein by reference to Exhibit No. 2 to Post-Effective Amendment No. 7 to Registrant's Registration Statement ("Post-Effective Amendment No. 7"). (b) Amendment No. 1 to Registrant's Code of Regulations dated August 11, 1987 is incorporated herein by reference to Exhibit No. 2(b) to Post-Effective Amendment No. 11 to Registrant's Registration Statement. C-1 (c) Amendment No. 2 to Registrant's Code of Regulations dated August 17, 1995 is incorporated herein by reference to Exhibit 2(c) to Post-Effective Amendment No. 44. (d) Registrant's Amended and Restated Code of Regulations is filed herein. (3) None. (4) See Sections 5.1, 5.2 and 5.4 of Article 5, Sections 8.1, 8.2, 8.3, 8.4 and 8.5 of Article 8 and Sections 9.5 and 9.6 of Article 9 of the Amended and Restated Declaration of Trust which is incorporated by reference to Exhibit 1(a) herein, and Sections 2.1, 2.2, 2.3 and 2.4 of Article 2 of the Amended and Restated Code of Regulations which is incorporated by reference to Exhibit 2 herein. (5) (a) Amended and Restated Advisory Agreement dated October 1, 1995 between Registrant and Denver Investment Advisors LLC relating to Registrant's Cash Reserve Fund (which has not yet commenced operations, Colorado Tax-Exempt Fund, Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund, Long-Term Bond Fund, MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund) and Small-Cap Opportunity Fund is incorporated by reference to Exhibit 5(b) to Post-Effective Amendment No. 44. (6) (a) Distribution Agreement dated November 30, 1987 between Registrant and ALPS Securities, Inc. relating to Registrant's MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund), Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund, and Long-Term Bond Fund is incorporated herein by reference to Exhibit No. 6(b) to Post-Effective Amendment No. 14. (i) Amendment No. 1 dated March 30, 1989 relating to Registrant's Short-Intermediate Tax-Exempt Fund is incorporated herein by reference to Exhibit No. 6(b)(i) to Post-Effective Amendment No. 16 to Registrant's C-2 Registration Statement ("Post-Effective Amendment No. 16"). (ii) Amendment No. 2 dated as of September 28, 1990 relating to Registrant's Balanced Investment Fund is incorporated herein by reference to Exhibit 6(b)(ii) to Post-Effective Amendment No. 23. (iii) Amendment No. 3 dated as of June 1, 1991 relating to Registrant's Colorado Tax-Exempt Fund is incorporated herein by reference to Exhibit 6(b)(iii) to Post-Effective Amendment No. 26 to Registrant's Registration Statement ("Post-Effective Amendment No. 26"). (iv) Amendment No. 4 dated as of March 1, 1992 relating to Registrant's Arizona Intermediate Tax-Free Fund is incorporated herein by reference to Exhibit 6(b)(iv) to Post-Effective Amendment No. 32. (v) Amendment No. 5 dated as of August 1, 1993 relating to Registrant's Growth Fund is incorporated herein by reference to Exhibit 6(b)(v) to Post-Effective Amendment No. 36. (vi) Amendment No. 6 dated as of January 7, 1993 relating to Registrant's Quality Tax-Exempt Income Fund is incorporated herein by reference to Exhibit 6(b)(vi) to Post-Effective Amendment No. 36. (vii) Amendment No. 7 dated as of January 4, 1993 relating to Registrant's California Intermediate Tax-Free Fund is incorporated herein by reference to Exhibit 6(b)(vii) to Post-Effective Amendment No. 36. (viii) Amendment No. 8 dated as of December 28, 1993 relating to Registrant's Small-Cap Opportunity Fund is incorporated herein by reference to Exhibit 6(b)(viii) to Post-Effective Amendment No. 40 to Registrant's Registration statement ("Post-Effective Amendment No. 40"). C-3 (b) Form of Broker/Dealer Selling Agreement is incorporated herein by reference to Exhibit No. 6(c) to Post-Effective Amendment No. 14. (c) Form of Bank Agreement is incorporated herein by reference to Exhibit No. 6(d) to Post-Effective Amendment No. 14. (7) None. (8) (a) Custody Agreement dated November 30, 1987 between Registrant and First Interstate Bank of Denver, N.A. relating to Registrant's MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund), Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund and Long-Term Bond Fund is incorporated herein by reference to Exhibit No. 8(c) to Post-Effective Amendment No. 14. (i) Amendment No. 1 dated as of June 1, 1991 relating to Registrant's Colorado Tax-Exempt Fund is incorporated herein by reference to Exhibit 8(c)(i) to Post-Effective Amendment No. 26. (ii) Amendment No. 2 dated as of December 28, 1993 relating to Registrant's Small-Cap Opportunity Fund is incorporated herein by reference to Exhibit 8(b)(ii) to Post-Effective Amendment No. 40. (9) (a) Administration Agreement dated as of October 1, 1995 between Registrant, Denver Investment Advisors LLC, and ALPS Mutual Funds Services, Inc. relating to Registrant's Cash Reserve Fund, Colorado Tax-Exempt Fund, Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund, Long-Term Bond Fund, MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund) and Small-Cap Opportunity Fund is filed herewith as Exhibit 9(b). (b) Amended and Restated Transfer Agency and Service Agreement dated January 4, 1993 as amended from the Transfer Agency and Service Agreement dated June 1, 1992 between Registrant and State Street Bank and Trust Company relating to Registrant's Blue Chip C-4 Fund (formerly the Modern Value Equity Fund), Growth and Income Fund (formerly the Equity Income Fund), MIDCO Growth Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund is incorporated herein by reference to Exhibit 9(f) to Post-Effective Amendment No. 36. (i) Amendment No. 1 dated as of December 28, 1993 relating to Registrant's Small-Cap Opportunity Fund is incorporated herein by reference to Exhibit 9(c)(i) to Post-Effective Amendment No. 38. (ii) Amendment No. 2 dated as of November 1, 1994 is incorporated herein by reference to Exhibit 9(c) (ii) to Post-Effective Amendment No. 44. (c) Amended and Restated Bookkeeping and Pricing Agreement dated January 7, 1993 as amended from the Bookkeeping and Pricing Agreement dated June 1, 1992 between Registrant and ALPS Securities, Inc. relating to Registrant's Colorado Tax-Exempt Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Blue Chip Fund (formerly the Modern Value Equity Fund), Growth and Income Fund (formerly the Equity Income Fund), MIDCO Growth Fund and Small-Cap Opportunity Fund is incorporated herein by reference to Exhibit 9(g) to Post-Effective Amendment No. 36. (d) Indemnification Agreement dated July 17, 1995 between Registrant and First Interstate Bancorp is incorporated herein by reference to Exhibit 9(h) to Post-Effective Amendment No. 44. (e) Retirement Plan Order Processing Amendment to the Operating Agreements dated as of February 15, 1996; Institutional Services Agreements dated as of November 27, 1995; Operating Agreements dated as of November 27, 1995; Retail Services Agreement dated as of March 26, 1996; and Confidentiality Agreement dated as of March 26, 1996 among Westcore Trust, Denver Investment Advisors LLC and Charles Schwab & Co., Inc. relating to the Cash Reserve Fund, Colorado Tax-Exempt Fund, Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund, Long- Term Bond Fund, MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund) and Small-Cap Opportunity Fund is filed herewith as Exhibit 9(h). C-5 (10) (a) Opinion and consent of counsel with respect to Registrant's 24f-2 Notice was filed with the Securities and Exchange Commission on July 29, 1996. (b) Opinion and consent of counsel with respect to Registrant's registration of shares pursuant to Rule 24e-2 is filed herein. (11) (a) Consent of Drinker Biddle & Reath. (b) Consent of Deloitte & Touche LLP. (12) None. (13) None. (14) (a) Prototype Westcore IRA Application, Custodial Account Statement and Disclosure Statement is incorporated herein by reference to Exhibit 14(a) to Post-Effective Amendment No. 36. (b) Prototype Trust Consultants Inc. 401k Plan and Engagement Letter is incorporated herein by reference to Exhibit 14(b) to Post-Effective Amendment No. 36. (15) None. (16) Schedule for Computation of Performance Quotations for Small-Cap Opportunity Fund is incorporated herein by reference to Exhibit 16 to Post-Effective Amendment No. 40. Schedule for Computation of Performance Quotations for Colorado Tax-Exempt Fund is incorporated herein by reference to Exhibit (16) to Post-Effective Amendment No. 29. Schedule for Computation of Performance Quotations for remaining portfolios incorporated herein by reference to Exhibit (16) to Post-Effective Amendment No. 23. (17) Financial Data Schedules as of May 31, 1996 (18) None. Item 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT Registrant is controlled by its Board of Trustees. Certain of Registrant's trustees serve on the board of directors/trustees of certain other registered investment C-6 companies. (See "Management of the Fund - Directors and Officers" in Part B hereof). Item 26. NUMBER OF HOLDERS OF SECURITIES As of June 30, 1996: Number of Title of Class Record Holders -------------- -------------- Class B Shares (MIDCO Growth Fund) 8,619 Class G Shares (Long-Term Bond Fund) 266 Class H Shares (Intermediate-Term Bond Fund) 616 Class I Shares (Blue Chip Fund) 947 Class J Shares (Growth and Income Fund) 1,127 Class S Shares (Colorado Tax-Exempt Fund) 122 Class X (Small-Cap Opportunity Fund) 472 Item 27. INDEMNIFICATION The trustees are indemnified by First Interstate Bancorp ("FIB"), generally against damages arising out of (i) claims by any person that implementation of the Agreement and Plan of Reorganization between Pacifica Funds Trust ("Pacifica") and Westcore Trust (the "Plan") constitutes breach or violation of certain agreements with ALPS Mutual Funds Services, Inc.; and (ii) certain untrue or alleged untrue statements of material facts or omissions or alleged omissions of material facts in information furnished by or on behalf of FIB, intended for use in certain proxy materials or amendments or supplements to the Registrant's registration statement relating to the Plan. Under the Plan, Pacifica has agreed to assume certain liabilities of the Registrant, including certain obligations of the Registrant to indemnify the Registrant's Trustees acting in their capacity as such with respect to any claim alleging any breach of fiduciary duty with respect to transactions contemplated by the Plan or otherwise to the fullest extent C-7 permitted by law and the Registrant's Declaration of Trust as in effect on the date of such Plan. Indemnification of Registrant's principal underwriter against certain losses is provided for in Section 1.9 of the Distribution Agreement incorporated herein by reference as Exhibits 6(a). Indemnification of First Interstate Bank of Denver, N.A. as Custodian to the MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund), Growth and Income Fund (formerly the Equity Income Fund), Intermediate-Term Bond Fund, Long-Term Bond Fund, Colorado Tax-Exempt Fund and Small-Cap Opportunity Fund against certain losses is provided in Section 23 of the Custody Agreement incorporated herein by reference as Exhibits 8(a). Indemnification of Registrant's Bookkeeping and Pricing Agent against certain losses is provided for in Section 6 of the Amended and Restated Bookkeeping and Pricing Agreement incorporated herein by reference as Exhibit 9(c). Registrant has obtained from a major insurance carrier a trustees' and officers' liability policy covering certain types of errors and omissions. Registrant will not pay an insurance premium for insurance coverage which indemnifies for any act for which Registrant itself cannot indemnify. In addition, Section 9.3 of the Registrant's Amended and Restated Declaration of Trust dated November 19, 1987, incorporated herein by reference as Exhibit 1, provides as follows: 9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES. The Trust shall indemnify each of its Trustees against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, and as counsel fees) reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened, while as a Trustee or thereafter, by reason of his being or having been such a Trustee EXCEPT with respect to any matter as to which he shall have been adjudicated to have acted in bad faith, willful misfeasance, gross negligence or reckless disregard of his duties, PROVIDED that as to any matter disposed of by a compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless the Trust shall have received a written opinion from independent legal counsel approved by the Trustees to the effect that if either the matter of willful misfeasance, gross negligence or reckless disregard of duty, or the matter of bad faith had been adjudicated, it would in the opinion of such counsel have been adjudicated in favor of such person. The rights accruing to any person under these provisions shall not exclude any other right to which he may be lawfully entitled, PROVIDED that no person may satisfy any right of indemnity or reimbursement hereunder except out of the C-8 property of the Trust. The Trustees may make advance payments in connection with the indemnification under this Section 9.3, PROVIDED that the indemnified person shall have given a written undertaking to reimburse the Trust in the event it is subsequently determined that he is not entitled to such indemnification. The Trustees shall indemnify representatives and employees of the Trust to the same extent that Trustees are entitled to indemnification pursuant to this Section 9.2. Insofar as indemnification for liability arising under the Securities Act of 1933 may be permitted to trustees, officers and controlling persons of Registrant pursuant to the foregoing provisions, or otherwise, Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by Registrant of expenses incurred or paid by a trustee, officer or controlling person of Registrant in the successful defense of any action, suit or proceeding) is asserted by such trustee, officer or controlling person in connection with the securities being registered, Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Section 9.6 of the Registrant's Amended and Restated Declaration of Trust dated November 19, 1987, incorporated herein by reference as Exhibit 1, also provides for the indemnification of shareholders of the Registrant. Section 9.6 states as follows: 9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or former Shareholder shall be held to be personally liable solely by reason of his being or having been an [sic] Shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, executors, administrators or other legal representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets belonging to the classes of Shares owned by such Shareholder to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust shall, upon request by the Shareholder, assume the defense of any claim made against any Shareholder for any act or obligations of the Trust and satisfy any judgment thereon from such assets. C-9 Item 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER To Registrant's knowledge, none of the directors or senior executive officers of Denver Investment Advisors LLC, except those set forth below, is, or has been at any time during Registrant's past two fiscal years, engaged in any other business, profession, vocation or employment of a substantial nature. Set forth below are the names and principal businesses of the directors and certain of the senior executive officers of Denver Investment Advisors LLC who are or have been engaged in any other business, profession, vocation or employment of a substantial nature during the past two years. C-10 DENVER INVESTMENT ADVISORS LLC Position with Other Denver Investment Business Type of Name Advisors LLC Connections Business - ---- ----------------- ----------- -------- Jeff Adams Manager/Vice None N/A President Todger Anderson Executive President of Blue Investment Manager/President Chip Value Fund, Company Inc. Terri Baldwin Vice President None N/A Leo Beserra Vice President None N/A Glen Cahill Vice President None N/A Will Chester Vice President None N/A John Cormey Vice President Vice President of Investment Blue Chip Value Company Fund, Inc. Mary Ellen Cox Vice President None N/A Kathleen Duggan Vice President None N/A Janet Gardiner Vice President None N/A Les Garrison Vice President None N/A Caleb F. Gates, Jr. Vice President None N/A Dean Graves Vice President None N/A Grafton Jhung Vice President None N/A Doug Kidd Vice President None N/A Dennis Larkin Manager/Vice None N/A President Alex Lock Vice President None N/A Larry Luchini Vice President None N/A JoAnn Nearents Vice President None N/A Kenneth V. Penland Executive Chairman of the Investment Manager/Chairman Board of Blue Chip Company Value Fund, Inc. Charlotte Petersen Vice President None N/A Gerald Peterson Vice President None N/A
C-11 Position with Other Denver Investment Business Type of Name Advisors LLC Connections Business - ---- ----------------- ----------- -------- Varilyn Schock Vice President Vice President of Investment Blue Chip Value Company Fund, Inc. Mil Schulhof Vice President None N/A Tom Stevens Vice President None N/A Dave Stueber Vice President/ None N/A Manager
Item 29. PRINCIPAL UNDERWRITER (a) ALPS Mutual Funds Services, Inc. acts as the distributor for the Registrant and the following investment companies: Duff & Phelps Trust, FGIC Public Trust, First Funds, Sefton Funds and The Country Baskets Index Fund, Inc. (b) To the best of Registrant's knowledge, the directors and executive officers of ALPS Mutual Funds Services, Inc., are as follows: Positions and Positions and Name and Principal Offices with Offices with Business Address ALPS Registrant - ------------------ ------------- -------------- W. Robert Alexander Chairman None and Director Arthur J. L. Lucey Secretary, None President and Director Mark Pougnet Chief Financial Officer Treasurer Ned Burke Senior Vice President None John W. Hannon, Jr. Director None Asa W. Smith Director None Rick Pederson Director None Gordon Hobgood Director None Steven Bettcher Director None Mary Anstine Director None C-12 The principal business address for each of the above directors and executive officers is 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202. (c) None. Item 30. LOCATION OF ACCOUNTS AND RECORDS (1) Denver Investment Advisors LLC, 1225 17th Street, 26th Floor, Denver, Colorado 80202 (records relating to its function as investment adviser for Registrant's Colorado Tax-Exempt Fund, MIDCO Growth Fund, Blue Chip Fund (formerly the Modern Value Equity Fund), Long-Term Bond Fund, Small-Cap Opportunity Fund, Growth and Income Fund (formerly the Equity Income Fund) and Intermediate-Term Bond Fund). (2) ALPS Mutual Funds Services, Inc., 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202 (records relating to its functions as distributor, administrator and bookkeeping and pricing agent for each of Registrant's investment portfolios). (3) State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110 (records relating to its functions as transfer agent for each of the Registrant's investment portfolios). (4) Drinker Biddle & Reath, Philadelphia National Bank Building, 1345 Chestnut Street, Philadelphia, Pennsylvania 19107-3496 (Registrant's Declaration of Trust, Code of Regulations and Minute Books). Item 31. MANAGEMENT SERVICES None. Item 32. UNDERTAKINGS The Registrant undertakes to furnish to each person to whom a prospectus is delivered, a copy of the Registrant's latest annual report to shareholders upon request and without charge. C-13 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, and the Investment Company Act of 1940, as amended, the Registrant certifies that it meets all of the requirements for effectiveness of this Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused this Post-Effective Amendment to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Denver, and State of Colorado, on the 30th day of September, 1996. WESTCORE TRUST Registrant By: /s/ Kenneth V. Penland ------------------------------- Kenneth V. Penland President Pursuant to the requirements of the Securities Act of 1933, as amended, this Post-Effective Amendment to Registrant's Registration Statement has been signed by the following persons in the capacities and on the dates indicated: Signature Title Date - --------- ----- ---- /s/ Jack D. Henderson - -------------------------- Chairman September 27, 1996 Jack D. Henderson /s/ McNeil S. Fiske - -------------------------- Trustee September 27, 1996 McNeil S. Fiske /s/ James B. O'Boyle - -------------------------- Trustee September 27, 1996 James B. O'Boyle /s/ Robert L. Stamp - -------------------------- Trustee September 27, 1996 Robert L. Stamp /s/ Lyman Seely - -------------------------- Trustee September 27, 1996 Lyman Seely /S/ Mark Pougnet - -------------------------- Treasurer September 27, 1996 Mark Pougnet C-14 EXHIBIT INDEX Exhibit Number Item -------------- ---- Ex.99 (1)(a) Amended and Restated Declaration of Trust of the Registrant dated November 19, 1987. Ex.99 (1)(b) Amendment to Amended and Restated Declaration of Trust of the Registrant dated July 16, 1990. Ex.99 (2)(a) Registrant's Amended and Restated Code of Regulations dated November 19, 1987. Ex.99 (5)(a) Amended and Restated Advisory Agreement dated October 1, 1995. Ex.99 (6)(a) Distribution Agreement dated November 30, 1987. Ex.99 (6)(a)(i) Amendment No. 1 to Registrant's Distribution Agreement dated March 30, 1989. Ex.99 (6)(a)(ii) Amendment No. 2 to Registrant's Distribution Agreement dated September 28, 1990. Ex.99 (6)(a)(iii) Amendment No. 3 to Registrant's Distribution Agreement dated June 1, 1991. Ex.99 (6)(a)(iv) Amendment No. 4 to Registrant's Distribution Agreement dated March 1, 1992. Ex.99 (6)(a)(v) Amendment No. 5 to Registrant's Distribution Agreement dated August 1, 1993. Ex.99 (6)(a)(vi) Amendment No. 6 to Registrant's Distribution Agreement dated January 7, 1993. Ex.99 (6)(a)(vii) Amendment No. 7 to Registrant's Distribution Agreement dated January 4, 1993. Ex.99 (6)(a)(viii) Amendment No. 8 to Registrant's Distribution Agreement dated December 28, 1993. Ex.99 (6)(b) Form of Broker/Dealer Selling Agreement. Ex.99 (6)(c) Form of Bank Agreement. Ex.99 (8)(a) Custody Agreement dated November 30, 1987. Ex.99 (8)(a)(i) Amendment No. 1 to Registrant's Custody Agreement dated June 1, 1991. C-15 EXHIBIT INDEX Exhibit Number Item -------------- ---- Ex.99 (8)(a)(ii) Amendment No. 2 to Registrant's Custody Agreement dated December 28, 1993. Ex.99 (9)(a) Administration Agreement dated October 1, 1995. Ex.99 (9)(b) Amended and Restated Transfer Agency and Service Agreement dated January 4, 1993 as amended from the Transfer Agency and Service Agreement dated June 1, 1992. Ex.99 (9)(b)(i) Amendment No. 1 to Registrant's Transfer Agency Agreement dated December 28, 1993. Ex.99 (9)(b)(ii) Amendment No. 2 to Registrant's Transfer Agency Agreement dated November 1, 1994. Ex.99 (9)(c) Amended and Restated Bookkeeping and Pricing Agreement dated January 7, 1993 as amended from the Bookkeeping and Pricing Agreement dated June 1, 1992. Ex.99 (9)(d) Indemnification Agreement dated July 17, 1995. Ex.99 (9)(e) Service Agreement dated April 14, 1996 among Registrant, Denver Investment Advisors LLC and Charles Schwab & Co., Inc. Ex.99 (10)(b) Opinion and consent of counsel. Ex.99 (11)(a) Consent of Drinker Biddle & Reath. Ex.99 (11)(b) Consent of Deloitte & Touche LLP. Ex.99 (14)(a) Prototype Westcore IRA Application, Custodial Account Statement and Disclosure Statement. Ex.99 (14)(b) Prototype Trust Consultants Inc. 401k Plan and Engagement Letter. Ex.99 (16) Schedule for Computation of Performance Quotations for Small-Cap Opportunity Fund. Schedule for Computation of Performance Quotations for Colorado Tax-Exempt Fund. Schedule for Computation of Performance Quotations for remaining portfolios. (27)(a) Financial Data Schedules with respect to the Blue Chip Fund for the fiscal year ended May 31, 1996. (27)(b) Financial Data Schedules with respect to the Growth and Income Fund for the fiscal year ended May 31, 1996. (27)(c) Financial Data Schedules with respect to the Long-Term Bond Fund for the fiscal year ended May 31, 1996. (27)(d) Financial Data Schedules with respect to the Colorado Tax-Exempt Fund for the fiscal year ended May 31, 1996. (27)(e) Financial Data Schedules with respect to the Small-Cap Opportunity Fund for the fiscal year ended May 31, 1996. (27)(f) Financial Data Schedules with respect to the MIDCO Growth Fund for the fiscal year ended May 31, 1996. (27)(g) Financial Data Schedules with respect to the Intermediate- Term Bond Fund for the fiscal year ended May 31, 1996. (27)(h) Financial Data Schedules with respect to the Growth and Income Fund (Retail Shares) for the four month period ended September 30, 1995. (27)(i) Financial Data Schedules with respect to the MIDCO Growth Fund (Retail Shares) for the four month period ended September 30, 1995. (27)(j) Financial Data Schedules with respect to the Small-Cap Opportunity Fund (Retail Shares) for the four month period ended September 30, 1995. (27)(k) Financial Data Schedules with respect to the Intermediate- Term Bond Fund (Retail Shares) for the four month period ended September 30, 1995. C-16 EX-1.(A) 2 EXHIBIT 1(A) AMENDED AND RESTATED DECLARATION OF TRUST WESTCORE TRUST November 19, 1987 AMENDED AND RESTATED DECLARATION OF TRUST, made as of November 19, 1987 by Jack D. Henderson, McNeil S. Fiske, James B. O'Boyle, Robert L. Stamp and Lyman E. Seely (the "Trustees"): WHEREAS, the Trustees have established trust funds for the investment and reinvestment of funds contributed thereto under a Declaration of Trust dated December 10, 1985; and WHEREAS, the Trustees desire to amend and restate said Declaration of Trust in its entirety; and WHEREAS, all requisite authority by the Trustees and Shareholders pertaining to said amendment and restatement has been obtained; NOW, THEREFORE, the Trustees declare that all money and property contributed to the trust funds under said Declaration of Trust and hereunder shall be held and managed under this Amended and Restated Declaration of Trust as herein set forth below. I. NAME This trust shall be known as WESTCORE TRUST (hereinafter called the "Trust"), and the Trustees shall conduct the business of the Trust under that name or any other name as they shall from time to time determine. II. DEFINITIONS 2.1 DEFINITION OF CERTAIN TERMS. As used in this Declaration of Trust, the terms set forth below shall have the following meanings: A. The "Act" refers to the Investment Company Act of 1940, as now or hereafter amended, to the rules and regulations adopted from time to time thereunder and to any order or orders thereunder which may from time to time be applicable to the Trust. B. The terms "affiliated person," "assignment" and "interested person" shall have the respective meanings set forth in the Act. The term "vote of a majority of outstanding Shares" shall mean the "vote of a majority of the outstanding voting securities" as defined in the Section 2(a)(42) of the Act. C. The "Regulations" shall refer to the Code of Regulations of the Trust as adopted and amended from time to time. D. The "Declaration of Trust" shall mean this Declaration of Trust as amended or restated from time to time. E. "Person" shall mean a natural person, a corporation, a partnership, an association, a joint-stock company, a trust, a fund or any organized group of persons whether incorporated or not. F. "Shares" means the equal proportionate transferable units of interest of each class into which the beneficial interest in the Trust may be classified or reclassified from time to time by the Trustees acting under this Declaration of Trust, or in the absence of such action, means the equal proportionate transferable units of interest into which the entire beneficial interest in the Trust shall be divided from time to time, and includes fractions of Shares as well as whole Shares. G. "Shareholder" means a record owner of Shares in the Trust. H. The "Trustees" refers to the individual trustees of the Trust named herein or elected in accordance with Article VI hereof in their capacity as trustees hereunder and not as individuals and to their successor or successors while serving in office as a trustee of the Trust, and includes a single trustee. I. "Trust Property" means any and all assets and property, real or personal, tangible or intangible, which is owned or held by or for the account of the Trust or the Trustees. -2- III. PURPOSE OF TRUST; AGENT FOR SERVICE The Trust is a Massachusetts business trust of the type described in Chapter 182 section l of the General Laws of the Commonwealth of Massachusetts formed for the purpose of acting as a management investment company under the Act; PROVIDED, HOWEVER, that the Trust may exercise all powers which are ordinarily exercised by or permissible for Massachusetts business trusts. The Agent of the Trust for Service of Process within the Commonwealth of Massachusetts shall be: CT Corporation System, Two Oliver Street, Boston, Massachusetts 02109. IV. OWNERSHIP OF ASSETS OF THE TRUST The assets of the Trust shall be held separate and apart from any assets now or hereafter held in any capacity, other than as Trustees hereunder, by the Trustees, including without limitation any successor Trustees. Legal title to all the assets of the Trust shall be vested in the Trustees as joint tenants except that the Trustees shall have power to cause legal title to any assets of the Trust to be held by or in the name of one or more of the Trustees, or in the name of the Trust, or in the name of any other person as nominee, on such terms as the Trustees may reasonably determine. The right, title and interest of the Trustees in the assets of the Trust shall vest automatically in each person who may hereafter become a Trustee. Upon the resignation, removal or death of a Trustee, such Trustee shall automatically cease to have any right, title or interest in any of the assets of the Trust, and the right, title and interest of such Trustee in the assets of the Trust shall vest automatically in the remaining Trustees. Such vesting and cessation of title shall be effective regardless of whether conveyancing documents (pursuant to Section 6.6 hereof or otherwise) have been executed and delivered. Except to the extent otherwise required by Article V hereof, no Shareholder shall be deemed to have severable ownership in any individual asset of the Trust or any right of partition or possession thereof, or shall be called upon to assume any loss of the Trust nor can he be called upon to assume any loss of the Trust or suffer an assessment of any kind by virtue of his ownership of Shares, but each Shareholder shall have a proportionate undivided beneficial interest in the assets belonging to a particular class or classes of Shares to the extent provided in Article V. The ownership of the Trust Property of every description and the right to conduct any business hereinbefore described shall be vested exclusively in the Trustees, and the Shareholders shall have no interest therein other than the beneficial interest -3- conferred by their Shares, and they shall have no right to call for any partition or division of any property, profits, rights or interests of the Trust nor can they be called upon to assume any losses of the Trust or suffer an assessment of any kind by virtue of their ownership of Shares. The Shares shall be personal property giving only the rights specifically set forth in this Declaration of Trust. Shares shall not entitle any holder thereof to preference, preemptive, appraisal, conversion or exchange rights, except as the Trustees may determine pursuant to Article V hereof. V. SHAREHOLDERS; BENEFICIAL INTEREST IN THE TRUST; PURCHASE AND REDEMPTION OF SHARES 5.1 SHARES IN THE TRUST. A. The beneficial interest in the Trust shall at all times be divided into an unlimited number of full and fractional transferable Shares without par value. All Shares shall be of one class, PROVIDED that subject to this Declaration of Trust and the requirements of applicable law, the Trustees shall have the power to classify or reclassify any unissued Shares into any number of additional classes of Shares by setting or changing in any one or more respects, from time to time before the issuance thereof, their designations, preferences, conversion or other rights, voting powers, restrictions, limitations, qualifications or terms or conditions of redemption, PROVIDED FURTHER that the investment objectives, policies and restrictions governing the management and operations of the Trust, including the management of assets belonging to any class of Shares, may from time to time be changed or supplemented by the Trustees, subject to the requirements of the Act. The power of the Trustees to classify or reclassify Shares shall include, without limitation, the power to classify or reclassify any class of Shares into one or more series of such class. All references to Shares in this Declaration of Trust which are not accompanied by a reference to any particular class of Shares shall be deemed to apply to all outstanding Shares of any and all classes. All references in this Declaration of Trust to any class of Shares shall include and refer to the Shares of any series thereof. Upon the issuance of the first Share of a second class of Shares classified or reclassified by the Trustees pursuant to this Section 5:1, all Shares theretofore issued and outstanding shall automatically represent Shares of a separate class having the preferences, conversion and other rights, voting powers, restrictions, limitations, qualifications and terms and conditions of redemption provided for in this Declaration of -4- Trust with respect to any class of Shares. The Trustees may from time to time divide or combine the outstanding Shares of the Trust, or of any class or classes with the same alphabetical designation, into a greater or lesser number without thereby changing the proportionate beneficial interest of the Shares in the Trust as so divided or combined or in the assets belonging to such class or classes, as the case may be. At any time that there are no Shares outstanding of any particular class previously established and designated, the Trustees may abolish that class and the establishment and designation thereof. B. Subject always to the power of the Trustees to classify and reclassify any unissued Shares pursuant to subsection A of this Section 5.1, Shares of the Trust shall have the following designations, preferences, conversion and other rights, voting powers, restrictions, limitations, qualifications and terms and conditions of redemption: (1) DESIGNATIONS. The Board of Trustees shall give each class of Shares an alphabetical designation ("A," "B," "C," etc.), and may give any class of Shares such supplementary designations as the Board may deem appropriate. More than one class of Shares may have the same alphabetical designation. (2) ASSETS BELONGING TO CLASSES WITH SAME ALPHABETICAL DESIGNATION. All consideration received by the Trust for the issue and sale of Shares of any class shall be commingled, invested and reinvested together with the consideration received by the Trust for the issue and sale of Shares of such other class or classes, if any, that have the same alphabetical designation, along with all income, earnings, profits and proceeds derived from the investment thereof, including any proceeds derived from the sale, exchange or liquidation of such investments, any funds or payments derived from any reinvestment of such proceeds in whatever form the same may be, and any general assets of the Trust not belonging to a particular class which the Trustees may, in their sole discretion, allocate to such classes having the same alphabetical designation, and shall irrevocably belong to the classes with respect to which such assets, payments or funds were received or allocated for all purposes, subject only to the rights of creditors, and shall be so handled upon the books of account of the Trust. For purposes of this Declaration of Trust, such assets and the income, earnings, profits and proceeds thereof, including any proceeds derived from the sale, exchange or liquidation thereof, and any assets derived from any reinvestment of such proceeds in whatever form, are referred to as "assets belonging to" such classes. Each Share of the classes having the same alphabetical designation shall share equally with each other -5- Share of such classes in the assets belonging to such classes. Shareholders of any class of Shares shall have no right, title or interest in or to the assets belonging to any class of Shares with a different alphabetical designation. (3) LIABILITIES BELONGING TO CLASSES WITH SAME ALPHABETICAL DESIGNATION. The assets belonging to classes of Shares with the same alphabetical designation shall be charged with the direct liabilities in respect of such classes and shall also be charged with such classes' proportionate share of the general liabilities of the Trust as determined by comparing the assets belonging to such classes with the aggregate assets of the Trust. The liabilities so charged to such classes are herein referred to as "liabilities belonging to" such classes, and each Share of such classes shall be charged equally with each other Share of a class having the same alphabetical designation with the liabilities belonging to such classes, except that: (a) Shares of a class shall bear the expenses and liabilities of payments to institutions under any agreements entered into by or on behalf of the Trust which provide for services by the institutions to their customers who beneficially own Shares of that class but do not provide for services to any beneficial owners of Shares with that alphabetical designation other than Shares of that class, as well as any other expenses that are directly attributable to Shares of that class which the Board of Trustees determines should be borne solely by such Shares; and (b) Shares of a class shall not bear the expenses and liabilities of payments to institutions under any agreements entered into by or on behalf of the Trust which provide for services by the institutions to their customers which beneficially own Shares other than Shares of that class but do not provide for services to any beneficial owners of Shares of that class, or any other expenses that are directly attributable to another class of Shares which the Board of Trustees determines should be borne solely by such other class of Shares. (4) DIVIDENDS AND DISTRIBUTIONS. Shares of classes having the same alphabetical designation shall be entitled to such dividends and distributions, in Shares or in cash or both, as may be declared from time to time by the Trustees, acting in their sole discretion, with respect to such classes, PROVIDED that such dividends and distributions shall be paid only out of the lawfully available "assets belonging to" such classes as such term is defined in subsection B(2) of this Section 5.1. (5) LIQUIDATING DISTRIBUTIONS. In the event of the termination of the Trust and the winding up of its affairs, the Shareholders of classes having the same alphabetical -6- designation shall be entitled to receive out of the assets of the Trust available for distribution to Shareholders, but other than general assets not belonging to any particular class of Shares, the assets belonging to such classes and the assets so distributable to the Shareholders of such classes shall, subject to the allocation of certain liabilities to a particular class as set forth in sub-section B(3) of this Section 5.1, be distributed among such shareholders in proportion to the number of Shares of such classes held by them and recorded in their name on the books of the Trust. In the event that there are any general assets not belonging to any particular class of Shares and available for distribution, the Shareholders of classes having the same alphabetical designation shall be entitled to receive a portion of such general assets determined by comparing the assets belonging to such classes with the aggregate assets of the Trust; and the assets so distributable to the Shareholders of such classes shall, subject to the allocation of certain liabilities to a particular class as set forth in sub-section B(3) of this Section 5.1, be distributed among such Shareholders in proportion to the number of Shares of such classes held by them and recorded in their name on the books of the Trust. (6) VOTING. The holder of each Share shall be entitled to one vote for each full Share, and a proportionate fractional vote for each fractional Share, irrespective of the class, then recorded in his name on the books of the Trust, to the extent provided in Article VIII hereof. (7) PRE-EMPTIVE RIGHTS. Shareholders shall have no pre- emptive or other rights to subscribe to any additional Shares or other securities issued by the Trust. (8) CONVERSION RIGHTS. The Trustees shall have the authority to provide from time to time that the holders of Shares of any class shall have the right to convert or exchange said Shares for or into Shares of one or more other classes in accordance with such requirements and procedures as may be established from time to time by the Trustees. (9) REDEMPTION OF SHARES. To the extent of the assets of the Trust equally available for such redemptions, a Shareholder of the Trust shall have the right to require the Trust to redeem his full and fractional Shares of any class out of assets belonging to the classes with the same alphabetical designation as such class at a redemption price equal to the net asset value per Share next determined after receipt of a request to redeem in proper form as determined by the Trustees, subject to the right of the Trustees to suspend the right of redemption of Shares or postpone the date of payment of such redemption price in accordance with the provisions of applicable law. The Trustees shall establish such rules and procedures as they deem appropriate for the redemption of Shares, provided that all -7- redemptions shall be in accordance with the Act. Without limiting the generality of the foregoing, the Trust shall, to the extent permitted by applicable law, have the right at any time to redeem the Shares owned by any holder thereof: (a) in connection with the termination of any class of Shares as provided hereunder; (b) if the value of such Shares in the account or accounts maintained by the Trust or its transfer agent for any class or classes of Shares is less than the value determined from time to time by the Trustees as the minimum required for an account or accounts of such class or classes, PROVIDED that the Trust shall provide a Shareholder with written notice at least fifteen (15) days prior to effecting a redemption of Shares as a result of not satisfying such requirement; (c) to reimburse the Trust for any loss it has sustained by reason of the failure of such Shareholder to make full payment for Shares purchased by such Shareholder; (d) to collect any charge relating to a transaction effected for the benefit of such Shareholder which is applicable to Shares as provided in the prospectus relating to such Shares; or (e) if the net income with respect to any particular class of Shares should be negative or it should otherwise be appropriate to carry out the Trust's responsibilities under the Act, in each case subject to such further terms and conditions as the Trustees may from time to time establish. The redemption price of Shares in the Trust shall, except as otherwise provided in this sub-section, be the net asset value thereof as determined by the Trustees from time to time in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by the Trustees. When the net income of any class with respect to which the Trustees have, in their discretion, established a policy of maintaining a constant net asset value per Share is negative or whenever deemed appropriate by the Trustees in order to carry out the Trust's responsibilities under the Act, the Trust may, without payment of compensation but in consideration of the interests of the Trust and the holders of Shares of such class in maintaining a constant net asset value per Share of such class, redeem pro rata from each holder of record on such day, such number of full and fractional Shares of such class as may be necessary to reduce the aggregate number of outstanding Shares in order to permit the net asset value thereof to remain constant. Payment of the redemption price, if any, shall be made in cash by the Trust at such time and in such manner as may be determined from time to time by the Trustees unless, in the opinion of the Trustees, which shall be conclusive, conditions exist which make payment wholly in cash unwise or undesirable; in such event the Trust may make payment in the assets belonging or allocable to the classes of Shares having the same alphabetical designation as the class of the Shares redemption of which is being sought, the value of which shall be determined as provided herein. -8- (10) TERMINATION OF CLASSES. Without the vote of the Shares of any class then outstanding (unless otherwise required by applicable law), the Trustees may: (a) Sell and convey the assets belonging to any class or classes of Shares having the same alphabetical designation to another trust or corporation that is a management investment company (as defined in the Act) and is organized under the laws of any state of the United States for consideration which may include the assumption of all outstanding obligations, taxes and other liabilities, accrued or contingent, belonging to such class(es) and which may include securities issued by such trust or corporation. Following such sale and conveyance, and after making provision for the payment of any liabilities belonging to such class(es) that are not assumed by the purchaser of the assets belonging to such class(es), the Trust may, at the Trustees' option, redeem all outstanding Shares of such class(es) at net asset value as determined by the Trustees in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by the Trustees. Notwithstanding any other provision of this Declaration of Trust to the contrary, the redemption price may be paid in cash or by distribution of the securities or other consideration received by the Trust for the assets belonging to such class(es) upon such conditions as the Trustees deem, in their sole discretion, to be appropriate consistent with applicable law and this Declaration of Trust; (b) Sell and convert the assets belonging to any class or classes of Shares having the same alphabetical designation into money and, after making provision for the payment of all obligations, taxes and other liabilities, accrued or contingent, belonging to such class(es), the Trust may, at the: Trustees' option, (i) redeem all outstanding Shares of such class(es) at net asset value as determined by the Trustees in accordance with the provisions of applicable law, less such redemption fee or other charge, if any, as may be fixed by the Trustees upon such conditions as the Trustees deem, in their sole discretion, to be appropriate consistent with applicable law and this Declaration of Trust; or (ii) combine the assets belonging to such class(es) following such sale and conversion with the assets belonging to any one or more other class(es) of Shares having a different alphabetical designation pursuant to and in accordance with sub-section (c) of this Section 5.10; (c) Combine the assets belonging to any class or classes of Shares having the same alphabetical designation with the assets belonging to any one or more other classes of Shares having a different alphabetical designation if the Trustees reasonably determine that such combination will not have a material adverse effect on the Shareholders of any class -9- participating in such combination. In connection with any such combination of assets the Shares of any class then outstanding may, if so determined by the Trustees, be converted into Shares of any other class or classes of Shares participating in such combination, or may be redeemed, at the option of the Trustees, at net asset value as determined by the Trustees in accordance with the provisions of applicable law, less such redemption fee or other charge, or conversion cost, if any, as may be fixed by the Trustees upon such conditions as the Trustees deem, in their sole discretion, to be appropriate consistent with applicable law and this Declaration of Trust. Notwithstanding any other provision of this Declaration of Trust to the contrary, any redemption price, or part thereof, paid pursuant to this sub-section may be paid in Shares of any other class or classes participating in such combination; or (d) Otherwise terminate and wind up the affairs of any class or classes of Shares having the same alphabetical designation in accordance with this Declaration of Trust and applicable law. In connection with such termination of a class or classes of Shares having the same alphabetical designation and the winding up of the affairs of such class(es), all of the powers of the Trustees under this Declaration of Trust shall continue until the affairs of such class(es) shall have been wound up, including the power to fulfill or discharge the contracts of the Trust relating to such class(es), to collect assets belonging to such class(es), to sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining assets belonging to such class(es) to one or more persons at public or private sale for consideration that may consist in whole or in part of cash, securities or other property of any kind, to discharge or pay the liabilities belonging to such class(es), and to do all other acts appropriate to liquidate the business of such class(es), provided that the holders of Shares of any class shall not be entitled in any liquidation to receive any distribution upon the assets belonging to any other class that has a different alphabetical designation. If no Shares of a class then remain outstanding, or after the excess of the assets belonging to any class(es) of Shares over the liabilities belonging to such class(es) has been distributed among the Shareholders of such class(es) as provided in this Declaration of Trust, the Trustees may authorize the termination of such class(es) of Shares. 5.2 PURCHASE OF SHARES. The Trustees may accept investments in the Trust from such persons for such consideration, including cash or property, and on such other terms as they may from time to time authorize and the Trustees may in such manner acquire other assets (including the acquisition of assets subject to, and in connection with, the -10- assumption of liabilities) and businesses. The Trustees may in their discretion reject any order for the purchase of Shares. 5.3 NET ASSET VALUE PER SHARE. The net asset value per Share of any class of Shares shall be computed at such time or times as the Trustees may specify pursuant to the Act. Assets shall be valued and net asset value per Share shall be determined by such person or persons as the Trustees may appoint under the supervision of the Trustees in such manner as the Trustees may determine not inconsistent with the Act. 5.4 OWNERSHIP OF SHARES. The ownership of Shares shall be recorded on the record books of the Trust. The Trustees may make such rules and regulations as they consider appropriate for the issuance of Share certificates, the transfer of Shares and similar matters. Certificates certifying the ownership of Shares may be issued as the Trustees may determine from time to time, PROVIDED that the Trustees shall have the power to call outstanding Share certificates and to replace them with book entries. The record books of the Trust shall be conclusive as to the identity of holders of Shares and as to the number of Shares held by each Shareholder. VI. THE TRUSTEES 6.1 MANAGEMENT OF THE TRUST. The affairs of the Trust shall be managed by the Trustees and they shall have all powers necessary or desirable to carry out such responsibility, including without limitation the appointment of and delegation of responsibility to such officers, employees, agents, and contractors as they may select. 6.2 NUMBER AND TERM OF OFFICE. The number of Trustees shall be determined from time to time by the Trustees themselves, but shall not be more than ten. Subject to the provisions of this section relating to resignation or removal, the Trustees shall have the power to set and alter the terms of office of the Trustees, and they may at any time lengthen or shorten their own terms or make their terms of unlimited duration, PROVIDED that the term of office of any incumbent Trustees shall continue until terminated as provided in Section 6.5 hereof, or, if not so terminated until the election of such Trustee's successor in office has become effective in accordance with this section. A Trustee shall qualify by accepting in writing his election or appointment and agreeing to be bound by the provisions of this Declaration of Trust. Except as otherwise provided herein in the case of vacancies, Trustees (other than the Initial Trustee provided in Section 6.3 hereof) shall be elected by the shareholders at such time or times as the Trustees shall -11- determine that such election is required under Section 16(a) of the Act or is otherwise advisable. Notwithstanding the foregoing, (a) any Trustee may resign as a Trustee by written instrument signed by him and delivered to the other Trustees at the principal business office of the Trust (without need for prior or subsequent accounting), which shall take effect upon such delivery or upon such later date as is specified therein; (b) any Trustee may be removed at any time with or without cause by written instrument, signed by at least two-thirds of the number of Trustees prior to such removal, specifying the date when such removal shall become effective; (c) any Trustee who has become incapacitated by illness or injury may be retired by written instrument signed by a majority of the other Trustees; and (d) the term of a Trustee shall terminate at his death, resignation, removal or adjudicated incompetency. 6.3 INITIAL TRUSTEE. The initial Trustee shall be Patricia L. Bickimer, who, by her execution hereof, has agreed to be bound by the provisions of this Declaration of Trust. The initial trustee shall have the power to appoint additional trustees prior to any public meeting. 6.4 QUORUM. At all meetings of the Trustees, a majority of the Trustees shall constitute a quorum for the transaction of business and the action of a majority of the Trustees present at any meeting at which a quorum is present shall be the action of the Trustees unless the concurrence of a greater proportion is required for such action by law, the Regulations or this Declaration of Trust. If a quorum shall not be present at any meeting of Trustees, the Trustees present thereat may by a majority vote adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Meetings may be held by means of a conference telephone circuit or similar communications equipment by means of which all persons participating may hear each other. The Trustees may also act without a meeting, unless provided otherwise in this Declaration of Trust or required by law, by written consents of a majority of the Trustees. As used herein, a "majority of the Trustees" shall mean a majority of the Trustees in office at the time in question or if there shall be only one (l) Trustee in office then such term shall mean such Trustee. The Trustees may appoint committees of Trustees and delegate powers to them as provided in the Regulations. Any committee of the Trustees, including an executive committee, if any, may act with or without a meeting. A quorum for all meetings of any such committee shall be a majority of the members thereof. Unless provided otherwise in this Declaration of Trust, any action of any such committee may be taken at a meeting by vote of a majority of the members present (a quorum being -12- present) or without a meeting by unanimous written consent of the members. 6.5 VACANCIES. In case a vacancy shall exist by reason of an increase in number, or for any other reason, the remaining Trustees may fill such vacancy by appointing such other person as they in their discretion shall select. An appointment of a Trustee may be made in anticipation of a vacancy to occur at a later date by reason of retirement or resignation of the Trustee or an increase in the number of Trustees; provided, that such appointment will not become effective prior to such retirement or resignation or such increase in the number of the Trustees. Whenever a vacancy in number of Trustees shall occur, until such vacancy is filled as provided in this section, the Trustees in office, regardless of their number, shall have all the powers granted to the Trustees and shall discharge all the duties imposed on the Trustees by the Declaration of Trust. A written instrument certifying existence of such vacancy signed by a majority of the Trustees shall be conclusive evidence of the existence of such vacancy. Such appointment shall be evidenced by a written instrument signed by a majority of the then Trustees but the appointment shall not take effect until the individual so named shall have qualified by accepting in writing the appointment and agreeing to be bound by the terms of this Declaration of Trust. A vacancy may also be filled by the Shareholders in an election held at an annual or special meeting. As soon as any Trustee so appointed or elected shall have qualified, the Trust estate shall vest in the new Trustee or Trustees, together with the continuing Trustees, without any further act or conveyance. 6.6 EFFECT OF DEATH, RESIGNATION, ETC. OF TRUSTEE. The death, resignation, removal, or incapacity of the Trustees, or any one of them, shall not operate to annul the Trust or to revoke any existing agency created pursuant to the terms of this Declaration of Trust. Upon the resignation or removal of a Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the purpose of conveying to the Trust or the remaining Trustees any Trust property held in the name of the resigning or removed Trustee. Upon the incapacity or death of any Trustee, his legal representative shall execute and deliver on his behalf such documents as the remaining Trustees shall require as provided in the preceding sentence. The failure to request or deliver such documents shall not affect the operation of the provisions of Article IV hereof. 6.7 POWERS. The Trustees in all instances shall act as principals and are and shall be free from the control of the shareholders. The Trustees shall have full power and authority to do any and all acts and to make and execute any and all contracts and instruments that they may consider necessary or -13- desirable in connection with the management of the Trust. The Trustees shall not be bound or limited by present or future laws or customs in regard to Trust investments, but shall have full authority and power to make any and all investments which they, in their uncontrolled discretion, shall deem proper to accomplish the purpose of this Trust. Without limiting the foregoing, and subject to any applicable limitation in this Declaration of Trust or the Regulations, the Trustees shall have power and authority: A. To conduct, operate and carry on, either directly or through one or more wholly-owned subsidiaries, the business of an investment company or any other lawful business activity which the Trustees, in their sole and absolute discretion, consider to be (l) incidental to the business of the Trust or any class of Shares as an investment company, (2) conducive to or expedient for the benefit or protection of the Trust or the shareholders of any class of Shares, or (3) calculated in any other manner to promote the interests of the Trust or the Shareholders of any class of Shares. B. To adopt Regulations not inconsistent with this Declaration of Trust providing for the conduct of the affairs of the Trust and to amend and repeal them to the extent that they do not reserve that right solely to the shareholders. C. To issue, sell, repurchase, redeem, retire, cancel, acquire, hold, resell, reissue, dispose of, transfer, and otherwise deal in Shares of the Trust; and to apply to any such repurchase, redemption, retirement, cancellation or acquisition of Shares, any funds or other assets of the Trust, whether constituting capital or surplus or otherwise, to the full extent now or hereafter permitted by applicable law; and to divide or combine Shares without thereby changing the proportionate beneficial interest in the Trust. D. To issue, acquire, hold, resell, convey, write options on, and otherwise deal in securities, debt instruments and other instruments and rights of a financial character and to apply to any acquisition of securities any property of the Trust whether from capital or surplus or otherwise. E. To invest and reinvest cash, and to hold cash uninvested. F. To borrow money, issue guarantees of indebtedness or contractual obligations of others, to sell, exchange, lend, pledge, mortgage, hypothecate, write options on and lease any or all of the Trust Property. -14- G. To act as a distributor of Shares and as underwriter of, or broker or dealer in, securities or other property. H. To vote or give assent, or exercise any rights of ownership, with respect to stock or other securities or property; and to execute and deliver proxies or powers of attorney to such Person or Persons as the Trustees shall deem proper, granting to such Person or Persons such power and discretion with relation to securities or property as the Trustees shall deem proper. I. To exercise powers and rights of subscription or otherwise which in any manner arise out of ownership of securities. J. To hold any security or property in a form not indicating any trust, whether in bearer, unregistered or other negotiable form, or in the name of the Trustees or of the Trust or in the name of a custodian, subcustodian or other depositary or a nominee or nominees or otherwise. K. To consent to or participate in any plan for the reorganization, consolidation or merger of any corporation or issuer; any security of which is or was held in the Trust; and consent to any contract, lease, mortgage purchase or sale of property by such corporation or issuer; and to pay calls or subscriptions with respect to any security held in the Trust. L. To join with other security holders in acting through a committee, depositary, voting trustee or otherwise, and in that connection to deposit any security with, or transfer any security to, any such committee, depositary or trustee, and to delegate to them such power and authority with relation to any security (whether or not so deposited or transferred) as the Trustees shall deem proper, and to agree to pay, and to pay, such portion of the expenses and compensation of such committee, depositary or trustee as the Trustees shall deem proper. M. To enter into joint ventures, general or limited partnerships and any other combinations or associations. N. To enter into contracts of any kind and description. O. To collect all property due to the Trust, to pay all claims, including taxes, against the assets belonging to the Trust, to prosecute, defend, compromise, arbitrate, or otherwise adjust claims in favor of or against the Trust or any matter in controversy including, but not limited to, claims for taxes, to foreclose any security interest securing any -15- obligations by virtue of which any property is owed to the Trust, and to enter into releases, agreements and other instruments. P. To retain and employ any Person or Persons to serve on behalf of the Trust as investment adviser, administrator, transfer agent, custodian, underwriter, distributor or in such other capacities as they consider desirable and to delegate such power and authority as they consider desirable to any such Person or Persons. Q. To indemnify any person with whom the Trust has dealings. R. To purchase and pay for entirely out of Trust Property such insurance as they may deem necessary or appropriate for the conduct of the business, including without limitation, insurance policies insuring the Trust Property and payment of distributions and principal on its portfolio investments, and insurance policies insuring the Shareholders, Trustees, officers, employees, agents, investment advisers or managers, principal underwriters, or independent contractors of the Trust individually against all claims and liabilities of every nature arising by reason of holding, being or having held any such office or position, or by reason of any action alleged to have been taken or omitted by any such person as Shareholder, Trustee, officer, employee, agent, investment adviser or manager, principal underwriter, or independent contractor, including any action taken or omitted that may be determined to constitute negligence, whether or not the Trust would have the power to indemnify such Person against such liability. S. To engage in and to prosecute, defend, compromise, abandon, or adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes, claims, and demands relating to the Trust or the Trust Property, and, out of the Trust Property, to pay or to satisfy any debts, claims or expenses incurred in connection therewith, including those of litigation, and such power shall include without limitation the power of the Trustees or any appropriate committee thereof, in the exercise of their or its good faith business judgment, consenting to dismiss any action, suit, proceeding, dispute, claims, or demand, derivative or otherwise, brought by any person, including a Shareholder in such Shareholder's own name or in the name of the Trust, whether or not the Trust or any of the Trustees may be named individually therein or the subject matter arises by reason of business for or on behalf of the Trust. T. To establish pension, profit sharing, Share purchase, and other retirement, incentive and benefit plans for any Trustees, officers, employees and agents of the Trust. -16- U. To determine and change the fiscal year of the Trust and the method by which its accounts shall be kept. V. To establish in their absolute discretion in accordance with the provisions of applicable law the basis or method for determining the value of the assets belonging to any class or classes of Shares, the value of the liabilities belonging to any class or classes of Shares, the allocation of any assets or liabilities to any class or classes of Shares, the net asset value of any class of Shares, the times at which Shares of any class shall be deemed to be outstanding or no longer outstanding and the net asset value of each Share of any class for purposes of sales, redemptions, repurchases of Shares or otherwise. W. To determine in accordance with generally accepted accounting principles and practices what constitutes net profits or net earnings, and to determine what accounting periods shall be used by the Trust for any purpose, whether annual or any other period, including daily; to set apart out of the assets belonging to any class or classes of Shares such reserves of funds for such purposes as it shall determine and to abolish the same; to declare and pay any dividends and distributions to any class of Shares in cash, securities or other property from any assets legally available therefor, at such intervals (which may be as frequently as daily) or on such other periodic basis, as it shall determine; to declare such dividends or distributions by means of a formula or other method of determination, at meetings held less frequently than the frequency of the effectiveness of such declaration; to establish payment dates for dividends or any other distributions on any basis, including dates occurring less frequently than the effectiveness of declarations thereof; and to provide for the payment of declared dividends on a date earlier or later than the specified payment date in the case of Shareholders redeeming their entire ownership of Shares of any class. X. To engage in any other lawful act or activity in which a Massachusetts business trust or a corporation organized under the Massachusetts Business Corporation Law may engage. No one dealing with the Trustees shall be under any obligation to make any inquiry concerning the authority of the Trustees, or to see to the application of any payments made or property transferred to the Trustees or upon their order. 6.8 TRUSTEES AND REPRESENTATIVES AS SHAREHOLDERS. Any Trustee, representative or other agent of the Trust may acquire, own and dispose of Shares of the Trust to the same extent as if he were not a Trustee, representative or agent; and the Trust may issue and sell or cause to be issued and sold Shares of the Trust -17- to, and may buy such Shares from, any person with which such Trustee, representative or agent is affiliated subject only to the general limitations herein contained as to the sale and purchase of such Shares; all subject to any restrictions which may be contained in the Regulations. 6.9 EXPENSES; TRUSTEE REIMBURSEMENT. The Trustees shall have the power to incur and to pay (or shall be reimbursed) from the Trust Property all expenses and disbursements of the Trust, including, without limitation, interest expense, compensation payable to Trustees and representatives of the Trust, taxes, fees and commissions of every kind incurred in connection with the affairs of the Trust, expenses of issue, repurchase and redemption or Shares, expenses of registering and qualifying the Trust and its Shares under Federal and State securities laws and regulations, charges of custodians, transfer agents, investment advisers, administrators and registrars, expenses of preparing and printing and distributing prospectuses, auditing and legal expenses, expenses of reports to Shareholders, expenses of meetings of Shareholders and proxy solicitations therefor, insurance expense, association membership dues and such non-recurring items as may arise, including costs and expenses of litigation to which the Trust is a party, and for all losses and liabilities by them incurred in administering the Trust, PROVIDED that expenses, disbursements, losses and liabilities incurred in connection with classes of Shares having the same alphabetical designation or in connection with the management of the assets belonging to such classes shall be payable solely out of the assets belonging to such classes, PROVIDED FURTHER that the Trustees shall have a lien on the Trust Property prior to any rights or interests of the Shareholders thereto for the payment of any expenses, disbursements, losses and liabilities of the Trust. 6.10 POWER TO CARRY OUT TRUST'S PURPOSES; PRESUMPTIONS. The Trustees shall have power to carry out any and all acts consistent with the Trust's purposes through branches and offices both within and without the Commonwealth of Massachusetts, in any and all states of the United States of America, in the District of Columbia, and in any and all commonwealths, territories, dependencies, possessions, agencies or instrumentalities of the United States of America and of foreign governments, and to do all such other things and execute all such instruments as they deem necessary, proper or desirable in order to promote the interests of the Trust although such things are not herein specifically mentioned. Any determination as to what is in the interests of the Trust made by the Trustees in good faith shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of a grant of power to the Trustees. The enumeration of any specific power herein shall not be construed as limiting the aforesaid power. The Trustees shall -18- not be required to obtain any court order to deal with the Trust Property. 6.11 DETERMINATIONS BY TRUSTEES. Any determination made in good faith and, so far as accounting matters are involved in accordance with generally accepted accounting principles, by or pursuant to the direction of the Trustees as to the amount and value of assets, obligations or liabilities of the Trust or any class of Shares, as to the amount of net income of the Trust or any class of Shares from dividends and interest for any period or amounts at any time legally available for the payment of dividends, as to the amount of any reserves or charges set up and the propriety thereof, as to the time of or purpose for creating reserves or as to the use, alteration or cancellation of any reserves or charges (whether or not any obligation or liability for which such reserves or charges shall have been created shall have been paid or discharged or shall be then or thereafter required to be paid or discharged), as to the value of any security owned by the Trust or any class of Shares, as to the allocation of any assets or liabilities to a class or classes of Shares, as to the times at which Shares of any class shall be deemed to be outstanding or no longer outstanding, or as to any other matters relating to the issuance, sale, redemption or other acquisition or disposition of securities or Shares, and any reasonable determination made in good faith by the Trustees as to whether any transaction constitutes a purchase of securities on "margin," a sale of securities "short," or any underwriting of the sale of, or a Participation in any underwriting or selling group in connection with the public distribution of, any securities, shall be final and conclusive, and shall be binding upon the Trust and all shareholders, past, present and future, and Shares are issued and sold on the condition and understanding, evidenced by the purchase of Shares or acceptance of Share certificates, that any and all such determinations shall be binding as aforesaid. 6.12 SERVICE IN OTHER CAPACITIES. Any Trustee, representative, employee or agent of the Trust, including any investment adviser, transfer agent, administrator, distributor, custodian or underwriter for the Trust, may serve in any other capacity on his or its own behalf or on behalf of others, and may engage in other business activities in addition to his or its services on behalf of the Trust, PROVIDED that such other activities do not materially interfere with the performance of his or its duties for or on behalf of the Trust. -19- VII. AGREEMENTS WITH INVESTMENT ADVISER, PRINCIPAL UNDERWRITER, ADMINISTRATOR, TRANSFER AGENT, CUSTODIAN AND OTHERS 7.1 INVESTMENT ADVISER. The Trustees may, on such terms and conditions as they may in their discretion determine, enter into a written investment advisory agreement or agreements with any Person or Persons providing for portfolio management, investment advisory, statistical and research facilities and other services pertaining to the assets belonging to one or more classes of Shares. Notwithstanding any other provision hereof, the Trustees may authorize such an investment adviser (subject to such general or specific instructions as the Trustees may adopt) to effect purchases; sales or exchanges of portfolio securities of such class(es) on behalf of the Trustees and to determine the net asset value and net income of such class(es) or may authorize any representative or Trustee to effect such purchases, sales or exchanges pursuant to the recommendations of such investment adviser (all without further action by the Trustees). Any such purchases, sales and exchanges so effected shall be deemed to have been authorized by all of the Trustees. 7.2 ADMINISTRATOR. The Trustees may, on such terms and conditions as they may in their discretion determine, enter into one or more agreements with any Person or Persons providing for administrative services to one or more classes of Shares, including assistance in supervising the affairs of such class(es) and performance of administrative, clerical and other services considered desirable by the Trustees. 7.3 PRINCIPAL UNDERWRITER. The Trustees may, on such terms and conditions as they may in their discretion determine, enter into one or more distribution agreements with any Person or Persons providing for the sale of Shares of one or more classes at a price at least equal to the net asset value per Share of such class(es) and providing for sale of the Shares of such class(es) pursuant to arrangements by which the Trust may either agree to sell the Shares of such class(es) to the other party to the agreement or appoint such other party its sales agent for such Shares. Such agreement(s) may also provide for the repurchase of Shares of such class(es) by such other party as principal or as agent of the Trust, and may authorize the other party to enter into agreements with others for the purpose of the distribution or repurchase of Shares of such class(es). 7.4 TRANSFER AGENT. The Trustees may, on such terms and conditions as they may in their discretion determine, enter into one or more agreements with any Person or Persons providing for transfer agency and other services to Shareholders of any class. -20- 7.5 CUSTODIAN. The Trustees may, on such terms and conditions as they may in their discretion determine, enter into one or more agreements with any Person or Persons providing for the custody and safekeeping of the property of the Trust or any class of Shares. 7.6 SERVICE AND DISTRIBUTION PLANS. The Trustees may, on such terms and conditions as they may in their discretion determine, adopt one or more plans pursuant to which Persons may be compensated directly or indirectly by the Trust for shareholder servicing, administration or distribution with respect to one or more classes of Shares, including without limitation plans subject to Rule 12b-1 under the Act, and the Trustees may enter into agreements pursuant to such Plans. 7.7 PARTIES TO AGREEMENTS. The same Person may be employed in multiple capacities under Sections 7.1 through 7.6 of this Article VII and may receive compensation in as many capacities as such Person serves. The Trustees may enter into any agreement of the character described in this Article VII, or any other agreement necessary or appropriate to the conduct of the business of the Trust or any class of Shares, with any Person, including any Person in which any Trustee, representative, employee or shareholder of the Trust may be interested, and no such agreement shall be invalidated or rendered voidable by reason of the existence of any such relationship, nor shall any Person holding such relationship be liable by reason of such relationship for any loss or expense to the Trust under or by reason of said agreement or accountable for any profit realized directly or indirectly therefrom. VIII. SHAREHOLDERS' VOTING POWERS AND MEETINGS 8.1 VOTING POWERS. The shareholders shall have power to vote (a) for the election of Trustees as provided in section 6.2 hereof, (b) to the same extent as the shareholders of a Massachusetts business corporation when considering whether a court action, proceeding or claim should or should not be brought or maintained derivatively or as a class action on behalf of the Trust or the Shareholders, (c) with respect to any of the matters and to the extent provided in Article X hereof, (d) with respect to such additional matters relating to the Trust as may be required by law, by this Declaration of Trust, by the Regulations of the Trust, by any requirement applicable to or agreement of the Trust, and as the Trustees may consider desirable. Every shareholder of record shall have the right to one vote for every whole Share (other than Shares held in the treasury of the Trust) standing in his name on the books of the Trust, and to have a proportional fractional vote for any fractional Share, as to any -21- matter on which the Shareholder is entitled to vote. There shall be no cumulative voting. Shares may be voted in person or by proxy. Until Shares are issued, the Trustees may exercise all rights of Shareholders and may take any action required or permitted to be taken by shareholders by law, this Declaration of Trust or the Regulations. 8.2 MEETINGS. Meetings of Shareholders may be called by the Trustees as provided in the Regulations and shall be called by the Trustees upon the written request of Shareholders owning at least ten percent (10%) of the outstanding Shares entitled to vote. 8.3 QUORUM AND REQUIRED VOTE. The presence, in person or by proxy, of Shareholders entitled to cast at least a majority of the votes which all Shareholders are entitled to cast on the particular matter shall constitute a quorum for the purpose of considering such matter. Action may be taken on all matters for which a quorum exists, irrespective of the absence of a quorum on other matters. If a meeting cannot be organized with respect to a particular matter because a quorum for that matter has not attended, those present and entitled to vote on such matter may adjourn the meeting to such reasonable time and place as they may determine. On any matter submitted to a vote of Shareholders, Shares with different alphabetical class designations that are then issued and outstanding and entitled to vote shall be voted in the aggregate and not by class except: (1) as otherwise required by applicable law or permitted by the Board of Trustees of the Trust, or (2) when the matter, as conclusively determined by the Trustees, affects only the interests of the Shareholders of a class or classes with a particular alphabetical designation (in which case only Shareholders of the affected class or classes shall be entitled to vote thereon). Each share of classes having the same alphabetical designation shall vote together in the aggregate and not by class on all matters submitted to a vote of the Shareholders of such classes, except that: (1) on any matter that pertains to the agreements or expenses and liabilities described in subsection B(3)(a) of section 5.1 hereof (or to any plan or other document adopted by the Trust relating to said agreements, expenses or liabilities) and is submitted to a vote of Shareholders of the Trust, only shares of the particular class specified therein shall be entitled to vote, except that: (i) if said matter affects Shares in the Trust other than shares of such class, such other affected shares in the Trust shall also be entitled to vote, and in such case Shares of the particular class so specified shall be voted in the aggregate together with such -22- other affected Shares and not by class except where otherwise required by law or permitted by the Board of Trustees of the Trust; and (ii) if said matter does not affect shares of the particular class specified therein, said Shares shall not be entitled to vote (except where required by law or permitted by the Board of Trustees) even though the matter is submitted to a vote of the holders of shares in the Trust other than Shares of such class; and (2) on any matter that pertains to the agreements or expenses and liabilities described in subsection B(3)(b) of section 5.1 hereof (or any plan or other document adopted by the Trust relating to said agreements, expenses or liabilities) and is submitted to a vote of Shareholders of the Trust, Shares of the particular class specified therein shall not be entitled to vote, except where otherwise required by law or permitted by the Board of Trustees of the Trust, and except that if said matter affects Shares of such class, such Shares shall be entitled to vote, and in such case shall be voted in the aggregate together with all other shares in the Trust voting on the matter and not by class except where otherwise required by law or permitted by the Board of Trustees. Subject to any applicable requirements of law or of this Declaration of Trust or the Regulations: (a) the acts, at any duly organized meeting, of the Shareholders present, in person or by proxy, entitled to cast at least a majority of the votes which all shareholders present are entitled to cast on the particular matter shall be the acts of the shareholders with respect to that matter; and (b) in the election of Trustees, a plurality of the Shares voting shall elect a Trustee. 8.4 SHAREHOLDER ACTION BY WRITTEN CONSENT. Any action which may be taken by Shareholders may be taken without a meeting if not less than a majority of the Shareholders entitled to vote on the matter consent to the action in writing and the written consents are filed with the records of the meetings of shareholders. Such consent shall be treated for all purposes as a vote taken at a meeting of shareholders. 8.5 CODE OF REGULATIONS. The Regulations may include further provisions not inconsistent with this Declaration of Trust for meetings of Shareholders, votes, record dates, notices of meetings and related matters. -23- IX. LIMITATIONS OF LIABILITY AND INDEMNIFICATION 9.1 LIABILITIES OF CLASSES. Liabilities belonging to classes of Shares with the same alphabetical designation, including, without limitation, expenses, fees, charges, taxes, and liabilities incurred or arising in connection with such classes, or in connection with the management thereof, shall be paid only from the assets belonging to such classes. 9.2 LIMITATION OF TRUSTEE LIABILITY. Every act or thing done or omitted, and every power exercised or obligation incurred by the Trustee or any of them in the administration of this Trust or in connection with any affairs, property or concerns of the Trust, whether ostensibly in their own names or in their Trust capacity, shall be done, omitted, exercised or incurred by them as Trustees and not as individuals. Every person contracting or dealing with the Trustees or having any debt, claim or judgment against them or any of them shall look only to the funds and property of the Trust for payment or satisfaction. No Trustee or Trustees of the Trust shall ever be personally liable for or on account of any contract, debt, tort, claim, damage, judgment or decree arising out of or connected with the administration or preservation of the Trust Property or the conduct of any of the affairs of the Trust. Every note, bond, contract, order or other undertaking issued by the Trust or the Trustees relating to the Trust, and stationery used by the Trust shall include the notice set forth in Section 9.5 of this Article IX (but the omission thereof shall not be construed as a waiver of the foregoing provision, and shall not render the Trustees personally liable). It is the intention of this Section 9.2 that no Trustee shall be subject to any personal liability whatsoever to any person for any action or failure to act (including without limitation the failure to compel in any way any former or acting Trustee to redress any breach of trust) except that nothing in this Declaration of Trust shall protect any Trustee from any liability to the Trust or its Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of his duties, or by reason of reckless disregard of his obligations and duties as Trustee; and that all persons shall look solely to the Trust Property belonging to a class of Shares for satisfaction of claims of any nature arising in connection with the affairs of such class of the Trust. 9.3 INDEMNIFICATION OF TRUSTEES, REPRESENTATIVES AND EMPLOYEES. The Trust shall indemnify of its Trustees against all liabilities and expenses (including amounts paid in satisfaction of judgments, in compromise, as fines and penalties, -24- and as counsel fees) reasonably incurred by him in connection with the defense or disposition of any action, suit or other proceeding, whether civil or criminal, in which he may be involved or with which he may be threatened, while as a Trustee or thereafter, by reason of his being or having been such a Trustee EXCEPT with respect to any matter as to which he shall have been adjudicated to have acted in bad faith, willful misfeasance, gross negligence or reckless disregard of his duties, PROVIDED that as to any matter disposed of by a compromise payment by such person, pursuant to a consent decree or otherwise, no indemnification either for said payment or for any other expenses shall be provided unless the Trust shall have received a written opinion from independent legal counsel approved by the Trustees to the effect that if either the matter of willful misfeasance, gross negligence or reckless disregard of duty, or the matter of bad faith had been adjudicated, it would in the opinion of such counsel have been adjudicated in favor of such person. The rights accruing to any person under these provisions shall not exclude any other right to which he may be lawfully entitled, PROVIDED that no person may satisfy any right of indemnity or reimbursement hereunder except out of the property of the Trust. The Trustees may make advance payments in connection with the indemnification under this Section 9.3, PROVIDED that the indemnified person shall have given a written undertaking to reimburse the Trust in the event it is subsequently determined that he is not entitled to such indemnification. The Trustees shall indemnify representatives and employees of the Trust to the same extent that Trustees are entitled to indemnification pursuant to this Section 9.2. 9.4 RELIANCE ON EXPERTS, ETC. Each Trustee and representative of the Trust shall, in the performance of his duties, be fully and completely justified and protected with regard to any act or any failure to act resulting from reliance in good faith upon the books of account or other records of the Trust, upon an opinion of counsel satisfactory to the Trust, or upon reports made to the Trust by any of its representatives or employees or by the investment adviser, the principal underwriter, selected dealers, accountants, appraisers or other experts or consultants selected with reasonable care by the Trustees or representatives of the Trust, regardless of whether such counsel or expert may also be a Trustee. 9.5 LIMITATION OF SHAREHOLDER LIABILITY. Shareholders shall not be subject to any personal liability in connection with the assets of the Trust for the acts or obligations of the Trust. The Trustees shall have no power to bind any Shareholder personally or to call upon any Shareholder for the payment of any sum of money or assessment whatsoever other than such as the Shareholder may at any time personally agree to pay by way of -25- subscription to any Shares or otherwise. Every obligation, contract, instrument, certificate, Share, other security of any class of Shares or undertaking, and every other act whatsoever executed in connection with the Trust or any class of Shares shall be conclusively presumed to have been executed or done by the executors thereof only in their capacities as Trustees under the Declaration of Trust or in their capacity as officers, employees or agents of the Trust and not individually. Every note, bond, contract, order or other undertaking issued by or on behalf of the Trust or the Trustees relating to the Trust or any class of Shares, and the stationery used by the Trust, shall include a recitation limiting the obligation represented thereby to the Trust and its assets (but the omission of such a recitation shall not operate to bind any shareholder), as follows: "The names 'Westcore Trust' and 'Trustees of Westcore Trust' refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of 'Westcore Trust' entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, Shareholders or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust property belonging to such class for the enforcement of any claims against the Trust." The rights accruing to a Shareholder under this Section 9.5 shall not exclude any other right to which such Shareholder may be lawfully entitled, nor shall anything herein contained restrict the right of the Trust to indemnify or reimburse a Shareholder in any appropriate situation even though not specifically provided for herein, PROVIDED that a shareholder of any class of Shares shall be indemnified only from assets belonging to the classes of shares with the same alphabetical designation. 9.6 INDEMNIFICATION OF SHAREHOLDERS. In case any shareholder or former shareholder shall be held to be personally liable solely by reason of his being or having been a shareholder and not because of his acts or omissions or for some other reason, the Shareholder or former Shareholder (or his heirs, -26- executors, administrators or other legal representatives or, in the case of a corporation or other entity, its corporate or other general successor) shall be entitled out of the assets belonging to the classes of shares with the same alphabetical designation as that of the shares owned by such shareholder to be held harmless from and indemnified against all loss and expense arising from such liability. The Trust shall, upon request by the Shareholder, assume the defense of any claim made against any Shareholder for any act or obligations of the Trust and satisfy any judgment thereon from such assets. X. MISCELLANEOUS 10.1 TRUST NOT A PARTNERSHIP. It is hereby expressly declared that a Massachusetts business trust and not a partnership, joint venture, corporation, joint stock company or any form of legal relationship other than a trust is created hereby. Nothing herein shall be construed to make the Shareholders, either by themselves or with the Trustees, partners or members of a joint stock association. No Trustee hereunder shall have any power to bind personally either a representative of the Trust or any Shareholder. All persons extending credit to, contracting with or having any claim against the Trust or the Trustees shall look only to the assets of the Trust for payment under such credit, contract or claim; and neither the Shareholders nor the Trustees, whether past, present or future, shall be personally liable therefor. 10.2 NO BOND OR SURETY. The Trustees shall not be required to give any bond as such, nor any surety if a bond is required. 10.3 DURATION OF TRUST. This Trust shall continue without limitation of time, PROVIDED that the Trust or any class of Shares may be terminated at any time in accordance with the provisions of this Declaration of Trust and applicable law. 10.4 MERGER, CONSOLIDATION AND SALE OF ASSETS. The Trust may merge into or consolidate with any other corporation, association, trust or other organization or may sell, lease or exchange all or substantially all of the Trust Property, including its good will, upon such terms and conditions and for such consideration when and as authorized by vote or written consent of the Trustees and approved by the affirmative vote of the holders of not less than two-thirds of the Shares outstanding and entitled to vote, voting in the aggregate and not by class except to the extent that applicable law may require voting by class, or by an instrument or instruments in writing without a meeting consented to by the holders of not less than two-thirds -27- of such Shares, voting in the aggregate and not by class except to the extent that applicable law may require voting by class, PROVIDED that if such merger, consolidation, sale, lease or exchange is recommended by the Trustees, such may be approved by a vote of the majority of the outstanding Shares, voting in the aggregate and not by class except to the extent that applicable law may require voting by class or by an instrument or instruments in writing without a meeting consented to by the holders of not less than a majority of such Shares, voting in the aggregate and not by class except to the extent that applicable law may require voting by class. 10.5 INCORPORATION. With the approval of the holders of a majority of the outstanding shares, voting in the aggregate and not by class except to the extent that applicable law may require voting by class, the Trustees may cause to be organized, or assist in organizing, a corporation or corporations under the laws of any jurisdiction, to carry on any affairs in which the Trust shall directly or indirectly have any interest, and to transfer the Trust Property to any such Person in exchange for any shares or securities thereof or otherwise, and to lend money to, subscribe for the shares or securities of, and enter into any contracts with any such Person in which the Trust holds or is about to acquire securities or any other interest. The Trustees may also cause a merger or consolidation between the Trust or any successor thereto and any such Person if and to the extent permitted by law. Nothing contained herein shall be construed as requiring approval of Shareholders for the Trustees to organize or assist in organizing one or more corporations, trusts, partnerships, associations or other organizations and selling, conveying or transferring a portion of the Trust Property to such Person(s). 10.6 FILING OF COPIES, REFERENCES, HEADINGS. The original instrument of this Declaration of Trust and of each amendment hereto shall be filed with the State Secretary of the Commonwealth of Massachusetts as provided by law and copies thereof shall be kept at the office of the Trust where they may be inspected by any Shareholder. Each amendment so filed shall be accompanied by a certificate signed and acknowledged by a Trustee or by the Secretary or any Assistant Secretary of the Trust stating that such action was duly taken in the manner provided herein, and unless such amendment or such certificate sets forth some later time for the effectiveness of such amendment, such amendment shall be effective upon its filing. A restated Declaration of Trust, integrating into a single instrument all of the provisions of the Declaration of Trust that are then in effect and operative, may be executed from time to time by a majority of the Trustees and shall, upon filing with the State Secretary of the Commonwealth of Massachusetts, be conclusive evidence of all amendments contained therein and may thereafter be referred to in lieu of the initial Declaration of -28- Trust and the various amendments thereto. Anyone dealing with the Trust may rely on a certificate by a representative of the Trust as to whether or not any such amendment hereto may have been made and as to any matters in connection with the Trust hereunder, with the same effect as if it were the original, and may rely on a copy certified by a representative of the Trust to be a copy of this instrument or of any amendment thereto. Headings are placed herein for convenience of reference only and in the case of any conflict, the text of this instrument, rather than the headings, shall control. This instrument may be executed in any number of counterparts each of which shall be deemed an original. All signatures to this instrument need not appear on the same page. 10.7 APPLICABLE LAW. The Trust set forth in this instrument is a trust made in the Commonwealth of Massachusetts and is to be governed by and construed and administered according to the laws of said Commonwealth. 10.8 PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS. A. No provision of this Declaration of Trust shall be effective to: (1) Require a waiver of compliance with any provision of the Securities Act of 1933, as amended, or the Act, or of any valid rule, regulation or order of the Securities and Exchange Commission thereunder; or (2) Protect or purport to protect any Trustee or officer of the Trust against any liability to the Trust or its Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office. B. The provisions of this Declaration of Trust are severable, and if the Trustees shall determine with the advice of counsel that any of such provisions is in conflict with the Act, the regulated investment company provisions of the Internal Revenue Code, Chapter 182 of the General Laws of the Commonwealth of Massachusetts or with any other applicable law or regulation, then in such event the conflicting provision shall be deemed never to have constituted a part of this Declaration of Trust, PROVIDED that such determination shall not affect any of the remaining provisions of this Declaration of Trust or render invalid or improper any action taken or omitted prior to such determination. C. If any provision of this Declaration of Trust shall be held invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall attach only to such -29- provision in such jurisdiction and shall not in any manner affect such provision in any other jurisdiction or any other provision of this Declaration of Trust in any jurisdiction. 10.9 AMENDMENT OF DECLARATION OF TRUST. A. This Declaration of Trust may be amended upon a resolution to that effect being adopted by the Trustees and approved by the affirmative vote of the holders of not less than a majority of the outstanding Shares, voting in the aggregate and not by class except to the extent that applicable law may require voting by class. B. Notwithstanding any other provision hereof, until such time as a Registration Statement under the Securities Act of 1933, as amended, covering the first public offering of securities of the Trust shall have become effective, this Declaration of Trust may be terminated or amended in any respect by the affirmative vote of a majority of the Trustees. C. The Trustees may amend this Declaration of Trust without a vote of Shareholders to change the name of the Trust or to cure any error or ambiguity or if they deem it necessary to conform this Declaration of Trust to the requirements of applicable state or federal laws or regulations, including without limitation the requirements of the regulated investment company provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing so to do. D. Notwithstanding any other provision hereof, this Declaration of Trust may not be amended in any manner whatsoever that would impair the exemption from personal liability of the Trustees and Shareholders of the Trust or that would permit an assessment upon any Shareholder. IN WITNESS WHEREOF, the undersigned have executed this Amended and Restated Declaration of Trust as Trustees and not individually, as of the 19th day of November, 1987. /s/Jack D. Henderson -------------------------- Jack D. Henderson -------------------------- McNeil S. Fiske -30- -------------------------- James B. O'Boyle -------------------------- Robert L. Stamp -------------------------- Lyman E. Seely -31- -------------------------- Jack D. Henderson /s/McNeil S. Fiske -------------------------- McNeil S. Fiske -------------------------- James B. O'Boyle -------------------------- Robert L. Stamp -------------------------- Lyman E. Seely -32- -------------------------- Jack D. Henderson -------------------------- McNeil S. Fiske /s/James B. O'Boyle -------------------------- James B. O'Boyle -------------------------- Robert L. Stamp -------------------------- Lyman E. Seely -33- -------------------------- Jack D. Henderson -------------------------- McNeil S. Fiske -------------------------- James B. O'Boyle /s/Robert L. Stamp -------------------------- Robert L. Stamp -------------------------- Lyman E. Seely -34- -------------------------- Jack D. Henderson -------------------------- McNeil S. Fiske -------------------------- James B. O'Boyle -------------------------- Robert L. Stamp /s/Lyman E. Seely -------------------------- Lyman E. Seely -35- STATE OF Colorado : : : SS. CITY OF Jefferson : On this 22nd day of September, 1987, James B. O'Boyle, known to me and known to be the individual described in and who executed the foregoing instrument, personally appeared before me and acknowledged the foregoing instrument to be his free act and deed. /s/L. Denise Cumming ------------------------- Notary Public My commission expires: 10/2/89 -36- STATE OF : : : SS. CITY OF : On this 23rd day of September, 1987, McNeil S. Fiske, known to me and known to be the individual described in and who executed the foregoing instrument, personally appeared before me and acknowledged the foregoing instrument to be his free act and deed. /s/Margaret Morrissey ------------------------- Notary Public -37- STATE OF : : SS. CITY OF : On this 21st day of September, 1987, Jack D. Henderson, Esquire, known to me and known to be the individual described in and who executed the foregoing instrument, personally appeared before me and acknowledged the foregoing instrument to be his free act and deed. /s/Roberta J. Stone ------------------------- Notary Public -38- STATE OF : : SS. CITY OF : On this 28th day of September, 1987, Robert L. Stamp, known to me and known to be the individual described in and who executed the foregoing instrument, personally appeared before me and acknowledged the foregoing instrument to be his free act and deed. /s/ L. Patricia Sumney ------------------------- Notary Public -39- STATE OF OREGON : : CITY OF LINCOLN CITY : SS. On this 25th day of September, 1987, Lyman E. Seely, known to me and known to be the individual described in and who executed the foregoing instrument, personally appeared before me and acknowledged the foregoing instrument to be his free act and deed. /s/Mary Ann Cook ------------------------- Notary Public -40- EX-1.(B) 3 EXHIBIT 1(B) WESTCORE TRUST SECRETARY'S CERTIFICATE The undersigned, Secretary of Westcore Trust (the "Trust"), does hereby certify that pursuant to Section 6.4 of the Amended and Restated Declaration of Trust executed November 19, 1987, the following Resolutions were consented to and adopted as and for the action of the Board of Trustees: RESOLVED, that Section 5.1(B) (3) of the Trust's Amended and Restated Declaration of Trust be amended and restated as follows: (3) LIABILITIES BELONGING TO CLASSES WITH SAME ALPHABETICAL DESIGNATION. The assets belonging to classes of Shares with the same alphabetical designation shall be charged with the direct liabilities in respect of such classes and shall also be charged with such classes' proportionate share of the general liabilities of the Trust as determined by comparing the assets belonging to such classes with the aggregate assets of the Trust or as may otherwise be determined by the Board of Trustees in its discretion. The liabilities so charged to such classes are herein referred to as "liabilities belonging to" such classes, and each Share of such classes shall be charged equally with each other Share of a class having the same alphabetical designation with the liabilities belonging to such classes, except that: (a) Shares of a class shall bear the expenses and liabilities of payments to institutions under any agreements entered into by or on behalf of the Trust which provide for services by the institutions to their customers who beneficially own Shares of that class but do not provide for services to any beneficial owners of Shares with that alphabetical designation other than Shares of that class, as well as any other expenses that are directly attributable to Shares of that class which the Board of Trustees determines should be borne solely by such Shares; and (b) Shares of a class shall not bear the expenses and liabilities of payments to institutions under any agreements entered into by or on behalf of the Trust which provide for services by the institutions to their customers which beneficially own Shares other than Shares of that class but do not provide for services to any beneficial owners of Shares of that class, or any other expenses that are directly attributable to another class of Shares which the Board of Trustees determines should be borne solely by such other class of Shares. IN WITNESS WHEREOF, the undersigned has hereto set his hand this 16th day of July, 1990. /s/ W. Bruce McConnel, III --------------------------------- W. Bruce McConnel, III EX-2.(D) 4 EXHIBIT 2(D) AMENDED AND RESTATED CODE OF REGULATIONS of WESTCORE TRUST ARTICLE I TRUSTEES 1.1 NUMBER AND TERM OF OFFICE. The number of Trustees shall be such number, not more than ten (10), as may be fixed from time to time by the Trustee(s). Each Trustee shall hold office until the next meeting of the Shareholders following his election or appointment as a Trustee at which trustees are elected and until his successor shall have been elected and qualified. 1.2 PLACE OF MEETING; TELEPHONE MEETING. Meetings of the Trustees, regular or special, shall be held at the principal office of the Trust or at such other place as the Trustees may from time to time determine. The Trustees or any committee thereof may participate in a meeting of the Trustees or of such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the conference may hear each other at the same time and participation by such means shall constitute presence in person at the meeting. 1.3 REGULAR MEETINGS. Regular meetings of the Trustees may be held without notice at such time and at the principal office of the Trust or at such other place as the Trustees may from time to time determine. 1.4 SPECIAL MEETINGS. Special meetings of the Trustees may be called by the President on one day's notice to each Trustee; special meetings of the Trustees shall be called by the President or Secretary in like manner and on like notice on the written request of three Trustees. 1.5 COMMITTEES. The Trustees may by resolution passed by a majority of the Trustees appoint from among its members an executive committee and other committees composed of two or more Trustees, and may delegate to such committees, in the intervals between meetings of the Trustees, any or all of the powers of the Trustees in the management of the business and affairs of the Trust, except the power to issue Shares in the Trust or to recommend to Shareholders any action requiring Shareholders' approval. 1.6 CHAIRMAN OF THE BOARD. The Trustees may at any time appoint one of their number as Chairman of the Board, who shall serve at the pleasure of the Trustees and shall perform and execute such duties as the Trustees may from time to time provide but who shall not by reason of performing or executing these duties be deemed an officer or employee of the Trust. 1.7 COMPENSATION. Any Trustee, whether or not a salaried officer, employee, or agent of the Trust, may be compensated for his services as a Trustee or as a member of a committee, or as Chairman of the Trustees or Chairman of a -2- committee, by fixed periodic payments or by fees for attendance at meetings or by both, and in addition may be reimbursed for transportation and other expenses, all in such manner and amounts as the Trustees may from time to time determine. ARTICLE II SHAREHOLDERS 2.1 MEETINGS. Meetings of the Shareholders of the Trust may be called by the Trustees and shall be called by the Trustees whenever required by law or upon the written request of the holders of at least ten percent (10%) of the outstanding Shares entitled to vote. 2.2 NOTICE. Written notice, stating the place, day and hour of each meeting of the Shareholders and the general nature of the business to be transacted shall be given by, or at the direction of, the person calling the meeting to each Shareholder of record entitled to vote at the meeting at least ten days prior to the day named for the meeting, unless in a particular case a longer period of notice is required by law. 2.3 SHAREHOLDERS' LIST. The officer or agent having charge of the transfer books for Shares of the Trust shall make, at least five days before each meeting of the Shareholders, a complete list of the Shareholders entitled to vote at the meeting, arranged in alphabetical order with the address of and the number of Shares held by each such Shareholder. The list shall be kept on file at the office of the Trust and shall be -3- subject to inspection by any Shareholders at any time during usual business hours and shall also be produced and kept open at the time and place of each meeting of Shareholder and shall be subject to the inspection of any Shareholder during each meeting of Shareholders. 2.4 RECORD DATE. The Trustees may fix a time (during which they may close the Share transfer books of the Trust) not more than sixty (60) days prior to the date of any meeting of the Shareholders, or the date fixed for the payment of any dividend, or the date of the allotment of rights or the date when any change or conversion or exchange of Shares shall go into effect, as a record date for the determination of the Shareholders entitled to notice of, or to vote at, any such meeting, or entitled to receive payment of any such dividend, or to receive any such allotment of rights, or to exercise such rights, as the case may be. In such case, only such Shareholders as shall be Shareholders of record at the close of business on the date so fixed shall be entitled to notice of, or to vote at, such meeting or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, as the case may be, notwithstanding any transfer of any Shares on the books of the Trust after any record date fixed, as aforesaid. -4- ARTICLE III NOTICES 3.1 FORM. Notices to the Trustees shall be oral or by telephone or telegram or in writing delivered personally or mailed to the Trustees at their addresses appearing on the books of the Trust. Notices to the Shareholders shall be in writing and delivered personally or mailed to the Shareholders at their addresses appearing on the books of the Trust. Oral notice shall be deemed to be given when given directly to the person required to be notified and notice by mail shall be deemed to be given when deposited in the United States mail or with a telegraph office for transmission. Notice to the Trustees need not state the purpose of a regular or special meeting of the Trustees or committee. 3.2 WAIVER. Whenever any notice of the time, place or purpose of any meeting of the Shareholders, the Trustees or a committee is required to be given under the provisions of Massachusetts law or under the provisions of the Declaration of Trust or these Regulations, a waiver thereof in writing, signed by the person or persons entitled to such notice and filed with the records of the meeting, whether before or after the holding thereof, or actual attendance at the meeting of the Shareholders in person or by proxy, or at the meeting of the Trustees or the committee in person, shall be deemed equivalent to the giving of such notice to such persons. -5- ARTICLE IV OFFICERS 4.1 NUMBER. The officers of the Trust shall be chosen by the Trustees and shall include a President, a Secretary and a Treasurer. The Board of Trustees may from time to time elect or appoint one or more Vice Presidents, Assistant Secretaries and Assistant Treasurers. 4.2 OTHER OFFICERS. The Trustees from time to time may appoint such other officers and agents as they shall deem advisable, who shall hold their offices for such terms and shall exercise such powers and perform such duties as the Trustees may from time to time prescribe. The Trustees may delegate to one or more officers or agents the power to appoint any such subordinate officers or agents and to prescribe the respective rights, terms of office, authorities and duties. 4.3 ELECTION AND TENURE. The officers of the Trust shall be chosen by the Trustees. Two or more offices may be held by the same person but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required by law, the Declaration of Trust or these Regulations to be executed, acknowledged or verified by two or more officers. Any officer or agent may be removed by the Trustees. An officer of the Trust may resign by filing a written resignation with the President or with the Trustees or with the Secretary. Any vacancy occurring in any office of the Trust by -6- death, resignation, removal or otherwise may be filled by the Trustees. 4.4 COMPENSATION. The salaries or other compensation of all officers and agents of the Trust shall be fixed by the Trustees, except that the Trustees may delegate to any committee the power to fix the salary or other compensation of any officer of the Trust. 4.5 PRESIDENT. The President shall be the chief executive officer of the Trust; he shall preside at all meetings of the Trustees and of the Shareholders unless a Chairman has been designated; he shall be, EX OFFICIO, a member of all standing committees; and he shall see that all orders and resolutions of the Trustees are carried into effect. He, or such person as he may designate, shall sign, execute and acknowledge, in the name of the Trust, deeds, mortgages, bonds, contracts and other instruments authorized by the Trustees, except in the case where the signing and execution thereof shall be delegated by the Trustees to some other officer or agent of the Trust. The President shall also be the chief administrative officer of the Trust and shall perform such other duties and shall have such other powers as the Trustees may from time to time prescribe. 4.6 VICE PRESIDENTS. The Vice Presidents, in the order of their seniority, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President, and shall perform such other duties as the Trustees may from time to time prescribe. -7- 4.7 SECRETARY. The Secretary shall attend all meetings of the Trustees and of the Shareholders and shall record all the proceedings thereof and shall perform like duties for any committee when required. He shall give, or cause to be given, notice of meetings of the Trustees and of the Shareholders, and shall perform such other duties as may be prescribed by the Trustees or the President, under whose supervision he shall be. He shall keep in safe custody the seal of the Trust and, when authorized by the Trustees, affix and attest the same to any instrument requiring it, provided that, in lieu of affixing the seal of the Trust to any document, it shall be sufficient to meet the requirements of any law, rule or regulation relating to a seal to affix the word "(SEAL)" adjacent to the signature of the authorized officer of the Trust. The Trustees may give general authority to any other officer to affix the seal of the Trust and to attest the affixing by his signature. 4.8 ASSISTANT SECRETARIES. The Assistant Secretaries, in order of their seniority, shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Trustees may from time to time prescribe. 4.9 TREASURER. The Treasurer shall be the chief financial officer of the Trust. He shall be responsible for the maintenance of its accounting records and shall render to the Trustees when the Trustees so require an account of all the -8- Trust's financial transactions and a report of the financial condition of the Trust. 4.10 ASSISTANT TREASURERS. The Assistant Treasurers, in the order of their seniority, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer and shall perform such other duties as the Trustees may from time to time prescribe. ARTICLE V INVESTMENT RESTRICTIONS The Trustees may from time to time adopt such restrictions upon the investment of the assets of the Trust, or amendments thereto, as they may consider necessary or desirable, PROVIDED that any such restriction or amendment shall be approved by a majority of the outstanding Shares of the Trust entitled to vote thereon if required by the Investment Company Act of 1940, as amended. ARTICLE VI GENERAL PROVISIONS 6.1 INSPECTION OF BOOKS. The Trustees may from time to time determine whether and to what extent, and at what time and places, and under what conditions and regulations the accounts and books of the Trust or any of them shall be open to the inspections of the Shareholders; and no Shareholder shall have any right of inspecting any account or book or document of -9- the Trust except as conferred by law or authorized by the Trustees or by resolution of the Shareholders. 6.2 REPORTS. The Trust shall transmit to the Shareholders and/or file with federal and state regulatory agencies such reports of its operations as the Trustees shall consider necessary or desirable or as may be required by law. 6.3 BONDING OF OFFICERS AND EMPLOYEES. All officers and employees of the Trust shall be bonded to such extent, and in such manner, as may be required by law. 6.4 TRANSFER OF SHARES. Transfer of Shares shall be made on the books of the Trust at the direction of the person named on the Trust's books or named in the certificates for such Shares (if issued), or by his attorney lawfully constituted in writing, and upon surrender of the certificate or certificates for such Shares (if issued) properly endorsed, together with a proper request for redemption, to the Trust's transfer agent, with such evidence of the authenticity of such transfer, authorization and other matters as the Trust or its agents may reasonably require, and subject to such other reasonable conditions and requirements as may be required by the Trust or its agents; or if the Trustees shall by resolution so provide, transfer of Shares may be made in any other manner provided by law. -10- ARTICLE VII AMENDMENTS This Code of Regulations may be altered or repealed by the Trustees at any regular or special meeting of the Trustees. Amended and Restated October 24, 1995 -11- EX-5.(A) 5 EXHIBIT 5.A DENVER INVESTMENT ADVISORS LLC AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT AGREEMENT made as of October 1, 1995 between WESTCORE TRUST, a Massachusetts business trust (the "Trust"), and DENVER INVESTMENT ADVISORS LLC (the "Investment Adviser"), a Colorado limited liability company. WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended ("1940 Act"); and WHEREAS, the Trust desires to retain the Investment Adviser to furnish investment advisory and other services to the Trust for its Cash Reserve Fund, Colorado Tax-Exempt Fund, Equity Income Fund, Intermediate-Term Bond Fund, Small-Cap Opportunity Fund, MIDCO Growth Fund, Long-Term Bond Fund and Blue Chip Fund (the "Funds"), and the Investment Adviser is willing to so furnish such services; NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the parties hereto as follows: 1. APPOINTMENT. (a) The Trust hereby appoints the Investment Adviser to act as investment adviser to each Fund for the period and on the terms set forth in this Agreement. The Investment Adviser accepts such appointment and agrees to furnish the services herein set forth for the compensation herein provided. (b) In the event that the Trust establishes one or more series or portfolios other than the Funds with respect to which it desires to retain the Investment Adviser to act as investment adviser hereunder, it shall notify the Investment Adviser in writing. If the Investment Adviser is willing to render such services under this Agreement, it shall notify the Trust in writing whereupon such series or portfolio shall become a Fund hereunder and shall be subject to the provisions of this Agreement to the same extent as each Fund except to the extent that said provisions (including those relating to the compensation payable by the Trust to the Investment Adviser) are modified with respect to such Fund in writing by the Trust and the Investment Adviser at the time. The term "Fund" herein shall 1 refer to each such Fund as referred to in the foregoing sentence together with each existing Fund. 2. DELIVERY OF DOCUMENTS. The Trust has furnished the Investment Adviser with copies properly certified or authenticated of each of the following: (a) The Trust's Amended and Restated Declaration of Trust, as filed with the State Secretary of the Commonwealth of Massachusetts on November 19, 1987, and all amendments thereto (such Declaration of Trust, as presently in effect and as it shall from time to be amended, is herein called the "Declaration of Trust"); (b) The Trust's Code of Regulations and amendments thereto; (c) Post-Effective Amendment No. 42 to the Trust's Registration Statement on Form N-1A under the Securities Act of 1933 as amended ("1933 Act") (File No. 2-75677) and under the 1940 Act; (d) The most recent prospectus of each Fund (such prospectus together with the related statement of additional information, as presently in effect and all amendments and supplements thereto, are herein called "Prospectus"). The Trust will furnish the Investment Adviser from time to time with copies of all amendments of or supplements to the foregoing, if any. 3. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees, the Investment Adviser will provide a continuous investment program for each Fund, including investment research and management with respect to all securities, investments, cash and cash equivalents in each Fund. The Investment Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by each Fund. The Investment Adviser will provide the services rendered by it under this Agreement in accordance with each Fund's investment objective, policies and restrictions as stated in the Prospectus for each Fund and resolutions of the Trust's Board of Trustees. Without limiting the generality of the foregoing, the Investment Adviser shall: (a) Furnish to the Board of Trustees statistical and economic information as may be requested, and 2 (b) Recommend potential changes in investment policy. The Investment Adviser further agrees that it shall: (c) Update each Fund's cash availability throughout the day as required; (d) Maintain historical tax lots for each portfolio security held by each Fund; (e) Transmit trades to the Trust's custodian for proper settlement; (f) Maintain all books and records with respect to each Fund's securities transactions; (g) Supply the Trust and its Board of Trustees with reports and statistical data as requested; and (h) Prepare a quarterly broker security transaction summary and monthly security transaction listing for each Fund. 4. OTHER COVENANTS. The Investment Adviser agrees that it: (a) Will comply with all applicable Rules and Regulations of the Securities and Exchange Commission and will conduct its activities under this Agreement in accordance with other applicable law; (b) Will use the same skill and care in providing such services as it uses in providing services to fiduciary accounts for which it has investment responsibilities; and (c) Will place orders pursuant to its investment determinations for each Fund either directly with the issuer or with any broker or dealer. In executing portfolio transactions and selecting brokers or dealers, the Investment Adviser will use its best efforts to seek on behalf of each Fund the best overall terms available. In assessing the best overall terms available for any transaction, the Investment Adviser shall consider all factors that it deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. In 3 evaluating the best overall terms available, and in selecting the broker-dealer to execute a particular transaction, the Investment Adviser may also consider the brokerage and research services (as those terms are defined in Section 28(e) of the Securities Exchange Act of 1934) provided to each Fund and/or other accounts over which the Investment Adviser or an affiliate of the Investment Adviser exercises investment discretion. The Investment Adviser is authorized, subject to the prior approval of the Trust's Board of Trustees, to pay to a broker or dealer who provides such brokerage and research services a commission for executing a portfolio transaction for each Fund which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if, but only if, the Investment Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such broker or dealer -- viewed in terms of that particular transaction or in terms of the overall responsibilities of the Investment Adviser to the Fund. In addition, the Investment Adviser is authorized in allocating purchase and sales orders for portfolio securities to brokers or dealers (including brokers and dealers that are affiliated with the Investment Adviser or the Trust's principal underwriter) to take into account the sale of shares of the Trust by the broker or dealer if the Investment Adviser believes that the quality of the transaction and the commission are comparable to what they would be with other qualified firms. In no instance, however, will portfolio securities be purchased from or sold to the Investment Adviser, the Trust's principal underwriter or any affiliated person of either the Trust, the Investment Adviser or the principal underwriter, acting as principal in the transaction, except to the extent permitted by the Securities and Exchange Commission. 5. SERVICES NOT EXCLUSIVE. The services furnished by the Investment Adviser hereunder are deemed not to be exclusive, and the Investment Adviser shall be free to furnish similar services to others so long as its services under this Agreement are not impaired thereby. To the extent that the purchase or sale of securities or other investments of the same issuer may be deemed by the Investment Adviser to be suitable for two or more accounts managed by the Investment Adviser, the available securities or investments may be allocated in a manner believed by the Investment Adviser to be equitable to each account. It is recognized that in some cases this procedure may adversely affect 4 the price paid or received by a Fund or the size of the position obtainable for or disposed of by a Fund. 6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Investment Adviser hereby agrees that all records which it maintains for the Funds are the property of the Trust and further agrees to surrender promptly to the Trust any of such records upon the Trust's request. The Investment Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act. 7. EXPENSES. During the term of this Agreement, the Investment Adviser will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities, commodities and other investments (including brokerage commissions and other transaction costs, if any) purchased or sold for a Fund. If the expenses borne by a Fund in any fiscal year exceed the applicable expense limitations imposed by the securities regulations of any state in which its shares are registered or qualified for sale to the public, the Investment Adviser shall reimburse the Fund for any such excess to the extent that said securities regulations so require. Such expense reimbursement, if any, will be estimated, reconciled and paid on a monthly basis. 8. COMPENSATION. For the services provided and the expenses assumed pursuant to this Agreement, the Trust will pay the Investment Adviser and the Investment Adviser will accept as full compensation therefor a fee, computed daily and payable monthly, at the annual rate of .50% of the average daily net assets of the Cash Reserve Fund, .50% of the average daily net assets of the Colorado Tax-Exempt Fund, .65% of the average daily net assets of the Equity Income Fund, .45% of the average daily net assets of the Intermediate-Term Bond Fund, 1.00% of the average daily net assets of the Small-Cap Opportunity Fund, .65% of the average daily net assets of the MIDCO Growth Fund, .45% of the average daily net assets of the Long-Term Bond Fund, and .65% of the average daily net assets of the Blue Chip Fund. As this Agreement covers multiple portfolios of the Trust, fees that are attributable to each portfolio shall be a separate charge to such portfolio and shall be the several (and not joint or joint and several) obligation of each such portfolio. 5 9. LIMITATION OF LIABILITY. The Investment Adviser shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with the performance of this 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 Investment Adviser in the performance of its duties or from reckless disregard by it of its obligations and duties under this Agreement. 10. DURATION AND TERMINATION. This Agreement shall become effective as of the date hereof and, unless sooner terminated as provided herein, shall continue in effect until September 30, 1996. Thereafter, if not terminated, this Agreement shall automatically continue in effect as to a particular fund for successive annual periods, PROVIDED such continuance is specifically approved at least annually (a) by the vote of a majority of those members of the Trust's Board of Trustees who are not interested persons of any party to this Agreement, cast in person at a meeting called for the purpose of voting on such approval, and (b) by the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of such fund. Notwithstanding the foregoing, this Agreement may be terminated as to any fund at any time, without the payment of any penalty, by the Trust (by vote of the Trust's Board of Trustees or by vote of a majority of the outstanding voting securities of such Fund), or by the Investment Adviser on sixty days written notice. This Agreement will immediately terminate in the event of its assignment. (As used in this Agreement, the terms "majority of the outstanding voting securities," "interested persons" and "assignment" shall have the same meaning as such terms have in the 1940 Act.) 11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. No amendment of this Agreement shall be effective as to a particular fund until approved by vote of a majority of the outstanding voting securities of such fund. 12. MISCELLANEOUS. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. If any provision of this Agreement shall be held or 6 made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding and shall inure to the benefit of the parties hereto and their respective successors and shall be governed by Colorado law. 13. NAMES. The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as of the day and year first above written. WESTCORE TRUST Attest: BY: /s/Kenneth V. Penland ------------------------------ /s/ Dennis E. Larlson TITLE: President - ------------------------------ --------------------------- [SEAL] DENVER INVESTMENT ADVISORS LLC Attest: BY: /s/Kenneth V. Penland ------------------------------ /s/ Dennis E. Larlson TITLE: Chairman - ------------------------------ --------------------------- [SEAL] 7 EX-6.(A) 6 EXHIBIT 6(A) DISTRIBUTION AGREEMENT November 30, 1987 ALPS Securities, Inc. 600 Seventeenth Street Suite 1605 Denver, CO 80202 Dear Sirs: This is to confirm that in consideration of the agreements hereinafter contained, the undersigned, Westcore Trust, a Massachusetts business trust (the "Trust"), has agreed that you shall be, for the period of this Agreement, the distributor of shares of beneficial interest (the "Shares") of the Trust's MIDCO Growth Fund, Oregon Tax-Exempt Fund, GNMA Fund, Basic Value Fund, Bonds Plus Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund, Short-Term Bond Fund, Short-Term Government Bond Fund and Modern Value Equity Fund (the "Funds"). 1. SERVICES AS DISTRIBUTOR 1.1 You will act as agent for the distribution of Shares in accordance with the instructions of the Trust's Board of Trustees and the registration statement and prospectuses then in effect with respect to the Funds under the Securities Act of 1933, as amended, and will transmit promptly any orders received by you for the purchase or redemption of Shares either directly to the Trust's transfer agent for the Fund involved or to any qualified broker/dealer for transmittal to said agent. 1.2(a) You agree to use your best efforts to solicit orders for the sale of Shares. You, at your own expense, shall finance appropriate activities which you deem reasonable which are primarily intended to result in the sale of Shares, including, but not limited to, advertising, compensation of underwriters, dealers and sales personnel, the printing and mailing of prospectuses to other than current shareholders, and the printing and mailing of sales literature. In addition, you will provide one or more persons, during normal business hours, to respond to telephone questions with respect to the Funds. It is contemplated that you will enter into selling agreements with qualified broker/dealers and other persons with respect to the offering of Shares to the public, and in so doing you will act only on your own behalf as principal. 1.2(b) All Shares of the Funds offered for sale by you shall be offered for sale to the public at a price per share (the "offering price") equal to (a) their net asset value (determined in the manner set forth in the Trust's Declaration of Trust and then current prospectuses) plus, except to those classes of persons set forth in the then current prospectuses (b) a sales charge which shall be the percentage of the offering price of such shares as set forth in the Trust's then current prospectuses. The offering price, if not an exact multiple of one cent, shall be adjusted to the nearest cent. Concessions by you to broker/dealers and other persons shall be set forth in either the selling agreements between you and such broker/dealers and persons as from time to time amended, or if such concessions are described in the Trust's then current prospectuses, shall be as so set forth. No broker/dealer or other person who enters into a selling agreement with you shall be authorized to act as agent for the Trust in connection with the offering or sale of its Shares to the public or otherwise. 1.2(c) If any Shares sold by the Trust are redeemed or repurchased by the Trust or by you as agent or are tendered for redemption within seven business days after the date of confirmation of the original purchase of said Shares, you shall forfeit the amount above the net asset value received by you in respect of such Shares, provided that the portion, if any, of such amount re- allowed by you to broker/dealers or other persons shall be repayable to the Trust only to the extent recovered by you from the broker/dealer or other person concerned. You shall include in the forms of agreement with such broker/dealers and other persons a corresponding provision for the forfeiture by them of their concession with respect to Shares sold by them or their principals and redeemed or repurchased by the Trust or by you as agent (or tendered for redemption) within seven business days after the date of confirmation of such initial purchases. 1.3 You shall act as distributor of the Shares in compliance with all applicable laws, rules and regulations, including, without limitation, all rules and regulations made or adopted pursuant to the Investment Company Act of 1940, as amended, by the Securities and Exchange Commission or any securities association registered under the Securities Exchange Act of 1934, as amended. 1.4 Whenever in their judgment such action is warranted by market, economic or political conditions, or by circumstances of any kind, the Trust's officers may decline to accept any orders for, or make any sales of, any Shares until such time as they deem it advisable to accept such orders and to make such sales and the Trust shall advise you promptly of such determination. 1.5 The Trust agrees to pay all costs and expenses in connection with the registration of Shares under the Securities Act of 1933, as amended, and all expenses in connection with -2- maintaining facilities for the issue and transfer of Shares and for supplying information, prices and other data to be furnished by the Trust hereunder. 1.6 The Trust agrees to execute any and all documents and to furnish any and all information and otherwise to take all actions which may be reasonably necessary in the discretion of the Trust's officers in connection with the qualification of Shares for sale in such states as you may designate to the Trust and the Trust may approve, and the Trust agrees to pay all expenses which may be incurred in connection with such qualification. You shall pay all expenses connected with your own qualification as a broker under State or Federal laws and, except as otherwise specifically provided in this agreement, all other expenses incurred by you in connection with the sale of Shares as contemplated in this agreement. 1.7 The Trust shall furnish you from time to time, for use in connection with the sale of Shares, such information with respect to the Trust and the Shares as you may reasonably request, and the Trust warrants that the statements contained in any such information, when so signed by the Trust's officers, shall be true and correct. The Trust also shall furnish you upon request with: (a) annual audited reports of the Trust's books and accounts with respect to each Funds, made by independent public accountants regularly retained by the Trust, (b) semi-annual reports with respect to each of the Funds prepared by the Trust, and (c) from time to time such additional information regarding the Trust's financial condition as you may reasonably request. 1.8 The Trust represents to you that all registration statements and prospectuses filed by the Trust with the Securities and Exchange Commission under the Securities Act of 1933, as amended, with respect to the Shares have been prepared in conformity with the requirements of said Act and rules and regulations of the Securities and Exchange Commission thereunder. As used in this agreement the terms "registration statement" and "prospectus" shall mean any registration statement and prospectus (together with the related statement of additional information) filed with the Securities and Exchange Commission with respect to any of the Shares and any amendments and supplements thereto which at any time shall have been filed with said Commission. The Trust represents and warrants to you that any registration statement and prospectus, when such registration statement becomes effective, will contain all statements required to be stated therein in conformity with said Act and the rules and regulations of said Commission; that all statements of fact contained in any such registration statement and prospectus will be materially true and correct when such registration statement becomes effective; and that neither any registration statement nor any prospectus when such registration statement becomes effective will include an untrue statement of a material fact or -3- omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Trust may but shall not be obligated to propose from time to time such amendment or amendments to any registration statement and such supplement or supplements to any prospectus as, in the light of future developments, may, in the opinion of the Trust's counsel, be necessary or advisable. If the Trust shall not propose such amendment or amendments and/or supplement or supplements within fifteen days after receipt by the Trust of a written request from you to do so, you may, at your option, terminate this agreement. The Trust shall not file any amendment to any registration statement or supplement to any prospectus without giving you reasonable notice thereof in advance; provided, however, that nothing contained in this agreement shall in any way limit the Trust's right to file at any time such amendments to any registration statement and/or supplements to any prospectus, of whatever character, as the Trust may deem advisable, such right being in all respects absolute and unconditional. 1.9 The Trust authorizes you to use any prospectus in the form furnished to you from time to time, in connection with the sale of Shares. The Trust agrees to indemnify, defend and hold you, your several officers and directors, and any person who controls you within the meaning of Section 15 of the Securities Act of 1933, as amended, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which you, your officers and directors, or any such controlling person, may incur under the Securities Act of 1933, as amended, or under common law or otherwise, arising out of or based upon any untrue statement, or alleged untrue statement, of a material fact contained in any registration statement or any prospectus or arising out of or based upon any omission, or alleged omission, to state a material fact required to be stated in either any registration statement or any prospectus or necessary to make the statements in either thereof not misleading; provided, however, that the Trust's agreement to indemnify you, your officers or directors, and any such controlling person shall not be deemed to cover any claims, demands, liabilities or expenses arising out of any untrue statement or alleged untrue statement or omission or alleged omission made in any registration statement or prospectus in reliance upon and in conformity with information furnished to the Trust or its counsel by you and used in the preparation thereof; and provided further that the Trust's agreement to indemnify you and the Trust's representations and warranties herein set forth shall not be deemed to cover any liability to the Trust or its shareholders to which you would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of your duties, or by reason of your reckless -4- disregard of your obligations and duties under this agreement. The Trust's agreement to indemnify you, your officers and directors, and any such controlling person, as aforesaid, is expressly conditioned upon the Trust's being notified of any action brought against you, your officers or directors, or any such controlling person, such notification to be given by letter or by telegram addressed to the Trust at its principal office within ten days after the summons or other first legal process shall have been served. The failure so to notify the Trust of any such action shall not relieve the Trust from any liability which the Trust may have to the person against whom such action is brought by reason of any such untrue, or alleged untrue, statement or omission, or alleged omission, otherwise than on account of the Trust's indemnity agreement contained in this paragraph 1.9. The Trust will be entitled to assume the defense of any suit brought to enforce any such claim, demand or liability, but, in such case, such defense shall be conducted by counsel of good standing chosen by the Trust and approved by you. In the event the Trust elects to assume the defense of any such suit and retain counsel of good standing approved by you which approval shall not be unreasonably withheld, the defendant or defendants in such suit shall bear the fees and expenses of any additional counsel retained by any of them; but in case the Trust does not elect to assume the defense of any such suit, or in case you do not reasonably approve of counsel chosen by the Trust, the Trust will reimburse you, your officers and directors, or the controlling person or persons named as defendant or defendants in such suit, for the fees and expenses of any counsel retained by you or them. The Trust's indemnification agreement contained in this paragraph 1.9 and the Trust's representations and warranties in this agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of you, your officers and directors, or any controlling person, and shall survive the delivery of any Shares. This agreement of indemnity will inure exclusively to your benefit, to the benefit of your several officers and directors, and their respective estates, and to the benefit of any controlling persons and their successors. The Trust agrees promptly to notify you of the commencement of any litigation or proceedings against the Trust or any of its officers or trustees in connection with the issue and sale of any of the Shares. 1.10 You agree to indemnify, defend and hold the Trust, its several officers and trustees, and any person who controls the Trust within the meaning of Section 15 of the Securities Act of 1933, as amended, free and harmless from and against any and all claims, demands, liabilities and expenses (including the cost of investigating or defending such claims, demands or liabilities and any counsel fees incurred in connection therewith) which the Trust, its officers or trustees, or any such controlling person, may incur under the Securities Act of 1933, as amended, or under common law or otherwise, but -5- only to the extent that such liability or expense incurred by the Trust, its officers or trustees, or such controlling person resulting from such claims or demands, shall arise out of or be based upon any untrue, or alleged untrue, statement of a material fact contained in information furnished by you to the Trust or its counsel and used in the Trust's registration statement or in the corresponding statements made in the prospectus, or shall arise out of or be based upon any omission, or alleged omission, to state a material fact in connection with such information furnished by you to the Trust or its counsel and required to be stated in such answers or necessary to make such information not misleading. Your agreement to indemnify the Trust, its officers and trustees, and any such controlling person, as aforesaid, is expressly conditioned upon your being notified of any action brought against the Trust, its officers or trustees, or any such controlling person, such notification to be given by letter or telegram addressed to you at your principal office within ten days after the summons or other first legal process shall have been served. You shall have the right to control the defense of such action, with counsel of your own choosing, satisfactory to the Trust, if such action is based solely upon such alleged misstatement or omission on your part, and in any other event the Trust, its officers or trustees or such controlling person shall each have the right to participate in the defense or preparation of the defense of any such action. The failure so to notify you of any such action shall not relieve you from any liability which you may have to the Trust, its officers or trustees, or to such controlling person by reason of any such untrue, or alleged untrue, statement or omission, or alleged omission, otherwise than on account of your indemnity agreement contained in this paragraph 1.10. 1.11 No Shares shall be offered by either you or the Trust under any of the provisions of this agreement and no orders for the purchase or sale of such Shares hereunder shall be accepted by the Trust if and so long as the effectiveness of the registration statement then in effect or any necessary amendments thereto shall be suspended under any of the provisions of the Securities Act of 1933, as amended, or if and so long as current prospectuses as required by Section 10 of said Act, as amended, are not on file with the Securities and Exchange Commission; provided, however, that nothing contained in this paragraph 1.11 shall in any way restrict or have an application to or bearing upon the Trust's obligation to repurchase Shares from any shareholder in accordance with the provisions of the prospectuses or Declaration of Trust. 1.12 The Trust agrees to advise you promptly in writing: -6- (a) of any request by the Securities and Exchange Commission for amendments to the registration statement or prospectuses then in effect; (b) in the event of the issuance by the Securities and Exchange Commission of any stop order suspending the effectiveness of the registration statement or prospectuses then in effect or the initiation of any proceeding for that purpose; (c) of the happening of any event which makes untrue any statement of a material fact made in the registration statement or prospectuses then in effect or which requires the making of a change in such registration statement or prospectuses in order to make the statements therein not misleading; and (d) of all actions of the Securities and Exchange Commission with respect to any amendments to any registration statement or prospectus which may from time to time be filed with the Securities and Exchange Commission. 2. TERM 2.1 This agreement shall become effective as of the date hereof and, unless sooner terminated, shall continue until September 30 1988, and thereafter shall continue automatically for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Trust's Board of Trustees or (ii) the vote of a majority (as defined in the Investment Company Act of 1940) of the Funds' outstanding Shares, provided that in either event its continuance also is approved by a majority of the Trust's trustees who are not "interested persons" (as defined in said Act) of any party to this agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. This agreement is terminable without penalty, on not less than 60 days' notice, by the Trust's Board of Trustees, by vote of the holders of a majority (as defined in said Act) of the Funds' outstanding Shares, or by you. This agreement will also terminate automatically in the event of its assignment (as defined in said Act). 3. MISCELLANEOUS 3.1 The Trust recognizes that from time to time your directors, officers and employees may serve as directors, officers and employees of other corporations or business trusts (including other investment companies) and that such other corporations and trusts may include the name ALPS as part of their name, and that you or your affiliates may enter into -7- investment advisory or other agreements with such other corporations and trusts. 3.2 The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of its trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the trustees, shareholders, or representatives of the Trust personally, but bind only the Trust property, and all persons dealing with any class of shares of the Trust must look solely to the Trust property belonging to such class for the enforcement of any claims against the Trust. 3.3 No provision of this agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which an enforcement of the change, waiver, discharge or termination is sought. 3.4 This agreement shall be governed by Colorado law. Please confirm that the foregoing is in accordance with your understanding by indicating your acceptance hereof at the place below indicated, whereupon it shall become a binding agreement between us. Very truly yours, WESTCORE TRUST By: /s/Jack D. Henderson -------------------- Accepted: ALPS SECURITIES, INC. By: /s/ W.R. Alexander -------------------- -8- EX-6.(A)(I) 7 EXHIBIT 6(A)(I) AMENDMENT NO. 1 TO DISTRIBUTION AGREEMENT Amendment dated as of March 30, 1989 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the investment portfolios of the Trust pursuant to the Agreement, and also serves as Administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's Short-Intermediate Tax-Exempt Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds, Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(II) 8 EXHIBIT 6(A)(II) AMENDMENT NO. 2 TO DISTRIBUTION AGREEMENT Amendment dated as of September 28, 1990 to the Distribution Agreement (the "Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the Trust's MIDCO Growth Fund, Bonds Plus Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund, Short-Term Bond Fund, Short-Term Government Bond Fund, Modern Value Equity Fund, GNMA Fund, Basic Value Fund, Oregon Tax-Exempt Fund and Short-Intermediate Tax- Exempt Fund pursuant to the Agreement, and also serves as administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's Balanced Investment Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds, Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(III) 9 EXHIBIT 6(A)(III) AMENDMENT NO. 3 TO DISTRIBUTION AGREEMENT Amendment dated as of June 1, 1991 to the Distribution Agreement (the "Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the Trust's MIDCO Growth Fund, Bonds Plus Fund, Long-Term Bond Fund, Intermediate-Term Bond Fund, Equity Income Fund, SHort-Term BOnd Fund, Short-Term Government BOnd Fund, Modern Value Equity Fund, GNMA Fund, Basic Value Fund, Oregon Tax-Exempt Fund, Short-Intermediate Tax- Exempt FUnd and Balanced Investment Fund pursuant to the Agreement, and also serves as administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's Colorado Tax-Exempt Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds, Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(IV) 10 EXHIBIT 6(A)(IV) AMENDMENT NO. 4 TO DISTRIBUTION AGREEMENT Amendment dated as of March 1, 1992 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for certain of the investment portfolios of the Trust pursuant to the Agreement, and also serves as Administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's Arizona Intermediate Tax-Free Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds, Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(V) 11 EXHIBIT 6(A)(V) AMENDMENT NO. 5 TO DISTRIBUTION AGREEMENT Amendment dated as of August 1, 1993 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the investment portfolios of the Trust pursuant to the Agreement, and also serves as Administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's Growth Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. -9- IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds Services, Inc. By: /s/W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(VI) 12 EXHIBIT 6(A)(VI) AMENDMENT NO. 6 TO DISTRIBUTION AGREEMENT Amendment dated as of January 7, 1993 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a ALPS Mutual Funds Service, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the investment portfolios of the Trust pursuant to the Agreement, and also serves as Administrator of said investment portfolios under Administration Agreements, dated as of October 1, 1990 and June 1, 1991. 2. The Trust is this day appointing ALPS as administrator for the Trust's Quality Tax-Exempt Income Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds, Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(A)(VII) 13 EXHIBIT 6(A)(VII) AMENDMENT NO. 7 TO DISTRIBUTION AGREEMENT Amendment dated as of January 4, 1993 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc., d/b/a ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for the investment portfolios of the Trust pursuant to the Agreement, and also serves as administrator of said investment portfolios under an Administration Agreement, also dated as of November 30, 1987. 2. The Trust is this day appointing ALPS as administrator for the Trust's California Intermediate Tax-Free Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. AMENDMENTS. Sections 1.2(a) and 2 of the Agreement are hereby amended and restated as follows: 1.2(a) You agree to use your best efforts to solicit orders for the sale of Shares. You, at your own expense, (but subject to reimbursement in accordance with the Distribution and Administrative Service Plan as may be in effect for the California Intermediate Tax-Free Fund) shall finance appropriate activities which you deem reasonable which are primarily intended to result in the sale of Shares, including, but not limited to, advertising, compensation of underwriters, dealers and sales personnel, the printing and mailing of prospectuses to other than current shareholders, and the printing and mailing of sales literature. In addition, you will provide one or more persons, during normal business hours, to respond to telephone questions with respect to the Funds. It is contemplated that you will enter into selling agreements with qualified broker/dealers and other persons with respect to the offering of Shares to the public, and in so doing you will act only on your own behalf as principal. 2. TERM AND COMPENSATION. 2.1 This agreement shall become effective as of the date hereof and, unless sooner terminated, shall continue until September 30, 1993, and thereafter shall continue automatically with respect to each Fund for successive annual periods, provided such continuance is specifically approved at least annually by (i) the Trust's Board of Trustees or (ii) the vote of a majority (as defined in the Investment Company Act of 1940) of the Fund's outstanding Shares, provided that in either event its continuance also is approved by a majority of the Trust's trustees who are not "interested persons" (as defined in said Act) of any party to this agreement and have no direct or indirect financial interest in the operation of any Distribution Plan under Rule 12b-1 for such Fund (if any) or in any agreements related to any such plan, by vote cast in person at a meeting called for the purpose of voting on such approval. This agreement is terminable with respect to a Fund without penalty, on not less than 60 days' notice, by a vote of a majority of the Trust's Board of Trustees who, in the case of a Fund which has a Distribution Plan under Rule 12b-1, are not interested persons of the Trust and have no direct or indirect financial interest in the operation of such Distribution Plan for such Fund or in any agreements related to any such Distribution Plan, by vote of the holders of a majority (as defined in said Act) of the Fund's outstanding Shares, or by you. This agreement will also terminate automatically in the event of its assignment (as defined in said Act). 2.2 Subject to the terms of, and upon effectiveness of the Distribution and Administrative Service Plan described below, the Trust shall reimburse you for the expenses described below with respect to the Retail Shares of the Trust's California Intermediate Tax-Free Fund (the "Distribution Plan Shares") at the annual rate of (a) up to .05% of the average daily net asset value of such Shares (such reimbursement to be for the purposes of and in the amount of your out-of-pocket expenses incurred in connection with distributing the Distribution Plan Shares) and (b) up to .15% of the average daily net asset value of such shares (such reimbursement to be for the purposes of and in the amount of payments by you to one or more securities dealers, financial institutions and other industry professionals who are dealers or shareholders of record or which otherwise have a servicing relationship with the beneficial owners of the Distribution Plan Shares for distribution assistance and/or support services provided with respect to the -2- Shares pursuant to the Distribution and Administrative Service Plan with respect to the Distribution Plan Shares). The amount of such compensation shall be calculated and accrued daily and paid monthly or at such other intervals as the Board of Trustees and you may mutually agree. 3. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on day and year first above written. WESTCORE TRUST By:/s/Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds Services, Inc. By:/s/W. Robert Alexander -------------------------------- W. Robert Alexander, President -3- EX-6.(A)(VIII) 14 EXHIBIT 6(A)(VIII) AMENDMENT NO. 8 TO THE DISTRIBUTION AGREEMENT Amendment dated as of December 28, 1993 to the Distribution Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and ALPS Securities, Inc. d/b/a ALPS Mutual Funds Services, Inc., a Colorado corporation ("ALPS"). BACKGROUND 1. ALPS serves as distributor for certain of the investment portfolios of the Trust pursuant to the Agreement, and also serves as administrator of said investment portfolios under an Administration Agreement, dated as of October 1, 1993. 2. The Trust is this day appointing ALPS as administrator for the Trust's Small-Cap Opportunity Fund (the "Fund"). 3. The Trust desires to employ ALPS as its distributor of the shares of the Fund, and ALPS is willing to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints ALPS to act as distributor for the Fund for the period and on the terms set forth in the Agreement. ALPS accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ------------------------------- Jack D. Henderson, President ALPS Mutual Funds Services, Inc. By: /s/ W. Robert Alexander ------------------------------- W. Robert Alexander, President EX-6.(B) 15 EXHIBIT 6(B) BROKER-DEALER AGREEMENT (FULLY DISCLOSED BASIS) ALPS Securities, Inc. Suite 1605 South 600 Seventeenth Street Denver, Colorado 80202 Gentlemen: We desire to enter into an Agreement with you for the sale of shares of beneficial interest in investment portfolios (collectively "Funds") of Westcore Trust (the "Trust") that are now or hereafter available for sale to our customers. You are the principal underwriter (as such term is defined in the Investment Company Act of 1940, as amended) of the offering of shares of the Funds and the exclusive agent for the continuous distribution of such shares pursuant to the terms of a Distribution Agreement between you and the Trust. As used herein the term "Prospectus" means the prospectus and, unless the context otherwise requires, related statement of additional information (the "Statement of Additional Information") incorporated therein by reference, as the same are amended and supplemented from time to time, of each of the respective Funds. In consideration for the mutual covenants contained herein, it is hereby agreed that our respective rights and obligations shall be as follows: 1. You acknowledge that customers of ours who purchase Fund shares are our customers. We shall be responsible for opening, approving and monitoring customer accounts and for the review and supervision of these accounts, all in accordance with the rules of the Securities and Exchange Commission ("SEC") and National Association of securities Dealers, Inc. (the "NASD"). In no transaction involving Fund shares shall we have any authority to act as agent for the Trust or for you. 2. All orders for the purchase of any Fund shares shall be executed at the then current public offering price per share (I.E., the net asset value per share plus the applicable sales load, if any) and all orders for the redemption of any Fund shares shall be executed at the net asset value per share, in each case as described in the Prospectus of such Fund. The minimum initial purchase order and minimum subsequent purchase order by any person shall be as set forth in the Prospectus of such Fund. All orders are subject to acceptance or rejection by the Trust at its sole discretion. Unless otherwise mutually agreed in writing, each transaction shall be promptly confirmed in writing to the customer on a fully disclosed basis and a copy of each confirmation shall be sent simultaneously to us. We agree that upon receipt of duplicate confirmations we will examine the same and promptly notify the Trust of any errors or discrepancies which we discover and shall promptly bring to the attention of the Trust any errors in such confirmations claimed by our customers. The Trust reserves the right, at its discretion and without notice, to suspend the sale of shares or withdraw entirely the sale of shares of any or all of the Funds. 3. In ordering shares of any Fund, we shall rely solely and conclusively on the representations contained in the Prospectus of such Fund. We agree that we shall not offer or sell shares of any Fund except in compliance with all applicable federal and state securities laws and the rules and regulations of applicable regulatory agencies or authorities. In connection with offers to sell and sales of shares of each Fund, we agree to deliver or cause to be delivered to each person to whom any such offer or sale is made, at or prior to the time of such offer or sale, a copy of the Prospectus and, upon request, the Statement of Additional Information of the Fund involved. We further agree to obtain from each customer to whom we sell Fund shares any taxpayer identification number certification required under Section 3406 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder, and to provide you or your designee with timely written notice of any failure to obtain such taxpayer identification number certification in order to enable the implementation of any required backup withholding in accordance with Section 3406 of the Code and the regulations thereunder. Unless otherwise mutually agreed in writing, you shall deliver or cause to be delivered to each of the customers who purchases shares of any Fund through us copies of all annual and interim reports, proxy solicitation materials and any other information and materials relating to such Fund and prepared by or on behalf of you, the Trust or its investment adviser, custodian, transfer agent or dividend disbursing agent for distribution to such customer. You agree to supply us with copies of the Prospectus, Statement of Additional Information, annual reports, interim reports, proxy solicitation materials and any such other information and materials relating to each Fund in reasonable quantities upon request. We acknowledge that any material or information that you -2- furnish to us, other than Prospectuses, annual and interim reports to shareholders and proxy solicitation materials prepared by the Trust, are your sole responsibility and not the responsibility of the Trust. 4. We shall not make any representations concerning any Fund shares other than those contained in the Prospectus of the Fund involved or in any promotional materials or sales literature furnished to us by you or the Trust. We shall not furnish or cause to be furnished to any person or display or publish any information or materials relating to any Fund (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to us by you or the Trust, and such other information and materials as may be approved in writing by you. 5. In determining the amount of any sales commission pay-able to us hereunder, you reserve the right to exclude any sales which you reasonably determine are not made in accordance with the terms of the applicable Fund Prospectus and the provisions of this Agreement. Unless at the time of transmitting an order we advise you or to the transfer agent for the Fund involved (the "Transfer Agent") to the contrary, the shares ordered will be deemed to be the total holdings of the specified investor. 6. (a) In the case of any Fund shares sold with a sales load, customers may be entitled to a reduction of the sales load on purchases made under a letter of intent ("Letter of Intent") in accordance with the Prospectus of the Fund involved. In such case our sales commission will be paid based upon the reduced sales load, but adjustment will be made in accordance with the Prospectus of the applicable Fund to reflect actual purchases of the customer if he should fail to fulfill his Letter of Intent. The sales load and/or our sales commission may be changed at any time in the Trust's sole discretion. (b) In accordance with the terms of the Prospectus of the Fund involved, a reduced sales load may also be applicable with respect to customer accounts through a right of accumulation under which customers are permitted to purchase shares of a Fund sold with a sales load at the then current public offering price per share applicable to the total of (i) the dollar amount of shares then being purchased plus (ii) an -3- amount equal to the then current net asset value of shares of such Fund (and any other Fund as may be permitted by the applicable Prospectus) that are already beneficially owned at the time of purchase by the customer on which a sales load has been paid. In each case where a reduced sales load is applicable, we agree to furnish to the Transfer Agent sufficient information to permit confirmation of qualification for a reduced sales load, and acceptance of the purchase order is subject to such confirmation. (c) For the purpose of applying the Letter of Intent and right of accumulation privileges offered by the Trust, reduced sales loads may apply to the combined purchases made by a customer and certain other persons (for example, a customer's spouse and minor children) as set forth from time to time in the applicable Fund Prospectus. The Letter of Intent and right of accumulation privileges may be modified in any respect or terminated by the Trust at any time in its sole discretion. (d) We acknowledge that certain classes of investors may be entitled to purchase shares of a Fund at net asset value without a sales load as from time to time provided in the applicable Fund Prospectus. (e) We agree to advise you promptly at your request as to amount of any and all sales by us qualifying for reduced sales load or no sales load. (f) Exchanges (I.E., the investment of the proceeds from the liquidation of shares of one Fund in the shares of another Fund) shall, where available, be made in accordance with the terms of each Fund Prospectus. 7. The procedures relating to orders and the handling thereof will be subject to the terms of the Prospectus of the Fund involved and instructions received by us from you or the Transfer Agent from time to time. No conditional orders will be accepted. We agree that purchase orders placed by us will be made only for the purpose of covering purchase orders already received from our customers and that we will not make purchases for any other securities dealer or broker. Further, we shall place purchase orders from customers with the Trust immediately and shall not withhold the placement of such orders so as to profit ourselves; provided, however, that the foregoing shall not prevent the purchase of shares of any Fund by us for our own bona fide investment. We agree that: (a) we shall not effect any transactions (including, without limitation, -4- any purchases and redemptions) in any Fund shares registered in the name of, or beneficially owned by, any customer unless such customer has granted us full right, power and authority to effect such transactions on his behalf, and (b) you, the Trust, each Transfer Agent and your and their respective officers, directors or trustees, agents, employees and affiliates shall not be liable for, and shall be fully indemnified and held harmless by us from and against, any and all claims, demands, liabilities and expenses (including, without limitation, reasonable attorneys' fees) which may be incurred by you or any of the foregoing persons entitled to indemnification from us hereunder arising out of or in connection with the execution of any transactions in Fund shares registered in the name of, or beneficially owned by, any customer in reliance upon any oral or written instructions believed to be genuine and to have been given by or on behalf of us. The indemnification agreement contained in this Paragraph 7 shall survive the termination of this Agreement. 8. (a) We agree that payment for orders from us for the purchase of Fund shares will be made in accordance with the terms of the Prospectus of the applicable Fund. On or before the settlement date of each purchase order for shares of any Fund, we shall either (i) remit to an account designated by you with the Transfer Agent an amount equal to the then current public offering price of the shares of such Fund being purchased less our sales commission, if any, with respect to such purchase order as determined by you in accordance with the terms of the applicable Fund Prospectus, or (ii) remit to an account designated by you with the Transfer Agent an amount equal to the then current public offering price of the shares of such Fund being purchased without deduction for our sales commission, if any, with respect to such purchase order as determined by you in accordance with the terms of the applicable Fund Prospectus, in which case our sales commission, if any, shall be payable to us on at least a monthly basis. If payment for any purchase order is not received in accordance with the terms of the applicable Fund Prospectus, you reserve the right, without notice, to cancel the sale and to hold us responsible for any loss sustained as a result thereof. (b) If any shares sold under the terms of this Agreement are sold with a sales load and are redeemed for the account of a Fund or are tendered for redemption within seven (7) business days after confirmation of our purchase order for such shares: (i) we shall forthwith refund to you the full sales -5- commission received by us on the sale; and (ii) you shall forthwith pay to the Fund your portion of the sales load on the sale which had been retained by you, if any, and shall also pay to the Trust the amount refunded by us. 9. Certificates for shares sold hereunder shall only be issued in accordance with the terms of each Fund Prospectus upon our customer's specific request and, upon such request, shall be promptly delivered to us by the Transfer Agent unless other arrangements are made by you and us. However, in making delivery of such share certificates, the Transfer Agent shall have adequate time to clear any checks drawn for the payment of Fund shares. We acknowledge that the terms of a Fund's Prospectus may provide that certificates for shares will not be issued under any circumstances. 10. We hereby represent and warrant that: (a) we are a corporation, partnership or other entity duly organized and validly existing in good standing under the laws of the jurisdiction in which we were organized; (b) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all necessary action and all other authorizations and approvals (if any) required for our lawful execution and delivery of this Agreement and our performance hereunder have been obtained; and (c) upon execution and delivery by us, and assuming due and valid execution and delivery by you, this Agreement will constitute a valid and binding agreement, enforceable against us in accordance with its terms. 11. We further represent and warrant that we are a member of the NASD and, with respect to any sales in the United States, we agree to abide by all of the rules and regulations of the NASD, including, without limitation, its Rules of Fair Practice. We agree to comply with all applicable federal and state laws, rules and regulations. You agree to inform us, upon our request, as to the states in which you believe the shares of the respective Funds have been qualified for sale under, or are exempt from the requirements of, the respective securities laws of such states, but you shall have no obligation or responsibility to make shares of any Funds available for sale to our customers in any jurisdiction. We agree to notify you immediately in the event of our expulsion or suspension from the NASD. Our expulsion from the NASD will automatically terminate this Agreement immediately without notice. Our suspension from the NASD will -6- terminate this Agreement effective immediately upon your written notice of termination to us. 12. The names and addresses and other information concerning our customers are and shall remain our sole property, and neither you nor your affiliates shall use such names, addresses or other information for any purpose except in connection with the performance of your duties and responsibilities hereunder and except for servicing and informational mailings relating to the Funds. Notwithstanding the foregoing, this Paragraph 12 shall not prohibit you or any of your affiliates from utilizing for any purpose the names, addresses or other information concerning any of our customers if such names, addresses or other information are obtained in any manner other than from us pursuant to this Agreement. The provisions of this Paragraph 12 shall survive the termination of this Agreement. 13. Neither this Agreement nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture between you and us. Neither party hereto shall be, act as, or represent itself as, the agent or representative of the other, nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against or in the name of, or on behalf of, the other party. This Agreement is not intended to, and shall not, create any rights against either party hereto by any third party solely on account of this Agreement. Neither party hereto shall use the name of the other party in any manner without the other party's prior written consent, except as required by any applicable federal or state law, rule or regulation, and except pursuant to any promotional programs mutually agreed upon in writing by the parties hereto. 14. Except as otherwise specifically provided herein, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery or by postage prepaid, registered or certified United States first class mail, return receipt requested, or by telex, telegram or similar means of same day delivery (with confirming copy by mail as provided herein), unless otherwise notified in writing, all notices to you shall be given or sent to you at your offices, located at Suite 1605 South, 600 Seventeenth Street, Denver, Colorado 80202, and all notices to us shall be given or sent to us at our address shown below. -7- 15. This Agreement shall become effective only when accepted and signed by you, and may be terminated at any time by either party hereto upon fifteen (15) days' prior written notice to the other party. This Agreement may be amended only by a written instrument signed by both of the parties hereto and may not be assigned by either party without the prior written consent of the other party. This Agreement constitutes the entire agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes any and all prior agreements between the parties relating to said subject matter. 16. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado, without giving effect to principles of conflicts of laws. Very truly yours, --------------------------------------------- Name of Broker-Dealer (Please Print or Type) --------------------------------------------- --------------------------------------------- Address Date: By: --------------- ----------------------------------------- Authorized Officer NOTE: Please sign and return both copies of this Agreement to ALPS Securities, Inc. Upon acceptance one countersigned copy will be returned to you for your files. Accepted: ALPS SECURITIES, INC. Date: By: --------------- ----------------------------------------- Authorized Officer -8- EX-6.(C) 16 EXHIBIT 6(C) BANK AGREEMENT ALPS Mutual Funds Services, Inc. Suite 1605 South 600 Seventeenth Street Denver, Colorado 80202 Gentlemen: We are either (i) a "bank" (as such term is defined in Section 3(a)(6) of the Securities Exchange Act of 1934, as amended) or (ii) a broker-dealer that is registered with the Securities and Exchange Commission ("SEC") under said Act and is affiliated with a "bank" as so defined. We desire to make available to our customers shares of beneficial interest in investment portfolios (collectively "Funds") of Westcore Trust (the "Trust") that are now or hereafter available for sale to our customers. You are the principal underwriter (as such term is defined in the Investment Company Act of 1940, as amended) of the offering of shares of the Funds and the exclusive agent for the continuous distribution of such shares pursuant to the terms of a Distribution Agreement between you and the Trust. As used herein the term "Prospectus" shall mean the prospectus and, unless the context otherwise requires, related statement of additional information (the "Statement of Additional Information") incorporated therein by reference, as the same are amended and supplemented from time to time, of each of the respective Funds. In consideration for the mutual covenants contained herein, it is hereby agreed that our respective rights and obligations shall be as follows: 1. With respect to any and all transactions in the shares of any Fund pursuant to this Agreement, it is understood and agreed in each case that: (a) we shall be acting solely as agent for the account of our customer; (b) each transaction shall be initiated solely upon the order of our customer; (c) each transaction shall be executed by the Trust only upon receipt of instructions from us acting as agent for our customer; (d) as between us and our customer, our customer will have full beneficial ownership of all Fund shares; and (e) each transaction shall be for the account of our customer and not for our account. Each transaction shall be without recourse to us provided that we act in accordance with the terms of this Agreement. We represent and warrant that we will have full right, power and authority to effect transactions (including, without limitation, any purchases and redemptions) in Fund shares on behalf of all customer accounts provided by us to you or to any transfer agent as such term is defined in the Prospectus of each Fund (the "Transfer Agent"). Customers of ours who purchase Fund shares are for all purposes our customers and not customers of the Trust. We shall be responsible for opening, approving and monitoring customer accounts and for the review and supervision of these accounts, all in accordance with applicable law, including the rules of the SEC and National Association of Securities Dealers, Inc. (the "NASD") if applicable and/or the regulations of applicable federal and state bank regulatory agencies or authorities. In no transaction involving Fund shares shall we have any authority to act as agent for the Trust or for you. 2. All orders for the purchase of any Fund shares shall be executed at the then current public offering price per share (I.E., the net asset value per share plus the applicable sale load, if any) and all orders for the redemption of any Fund shares shall be executed at the net asset value per share, in each case as described in the Prospectus. The minimum initial purchase order and minimum subsequent purchase order by any person shall be as set forth in the Prospectus of such fund. All orders are subject to acceptance or rejection by the Trust at its sole discretion. Unless otherwise mutually agreed in writing, each transaction shall be promptly confirmed in writing to the customer on a fully disclosed basis and a copy of each confirmation shall be sent simultaneously to us. We agree that upon receipt of duplicate confirmations we will examine the same and promptly notify the Trust of any errors or discrepancies which we discover and shall promptly bring to the attention of the Trust any errors in such confirmations claimed by our customers. The Trust reserves the right, at its discretion and without notice, to suspend the sale of shares or withdraw entirely the sale of shares of any or all of the Funds. 3. We agree that we shall not make shares of any Fund available to our customers except in compliance with all applicable federal and state laws and the rules and regulations of applicable regulatory agencies or authorities. We agree that we shall not purchase any Fund shares, as agent for any customer, unless we deliver or cause to be delivered to such customer, at or prior to the time of delivery of the sale confirmation, a copy of the appropriate Prospectus of the Fund involved, or unless such customer has acknowledged receipt of Prospectus of such fund. We further agree that such sale confirmation, accompanied by the appropriate Prospectus, shall be delivered by the Transfer Agent, upon receipt of an order to purchase units from us. We further agree to obtain from each customer for whom we act as agent for the purchase of Fund shares any taxpayer identification number certification required under Section 3406 of the Internal Revenue Code of 1986, as amended (the "Code"), and the regulations promulgated thereunder, and to provide you -2- or your designee with timely written notice of any failure to obtain such taxpayer identification number certification in order to enable the implementation of any required backup withholding in accordance with Section 3406 of the Code and the regulations thereunder. Unless otherwise mutually agreed in writing, you shall deliver or cause to be delivered to each of the customers who purchases shares of any Fund through us copies of all annual and interim reports, proxy solicitation materials and any other information and materials relating to such Fund and prepared by or on behalf of you, the Trust or its investment adviser, custodian, transfer agent or dividend disbursing agent for distribution to such customer. You agree to supply us with copies of the Prospectus, Statement of Additional Information, annual and interim reports, proxy solicitation materials and any such other information and materials relating to each Fund in reasonable quantities upon request. We acknowledge that any material or information that you furnish to us, other than Prospectuses, annual and interim reports to shareholders and proxy solicitation materials prepared by the Trust, are your sole responsibility and not the responsibility of the Trust. 4. We shall not make any representations concerning any Fund shares other than those contained in the Prospectus of the Fund involved or in any promotional materials or sales literature furnished to us by you or the Trust. We shall not furnish or cause to be furnished to any person or display or publish any information or materials relating to any Fund (including, without limitation, promotional materials and sales literature, advertisements, press releases, announcements, statements, posters, signs or other similar material), except such information and materials as may be furnished to us by you or the Trust, and such other information and materials as may be approved in writing by you. 5. In the case of purchases of Fund shares hereunder that are sold with a sales load, an agency commission shall be payable to us as hereinafter provided. In determining the amount of any agency commission payable to us hereunder, you reserve the right to exclude any accounts which you reasonably determine are not initiated, and any subsequent purchases for any accounts which you reasonably determine are not made, in accordance with the terms of the applicable Fund Prospectus and the provisions of this Agreement. Unless at the time of transmitting an order we advise you or the Transfer Agent to the contrary, the shares ordered will be deemed to be the total holdings of the specified customer. 6. (a) In the case of any Fund shares sold with a sales load, customers may be entitled to a reduction of the sales load on purchases made under a letter of intent ("Letter of -3- Intent") in accordance with the Prospectus of the Fund involved. In such case, our agency commission will be paid based upon the reduced sales load, but an adjustment will be made in accordance with the Prospectus of the applicable Fund to reflect actual purchases of the customer if he should fall to fulfill his Letter of Intent. The sales load and/or agency commission may be changed at any time in the Trust's sole discretion. (b) In accordance with the terms of the Prospectus of the Fund involved, a reduced sales load may also be applicable with respect to customer accounts through a right of accumulation under which customers are permitted to purchase shares of a Fund sold with a sales load at the then current public offering per share applicable to the total of (i) the dollar amount of shares then being purchased plus (ii) an amount equal to the then current net asset value of shares of such Fund (and any other Fund as may be permitted by the applicable Prospectus) that are already beneficially owned at the time of purchase by the customer on which a sales load has been paid. In each case where a reduced sales load is applicable, we agree to furnish to the Transfer Agent sufficient information to permit confirmation of qualification for a reduced sales load, and acceptance of the purchase order is subject to such confirmation. (c) For the purpose of applying the Letter of Intent and right of accumulation privileges offered by the Trust, reduced sales loads may apply to the combined purchases made by a customer and certain other persons (for example, a customer's spouse and minor children) as set forth from time to time in the applicable Fund Prospectus. The Letter of Intent and right of accumulation privileges may be modified in any respect or eliminated by the Trust at any time in its sole discretion. (d) We acknowledge that certain classes of investors may be entitled to purchase shares of a Fund at net asset value without a sales load as from time to time provided in the applicable Fund Prospectus. (e) We agree to advise you promptly at your request as to amounts of any and all purchases of Fund shares made by us, as agent for our customers, qualifying for a reduced sales load or no sales load. (f) Exchanges (I.E., the investment of the proceeds from the liquidation of shares of one Fund in the shares of another Fund) shall, where available, be made in accordance with the terms of each Fund Prospectus. -4- 7. The procedures relating to orders and the handling thereof will be subject to the terms of the Prospectus of the Fund involved and instructions received by us from you or the Transfer Agent from time to time. No conditional orders will be accepted. We agree that purchase orders placed by us will be made only for the purpose of covering purchase orders already received from our customers and that we will not make purchases for any securities dealer or broker. Further, we shall not withhold the placement of such orders so as to profit ourselves; provided, however, that the foregoing shall not prevent the purchase of shares of any Fund by us for our own bona fide investment. 8. (a) We agree to pay for purchase orders of any Fund shares from us as agent for our customers in accordance with the terms of the Prospectus of the applicable Fund. On or before the settlement date of each purchase order for shares of any Fund, we shall either (i) remit to an account designated by you with the Transfer Agent an amount equal to the then current public offering price of the shares of such Fund being purchased less our agency commission, if any, with respect to such purchase order as determined by you in accordance with the terms of the applicable Fund Prospectus, or (ii) remit to an account designated by you with the Transfer Agent an amount equal to the then current public offering price of the shares of such Fund being purchased without deduction for our agency commission, if any, with respect to such purchase order as determined by you in accordance with the terms of the applicable Fund Prospectus, in which case our agency commission, if any, shall be payable to us by you on at least a monthly basis. If payment for any purchase order is not received in accordance with the terms of the applicable Fund Prospectus, you reserve the right, without notice, to cancel the sale and to hold us responsible for any loss sustained as a result thereof. (b) If any shares sold to us as agent for our customers under the terms of this Agreement are sold with a sales load and are redeemed for the account of a Fund or are tendered for redemption within seven (7) business days after confirmation of our purchase order for such shares: (i) we shall forthwith refund to you the full agency commission received by us on the sale; and (ii) you shall forthwith pay to the Fund your portion of the sales load on the sale which had been retained by you, if any, and shall also pay to the Trust the amount refunded by us. 9. Certificates for shares sold hereunder shall only be issued in accordance with the terms of each Fund Prospectus upon our customers' specific request and, upon such request, shall be promptly delivered to us, acting as agent for our -5- customers, by the Transfer Agent unless other arrangements are made by you and us. However, in making delivery of such share certificates, the Transfer Agent shall have adequate time to clear any checks drawn for the payment of Fund shares. We acknowledge that the terms of a Fund's Prospectus may provide that certificates for shares will not be issued under any circumstances. 10. We hereby represent and warrant that: (a) we are a corporation, partnership, national association or other entity duly organized and validly existing in good standing under the laws of the jurisdiction in which we are organized; (b) the execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all necessary action and all other authorizations and approvals (if any) required for our lawful execution and delivery of this Agreement and our performance hereunder have been obtained; and (c) upon execution and delivery by us, and assuming due and valid execution and delivery by you, this Agreement will constitute a valid and binding agreement, enforceable against us in accordance with its terms. 11. If we are a bank as defined in the first paragraph of this Agreement, then we agree to give written notice to you immediately in the event that we cease to be a "bank" as so defined. In such event, this Agreement shall automatically terminate upon such written notice. 12. You agree to inform us, upon our request, as to the states in which you believe the shares of the respective Funds have been qualified for sale under, or are exempt from the requirements of, the respective securities laws of such states, but you shall have no obligation or responsibility to make shares of any Funds available for sale to our customers in any jurisdiction. 13. The names and addresses and other information concerning our customers are and shall remain our sole property, and neither you nor your affiliates shall use such names, addresses or other information for any purpose except in connection with the performance of your duties and responsibilities hereunder and except for servicing and informational mailings relating to the Funds. Notwithstanding the foregoing, this Paragraph 13 shall not prohibit you or any of your affiliates from utilizing for any purpose the names, addresses or other information concerning any of our customers if such names, addresses or other information are obtained in any manner other than from us pursuant to this Agreement. The provisions of this Paragraph 13 shall survive the termination of this Agreement. -6- 14. (a) We will indemnify and hold you, the Trust, each transfer agent and their respective officers, directors or trustees, agents, employees, affiliates and controlling persons harmless against any and all losses, claims, damages, liabilities, actions, costs or expenses (including any legal expenses) insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise out of or are based upon (i) the execution of any transactions in Fund shares registered in the name of, or beneficially owned by, any customer in reliance upon any oral or written instructions believed to be genuine and to have been given by or on behalf of us or (ii) the negligent, reckless or intentional conduct of us or our employees. (b) You will indemnify and hold harmless us and our directors, officers, employees, agents, controlling persons and affiliates against any and all losses, claims, damages, liabilities, actions, costs or expenses insofar as such losses, claims, damages, liabilities, actions, costs or expenses arise out of or are based upon your or your employees negligent, reckless or intentional conduct. (c) A party seeking indemnification (an "Indemnified Party") hereunder will (i) give prompt written notice to other party hereto (the "Indemnifying Party") of any claim with respect to which it seeks indemnification, and (ii) permit such Indemnifying Party to assume the defense of such claim with counsel reasonably satisfactory to the Indemnified Party, PROVIDED, HOWEVER, that the Indemnified Party shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless (w) the Indemnifying Party has agreed in writing to pay such fees or expenses, or (x) the Indemnifying Party shall have failed to assume the defense of such claim or employ counsel reasonably satisfactory to the Indemnified Party, or (y) the defendants in any such action include both the Indemnifying Party and the Indemnified Party, and the Indemnified Party has reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to the Indemnifying Party, or (z) there exists or will exist a conflict of interest between the Indemnified Party and Indemnifying Party which would make it inappropriate in the reasonable judgement of the Indemnified Party for the same counsel to represent both the Indemnified Party and the Indemnifying Party (in which case, if the Indemnified Party notifies the Indemnifying Party in writing that the Indemnified Party elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnified Party shall cooperate with the Indemnifying Party in the contest or defense thereof. The Indemnifying Party, in defense of any action assumed by it, shall not, -7- without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement of such action which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect to such action. If such defense is not assumed by the Indemnifying Party, the Indemnifying Party will not be subject to any liability for any settlement made without its consent (but such consent will not be unreasonably withheld), and the Indemnifying Party will not be required to consent to entry of any judgment or entry into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect to such action. If the Indemnifying Party is not entitled to, or elect not to, assume the defense of a claim, the Indemnifying Party will not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by the Indemnifying Party with respect to such claim, unless in the reasonable judgment of the Indemnified Party a conflict of interest may exist between any of the Indemnified parties with respect to such claim, in which event the Indemnifying Party shall be obligated to pay the fees and expenses of such additional counsel or counsels. (d) The indemnification agreement contained in this paragraph shall survive the termination of this Agreement. 15. Neither this Agreement nor the performance of the services of the respective parties hereunder shall be considered to constitute an exclusive arrangement, or to create a partnership, association or joint venture between you and us. Neither party hereto shall be, act as, or represent itself as, the agent or representative of the other, nor shall either party have the right or authority to assume, create or incur any liability or any obligation of any kind, express or implied, against or in the name of, or on behalf of, the other party. This Agreement is not intended to, and shall not, create any rights against either party hereto by any third party solely on account of this Agreement. Neither party hereto shall use the name of the other party in any manner without the other party's prior written consent, except as required by any applicable federal or state law, rule or regulation, and except pursuant to any promotional programs mutually agreed upon in writing by the parties hereto. 16. Except as otherwise specifically provided herein, all notices required or permitted to be given pursuant to this Agreement shall be given in writing and delivered by personal delivery or by postage prepaid, registered or certified United States first class mail, return receipt -8- requested, or by telex, telegram or similar means of same day delivery (with a confirming copy by mail as provided herein). Unless otherwise notified in writing, all notices to you shall be given or sent to you at your offices located at Suite 1605 South, 600 Seventeenth Street, Denver, Colorado 80202, and all notices to us shall be given or sent to us at our address shown below. 17. This Agreement shall become effective only when accepted and signed by you, and may be terminated at any time by either party hereto upon fifteen (15) days' prior written notice to the other party. This Agreement may be amended only by a written instrument signed by both of the parties hereto and may not be assigned by either party without the prior written consent of the other party. This Agreement constitutes the entire agreement and understanding between the parties hereto relating to the subject matter hereof and supersedes any and all prior agreements between the parties relating to said subject matter. 18. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Colorado, without giving effect to principles of conflicts of laws. Very truly yours, ------------------------------------------------------- Name of Bank or Bank-Affiliated Broker-Dealer (Please Print or Type) ------------------------------------------------------- ------------------------------------------------------- Address Date: By: --------------- ---------------------------------------------------- Authorized Officer NOTE: Please sign and return both copies of this Agreement to ALPS Mutual Funds Services, Inc. Upon acceptance one countersigned copy will be returned to you for your files. Accepted: ALPS MUTUAL FUNDS SERVICES, INC. Date: By: --------------- ---------------------------------------------------- -9- Authorized Officer -10- EX-8.(A) 17 EXHIBIT 8(A) CUSTODY AGREEMENT THIS AGREEMENT is made this 30th day of November, 1987, by and between WESTCORE TRUST, a Massachusetts business trust (the "Trust"), and FIRST INTERSTATE BANK OF DENVER, N.A., a national banking association ("First Interstate"). W I T N E S S E T H : WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended ("the 1940 Act"); and WHEREAS, the Trust desires to retain First Interstate to serve as the custodian for the Trust's MIDCO Growth Fund, Modern Value Equity Fund, Equity Income Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Short/Intermediate-Term Bond Fund (the "Funds") and First Interstate is willing to furnish such services: NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows: 1. APPOINTMENT. The Trust hereby appoints First Interstate to act as custodian of the portfolio securities, cash, and other property belonging to each of the Funds for the period and on the terms set forth in this Agreement. First Interstate accepts such appointment and agrees to furnish the services herein set forth in return for the compensation as provided n Paragraph 22 this Agreement. First Interstate agrees to comply with all relevant provisions of the 1940 Act and applicable rules and regulations thereunder. 2. DELIVERY OF DOCUMENTS. The Trust has furnished First Interstate with copies properly certified or authenticated of each of the following: (a) Resolutions of the Trust's Board of Trustees authorizing the appointment of First Interstate as custodian of the portfolio securities, cash and other property of each Fund and approving this Agreement; (b) Incumbency and signature certificates identifying and containing the signatures of the Trust's officers and/or other persons authorized to sign Written Instructions, as hereinafter defined, on behalf of the Trust; (c) The Trust's Amended and Restated Declaration of Trust dated as of November 19, 1987 and all amendments thereto (such Declaration of Trust, as presently in effect and as it shall from time to time be amended or supplemented, is herein called the "Declaration of Trust"); (d) The Trust's Code of Regulations and all amendments thereto (such Code of Regulations, as presently in effect and as it shall from time to time be amended, is herein called the "Code of Regulations"); (e) Resolutions of the Trust's Board of Trustees appointing First Interstate as the investment adviser, and Denver -2- Investment Advisors, Inc. as the sub-investment adviser, of the Funds, and resolutions of the Trust's Board of Trustees and holders of shares of beneficial interest ("Shareholders") of the Funds approving proposed Investment Advisory and Sub-Advisory Agreements pertaining to the Funds; (f) Resolutions of the Trust's Board of Trustees appointing ALPS Securities, Inc; ("ALPS") as the Funds' distributor and administrator and resolutions of the Trust's Board of Trustees approving a proposed Distribution Agreement and a proposed Administration Agreement pertaining to the Funds; (g) Resolutions of the Trust's Board of Trustees appointing Fund/Plan Services, Inc. as the transfer agent, dividend disbursing agent and accounting services agent of the Funds, and resolutions of the Trust's Board of Trustees approving a proposed General Services Agreement and a proposed Accounting Services Agreement pertaining to the Funds; (h) Copies of each of the aforesaid proposed agreements; (i) Post-Effective Amendment No. 13 to the Trust's Registration Statement on Form N-1A under the Securities Act of 1933, as amended ("the 1933 Act"), and under the 1940 Act as filed with the Securities and Exchange Commission ("SEC"); and (j) The Trust's most recent Prospectus pertaining to the Funds (such prospectus, together with the related statement of additional information, as presently in effect and -3- all amendments and supplements thereto, are herein called the "Prospectus"). The Trust will furnish First Interstate from time to time with copies of all amendments of or supplements to the foregoing, if any. 3. DEFINITIONS. (a) "AUTHORIZED PERSON". As used in this Agreement, the term "Authorized Person" means the Trust's President, Treasurer, and any other person, whether or not any such person is an officer or employee of the Trust, duly authorized by the Board of Trustees of the Trust to give Oral and Written Instructions on behalf of the Trust and listed on the Certificate annexed hereto as Appendix A or such other Certificate listing persons duly authorized to give Oral and Written Instructions on behalf of the Trust as may be received by First Interstate from time to time. (b) "BOOK-ENTRY SYSTEM". As used in this Agreement, the term "Book-Entry System" means the Federal Reserve/Treasury book-entry system for United States and federal agency securities, its successor or successors and its nominee or nominees. (c) "DEPOSITORY". As used in this Agreement. the term "Depository" means a clearing agency registered with the SEC under Section 17A of the Securities Exchange Act of 1934, as amended ("1934 Act") which acts as a depository. -4- (d) "ORAL INSTRUCTIONS". As used in this Agreement, the term "Oral Instructions" means verbal instructions actually received by First Interstate from an Authorized Person or from a person reasonably believed by First Interstate to be an Authorized Person. The Trust agrees to deliver to First Interstate, at the time and in the manner specified in Paragraph 8(b) of this Agreement, Written Instructions confirming Oral Instructions. (e) "PROPERTY". The term "Property", as used in this Agreement, means: (i) any and all securities and other property which the Trust may from time to time deposit, or cause to be deposited, with First Interstate with respect to any Fund or which First Interstate may from time to time hold for the Trust with respect to a Fund; (ii) all income in respect of any of such securities or other property; (iii) all proceeds of the sale of any of such securities or other property; and (iv) all proceeds of the sale of securities issued by the Trust with respect to any Fund, which are received by First Interstate from time to time from or on behalf of the Trust. (f) "WRITTEN INSTRUCTIONS". As used in this Agreement, the term "Written Instructions" means written instructions delivered by mail, tested telegram, cable, telex or -5- facsimile sending device, and received by First Interstate, signed by two Authorized Persons. 4. DELIVERY AND REGISTRATION OF THE PROPERTY. The Trust will deliver or cause to be delivered to First Interstate all securities, other investments and moneys with respect to the Funds owned by them, including cash received for the issuance of shares of beneficial interest representing interests in the Funds ("Shares"), at any time during the period of this Agreement. First Interstate will not be responsible for such securities, investments and moneys until actually received by it. All securities and other investments delivered to First Interstate (other than in bearer form) shall be registered in the name of the Trust or in the name of a nominee of the Trust or in the name of First Interstate or any nominee of First Interstate which nominee name shall be assigned exclusively to the Trust (with or without indication of fiduciary status) or in the name of any subcustodian or any nominee of any such subcustodian appointed pursuant to Paragraph 6 hereof or shall be properly endorsed and in form for transfer satisfactory to First Interstate. 5. RECEIPT AND DISBURSEMENT OF MONEY. (a) First Interstate shall open and maintain a separate custodial account or accounts for each Fund in the name of the Trust, subject only to draft or order by First Interstate acting pursuant to the terms of this Agreement, and shall hold in such account or accounts, subject to the provisions hereof, all cash received by it from or for the account of the particular -6- Fund involved. First Interstate shall make payments of cash to, or for the account of, a Fund from such cash only (i) for the purchase of securities and other investments as provided in Paragraph 12 hereof; (ii) for the redemption of Shares of the Fund as provided in subparagraph (b) of Paragraph 9 hereof; (iii) for the payment of interest, dividends and other shareholder distributions, taxes, management fees or expenses which are to be borne by the Trust on behalf of the Fund under the terms of this or any other agreement or arrangement, which payment shall be upon receipt of Written Instructions except as otherwise provided in Paragraph 9(d); (iv) upon receipt of Written Instructions, for payments in connection with the conversion, exchange or surrender of securities or other investments owned or subscribed to by the Trust for the Fund involved and held by or to be delivered to First Interstate; (v) to a subcustodian pursuant to Paragraph 6 hereof; or (vi) upon receipt of Written Instructions, for other proper Trust purposes. No payment pursuant to (i) above shall be made unless First Interstate has received a copy of the broker's or dealer's confirmation, the payee's invoice or comparable confirmation in connection with options or other investments, as appropriate. (b) First Interstate is hereby authorized to endorse and collect all checks, drafts or other orders for the payment of money received as custodian for the account of the Funds. -7- 6. RECEIPT OF SECURITIES AND OTHER NON-CASH PROPERTY. (a) Except as provided by Paragraph 7 hereof, First Interstate shall hold and physically segregate in a separate account, identifiable at all times from those of any other persons, firms, or corporations, all securities and non-cash property received by it for the account of a Fund. (Options issued by the Options Clearing Corporation and traded on a national securities exchange and securities issued by investment companies registered under the 1940 Act shall be deemed to be held by First Interstate if it has received appropriate confirmation from the clearing member or investment company involved that the securities have been purchased and are registered as provided in this Agreement and, in addition, First Interstate's records clearly identify such investments as belonging to the particular Fund involved.) All such securities and non-cash property are to be held or disposed of by First Interstate for such Fund pursuant to the terms of this Agreement. In the absence of Written Instructions accompanied by a certified resolution of the Trust's Board of Trustees authorizing the specific transaction. First Interstate shall have no power or authority to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose of any such securities and investments, except in accordance with the express terms provided for in this Agreement. In no case may any trustee, officer, employee or agent of the Trust withdraw any securities or other non-cash property. In connection with its duties under this Paragraph 6, First Interstate may, at its own expense, enter -8- into subcustodian agreements with other banks or trust companies for the receipt of certain securities, other investments and cash to be held by First Interstate for the account of the Funds pursuant to this Agreement; provided that each such bank or trust company has an aggregate capital, surplus and undivided profits, as shown by its last published report, of not less than twenty million dollars ($20,000,000) and that such bank or trust company agrees with First Interstate to comply with all relevant provisions of the 1940 Act and applicable rules and regulations thereunder. First Interstate shall remain responsible for the performance of all of its duties under this Agreement and shall hold the Trust harmless from the acts and omissions of any bank or trust company that it might choose pursuant to this Paragraph 6 except that First Interstate shall not be liable for any loss resulting from, or caused by, the direction of the Trust to maintain custody of any Property in a foreign country including but not limited to, losses resulting from nationalization, expropriation, currency restrictions or acts of war or terrorism. (b) Promptly after the close of business on each day First Interstate shall furnish the Trust with confirmations, where available, and a summary of all transfers to or from the account of each Fund during said day. Where securities are transferred to an account of a Fund established pursuant to Paragraph 7 hereof, First Interstate shall also by book entry or otherwise, identify as belonging to that Fund the quantity of securities in a fungible bulk of securities registered in the -9- name of First Interstate (or its nominee) or shown in First Interstate's account on the books of the Book-Entry System or Depository involved. At least monthly and from time to time, First Interstate shall furnish the Trust with a detailed statement of the Property held for each Fund under this Agreement. 7. USE OF BOOK-ENTRY SYSTEM AND DEPOSITORIES. Prior to using the Book-Entry System or a Depository with respect to a Fund, the Trust shall deliver to First Interstate certified resolutions of the Board of Trustees of the Trust approving, authorizing and instructing First Interstate on a continuous and on-going basis until instructed to the contrary by Oral or Written Instructions actually received by First Interstate (a) to deposit in the Book-Entry System and any Depository all securities of the Fund eligible for deposit therein and (b) to utilize the Book-Entry System and any Depository to the extent possible in connection with settlements of purchases and sales of securities by the Trust on behalf of such Fund, and deliveries and reurns of securities loaned, subject to repurchase or reverse repurchase agreements or used as collateral in connection with borrowings. Without limiting the generality of such use, it is agreed that the following provisions shall apply thereto: (a) Securities and any cash of a Fund deposited in the Book- Entry System or with a Depository will at all times be segregated from any assets and cash controlled by First Interstate in other than a fiduciary or custodian capacity but -10- may be commingled with other assets held in such capacities. First Interstate will pay out money only upon receipt of securities and will deliver securities only upon the receipt of money. (b) All books and records maintained by First Interstate which relate to a Fund's participation in the Book-Entry System or use of a Depository will at all times during First Interstate's regular business hours be open to the inspection of the Trust's duly authorized employees or agents, and the Trust will be furnished with all information in respect of such services rendered to such Fund as it may require. (c) First Interstate will provide the Trust with copies of any report obtained by First Interstate on the system of internal accounting control of the Book-Entry System or a Depository within ten days after receipt of such a report by First Interstate. First Interstate will also provide the Trust with such reports on its own system of internal control as the Trust may reasonably request from time to time. 8. INSTRUCTIONS CONSISTENT WITH CHARTER, ETC. (a) Unless otherwise provided in this Agreement, First Interstate shall act only upon Oral and Written Instructions. Although First Interstate may take cognizance of the provisions of the Declaration of Trust and Code of Regulations of the Trust, First Interstate may assume that any Oral or Written Instructions received hereunder are not in any way inconsistent with any provisions of such Declaration of Trust -11- or Code of Regulations or any vote, resolution or proceeding of the Shareholders, or of the Board of Trustees, or of any committee thereof. (b) First Interstate shall be entitled to rely upon any Oral Instructions and any Written Instructions actually received by First Interstate pursuant to this Agreement. The Trust agrees to forward to First Interstate Written Instructions confirming Oral Instructions in such manner that the Written Instructions are received by First Interstate, whether by hand delivery, telex, facsimile sending device or otherwise, by the close of business of the same day that such Oral Instructions are given to First Interstate. The Trust agrees that the fact that such confirming Written Instructions are not received by First Interstate shall in no way affect the validity of the transactions or enforceability of the transactions authorized by the Trust by giving Oral Instructions. The Trust agrees that First Interstate shall incur no liability to the Trust in acting upon Oral Instructions given to First Interstate hereunder concerning such transactions provided such instructions reasonably appear to have been received from an Authorized Person. 9. TRANSACTIONS NOT REQUIRING INSTRUCTIONS. First Interstate is authorized to take the following action without Oral or Written Instructions: (a) DEPOSITS OF PROCEEDS OF ISSUANCE OF SHARES. First Interstate shall collect and receive for the account of -12- each Fund all payments received in payment for Shares issued by that Fund. (b) REDEMPTIONS. Upon receipt of notice by the Trust's transfer agent stating that such transfer agent is required to redeem Shares and specifying the number and class of Shares which such transfer agent is required to redeem and the date and time the request or requests for redemption were received, First Interstate shall either (i) pay to such transfer agent, for distribution to the redeeming shareholder, the amount payable to such shareholder upon the redemption of such Shares as determined in the manner described in the then current Prospectus, or (ii) arrange for the direct payment of such redemption proceeds by First Interstate to the redeeming shareholder in accordance with such procedures and controls as are mutually agreed upon from time to time by and among First Interstate, the Trust and the Trust's transfer agent. (c) COLLECTION OF INCOME AND OTHER PAYMENTS. First Interstate shall: (i) collect and receive for the account of each Fund, all income and other payments and distributions, including (without limitation) stock dividends, rights, warrants and similar items, included or to be included in the Property of that Fund, and promptly advise the Trust of such receipt and shall credit such income, as collected, to the Trust's custodian account for the particular Fund involved; -13- (ii) endorse and deposit for collection, in the name of the Trust, checks, drafts, or other orders for the payment of money on the same day as received; (iii) receive and hold for the account of each Fund all securities received as a distribution on the portfolio securities of that Fund as a result of a stock dividend, share split-up or reorganization, recapitalization, readjustment or other rearrangement or distribution of rights or similar securities issued with respect to any portfolio securities belonging to the Fund held by First Interstate hereunder; (iv) present for payment and collect the amount payable upon all securities and other investments which may mature or be called, redeemed, or retired, or otherwise become payable on the date such securities become payable; and (v) take any action which may be necessary and proper in connection with the collection and receipt of such income, payments and other Property and the endorsement for collection of checks, drafts, and other negotiable instruments. (d) CERTAIN CASH DISBURSEMENTS. First Interstate may make cash disbursements for the payment of advisory and administration fees, as well as fees payable to Service Organizations (as defined in the Prospectus), in accordance with -14- the provisions of the Trust's agreements under which said fees are payable. (e) MISCELLANEOUS TRANSACTIONS. First Interstate is authorized to deliver or cause to be delivered Property against payment or other consideration or written receipt therefor in the following cases: (i) for examination by a broker selling for the account of a Fund in accordance with street delivery custom; (ii) for the exchange of interim receipts or temporary securities for definitive securities; and (iii) for transfer of securities or other investments into the name of the Trust or First Interstate or nominee of either, or for exchange of securities or other investments for a different number of bonds, certificates, or other evidence, representing the same aggregate face amount or number of units bearing the same interest rate, maturity date and call provisions, if any; provided that in any such case, the new securities or investments are to be delivered to First Interstate. 10. TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral or written Instructions and not otherwise, First Interstate, directly or through the use of the Book-Entry System or a Depository, shall: (a) execute and deliver to such persons as may be designated in such Oral or Written Instructions, proxies, -15- consents, authorizations, and any other instruments whereby the authority of the Trust as owner of any securities may be exercised; (b) deliver any securities held for a Fund against receipt of other securities or cash issued or paid in connection with the liquidation, reorganization, refinancing, merger, consolidation or recapitalization of any corporation, or the exercise of any conversion privilege; (c) deliver, any securities held for a Fund to any protective committee, reorganization Committee or other person in connection with the liquidation, reorganization, refinancing, merger, consolidation, recapitalization or sale of assets of any corporation, and receive and hold under the terms of this Agreement such certificates of deposit, interim receipts or other instruments or documents as may be issued to it to evidence such delivery; (d) make such transfers or exchanges of the assets of a Fund and take such other steps as shall be stated in said Oral or Written Instructions to be for the purpose of effectuating any duly authorized plan of liquidation, reorganization, merger, consolidation. recapitalization or sale of assets of a Fund or the Trust; (e) release securities belonging to a Fund to any bank or trust company for the purpose of pledge or hypothecation to secure any loan incurred by that Fund; provided, however, that securities shall be released only upon payment to First -16- Interstate of the monies borrowed, except that in cases where additional collateral is required to secure a borrowing already made, subject to proper prior authorization, further securities may be released for that purpose; and pay such loan upon redelivery to it of the securities pledged or hypothecated therefor and upon surrender of the note or notes evidencing the loan; and (f) release securities loaned by a Fund to any broker, dealer or other financial institution, provided that the Custodian receives the collateral specified in the Oral and Written Instructions authorizing said loan in accordance with the custom prevailing among dealers in securities; and return said collateral upon redelivery to it of the loaned securities. 11. SEGREGATED ACCOUNTS. First Interstate shall upon receipt of Written or Oral Instructions establish and maintain a segregated account or accounts on its records for the Trust on behalf of a Fund, into which account or accounts may be transferred cash and/or securities, including securities in the Book-Entry System or with a Depository (i) for the purposes of compliance by the Trust with the procedures required by Investment Company Act Release No. 10666, or any subsequent release or releases of the SEC relating to the maintenance of segregated accounts by registered investment companies and (ii) for other proper corporate purposes, but only, in the case of clause (ii), upon receipt of Written Instructions. -17- 12. PURCHASES OF SECURITIES AND OTHER INVESTMENTS. Promptly after each decision to purchase securities or other investments for a Fund, the Trust, through Denver Investment Advisors, Inc., shall deliver to First Interstate Oral Instructions specifying with respect to each such purchase: (a) the name of the issuer and the title of the securities or other investment, (b) the number of shares or the principal amount purchased and accrued interest, if any, (c) the date of purchase and settlement, (d) the purchase price per unit, (e) the total amount payable upon such purchase, (f) the name of the person from whom or the broker through whom the purchase was made and (g) the Fund for which the purchase was made. First Interstate shall, upon receipt of the securities or other investment purchased by or for a Fund (or upon receipt of a copy of the broker's or dealer's confirmation, the payee's invoice or comparable confirmation with respect to such securities or investment), pay out of the moneys held for the account of that Fund the total amount payable to the person from whom or the broker or dealer through whom the purchase was made, provided that the same conforms to the total amount payable as specified in such Oral Instructions. 13. SALES OF SECURITIES AND OTHER INVESTMENTS. (a) Promptly after each decision to sell securities or other investment for a Fund, the Trust, through Denver Investment Advisors, Inc., shall deliver to First Interstate Oral Instructions, specifying with respect to each such sale: (a) the -18- name of the issuer and the title of the security or other investment, (b) the number of shares or principal amount sold, and accrued interest, if any, (c) the date of sale, (d) the sale price per unit, (e) the total amount payable to the Fund upon such sale, (f) the name of the broker through whom or the person to whom the sale was made and (g) the Fund for which the sale was made. First Interstate shall deliver the securities or other investment upon receipt of the total amount payable to the particular Fund involved upon such sale, provided that the same conforms to the total amount payable as specified in such Oral Instructions. Subject to the foregoing, First Interstate may accept payment in such form as shall be satisfactory to it, and may deliver securities and other investments and arrange for payment in accordance with the customs prevailing among dealers in securities and the investments involved. (b) Whenever the Trust on behalf of a Fund writes a covered call or secured put option, the Trust, through Denver Investment Advisors, Inc., shall deliver to First Interstate Oral Instructions specifying with respect to such option such matters as First Interstate shall reasonably require. First Interstate shall deliver, in exchange for receipt of the premium payable with respect to such option, such receipts as are required in accordance with the customs prevailing among brokers in covered call and secured put options, and shall impose upon the securities subject to the options such restrictions as may be required by such receipts. -19- 14. DIVIDENDS AND DISTRIBUTIONS. The Trust shall furnish First Interstate with appropriate evidence of action by the Trust's Board of Trustees declaring and authorizing the payment of any dividends and distributions to the shareholders of a Fund. Upon receipt by First Interstate of Written Instructions (which may be standing instructions) with respect to dividends and distributions declared by the Trust's Board of Trustees and payable to the shareholders of a Fund, and in conformance with procedures mutually agreed upon by First Interstate, the Trust and the Fund's transfer agent, First Interstate shall pay to the Fund's transfer agent, as agent for the shareholders of the Fund involved, an amount equal to the amount indicated in said Written Instructions as payable by the Trust to the shareholders for distribution in cash by the transfer agent to said shareholders who have elected in proper manner to receive cash distributions. In lieu of paying the Trust's transfer agent cash dividends and distributions, First Interstate may arrange for the direct payment of cash dividends and distributions to shareholders by First Interstate in accordance with such procedures and controls as are mutually agreed upon from time to time by and among the Trust, First Interstate and the Trust's transfer agent. 15. CORRESPONDENCE. First Interstate will answer correspondence from securities brokers and others relating to its duties hereunder and such other correspondence as may from time to time be mutually agreed upon between First Interstate and the Trust. -20- 16. RECORDS. First Interstate shall keep and maintain appropriate books and records for each Fund with respect to its duties hereunder. The books and records pertaining to the Funds which are in the possession of First Interstate shall be property of the Trust. Such books and records shall be prepared and maintained as required by the 1940 Act and other applicable securities laws and rules and regulations. The Trust, or the Trust's authorized representatives, shall have access to such books and records at all times during First Interstate's normal business hours. Upon the reasonable request of the Trust, copies of any such books and records shall be provided by First Interstate to the Trust or the Trust's authorized representatives at the Trust's expense. 17. REPORTS. First Interstate shall furnish the Trust the following reports: (a) such periodic and special reports as the Trust may reasonably request; (b) a monthly statement summarizing all transactions and entries for the account of each Fund; (c) a monthly report of portfolio investments belonging to each Fund showing the adjusted average cost of each investment and the market value at the end of such month; (d) a monthly report of the cash account of each Fund showing disbursements; (e) the reports required to be furnished to the Trust pursuant to Rule 17f-4; and -21- (f) such other information as may be agreed upon from time to time between the Trust and First Interstate. 18. COOPERATION WITH ACCOUNTANTS. First Interstate shall cooperate with the Trust's independent public accountants and shall take all reasonable action in the performance of its obligations under this Agreement to assure that the necessary information is made availabLe to such accountants for the expression of their unqualified opinion, as such may be required by the Trust from time to time. 19. EQUIPMENT FAILURES. In the event of equipment failures beyond First Interstate's control, First Interstate shall, at no additional expense to the Trust, take reasonable steps to minimize service interruptions but shall have no liability with respect thereto. First Interstate shall enter into and maintain in effect with appropriate parties one or more agreements making reasonable provision for emergency use of electronic data processing equipment to the extent appropriate equipment is available. 20. RIGHT TO RECEIVE ADVICE. (a) ADVICE OF THE TRUST. If First Interstate shall be in doubt as to any action to be taken or omitted by it, it may request, and shall receive, from the Trust directions or advice, including Oral or Written Instructions where appropriate. (b) ADVICE OF COUNSEL. If First Interstate shall be in doubt as to any question of law involved in any action to be taken or omitted by First Interstate, it may request advice at -22- its own cost from counsel of its own choosing (who may be counsel for Denver Investment Advisors. Inc., ALPS, the Trust or First Interstate, at the option of First Interstate). (c) CONFLICTING ADVICE. In case of conflicting directions, advice or Oral or Written Instructions received by First Interstate pursuant to subparagraph (a) of this paragraph and advice received by First Interstate pursuant to subparagraph (b) of this paragraph, First Interstate shall be entitled to rely on and follow the advice received pursuant to the latter provision alone. (d) PROTECTION OF FIRST INTERSTATE. First Interstate shall be protected in any action or inaction which it takes in reliance on any directions, advice or Oral or Written Instructions received pursuant to subparagraphs (a) or (b) of this paragraph which First Interstate, after receipt of any such directions, advice or Oral or Written Instructions, in good faith believes to be consistent with such directions, advice or Oral or Written Instructions, as the case may be. However, nothing in this paragraph shall be construed as imposing upon First Interstate the obligation (i) to seek such directions, advice or Oral or Written Instructions, or (ii) to act in accordance with such directions, advice or Oral or Written Instructions when received, unless, under the terms of another provision of this Agreement, the same is a condition to First Interstate's properly taking or omitting to take such action. Nothing in this subsection shall excuse First Interstate when an action or -23- omission on the part of First Interstate constitutes willful misfeasance, bad faith, gross negligence or reckless disregard by First Interstate of any duties, obligations or responsibilities not expressly provided for in this Agreement or First Interstate's negligent failure to perform its duties expressly provided for in this Agreement. 21. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS. The Trust assumes full responsibility for insuring that the contents of the Prospectus for any Fund comply with all applicable requirements of the 1933 Act, the 1940 Act, and any laws, rules and regulations of governmental authorities having jurisdiction. 22. COMPENSATION. First Interstate shall be entitled to reasonable compensation for its services and expenses as Custodian under this Agreement as agreed upon in writing from time to time by the Trust and First Interstate. 23. INDEMNIFICATION. The Trust, on behalf of the Funds and as sole owner of the Property, agrees to indemnify and hold harmless First Interstate and its nominees from all taxes, charges, expenses, assessments, claims and liabilities (including, without limitation, liabilities arising under the 1933 Act, the Securities Exchange Act of 1934, the 1940 Act, and any state and foreign securities and blue sky laws, all as or to be amended from time to time) and expenses, including (without limitation) attorneys' fees and disbursements, arising directly or indirectly (a) from the fact that securities or other -24- investments included in the Property are registered in the name of any nominee or (b) without limiting the generality of the foregoing clause (a) from any action or thing which First Interstate takes or does or omits to take or do (i) at the request or on the direction of or in reliance on the advice of the Trust or (ii) upon Oral or Written Instructions, PROVIDED, that neither First Interstate nor any of its nominees shall be indemnified against any liability to the Trust or to its shareholders (or any expenses incident to such Liability) arising out of (x) First Interstate's or such nominee's own willful misfeasance, bad faith, gross negligence or reckless disregard of any duties, obligations or responsibilities not expressly provided for in this Agreement or (y) First Interstate's own negligent failure to perform its duties expressly provided for in this Agreement: and PROVIDED FURTHER, that First Interstate shall only be indemnified hereunder from assets of the Trust belonging to the Fund with respect to which such taxes, charges, expenses, assessments, claims and liabilities were incurred. In the event of any advance of cash for any purpose made by First Interstate resulting from orders or Oral or Written Instructions of the Trust, or in the event that First Interstate or its nominee shall incur or be assessed any taxes, charges, expenses, assessments, claims, or liabilities in connection with the performance of this Agreement, except such as may arise from its or its nominee's own negligent action, negligent failure to act, willful misconduct, or reckless disregard, any Property at any -25- time held for the account of the Fund with respect to which the same was incurred shall be security therefor. 24. RESPONSIBILITY OF FIRST INTERSTATE. First Interstate shall be under no duty to take any action on behalf of the Trust except as specifically set forth herein or as may be specifically agreed to by First Interstate in writing. In the performance of its duties hereunder, First Interstate shall be obligated to exercise care and diligence and to act in good faith and to use its best efforts within reasonable limits to ensure the accuracy of all services performed under this Agreement, First Interstate shall be responsible for its own negligent failure to perform its duties under this Agreement, but to the extent that duties, obligations and responsibilities are not expressly set forth in this Agreement, First Interstate shall not be liable for any act or omission which does not constitute willful misfeasance, bad faith or gross negligence on the part of First Interstate or reckless disregard of such duties, obligations and responsibilities. Without limiting the generality of the foregoing or of any other provision of this Agreement, First Interstate in connection with its duties under this Agreement shall not be under any duty or obligation to inquire into and shall not be liable for or in respect of (a) the validity or invalidity or authority or lack thereof of any Oral or Written Instruction, notice or other instrument which conforms to the applicable requirements of this Agreement, if any, and which First Interstate reasonably believes to be genuine: (b) -26- the validity or invalidity of the issuance of any securities or other investments included or to be included in the Property, the legality or illegality of the purchase of such securities or other investments, or the propriety or impropriety of the amount paid therefor; (c) the legality or illegality of the sale (or exchange) of any Property or the propriety or impropriety of the amount for which such Property is sold (or exchanged); or (d) delays or errors or loss of data occurring by reason of circumstances beyond First Interstate's control, including acts of civil or military authority, national emergencies, labor difficulties, fire, mechanical breakdown (except as provided in Paragraph 19), flood or catastrophe, acts of God, insurrection, war, riots or, failure of the mails, transportation, communication or power supply, nor shall First Interstate be under any duty or obligation hereunder to ascertain whether any Property at any time delivered to or held by First Interstate may properly be held by or for the Fund involved. 25. COLLECTIONS. All collections of monies or other property in respect, or which are to become part, of the Property (but not the safekeeping thereof upon receipt by First Interstate) shall be at the sole risk of the Trust. In any case in which First Interstate does not receive any payment due a Fund within a reasonable time after First Interstate has made proper demands for the same, it shall so notify the Trust in writing, including copies of all demand letters, any written responses thereto, and memoranda of all oral responses thereto and to -27- telephonic demands, and await instructions from the Trust. First Interstate shall not be obliged to take legal action for collection unless and until reasonably indemnified to its satisfaction. First Interstate shaLl also notify the Trust as soon as reasonably practicable whenever income due on securities or other investments is not collected in due course. 26. DURATION AND TERMINATION. This Agreement shall continue until termination by the Trust or by First Interstate on sixty (60) days' written notice. Upon any termination of this Agreement, pending appointment of a successor to First Interstate or a vote of the shareholders of the Trust to dissolve or to function without a custodian of its cash, securities or other property, First Interstate shall not deliver cash, securities or other property of any Fund to the Trust, but may deliver them to a bank or trust company of its own selection, having an aggregate capital, surplus and undivided profits, as shown by its last published report, of not less than twenty million dollars ($20,000,000) as a custodian for the Funds to be held under terms similar to those of this Agreement, PROVIDED, HOWEVER, that First Interstate shall not be required to make any such delivery of payment with respect to a Fund until full payment shall have been made by the Trust of all liabilities constituting a charge on or against the properties of said Fund then held by First Interstate, or on or against First Interstate with respect to said Fund, and until full payment shall have been made to First Interstate of all of its fees, compensation, costs and expenses -28- with respect to said Fund, subject to the provisions of Paragraph 22 of this Agreement. 27. NOTICES. All notices and other communications, including Written Instructions (collectively referred to as "Notice" or "Notices" in this paragraph), hereunder shall be in writing or by confirming telegram, cable, telex or facsimile sending device. Notices shall be addressed (a) if to First Interstate at First Interstate's address, P.O. Box 5825 Denver, Colorado 80217, marked for the attention of the Trust Operations (or its successor); (b) if to the Trust, at the address of the Trust; or (c) if to neither of the foregoing, at such other address as the sender of any such Notice or other communication shall have been notified. If the location of the sender of a Notice and the address of the addressee thereof are, at the time of sending, more than 100 miles apart, the Notice may be sent by first-class mail, in which case it shall be deemed to have been given three days after it is sent, or if sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given immediately, and, if the location of the sender of a Notice and the address of the addressee thereof are, at the time of sending, not more than 100 miles apart, the Notice may be sent by first-class mail, in which case it shall be deemed to have been given two days after it is sent, or if sent by messenger, it shall be deemed to have been given on the day it is delivered, or if sent by confirming telegram, cable, telex or facsimile sending device, it shall be deemed to have been given -29- immediately. All postage, cable, telegram, telex and facsimile sending device charges arising from the sending of a Notice hereunder shall be paid by the sender. 28. FURTHER ACTIONS. Each party agrees to perform such further acts and execute such further documents as are necessary to effectuate the purposes hereof. 29. AMENDMENTS. This Agreement or any part hereof may be changed or waived only by an instrument in writing signed by the party against which enforcement of such change or waiver is sought. 30. DELEGATION. On thirty (30) days' prior written notice to the Trust, First Interstate may assign its rights and delegate its duties hereunder, provided, however, that First Interstate may delegate its duties only to a bank having the qualifications provided in Section 17(f) of the 1940 Act, and further provided that First Interstate and its delegate shall promptly provide such information as the Trust may request relative to the delegation, including (without limitation) the capabilities of the delegate. First Interstate shall remain liable to the Trust for performance of its duties notwithstanding any delegation. 31. NAMES. The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 which is hereby -30- referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. 32. MISCELLANEOUS. This Agreement embodies the entire agreement and understanding between the parties hereto, and supersedes all prior agreements and understandings relating to the subject matter hereof, provided that the parties hereto may embody in one or more separate documents their agreement, if any, with respect to delegated and/or Oral and Written Instructions. The captions in this Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise affect their construction or effect. This Agreement shall be deemed to be a contract made in Colorado and governed by Colorado law. If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected thereby. This Agreement shall be binding and -31- shall inure to the benefit of the parties hereto and their respective successors. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their duly authorized officers designated below on the day and year first above written. [SEAL] WESTCORE TRUST Attest: By: /s/Jack D. Henderson ----------------------------- Jack D. Henderson, President [SEAL] FIRST INTERSTATE BANK OF DENVER, N.A. Attest: By: /s/Roberta L. Butterly ----------------------------- Roberta L. Butterly Senior Vice President & Trust Officer -32- APPENDIX B TO CUSTODY AGREEMENT BETWEEN WESTCORE TRUST AND FIRST INTERSTATE BANK OF DENVER, N.A. CUSTODIAL FEES Modern Value Equity Fund; Equity Income Fund; MIDCO Growth Fund; Short-Term Bond Fund; Intermediate Term Bond Fund; Long-Term Bond Fund; Colorado Tax-Exempt Fund ANNUAL FEE: Based on Aggregate Daily Market Values of the Funds' Total Gross Assets $.20 per $1,000 on 1st $50,000,000 or 2.0 Basis Points $.18 per $1,000 on Next $50,000,000 or 1.8 Basis Points $.13 per $1,000 on Next $100,000,000 or 1.3 Basis Points $.10 per $1,000 on Next $300,000,000 or 1.0 Basis Points $.05 per $1,000 on Remainder or .5 Basis Points MINIMUM ANNUAL FEE: $500.00 per year. ACTIVITY CHARGES: $20.00 per transaction (Includes purchases and sales, calls, maturities, tenders and exchanges and dated commercial paper.) $25.00 per foreign transaction $45.00 per option (Includes issuance of escrow receipt.) OUT-OF-POCKET EXPENSES: All such expenses will be charged to the account, including, but not limited to: postage, insurance, telephone and telegraph, correspondent bank charges. Accepted By: Date: April 15, 1991 Westcore Trust By /s/ Jack D. Henderson ------------------------- Title: *All fees, charges and expenses are payable on a monthly basis. WESTCORE TRUST CERTIFICATE The following resolutions, adopted by the Board of Trustees of Westcore Trust (the "Trust") on April 15, 1991, identify the persons authorized to give Proper Instructions under the Custody Agreement with First Interstate Bank of Denver, N.A. with respect to the Trust's MIDCO Growth Fund, Equity Income Fund, Modern Value Equity Fund, Short-Term Bond Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund: RESOLVED, that, in addition to each of the Trust's President and the Trust's Treasurer, any one of the following individuals be, and each of them hereby is, authorized to give "Oral Instructions" on behalf of the Trust to the Custodian under the Custody Agreement between the Trust and First Interstate Bank of Denver with respect to MIDCO Growth Fund, Equity Income Fund, Modern Value Equity Fund, Short-Term Bond Fund, Intermediate- Term Bond Fund, Long-Term Bond Fund and Colorado Tax-Exempt Fund (for purposes of these resolutions, the "Denver Group of Funds"), provided that no person shall be authorized or permitted to withdraw investments or assets belonging to the portfolios upon his or her mere receipt: All Denver Funds: W. Robert Alexander Thomas A. Hejl MIDCO Growth Fund Equity Income Fund Modern Value Equity Fund: Todger Anderson Kenneth Penland Larry Luchini JoAnn Nearents Mary Ellen Cox Short-Term Bond Fund Intermediate-Term Bond Long-Term Bond Fund: O. James Barr Glen Cahill Thomas Stevens Grafton Jhung Colorado Tax-Exempt Fund: Robert O. Lindig William F. Scott Milford H. Schulhof FURTHER RESOLVED, that, in addition to each of the Trust's president and the Trust's Treasurer, any two of the individuals named above be, and hereby are, authorized to give "Written Instructions" to the Custodian under such Custody Agreement; provided, however, that Written Instructions given in connection with the issuance of checks and other drafts in payment of the operating expenses of the Denver Group of Funds as provided therein must include the signature of either the Trust's Treasurer or Robert Alexander; and provided further that no one or more persons shall be authorized or permitted to withdraw investments or assets belonging to the Denver Group of Funds upon his, her or their mere receipt; FURTHER RESOLVED, that notwithstanding anything to the contrary in the foregoing resolutions, only any one of the following individuals be, and hereby is, authorized to give "Oral Instructions," and only any two of the following individuals be, and hereby are, authorized to give "Written instructions," to the Custodian under such Custody Agreement in connection with the purchase or sale of portfolio investments with respect to the portfolios, provided that no one or more persons shall be authorized or permitted to withdraw portfolio investments or assets upon his, her or their mere receipt: MIDCO Growth Fund Equity Income Fund Modern Value Equity Fund Todger Anderson Kenneth Penland Larry Luchini JoAnn Nearents Mary Ellen Cox Short-Term Bond Fund Intermediate-Term Bond Long-Term Bond Fund: O. James Barr Glen Cahill Thomas Stevens Grafton Jhung Colorado Tax-Exempt Fund: Robert O. Lindig William F. Scott Milford H. Schulhof FURTHER RESOLVED, that the President, Treasurer and Secretary of the Trust, and each of them, hereby is designated as a person authorized to execute and deliver an -2- officer's certificate setting forth persons authorized to give instructions under the Custody Agreement. WESTCORE TRUST Dated: April 16, 1991 By: /s/ W. Bruce McConnel, III -------------------------- W. Bruce McConnel, III Secretary -3- SPECIMEN SIGNATURES* - ------------------------------ ------------------------------ W. Robert Alexander Jack D. Henderson - ------------------------------ ------------------------------ Mark Pougnet Thomas A. Hejl /s/Kenneth Penland /s/Todger Anderson - ------------------------------ ------------------------------ Kenneth Penland Todger Anderson /s/JoAnn Nearents /s/Larry Luchini - ------------------------------ ------------------------------ JoAnn Nearents Larry Luchini /s/O. James Barr /s/Mary Ellen Cox - ------------------------------ ------------------------------ O. James Barr Mary Ellen Cox /s/Thomas Stevens /s/Glen Cahill - ------------------------------ ------------------------------ Thomas Stevens Glen Cahill /s/Robert O. Lindig /s/Grafton Jhung - ------------------------------ ------------------------------ Robert O. Lindig Grafton Jhung /s/Milford H. Schulhof /s/William F. Scott - ------------------------------ ------------------------------ Milford H. Schulhof William F. Scott -4- SPECIMEN SIGNATURES* /s/W. Robert Alexander /s/Jack D. Henderson - ------------------------------ ------------------------------ W. Robert Alexander Jack D. Henderson /s/Mark Pougnet /s/Thomas A. Hejl - ------------------------------ ------------------------------ Mark Pougnet Thomas A. Hejl - ------------------------------ ------------------------------ Kenneth Penland Todger Anderson - ------------------------------ ------------------------------ JoAnn Nearents Larry Luchini - ------------------------------ ------------------------------ O. James Barr Mary Ellen Cox - ------------------------------ ------------------------------ Thomas Stevens Glen Cahill - ------------------------------ ------------------------------ Robert O. Lindig Graton Jhung - ------------------------------ ------------------------------ Milford H. Schulhof William F. Scott -5- APPENDIX A TO CUSTODY AGREEMENT BETWEEN WESTCORE TRUST AND FIRST INTERSTATE OF DENVER, N.A. CERTIFICATE The following resolutions, adopted by the Board of Trustees of Westcore Trust (the "Trust") on February 18, 1994, identify the person authorized to give Oral and Written Instructions after such date on behalf of the Trust under the Custody Agreement with First Interstate Bank of Denver, N.A. with respect to the Trust's Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Colorado Tax-Exempt Fund and Small-Cap Opportunity Fund: RESOLVED, that, in addition to each of the Trust's President and the Trust's Treasurer, any one of the following individuals be, and each of them hereby is, authorized to give "Oral Instructions" on behalf of the Trust to the Custodian under the Custody Agreement between the Trust and First Interstate Bank of Denver with respect to MIDCO Growth Fund, Equity Income Fund, Modern Value Equity Fund, Intermediate-Term Bond Fund, Long- Term Bond Fund, Small-Cap Opportunity Fund and Colorado Tax-Exempt Fund (for purposes of these resolutions, the "Denver Group of Funds"), provided that no person shall be authorized or permitted to withdraw investments or assets belonging to the portfolios upon his or her mere receipt: All Denver Funds: W. Robert Alexander Edward Claunch Nancy Timm MIDCO Growth Fund Equity Income Fund Modern Value Equity Fund: Todger Anderson Kenneth Penland Larry Luchini JoAnn Nearents Mary Ellen Cox Grafton Jhung Varilyn Schock Intermediate-Term Bond Long-Term Bond Fund: Glen Cahill John Cormey Thomas Stevens Grafton Jhung Alex Lock -6- Colorado Tax-Exempt Fund: Robert O. Lindig Edward Claunch Milford H. Schulhof Small-Cap Opportunity Fund: Todger Anderson Mary Ellen Cox Grafton Jhung Larry Luchini JoAnn Nearents Kenneth Penland Varilyn Schock FURTHER RESOLVED, that, in addition to each of the Trust's President and the Trust's Treasurer, any two of the individuals named above be, and hereby are, authorized to give "Written Instructions" to the Custodian under such Custody Agreement; provided, however, that Written Instructions given in connection with the issuance of checks and other drafts in payment of the operating expenses of the Denver Group of Funds as provided therein must include the signature of either the Trust's Treasurer or W. Robert Alexander; and provided further that no one or more persons shall be authorized or permitted to withdraw investments or assets belonging to the Denver Group of Funds upon his, her or their mere receipt; FURTHER RESOLVED, that notwithstanding anything to the contrary in the foregoing resolutions, only any one of the following individuals be, and hereby is, authorized to give "Oral Instructions," and only any two of the following individuals be, and hereby are, authorized to give "Written Instructions," to the Custodian under such Custody Agreement in connection with the purchase or sale of portfolio investments with respect to the portfolios, provided that no one or more persons shall be authorized or permitted to withdraw portfolio investments or assets upon his, her or their mere receipt: MIDCO Growth Fund Equity Income Fund Modern Value Equity Fund: Todger Anderson Kenneth Penland Larry Luchini JoAnn Nearents Mary Ellen Cox Grafton Jhung -7- Intermediate-Term Bond Long-Term Bond Fund: Glen Cahill John Cormey Thomas Stevens Grafton Jhung Alex Lock Colorado Tax-Exempt Fund: Robert O. Lindig Edward Claunch Milford H. Schulhof Small-Cap Opportunity Fund: Todger Anderson Mary Ellen Cox Grafton Jhung Larry Luchini JoAnn Nearents Kenneth Penland Varilyn Schock FURTHER RESOLVED, that the President, Treasurer and Secretary of the Trust, and each of them, hereby is designated as a person authorized to execute and deliver an officer's certificate setting forth persons authorized to give instructions under the Custody Agreement. WESTCORE TRUST [SEAL] BY: ------------------------------ W. BRUCE McCONNEL Secretary Dated: March , 1994 -- -8- SPECIMEN SIGNATURES - ------------------------------ ------------------------------ Nancy Timm Varilyn Schock - ------------------------------ ------------------------------ John Cormey Edward Claunch - ------------------------------ Alex Lock -9- EX-8.(A)(I) 18 EXHIBIT 8(A)(I) AMENDMENT NO. 1 TO CUSTODY AGREEMENT Amendment dated as of June 1, 1991, to the Custody Agreement (the "Agreement") dated as of November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and First Interstate Bank of Denver, N.A., a national banking association ("First Interstate"). W I T N E S S E T H : WHEREAS, First Interstate serves as custodian of the Trust's MIDCO Growth Fund, Modern Value Equity Fund, Equity Income Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund and Short-Term Bond Fund pursuant to the terms and conditions of the Agreement; and WHEREAS, the Trust desires to retain First Interstate to serve as the custodian for the Trust's Colorado Tax-Exempt Fund (the "Fund") and First Interstate is willing to furnish such services; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints First Interstate to act as custodian of the portfolio securities, cash, and other property belonging to the Fund for the period and on the terms set forth in the Agreement. First Interstate accepts such appointment for said period and on said terms, and agrees to furnish the services set forth in the Agreement in return for the compensation as provided herein. First Interstate agrees to comply with all relevant provisions of the Investment Company Act of 1940 and the applicable rules and regulations thereunder. 2. COMPENSATION. First Interstate shall be entitled to reasonable compensation for its services and expenses as Custodian under this Amendment as agreed upon in writing from time to time by the Trust and First Interstate. 3. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. [SEAL] WESTCORE TRUST Attest: /s/ W. Bruce McConnel, III By /s/ Jack D. Henderson ----------------------------- ---------------------------- Jack D. Henderson, President [SEAL] FIRST INTERSTATE BANK OF DENVER, N.A. Attest:/s/ W. Bruce McConnel, III By /s/ EA Claunch ----------------------------- ---------------------------- Authorized Officer EX-8.(A)(II) 19 EXHIBIT 8(A)(II) AMENDMENT NO. 2 TO THE CUSTODY AGREEMENT Amendment dated as of December 28, 1993 to the Custody Agreement (the "Agreement") dated November 30, 1987 between Westcore Trust, a Massachusetts business trust (the "Trust"), and First Interstate Bank of Denver, N.A., a national banking association ("First Interstate"). W I T N E S S E T H : WHEREAS, First Interstate serves as custodian of the portfolio securities, cash and other property belonging to the Trust's Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund, Intermediate-Term Bond Fund, Long- Term Bond Fund and Colorado Tax-Exempt Fund, pursuant to the terms and conditions of the Agreement; and WHEREAS, the Trust desires to retain First Interstate to serve as the custodian for the Trust's Small-Cap Opportunity Fund (the "Fund") and First Interstate is willing to furnish such services; NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints First Interstate to act as custodian of the portfolio securities, cash, and other property belonging to the Fund for the period and on the terms set forth in the Agreement. First Interstate accepts such appointment for said period and on said terms, and agrees to furnish the services set forth in the Agreement in return for the compensation as provided herein. First Interstate agrees to comply with all relevant provisions of the Investment Company Act of 1940 and the applicable rules and regulations thereunder. 2. COMPENSATION. First Interstate shall be entitled to reasonable compensation for its services and expenses as Custodian under this Amendment as agreed upon in writing from time to time by the Trust and First Interstate. 3. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. [SEAL] WESTCORE TRUST Attest: By: /s/ Jack D. Henderson ----------------------- ------------------------------- Jack D. Henderson, President [SEAL] FIRST INTERSTATE BANK OF DENVER, N.A. Attest: By: /s/ W. Robert Alexander ----------------------- ------------------------------- W. Robert Alexander, President -2- APPENDIX A TO AMENDMENT NO. 2 OF THE CUSTODY AGREEMENT BETWEEN WESTCORE TRUST AND FIRST INTERSTATE BANK OF DENVER CERTIFICATE The following resolutions, adopted by the Board of Trustees of Westcore Trust (the "Trust") on December 9, 1993 identify the persons authorized to give Oral and Written Instruction after such date on behalf of the Trust under the Custody Agreement with First Interstate Bank of Denver, N.A. with respect to the Trust's Small-Cap Opportunity Fund: RESOLVED, that, in addition to each of the Trust's President and the Trust's Treasurer, any one of the following individuals be, and each of them hereby is, authorized to give "Oral Instructions" on behalf of the Trust to the Custodian under the Custody Agreement between the Trust and First Interstate Bank of Denver, N.A. with respect to the Trust's Small-Cap Opportunity Fund, provided that no person shall be authorized or permitted to withdraw investments or assets belonging to the portfolio upon his or here mere receipt: Nancy Timm Varilyn Schock Ken Penland Edward Claunch Robert Alexander FURTHER RESOLVED, that, in addition to each of the Trust's President and Trust's Treasurer, any two of the individuals named above be, and hereby are, authorized to give "Written Instructions" to the Custodian under such Custody Agreement; provided, however, that Written Instructions given in connection with the issuance of checks and other drafts in payment of the operating expenses of the Small-Cap Opportunity Fund as provided therein must include the signature of either the Trust's Treasurer, Robert Alexander, Edward Claunch or Nancy Timm and must not be given except upon prior written authorization of the Trust's Treasurer; and provided further that no one or more persons shall be authorized or permitted to withdraw investments or assets belonging to the portfolio upon his, or her or their mere receipt; FURTHER RESOLVED, that notwithstanding anything to the contrary in the foregoing resolutions, only one of the following individuals be, and hereby is, authorized to give "Oral Instructions," and only any two of the A-1 following individuals be, and hereby are, authorized to give "Written Instructions" to the Custodian under such Custody Agreement in connection with the purchase or sale of Small-Cap Opportunity Fund investments with respect to the portfolio, provided that no one or more persons shall be authorized or permitted to withdraw portfolio investments or assets upon his, her or their mere receipt: Ken Penland Varilyn Schock FURTHER RESOLVED, that the President, Treasurer and Secretary of the Trust, and each of them, hereby is designated as a person authorized to execute and deliver an officer's certificate setting forth persons authorized to give instructions under the Custody Agreement. WESTCORE TRUST [SEAL] By: /s/ W. Bruce McConnel, III ----------------------------- W. Bruce McConnel, III Secretary Dated: , 19 ---------------- -- A-2 APPENDIX B TO AMENDMENT NO. 2 OF THE CUSTODY AGREEMENT BETWEEN WESTCORE TRUST AND FIRST INTERSTATE BANK OF DENVER, N.A. CUSTODIAL FEES* SMALL-CAP OPPORTUNITY FUND ANNUAL FEE Based on Aggregate Daily Market Values of the Funds' Total Gross Assets $.20 per $1,000 on 1st $ 50,000,000 or 2.0 Basis Points $.18 per $1,000 on Next $ 50,000,000 or 1.8 Basis Points $.13 per $1,000 on Next $100,000,000 or 1.3 Basis Points $.10 per $1,000 on Next $300,000,000 or 1.0 Basis Points $.05 per $1,000 on Remainder or .5 Basis Points MINIMUM ANNUAL FEE $500.00 per year. ACTIVITY CHARGES: $20.00 per transaction (Includes purchases and sales, calls, maturities, tenders and exchanges and dated commercial paper). $25.00 per foreign transaction $45.00 per option (Includes issuance of escrow receipt.) OUT-OF-POCKET EXPENSES All such expenses will be charged to the account, including, but not limited to: postage, insurance, telephone and telegraph, and correspondent bank charges. B-1 *All fees, charges and expenses are payable on a monthly basis. Date: -------------------------- Accepted By: Westcore Trust By: /s/ Jack D. Henderson ----------------------------- Jack D. Henderson, President B-2 EX-9.(A) 20 EXHIBIT 9(A) ADMINISTRATION AGREEMENT THE AGREEMENT made as of October 1, 1995 by and between WESTCORE TRUST, a Massachusetts business trust (the "Trust") and Denver Investment Advisors LLC ("DIA"), a Colorado limited liability company having its principle office at 1225 Seventeenth Street, 26th Floor, Denver, Colorado 80202, and ALPS Mutual Funds Services, Inc. ("ALPS), a Colorado corporation having its principal office at 370 Seventeenth Street, Suite 2700, Denver, Colorado 80202 (DIA and ALPS being referred to herein collectively, as the "Administrators). W I T N E S S E T H: WHEREAS, the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the "1940 Act"); and WHEREAS, the Trust wishes to retain the Administrators to provide, as co-administrators, certain administration services with respect to the Trust's Colorado Tax-Exempt, Intermediate-Term Bond, Long-Term Bond, Equity Income, MIDCO Growth, Blue Chip (formerly the Modern Value Equity), Small-Cap Opportunity and Cash Reserve Funds (individually, a "Fund," collectively, the "Funds") and the Administrators are willing to furnish such services; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed among the parties hereto as follows: 1. APPOINTMENT. The Trust hereby appoints the Administrators jointly and severally to provide administration services to the Funds for the period and on the terms set forth in this Agreement. The Administrators accept such appointment and agree to furnish the services herein set forth in return for the compensation as provided in Paragraph 4 of this Agreement. In the event that the Trust establishes one or more portfolios other than the Funds with respect to which it decides to retain the Administrators to act as co- administrators hereunder, the Trust shall notify the Administrators in writing. If the Administrators are willing to render such services to a new portfolio, they shall so notify the Trust in writing whereupon such portfolio shall become a Fund hereunder and shall be subject to the provisions of this Agreement to the same extent as the Funds, except to the extent that said provisions (including those relating to the compensation payable by the Trust) may be modified with respect to such portfolio in writing by the Trust and the Administrators at the time of the addition of such new portfolio. 2. SERVICES (a) Subject to the direction and control of the Board of Trustees of the Trust, the Administrators jointly, and generally agree to assist in supervising various aspects of each Fund's administrative operations including the performance of the following specific services for each Fund: (i) assist in maintaining office facilities (which may be in the offices of either of the Administrators or a corporate affiliate but shall be in such location as the Trust shall reasonably determine); (ii) furnish clerical services and stationery and office supplies; (iii) compile data for and prepare with respect to the Funds timely Notices to the Securities and Exchange Commission required pursuant to Rule 24f-2 under the 1940 Act and SemiAnnual Reports on Form N-SAR; (iv) coordinate execution and filing by the Trust of all federal and state tax returns and required tax filings other than those required to be made by the Trust's custodians and transfer agent; (v) prepare compliance filings pursuant to state securities laws with the advice of the Trust's counsel; (vi) assist to the extent requested by the Trust with the Trust's preparation of Annual and Semi-Annual Reports to Fund shareholders and Registration Statements for the Funds (on Form N-IA or any replacement therefor); (vii) monitor each Fund's expense accruals and pay all expenses on proper authorization from each Fund; (viii) monitor each Fund's status as a regulated ,investment company under Subchapter M of the Internal Revenue Code of 1986, as amended from time to time; (ix) maintain each Fund's fidelity bond as required by the 1940 Act; (x) monitor compliance with the policies and limitations of each Fund as set forth in the Trust's most recent Prospectus(es) and Statement(s) of Additional Information and all amendments and supplements thereto (collectively, the "Prospectus"), Code of Regulations and Declaration of Trust; and (xi) generally assist in the Funds' operations. (b) The Administrators jointly and generally agree to monitor fund expenses, including but not limited to, fund accounting, and to use good faith efforts in maintaining such expenses at competitive levels. In compliance with the requirements of Rule 31a-3 under the 1940 Act, the Administrators hereby agree that all records which they or either of them maintains for the Funds are the property of the Trust and further agree to surrender promptly to the Trust any of such records upon the Trust's request. The Administrators agree to maintain a back-up set of accounts and records of the Trust (which back-up shall be updated on at least a weekly basis) at a location other than that where the original accounts and records are stored. The Administrators shall assist the Trust, the Trust's independent auditors, or, upon approval of the Trust, any regulatory body, in any requested review of the Trust's accounts and records, and reports by the Administrators -2- or their independent accountants concerning their accounting system and internal auditing controls will be open to such entities for audit or inspection upon reasonable request. There shall be no additional fee for these services. The Administrators further agree to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1 under the 1940 Act. In performing their duties as co-administrators of the Trust, the Administrators (a) will act in accordance with the Trust's Declaration of Trust, Code of Regulations, Prospectus and the instructions and directions of the Trust's Board of Trustees and will conform to, and comply with, the requirements of the 1940 Act and all other applicable Federal or state laws and regulations, and (b) will consult with outside legal counsel to the Trust, as necessary or appropriate. 3. FEES; EXPENSES: (a) In consideration of services rendered pursuant to this Agreement, the Trust will pay the Administrators jointly a fee, computed daily and payable monthly, at the annual rate of 0.30% of the average daily net assets of each Fund. Net asset value shall be computed in accordance with the Funds' Prospectus and resolutions of the Trust's Board of Trustees. The fee for the period from the day of the month this Agreement is entered into until the end of that month shall be pro-rated according to the proportion which such period bears to the full monthly period. Upon any termination of this Agreement before the end of any month, the fee for such part of a month shall be pro-rated according to the proportion which such period bears to the full monthly period and shall be payable upon the date of termination of this Agreement. Such fee as is attributable to each Fund shall be a separate charge to such Fund and shall be the several (and not joint or joint and several) obligation of each such Fund. The Administrators will bear all expenses in connection with the performance of their services under this Agreement except as otherwise provided herein. Other expenses to be incurred in the operation of the Funds, including taxes, interest, brokerage fees and commissions, if any, salaries and fees of officers and trustees, who are not officers, directors, shareholders, partners or employees of the Administrators, or the Trust's investment advisor or distributor for the Funds, Securities and Exchange Commission fees and state Blue Sky qualification fees, advisory, fund accounting and administration fees, charges of custodians and transfer agents, certain insurance-premiums, outside auditing and legal expenses, costs of maintenance of corporate existence, typesetting and printing of prospectuses for regulatory purposes and for distribution to current shareholders, costs of shareholder reports and meetings -3- and any extraordinary expenses, will be borne by the Trust; provided, however, that the Funds will not bear, directly or indirectly, the cost of any activity which is primarily intended to result in the distribution of shares of the Funds. If in any fiscal year any Fund's aggregate expenses (as defined under the securities regulations of any state having jurisdiction over the Fund) exceed the expense limitations of any such state, the Administrators jointly and severally agree to reimburse such Fund for a portion of any such excess expense in an amount equal to the proportion that the fees otherwise payable to the Administrators bear to the total amount of investment advisory and administration fees otherwise payable by the Fund. The expense reimbursement obligation of the Administrators is limited to the amount of their fees hereunder for such fiscal year, PROVIDED, HOWEVER, that notwithstanding the foregoing, the Administrators shall reimburse such Fund for a portion of any such excess expenses in an amount equal to the proportion that the fees otherwise payable to the Administrators bear to the total amount of investment advisory and administration fees otherwise payable by the Fund regardless of the amount of fees paid to the Administrators during such fiscal year to the extent that the securities regulations of any state having jurisdiction over the Fund so require. Such expense reimbursement, if any, will be estimated, reconciled and paid on a monthly basis. (b) The Trust agrees on behalf of each Fund to reimburse DIA, up to the amount set forth in the next succeeding sentence, for DIA's costs ("Costs") of providing sub-accounting and recordkeeping services to persons who beneficially own shares of the Fund as a result of investing through omnibus arrangements with a Fund shareholder of record. The amount to be reimbursed will be computed periodically based on the aggregate value of Fund shares so beneficially owned ("Beneficial Aggregate Value") and will not exceed the lesser of (i) Costs actually borne by DIA or (ii) that amount computed by determining the actual cost of transfer agency services borne by the Fund without taking into account the Beneficial Aggregate Value and applying that percentage to the beneficial Aggregate Value. 4. SUBCONTRACTORS AND COMPENSATION TO SERVICE PROVIDERS. The Administrators may from time to time employ or associate with themselves such person or persons as the Administrators may believe to be particularly fitted to assist them in the performance of this Agreement ("subcontractors"). Subcontractors may be officers and employees who are employed by both the Administrators and the Trust. The compensation of such sub-contractors shall be paid by the Administrators and no obligation shall be incurred on behalf of the Trust in such respect. The Administrators shall provide oversight over any -4- subcontractors) who shall in turn provide services pursuant to an agreement with the Administrators. Any agreement entered into between the Administrators and a subcontractor shall acknowledge that the agreement is for the benefit of the Trust, that the subcontractor shall be directly liable and responsible to the Trust for the performance of its obligations thereunder, and that the Trust may therefore enforce its rights directly against the subcontractor. Notwithstanding such delegation, the Administrators shall continue to be directly liable to the Trust for the performance of any subcontractor's obligations under such agreement. In addition to employing subcontractors, the Administrators may compensate parties who provide shareholder services or other services pursuant to contracts entered into directly between such parties and the Trust. 5. PROPRIETARY AND CONFIDENTIAL INFORMATION The Administrators agree on behalf of themselves and their employees to treat confidentiality and as proprietary information of the Trust all records and other information relative to the Funds and prior, present or potential shareholders of the Funds (and clients of said shareholders), and not to use such records and information for any purpose other than performance of their responsibilities and duties hereunder, except after prior notification to and approval in writing by the Trust, which approval shall not be unreasonably withheld and may not be withheld where the Administrators may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Trust. 6. LIMITATION OF LIABILITY The Administrators shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Trust in connection with matters to which this Agreement relates, except for a loss resulting from willful misfeasance, bad faith or gross negligence on their part in the performance of their duties or from reckless disregard by them of their obligations and duties under this Agreement. Any person, even though also an officer, partner, employee or agent of either of the Administrators, who may be or become an officer, director, employee or agent of the Trust, shall be deemed when rendering services to the Trust or acting on any business of the Trust (other than services or business in connection with the Administrator, duties hereunder) to be rendering such services to or acting solely for the Trust and not as an officer, partner, employee or agent or one under the control or direction of the Administrators even though paid by either of them. The Administrators agree that their "ability under this Agreement, as set forth herein, will be joint and several. -5- 7. REPORTS Whenever, in the course of performing their duties under this Agreement, the Administrators determine, on the basis of information supplied to the Administrators by the Trust or its authorized agents, that a violation of applicable law has occurred or that, to their knowledge, a possible violation of applicable law may have occurred or, with the passage of time, would occur, the Administrators shall promptly notify the Trust and its counsel. 8. ACTIVITIES OF THE ADMINISTRATORS. The services of the Administrators under this Agreement are not to be deemed exclusive, and the Administrators shall be free to render similar services to others so long as their services hereunder are not impaired thereby. 9. TERM This Agreement shall become effective as of the date hereof and unless sooner terminated as provided herein, shall continue until October 1, 1997 (the "Initial Term"). Thereafter, this Agreement shall continue automatically with respect to a Fund for successive annual periods ending September 30 of each year, PROVIDED such continuance is specifically approved at least annually (i) by the Trust's Board of Trustees or (ii) by a vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act), and PROVIDED further that in either' event such continuance is also approved by a majority of the Trust's Trustees who are not interested persons (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval. During the Initial Term, the performance of the Administrators, obligations and duties as Administrators and the fee payable hereunder shall be specifically reviewed at least annually by the Trust's Board of Trustees, and the fee payable hereunder for each succeeding year of the Initial Term shall be in such amount as may be approved by the Trust's Board of Trustees, in light of the Administrators, performance hereunder, the total expense ratios of the Funds as compared to comparable fund expense ratios as determined by Lipper Analytical Services, Inc. (or other data provider acceptable to the Trustees) and other information as the Trustees may deem relevant in connection with such annual review. In addition, during the Initial Term, this Agreement may be terminated with respect to a Fund,, without penalty, solely (a) by agreement of the parties, (b) for cause (as defined below) on not less than sixty days' notice by the Trust's Board of Trustees, (c) or by vote of a majority of the outstanding voting securities of such Fund (as defined by the 1940 Act), or (d) by the Trust's Board of Trustees, in their sole discretion, in connection with any reorganization, combination, -6- change of control, sale, loan, exchange or transfer of all or substantially all of the assets, consolidation or similar transaction involving such Fund. After the Initial Term, this Agreement may be terminated without cause with respect to a Fund and without penalty, by the Trust's Board of Trustees, by vote of a majority (as defined in the 1940 Act) of the outstanding voting securities of such Fund, or by either Administrator, on not less than sixty days, notice. Termination for "cause" during the Initial Term shall mean: (i) willful misfeasance, bad faith, gross negligence, abandonment, or reckless disregard on the part of an Administrator with respect to its obligations and duties hereunder; (ii) regulatory, administrative, or judicial proceedings against an Administrator which result in a determination that it has violated any rule, regulation, order, or law; (iii) financial difficulties on the part of an Administrator which are evidenced by the authorization or commencement of, or involvement by way of pleading, answer, consent, or acquiescence in, a voluntary or involuntary case under title 11 of the United States Code, as from time to time in effect, or any applicable law, other than said Title 11, of any jurisdiction relating to the liquidation or reorganization of debtors or to the modification or alteration of the rights of creditors; (iv) sale or any other change in control of an Administrator; (v) failure by an Administrator to maintain net capital of at least $100,000 and to provide to the Chairman of the Trust at least annually an audited financial statement documenting the existence of such net capital; (vi) failure by either Administrator to keep in effect professional liability insurance satisfactory to the Trust naming it as insured and providing coverage with respect to its activities on behalf of the Trust in the amount of at least $1,000,000 (provided that the Board of Trustees by resolution may approve a lesser amount); or (vii) any other circumstance which in the reasonable judgment of the Trust's Board of Trustees, including a majority of the Trust's Trustees who are not interested persons (as defined in the 1940 Act) of any party to this Agreement, -7- substantially impairs the performance of an Administrator's obligations and duties hereunder. Upon termination of this Agreement, the Administrators shall deliver to the Trust or as otherwise directed by the Trust (at the expense of the Trust, unless such termination is for breach of this Agreement by the Administrators) all records and other documents made or accumulated in the performance of their duties or the duties of any subcontractor(s) for the Trust hereunder. Upon effectiveness of this Agreement, the current Administration Agreement between the Trust and the Trust's Administrator is deemed to be terminated by consent of the parties thereto, with a waiver of any applicable notice. 10. ASSIGNMENT. This Agreement shall extend to and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Trust without the prior written consent of the Administrators, or by the Administrators without the prior written consent of the Trust; provided further, that no agreement with any subcontractor(s) contemplated hereunder shall be entered into, terminated, amended, assigned or permitted to be assigned without the prior written consent of the Trust. 11. NOTICES. All notices and other communications hereunder shall be in writing, shall be deemed to have been given when received or when sent by telex or facsimile, and shall be given to the following addresses (or such other addresses as to which notice is given): To the Administrators: ALPS Mutual Funds Services, Inc. 370 Seventeenth Street, Suite 2700 Denver, Colorado 80202 Attn: Mark Pougnet Denver Investment Advisors LLC 1225 Seventeenth Street, 26th Floor Denver, Colorado 80202 Attn: Kenneth V. Penland To the Fund: Westcore Trust c/o W. Bruce McConnel, III, Esq. Drinker Biddle & Reath Philadelphia National Bank Building 1345 Chestnut Street Philadelphia, PA 19107-3496 -8- 12. OTHER PROVISIONS The Trust recognizes that from time to time directors, officers and employees of either of the Administrators may serve as directors, officers and employees of other corporations or. business trusts (including other investment companies) and that such other corporations and trusts may include the name ALPS or DIA as part of their name, and that the Administrators or either of their affiliates may enter into investment advisory or other agreements with such other corporations and trusts. This Agreement shall be governed by the laws of the Commonwealth of Massachusetts, and the 1940 Act and the rules thereunder. To the extent that the laws of the Commonwealth of Massachusetts conflict with the 1940 Act or such rules, the latter shall control. No provision of this Agreement may be changed, discharged or terminated orally, but only by an instrument in ,writing signed by the party against which enforcement of the change, discharge or termination is sought. If a change or discharge is sought against the Trust, the instrument must be signed by both Administrators. This Agreement may be executed in one or more counterparts and all such counterparts will constitute one and the same instrument. The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of its trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the trustees shareholders, or representatives of the Trust Personally, but bind only the Trust property, and all persons dealing with any class Of shares of the Trust must look solely to the Trust property belonging to such class for the enforcement of any claims against the Trust. -9- If the foregoing is in accordance with your and understanding, will you kindly so indicate by signing and returning to us the enclosed copy hereof. Very truly yours, WESTCORE TRUST By /s/Jack D. Henderson -------------------- Title: Chairman Accepted: ALPS MUTUAL FUNDS SERVICES, INC. By: /s/W. Robert Alexander ---------------------- Title: Chairman DENVER INVESTMENT ADVISORS LLC By: /s/Kenneth V. Penland --------------------- Title: Chairman -10- EX-9.(B) 21 EXHIBIT 9(B) AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT AGREEMENT made as of the 4th day of January, 1993, as amended from the Transfer Agency and Service Agreement dated June 1, 1992 by and between WESTCORE TRUST, a Massachusetts business trust, having its principal office and place of business at 600 Seventeenth Street, Suite 1605 South, Denver, Colorado 80202 (the "Trust"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its principal office and place of business at 225 Franklin Street, Boston, Massachusetts 02110 (the "Bank"). WHEREAS, the Trust desires to appoint the Bank as its transfer agent, dividend disbursing agent and agent in connection with certain other activities, and the Bank desires to accept such appointment; WHEREAS, the Trust is authorized to issue shares in separate series, with each such series representing interests in a separate portfolio of securities and other assets; and WHEREAS, the Trust presently offers Shares in 22 series, Money Market Fund, Cash Reserve Fund, Treasury Money Market Fund, Prime Money Market Fund, Government Money Market Fund, Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund, Short-Term Bond Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Basic Value Fund, Bonds Plus Fund, GNMA Fund, Short-Term Government Bond Fund, Short-Intermediate Tax-Exempt Fund, Balanced Investment Fund, Colorado Tax-Exempt Fund, Oregon Tax-Exempt Fund, Arizona Intermediate Tax-Free Fund, Growth Fund and Quality Tax-Exempt Income Fund and California Intermediate Tax-Free Fund (the "Funds"); NOW, THEREFORE, in consideration of the mutual covenants herein contained, the parties hereto agree as follows: Article 1. TERMS OF APPOINTMENT; DUTIES OF THE BANK 1.01 Subject to the terms and conditions set forth in this Agreement, the Trust hereby employs and appoints the Bank to act as, and the Bank agrees to act as its transfer agent for the Trust's authorized and issued shares of beneficial interest in the Funds ("Shares"), dividend disbursing agent and agent in connection with any accumulation, open-account or similar plans provided to the shareholders of the Trust ("Shareholders") and set out in the currently effective prospectuses and statements of additional information ("prospectuses") of the Trust, including without limitation any periodic investment plan or periodic withdrawal program. 1.02 The Bank agrees that it will perform the following services in accordance with the Trust's respective prospectuses: (a) In accordance with procedures established from time to time by agreement between the Trust and the Bank, the Bank shall: (i) Receive for acceptance, orders for the purchase of Shares, promptly deliver payment and appropriate documentation thereof to the Custodians of the Trust authorized pursuant to the Amended and Restated Declaration of Trust of the Trust (each of which is referred -2- to herein as the "Custodian"), and make proper remittance of any sales load received by it to the persons entitled to the same as instructed by the Trust's Administrator; (ii) Pursuant to purchase orders, issue the appropriate number of Shares and hold such Shares in the appropriate Shareholder account; (iii) In the event any check or other order for the transfer of money is returned unpaid, take such steps as it may deem appropriate or the Trust may instruct to protect the Trust and the Bank from financial loss; (iv) Receive for acceptance redemption requests and redemption directions and deliver the appropriate documentation thereof to the appropriate Custodian; (v) In respect to the transactions in items (i), (ii) and (iv) above, the Bank shall execute transactions directly with broker-dealers authorized by the Trust who shall thereby be deemed to be acting on behalf of the Trust; (vi) At the appropriate time as and when it receives monies paid to it by the Custodian with respect to any redemption, pay over or cause to be paid over in the appropriate manner such monies as instructed by the redeeming Shareholders; -3- (vii) Effect transfers of Shares by the registered owners thereof upon receipt of appropriate instructions; (viii) Prepare and transmit payments (or where appropriate credit a Shareholder account) for dividends and distributions declared by a Fund; (ix) Issue replacement certificates for those certificates alleged to have been lost, stolen or destroyed upon receipt by the Bank of indemnification satisfactory to the Bank and protecting the Bank and the Trust, and the Bank at its option, may issue replacement certificates in place of mutilated stock certificates upon presentation thereof and without such indemnity; (x) Maintain records of account for and advise the Trust and its Shareholders as to the foregoing; and (xi) Record the issuance of Shares of the Trust and maintain pursuant to SEC Rule 17Ad-10(e) a record of the total number of Shares of the Trust which are authorized, based upon data provided to it by the Trust, and issued and outstanding. The Bank shall also provide the Trust on a regular basis with the total number of Shares which are authorized and issued and outstanding and shall have no -4- obligation, when recording the issuance of Shares, to monitor the issuance of such Shares or to take cognizance of any laws relating to the issue or sale of such Shares, which functions shall be the sole responsibility of the Trust. (b) In addition to and neither in lieu nor in contravention of the services set forth in the above paragraph (a), the Bank shall: (i) perform the customary services of a transfer agent, dividend disbursing agent and, as relevant, agent in connection with accumulation, open-account or similar plans (including without limitation any periodic investment plan or periodic withdrawal program), including but not limited to: maintaining all Shareholder accounts, preparing Shareholder meeting lists, mailing proxies, mailing Shareholder reports and prospectuses to current Shareholders, withholding taxes on U.S. resident and non-resident alien accounts and maintaining records with respect to such withholding, preparing and filing U.S. Treasury Department Forms 1099 and other appropriate forms required with respect to dividends and distributions by federal authorities for all Shareholders, preparing and mailing confirmation forms and statements of account to Shareholders for all purchases and redemptions of Shares and other confirmable transactions in Shareholder accounts, responding to Shareholder telephone calls and Shareholder correspondence, preparing and mailing activity statements for Shareholders, and providing Shareholder account information and (ii) provide a system which -5- will enable the Trust to monitor the total number of Shares sold in each State. (c) In addition, the Trust's Administrator shall (i) identify to the Bank in writing those transactions and assets to be treated as exempt from blue sky reporting for each State and (ii) verify the establishment of transactions for each State on the system prior to activation and thereafter monitor the daily activity for each State. The responsibility of the Bank for a Fund's blue sky State registration status is solely limited to the initial establishment of transactions subject to blue sky compliance by such Fund and the reporting of such transactions to the Fund as provided above. (d) Procedures as to who shall provide certain of these services in Article 1 may be established from time to time by agreement between the Trust and the Bank per the attached service responsibility schedule. The Bank may at times perform only a portion of these services and the Trust or its agent may perform these services on the Trust's behalf. (e) The Bank shall provide additional services on behalf of the Trust (i.e., escheatment services) which may be agreed upon in writing between the Trust and the Bank. Article 2. FEES AND EXPENSES 2.01 For the performance by the Bank pursuant to this Agreement, the Trust agrees to pay the Bank an annual maintenance fee for each Shareholder account as set out in the initial fee schedule attached hereto as Exhibit A. Such fees and out-of-pocket expenses and advances identified under Section 2.02 below -6- may be changed from time to time subject to mutual written agreement between the Trust and the Bank. 2.02 In addition to the fee paid under Section 2.01 above, the Fund(s) agree(s) to reimburse the Bank for out-of-pocket expenses, including but not limited to confirmation production, postage, forms, telephone, microfilm, microfiche, tabulating proxies, records storage, or advances incurred by the Bank for the items set out in the fee schedule attached hereto as Exhibit A. In addition, any other expenses incurred by the Bank at the request or with the consent of the Fund(s), will be reimbursed by the Fund(s). 2.03 The Fund(s) agree(s) to pay all fees and reimbursable expenses within thirty days following the receipt of the respective billing notice. Postage for mailing of dividends, proxies, Fund reports and other mailings to all Shareholder accounts shall be advanced to the Bank by the Fund(s) at least seven (7) days prior to the mailing date of such materials. Article 3. REPRESENTATIONS AND WARRANTIES OF THE BANK The Bank represents and warrants to the Trust that: 3.01 It is a trust company duly organized and existing and in good standing under the laws of the Commonwealth of Massachusetts. 3.02 It is duly qualified to carry on its business in the Commonwealth of Massachusetts. 3.03 It is empowered under applicable laws and by its Charter and By- Laws to enter into and perform this Agreement. 3.04 All requisite corporate proceedings have been taken to authorize it to enter into and perform this Agreement. -7- 3.05 It has and will continue to have access to the necessary facilities, equipment and personnel to perform its duties and obligations under this Agreement. Article 4. REPRESENTATIONS AND WARRANTIES OF THE TRUST The Trust represents and warrants to the Bank that: 4.01 It is a business trust duly organized and existing and in good standing under the laws of Massachusetts. 4.02 It is empowered under applicable laws and by its Amended and Restated Declaration of Trust and Code of Regulations to enter into and perform this Agreement. 4.03 All trust proceedings required by said Amended and Restated Declaration of Trust and Code of Regulations have been taken to authorize it to enter into and perform this Agreement. 4.04 It is an open-end and diversified management investment company registered under the Investment Company Act of 1940, as amended. 4.05 A registration statement under the Securities Act of 1933, as amended is currently effective and will remain effective, and appropriate state securities law filings have been made and will continue to be made, with respect to all Shares of the Trust being offered for sale. Article 5. DATA ACCESS AND PROPRIETARY INFORMATION 5.01 The Trust acknowledges that the data bases, computer programs, screen formats, report formats, interactive design techniques, and documentation manuals furnished to the Trust by the Bank as part of the Trust's ability to access certain related data ("Customer Data") maintained by the Bank on -8- data bases under the control and ownership of the Bank ("Data Access Services") constitute copyrighted, trade secret, or other proprietary information (collectively, "Proprietary Information") of substantial value to the Bank. It is understood that Customer Data, which includes data provided to the Bank by or on behalf of the Trust and records belonging to the Trust pursuant to Section 31 of the Investment Company Act of 1940 as amended (and the Rules thereunder), will not be deemed to be Data Access Services or Proprietary Information. The Trust agrees to treat all Proprietary Information as proprietary to the Bank and further agrees that it shall not divulge any Proprietary Information to any person or organization except as may be provided hereunder. Without limiting the foregoing, the Trust agrees for itself and its employees and agents: (a) to access Customer Data solely from locations as may be designated in writing by the Bank and solely in accordance with the Bank's applicable user documentation; (b) to refrain from copying or duplicating in any way the Proprietary Information; (c) to refrain from obtaining unauthorized access to any portion of the Proprietary Information, and if such access is inadvertently obtained, to inform in a timely manner of such fact and dispose of such information in accordance with the Bank's instructions; (d) to refrain from causing or allowing third-party data acquired hereunder from being retransmitted -9- to any other computer facility or other location, except with the prior written consent of the Bank; (e) that the Trust shall have access only to those authorized transactions agreed upon by the parties; (f) to honor all reasonable written requests made by the Bank to protect at the Bank's expense the rights of the Bank in Proprietary Information at common law, under federal copyright law and under other federal or state law. Each party shall take reasonable efforts to advise its employees or independent service contractors of the obligations pursuant to this Article 5. The obligations of this Article shall survive any earlier termination of this Agreement. 5.02 If the Trust notifies the Bank that any of the Data Access Services do not operate in material compliance with the most recently issued user documentation for such services, the Bank shall endeavor in a timely manner to correct such failure. Organizations from which the Bank may obtain certain data included in the Data Access Services are solely responsible for the contents of such data and the Trust agrees to make no claim against the Bank arising out of the contents of such third-party data, including, but not limited to, the accuracy thereof, provided that the Bank will comply with all reasonable requests for assistance from the Trust in resolving any claim or other discrepancy the Trust may have with such third party organizations. DATA ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE SPECIFICATIONS USED IN CONNECTION THEREWITH ARE -10- PROVIDED ON AN AS IS, AS AVAILABLE BASIS (PROVIDED THAT THE BANK SHALL CONTINUE TO BE RESPONSIBLE FOR ANY DELAY IN OR OTHER FAILURE OF PERFORMANCE THAT ARISES AS A RESULT OF A MATTER REASONABLY WITHIN THE BANK'S CONTROL). THE BANK EXPRESSLY DISCLAIMS ALL WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 5.03 If the transactions available to the Trust include the ability to originate a customer originated electronic financial instruction to the Bank in order to (i) effect the transfer or movement of cash or Shares or (ii) transmit Shareholder information or other information (such transactions constituting a "COEFI"), then in such event the Bank shall be entitled to rely on the validity and authenticity of such instruction without undertaking any further inquiry as long as such instruction is undertaken in conformity with reasonable security procedures established by the Bank from time to time. Article 6. INDEMNIFICATION 6.01 The Bank shall not be responsible for, and the Trust shall indemnify and hold the Bank harmless from and against, any and all losses, damages, costs, charges, counsel fees, payments, expenses and liability arising out of or attributable to: (a) All actions taken or omitted to be taken by the Bank or its agent or subcontractors required to be taken pursuant to this Agreement, provided that such actions are taken in good faith and without negligence or willful misconduct. -11- (b) The Funds' lack of good faith, negligence or willful misconduct which arise out of the breach of any representation or warranty of the Fund(s) hereunder. (c) The good faith reliance on or use by the Bank or its agents or subcontractors of written information, records and documents or services which (i) are received or relied upon by the Bank or its agents or subcontractors and furnished to it or performed by or on behalf of the Fund(s), and (ii) have been prepared, maintained and/or performed by the Fund(s) or any other authorized person or firm on behalf of the Fund(s). (d) The reliance on, or the carrying out by the Bank or its agents or subcontractors of any instructions or requests of the Fund(s). (e) The offer or sale of Shares in violation of any requirement under the federal securities laws or regulations or the securities laws or regulations of any state that such Shares be registered in such state or in violation of any stop order or other determination or ruling by any federal agency or any state with respect to the offer or sale of such Shares in such state. 6.02 At any time the Bank may apply to any officer of the Trust for instructions, and may consult with legal counsel with respect to any matter arising in connection with the services to be performed by the Bank under this Agreement, and the Bank and its agents or subcontractors shall not be liable and shall be indemnified by the Trust for any action taken or omitted by it in reliance upon such instructions or upon the opinion of such counsel (provided such counsel is reasonably satisfactory to -12- the Trust). The Bank, its agents and subcontractors shall be protected and indemnified in acting upon any paper or document furnished by or on behalf of the Fund(s), reasonably believed to be genuine and to have been signed by the proper person or persons, or upon any instruction, information, data, records or documents provided the Bank or its agents or subcontractors by machine readable input, telex, CRT data entry or other similar means authorized by the Fund(s), and shall not be held to have notice of any change of authority of any person, until receipt of written notice thereof from the Fund(s). The Bank, its agents and subcontractors shall also be protected and indemnified in recognizing stock certificates which are reasonably believed to bear the proper manual or facsimile signatures of the officer(s) of the Trust, and the proper countersignature of any former transfer agent or former registrar, or of a co- transfer agent or co-registrar. 6.03 In the event either party is unable to perform its obligations under the terms of this Agreement because of acts of God, strikes, equipment or transmission failure or damage reasonably beyond its control, or other causes reasonably beyond its control, such party shall not be liable for damages to the other for any damages resulting from such failure to perform or otherwise from such causes. 6.04 In order that the indemnification provisions contained in this Article 6 shall apply, upon the assertion of a claim for which the Trust may be required to indemnify the Bank, the Bank shall promptly notify the Trust of such assertion, and shall keep the Trust advised with respect to all developments -13- concerning such claim. The Trust shall have the option to participate with the Bank in the defense of such claim or to defend against said claim in its own name or in the name of the Bank. The Bank shall in no case confess any claim or make any compromise in any case in which the Trust may be required to indemnify the Bank except with the Trust's prior written consent. Article 7. STANDARD OF CARE 7.01 The Bank shall at all times act in good faith and agrees to use its best efforts within reasonable limits to insure the accuracy of all services performed under this Agreement, but assumes no responsibility and shall not be liable for loss or damage due to errors unless said errors are caused by its negligence, bad faith, or willful misconduct or that of its employees. Article 8. COVENANTS OF THE TRUST AND THE BANK 8.01 The Trust shall promptly furnish to the Bank the following: (a) A certified copy of the resolution of the Board of Trustees of the Trust authorizing the appointment of the Bank and the execution and delivery of this Agreement. (b) A copy of the Amended and Restated Declaration of Trust and Code of Regulations of the Trust and all amendments thereto. (c) Copies of each vote of the Board of Trustees of the Trust designating authorized persons to give instructions to the Bank. 8.02 The Bank hereby agrees to establish and maintain facilities and procedures reasonably acceptable to the Trust for -14- safekeeping of stock certificates, check forms and facsimile signature imprinting devices, if any; and for the preparation or use, and for keeping account of, such certificates, forms and devices. 8.03 The Bank shall keep records relating to the services to be performed hereunder, in the form and manner as it may deem advisable, as required by applicable laws, rules and regulations. To the extent required by Section 31 of the Investment Company Act of 1940, as amended, and the Rules thereunder, the Bank agrees that all such records prepared or maintained by the Bank relating to the services to be performed by the Bank hereunder are the property of the Trust and will be preserved, maintained and made available in accordance with such Section and Rules, and will be surrendered promptly to the Trust on and in accordance with its request. Additionally, the Bank will make reasonably available to the Trust and its authorized representatives records maintained by the Bank pursuant to this Agreement for reasonable inspection, use and audit, and will take all reasonable action to assist the Trust's independent accountants in rendering their opinion. 8.04 The Bank and the Trust agree that all books, records, information and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or the carrying out of this Agreement shall remain confidential, and shall not be voluntarily disclosed to any other person, except as may be required by law. 8.05 In case of any requests or demands for the inspection of the Shareholder records of the Trust, the Bank will -15- endeavor to notify the Trust and to secure instructions from an authorized officer of the Trust as to such inspection. The Bank reserves the right, however, to exhibit the Shareholder records to any person whenever it is advised by its counsel that it may be held liable for the failure to exhibit the Shareholder records to such person. Article 9. TERMINATION OF AGREEMENT 9.01 This Agreement may be terminated by either party upon one hundred twenty (120) days written notice to the other, and may be terminated immediately by the Trust should the Bank cease to be qualified to act as the Trust's transfer agent pursuant to applicable law. 9.02 Should the Trust exercise its right to terminate, other than as a result of a default under this Agreement by the Bank, all out-of-pocket expenses associated with the movement of records and material will be borne by the Trust. Additionally, the Bank reserves the right to charge for any other reasonable expenses associated with such termination. Article 10. ASSIGNMENT 10.01 Except as provided in Section 10.03 below, neither this Agreement nor any rights or obligations hereunder may be assigned by either party without the written consent of the other party. 10.02 This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. 10.03 The Bank may, without further consent on the part of the Trust, subcontract for the performance hereof with -16- (i) Boston Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which is duly registered as a transfer agent pursuant to Section 17A(c)(1) of the Securities Exchange Act of 1934, as amended ("Section 17A(c)(1)"), (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to Section 17A(c)(1) or (iii) a BFDS affiliate duly registered as a transfer agent pursuant to Section 17A(c)(1); provided, however, that the Bank shall be as fully responsible to the Trust for the acts and omissions of any subcontractor as it is for its own acts and omissions. Article 11. AMENDMENT 11.01 This Agreement may be amended or modified by a written agreement executed by both parties and authorized or approved by a resolution of the Board of Trustees of the Trust. Article 12. MASSACHUSETTS LAW TO APPLY 12.01 This Agreement shall be construed and the provisions thereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. Article 13. MERGER OF AGREEMENT 13.01 This Agreement constitutes the entire agreement between the parties hereto and supersedes any prior agreement with respect to the subject matter hereof whether oral or written. Article 14. COUNTERPARTS 14.01 This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. -17- Article 15. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS 15.01 The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 as amended July 16, 1990 and as may be further amended from time to time which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. -18- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed in their names and on their behalf by and through their duly authorized officers, as of the day and year first above written. WESTCORE TRUST By: /s/ Jack D. Henderson ----------------------------- ATTEST: - ------------------------------ STATE STREET BANK AND TRUST COMPANY By: /s/Ronald E. Logue ----------------------------- Sr. Vice President ATTEST: - ------------------------------ Assistant Secretary -19- STATE STREET BANK & TRUST COMPANY FUND SERVICE RESPONSIBILITIES Service Performed Responsibility - ----------------- -------------- Bank Trust ---- ----- 1. Receives orders for the purchase of Shares. 2. Issue Shares and hold Shares in Shareholders' accounts. 3. Receive redemption requests. 4. Effect transactions 1-3 above directly with broker-dealers. 5. Pay over monies to redeeming Shareholders. 6. Effect transfers of Shares. 7. Prepare and transmit dividends and distributions. 8. Issue replacement Certificates. 9. Reporting of abandoned property. 10. Maintain records of account. 11. Maintain and keep a current and accurate control book for each issue of securities. 12. Mail proxies. 13. Mail Shareholder reports. 14. Mail prospectuses to current Shareholders. 15. Withhold taxes on U.S. resident and non-resident alien accounts. 16. Prepare and file U.S. Treasury Department forms. 17. Prepare and mail account and confirmation statements for Shareholders. -1- Service Performed Responsibility - ----------------- -------------- Bank Trust ---- ----- 18. Provide Shareholder account information. 19. Blue sky reporting. * Such services are more fully described in Article 1.02(a), (b) and (c) of the Agreement. WESTCORE TRUST By: /s/Jack D. Henderson ----------------------------- ATTEST: - ------------------------------ STATE STREET BANK AND TRUST COMPANY By: /s/Ronald E. Logue ----------------------------- Sr. Vice President ATTEST: - ------------------------------ Assistant Secretary -2- EX-9.(B)(I) 22 EXHIBIT 9(B)(I) AMENDMENT NO. 1 TO THE AMENDED AND RESTATED TRANSFER AGENT AND SERVICE AGREEMENT Amendment dated as of December 28, 1993 to the Amended and Restated Transfer Agent and Service Agreement (the "Agreement") dated as of January 4, 1993 between Westcore Trust, a Massachusetts business trust (the "Trust"), and State Street Bank and Trust Company, a Massachusetts trust company ("STATE STREET"). BACKGROUND 1. STATE STREET serves as the transfer agent for certain of the Trust's portfolios pursuant to the Agreement. 2. The Trust desires to employ STATE STREET as its transfer agent for the Small-Cap Opportunity Fund (the "Fund"), on the terms and for the compensation set forth in the Agreement and STATE STREET agrees to provide such services. AGREEMENT NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, the parties hereto, intending to be legally bound, agree as follows: 1. APPOINTMENT. The Trust hereby appoints STATE STREET to act as transfer agent for the Fund for the period and on the terms set forth in the Agreement and STATE STREET accepts such appointment for said period and on said terms, and agrees to provide the services set forth in the Agreement and in return for the compensation provided therein. 2. CONTINUING VALIDITY. The provisions of the Agreement shall remain in full force and effect as modified hereby. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers designated below on the day and year first above written. WESTCORE TRUST By: /s/Jack D. Henderson ------------------------------- Jack D. Henderson, President STATE STREET BANK AND TRUST COMPANY By: /s/Robert Dame ------------------------------- Robert Dame, Vice President -2- EX-9.(B)(II) 23 EXHIBIT 9(B)(II) AMENDMENT NO. 2 TO AMENDED AND RESTATED TRANSFER AGENCY AND SERVICE AGREEMENT WHEREAS, WESTCORE TRUST, a Massachusetts business trust (the "Trust"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company (the "Bank"), are parties to an Amended and Restated Transfer Agency and Service Agreement dated as of January 4, 1993 (the "Agreement") wherein the Trust has appointed the Bank as its transfer agent, dividend disbursing agent and agent in connection with the Trust's funds as described in the Agreement; WHEREAS, the parties wish to amend the Agreement in certain respects; NOW THEREFORE, the parties hereby agree, intending to be legally bound, that effective immediately the Agreement is amended to read as follows: Section 1.02(a)(v) of the Agreement is amended and restated in its entirety as follows: "In respect to the transactions in items (i), (ii) and (iv) above, the Bank shall execute transactions directly with broker dealers, investment advisers and other institutions acting on behalf of investors authorized by the Trust who shall thereby be deemed to be acting on behalf of the Trust;" Except as expressly amended and modified hereby, all other provisions of the Agreement shall remain in full force and effect. In WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of the 1st day of November, 1994. WESTCORE TRUST By: ----------------------------- ATTEST: - ------------------------------ STATE STREET BANK AND TRUST By: /s/Ronald E. Logue ----------------------------- ATTEST: - ------------------------------ EX-9.(C) 24 EXHIBIT 9(C) AMENDED AND RESTATED BOOKKEEPING AND PRICING AGREEMENT Between WESTCORE TRUST and ALPS SECURITIES, INC. AMENDED AND RESTATED BOOKKEEPING AND PRICING AGREEMENT AGREEMENT made this 7th day of January, 1993, as amended from the Bookkeeping and Pricing Agreement dated June 1, 1992, by and between Westcore Trust, a business trust established under the laws of the Commonwealth of Massachusetts (the "Fund") and ALPS SECURITIES, INC., a Colorado corporation having its principal office at 600 Seventeenth Street, Suite 1605 South, Denver, Colorado 80202 (the "Agent"). WHEREAS, the Fund is an open-end management investment company registered under the Investment Company Act of 1940 presently consisting of the following twenty-one investment portfolios: the Money Market Fund, Cash Reserve Fund, Treasury Money Market Fund, Prime Money Market Fund, Government Money Market Fund, Modern Value Equity Fund, Equity Income Fund, MIDCO Growth Fund, Short-Term Bond Fund, Intermediate-Term Bond Fund, Long-Term Bond Fund, Basic Value Fund, Bonds Plus Fund, GNMA Fund, Short-Term Government Bond Fund, Short- Intermediate Tax-Exempt Fund, Oregon Tax-Exempt Fund, Balanced Investment Fund, Colorado Tax-Exempt Fund, Arizona Intermediate Tax-Free Fund, the Growth Fund, the Quality Tax-Exempt Income Fund and the California Intermediate Tax-Free Fund; each of such investment portfolios and any additional investment portfolios that may be established by the Fund is referred to herein individually as a "Portfolio" and collectively as the "Portfolios;" and WHEREAS, the Fund desires to appoint the Agent as agent to perform certain bookkeeping and pricing services for the Portfolios on behalf of the Fund, and the Agent has indicated its willingness to so act, subject to the terms and conditions of this Agreement. NOW, THEREFORE, in consideration of the premises and mutual covenants hereinafter contained, the parties hereto agree as follows: 1. AGENT APPOINTED BOOKKEEPING AND PRICING AGENT. The Fund hereby appoints the Agent as bookkeeping and pricing agent for the Portfolios and the Agent agrees to provide the services contemplated herein upon the terms and conditions hereinafter set forth. 2. DEFINITIONS. In this Agreement the terms below have the following meanings: (a) AUTHORIZED PERSON. Authorized Person means any of the persons duly authorized to give Proper Instructions or otherwise act on behalf of the Fund by appropriate resolution of the Board of Trustees of the Fund. The Fund will at all times maintain on file with the Agent certification, in such form as may be acceptable to the Agent, of (i) the names and signatures of the Authorized Person(s) and (ii) the names of the members of the Board of Trustees of the Fund, it being understood that upon the occurrence of any change in the information set forth in the most recent certification on file (including without limitation any person named in the most recent certification who is no longer an Authorized Person as designated therein), the Fund will provide a new or amended certification setting forth the change. The Agent will be entitled to rely upon any Proper Instruction (defined below) which has been signed by person(s) named in the most recent certification. (b) PROPER INSTRUCTIONS. Proper Instructions means any request, instruction or certification signed by one or more Authorized Persons. Oral instructions will be considered Proper Instructions if the Agent reasonably believes them to have been given by an Authorized Person and they are confirmed in writing. Proper Instructions may include communication effected directly between electro-mechanical or electronic devices as agreed upon by the parties hereto. 3. DUTIES OF THE AGENT. The Agent agrees to provide or to arrange to provide at its expense the following services for the Fund: (a) Maintain separate accounts for each Portfolio, all as directed from time to time by Proper Instructions; (b) Timely calculate and transmit to NASDAQ each Portfolio's daily net asset value and public offering price (such determinations to be made in accordance with the provisions of the Fund's Amended and Restated Declaration of Trust and the appropriate prospectuses and statements of additional information relating to the Portfolios, and any applicable resolutions of the Board of Trustees of the Fund) and promptly communicate such values and prices to the Fund and the Fund's transfer agent; (c) Maintain and keep current all books and records of the Fund as required by Section 31 and the rules thereunder under the 1940 Act ("Section 31") in connection with the Agent's duties hereunder. The Agent shall comply with all laws, rules and regulations -2- applicable to the performance of its obligations hereunder. Without limiting the generality of the foregoing, the Agent will prepare and maintain the following records upon receipt of information in proper form from Authorized Persons of the Fund: (i) Cash receipts journal (ii) Cash disbursements journal (iii) Dividend records (iv) Purchase and sales - portfolio securities journals (v) Subscription and redemption journals (vi) Security ledgers (vii) Broker ledger (viii) General ledger (ix) Daily expense accruals (x) Daily income accruals (xi) Securities and monies borrowed or loaned and collateral therefore (xii) Foreign currency journals (xiii) Trial balances (d) Provide the Fund and its investment adviser(s) with daily portfolio values, net asset values and other statistical data for each Portfolio as requested from time to time. (e) Compute the net income, exempt interest income and capital gains of each Portfolio for dividend purposes in accordance with relevant prospectus policies and resolutions of the Board of Trustees of the Fund. (f) Provide the Fund and its investment adviser(s) with camera ready copies of the semi-annual and annual financial statements to be furnished to shareholders of each Portfolio and all raw financial data necessary for the timely preparation of tax returns, Form N-SAR, prospectus updates, Rule 24f-2 filings and proxy statements. (g) Provide facilities to accommodate annual audits and any audits or examinations conducted by the Securities and Exchange Commission or other governmental entities. -3- (h) Provide audited financial statements regarding the Agent on an annual basis, as requested. Such audits shall be conducted by an independent accounting firm mutually agreed upon by the Agent and the Fund. (i) Furnish to the Fund at the end of every month, and at the close of each quarter of the Fund's fiscal year, a list of the portfolio securities and the aggregate amount of cash in the Portfolios. (j) Assist in the preparation of certain reports, audits of accounts, and other matters of like nature, as reasonably requested from time to time by the Fund. The Agent shall for all purposes be deemed to be an independent contractor and shall, unless otherwise expressly authorized, have no authority to act for or represent the Fund in any way or otherwise be deemed an agent of the Fund. 4. SUBCONTRACTORS. It is understood that the Agent may from time to time at its expense delegate the performance of all or a portion of its obligations under this Agreement to one or more persons (hereinafter "subcontractor(s)") as the Agent may believe to be particularly fit to assist it in the performance of this Agreement. The Agent shall provide oversight over any subcontractor(s) who shall in turn provide services pursuant to an agreement with the Agent approved by a resolution of the Board of Trustees of the Fund. Any agreement entered into between the Agent and a subcontractor shall acknowledge that the agreement is for the benefit of the Fund, that the subcontractor shall be directly liable and responsible to the Fund for the performance of its obligations thereunder, and that the Fund may therefore enforce its rights directly against the subcontractor. Notwithstanding such delegation, the Agent shall continue to be directly liable to the Fund for the performance of any subcontractor's obligations under such agreement. In accordance with the foregoing, it is understood that the Agent intends to appoint American Data Services as subcontractor. 5. INSTRUCTIONS TO THE AGENT. The Agent shall promptly take all appropriate steps necessary to carry out or comply with any Proper Instructions received from the Fund. 6. AGENT COMPENSATION. In consideration for the services to be performed by the Agent, the Agent shall be entitled to receive from the Fund such compensation and reimbursement for all reasonable out-of-pocket expenses as may be agreed upon from time to time between the Agent and the Fund in advance and in writing. The Fund agrees to pay the Agent -4- compensation as described in the schedule attached as Exhibit A. 7. LIABILITY OF THE AGENT. (a) The Agent may rely upon the written advice of counsel for the Fund and the Fund's independent accountants, and upon oral or written statements of brokers and other persons reasonably believed by the Agent in good faith to be expert in the matters upon which they are consulted and, for any actions reasonably taken in good faith reliance upon such advice or statements and without negligence, the Agent shall not be liable to anyone. (b) Nothing herein contained shall be construed to protect the Agent against any liability to the Fund or its security holders to which the Agent would otherwise be subject by reason of willful misfeasance, bad faith or negligence in the performance of its duties. (c) Except as may otherwise be provided by applicable law, neither the Agent nor its shareholders, officers, directors, employees or agents shall be subject to, and the Fund shall indemnify and hold such persons harmless from and against, any liability for and any damages, expenses or losses incurred by reason of the inaccuracy of factual information furnished to the Agent or any subcontractor(s) by an Authorized Person of the Fund. (d) The Agent shall ensure that it or any subcontractors have and maintain Errors and Omissions Insurance for the services rendered under this Agreement of at least $1 million (provided the Board of Trustees of the Fund may by resolution approve some lesser amount). The Agent shall provide to the Fund annually a certificate from the appropriate errors and omissions insurance carrier(s) certifying that such Errors and Omissions Insurance is in full force and effect. 8. REPORTS. Whenever, in the course of performing its duties under this Agreement, the Agent determines, on the basis of information supplied to the Agent by the Fund or its authorized agents, that a violation of applicable law has occurred or that, to its knowledge, a possible violation of applicable law may have occurred or, with the passage of time, would occur, the Agent shall promptly notify the Fund and its counsel. 9. ACTIVITIES OF THE AGENT. The services of the Agent under this Agreement are not to be deemed exclusive, and the Agent shall be free to render similar services to others so long as its services hereunder are not impaired thereby. -5- 10. ACCOUNTS AND RECORDS. The accounts and records maintained by the Agent shall be the property of the Fund, and shall be surrendered to the Fund promptly upon receipt of Proper Instructions from the Fund in the form in which such accounts and records have been maintained or preserved. The Agent agrees to maintain a back-up set of accounts and records of the Fund (which back-up set shall be updated on at least a weekly basis) at a location other than that where the original accounts and records are stored. The Agent shall assist the Fund, the Fund's independent auditors, or, upon approval of the Fund, any regulatory body, in any requested review of the Fund's accounts and records, and reports by the Agent or its independent accountants concerning its accounting system and internal auditing controls will be open to such entities for audit or inspection upon reasonable request. There shall be no additional fee for these services. The Agent shall preserve the accounts and records as they are required to be maintained and preserved by Section 31. 11. CONFIDENTIALITY. The Agent agrees that it will, on behalf of itself and its officers and employees, treat all transactions contemplated by this Agreement, and all other information germane thereto, as confidential and not to be disclosed to any person except as may be authorized by the Fund in Proper Instructions. 12. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall become effective as of the date hereof. Either party may terminate this Agreement, without penalty, upon sixty (60) days prior written notice to the other. Upon termination of this Agreement, the Agent shall deliver to the Fund or as otherwise directed in Proper Instructions (at the expense of the Fund, unless such termination is for breach of this Agreement by the Agent) all records and other documents made or accumulated in the performance of its duties or the duties of any subcontractor(s) for the Fund hereunder. 13. ASSIGNMENT. This Agreement shall extend to and shall be binding upon the parties hereto and their respective successors and assigns; provided, however, that this Agreement shall not be assignable by the Fund without the prior written consent of the Agent, or by the Agent without the prior written consent of the Fund; provided further, that no agreement with any subcontractor(s) contemplated hereunder shall be entered into, terminated, amended, assigned or permitted to be assigned without the prior written consent of the Fund. 14. GOVERNING LAW. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the Commonwealth of Massachusetts, and the 1940 Act and the rules -6- thereunder. To the extent that the laws of the Commonwealth of Massachusetts conflict with the 1940 Act or such rules, the latter shall control. 15. NAMES. The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 as amended July 16, 1990 and as may be further amended from time to time which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. 16. AMENDMENTS TO THIS AGREEMENT. This Agreement may only be amended by the parties in writing. 17. NOTICES. All notices and other communications hereunder shall be in writing, shall be deemed to have been given when received or when sent by telex or facsimile, and shall be given to the following addresses (or such other addresses as to which notice is given): To the Agent: ALPS Securities, Inc. 600 Seventeenth Street - Suite 1605 South Denver, Colorado 80202 Attn: W. Robert Alexander To the Fund: Westcore Trust c/o W. Bruce McConnel, III, Esq. Drinker Biddle & Reath Philadelphia National Bank Building 1345 Chestnut Street Philadelphia, PA 19107-3496 18. COUNTERPARTS. This Agreement may be executed by the parties hereto on any number of counterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. -7- IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WESTCORE TRUST By /s/ Jack D. Henderson --------------------------- ATTEST: /s/ James L. Smith - ------------------------------ ALPS SECURITIES, INC. By /s/ W. Robert Alexander --------------------------- ATTEST: /s/ James L. Smith - ------------------------------ -8- Exhibit A ALPS Fee Schedule - Commencing as of January 7, 1993. Fees to be calculated and paid on a monthly basis. I. Fee Based on total assets 2.9 basis points annually II. Minimum $1700 per month per Portfolio III. All out of pocket costs shall be submitted to the Fund on a monthly basis (such costs shall be pre-approved by the Fund) Out of pocket expenses include pricing (all pricing service fees shall be a direct pass through to the Fund) and incremental costs associated with record keeping for options, futures and foreign securities. -9- EX-9.(D) 25 EXHIBIT 9(D) INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT (the "Agreement") is entered into as of July 17, 1995 between First Interstate Bancorp, a Delaware corporation ("FI"), and Westcore Trust, a Massachusetts business trust (the "Trust"). R E C I T A L S WHEREAS, FI desires the Board of Trustees of the Trust to consider and vote on the Plan of Consolidation (as hereinafter defined); and WHEREAS, the Board of Trustees of the Trust desires that, prior to voting on the Plan of Consolidation, FI provide the Trust with written indemnification of any claims made by ALPS Mutual Funds Services, Inc. ("ALPS") or other persons related to or arising out of the Plan of Consolidation. A G R E E M E N T NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. DEFINITIONS. Unless otherwise defined herein, the terms used in this Agreement shall have the meanings assigned to such terms in this Section 1. "ALPS AGREEMENTS" shall mean, collectively, that certain Amended and Restated Administration Agreement (Money Market) between ALPS and the Trust dated as of October 1, 1993, as amended through the date hereof, and that certain Amended and Restated Administration Agreement (Non-Money Market) between ALPS and the Trust dated as of October 1, 1993, as amended through the date hereof, the current distribution agreements between ALPS, as distributor and principal underwriter for the Trust, and the Trust and each of its separate series of portfolios, and the Bookkeeping and Pricing Agreement between ALPS and the Trust. "CLAIMS" shall mean any and all actions, suits, claims, rights, causes of action, demands, damages, losses, liabilities, expenses, costs, attorneys' fees or charges of whatever kind or nature, whether contingent or fixed, whether known or unknown, whether suspected or unsuspected, which ALPS or any other person (i) now has or claims to have, (ii) at any time had or claimed to have, or (iii) at any time hereafter may have or claim to have. "DAMAGES" shall mean any and all losses, costs, liabilities, obligations, losses, claims, expenses, damages or judgments of any kind, including reasonable attorneys' fees and the fees of accountants and experts. "INDEMNIFIED PARTIES" shall mean, collectively, (i) the Trust; (ii) each current, former and future officer, trustee, beneficial interest holder, employee, agent, attorney, predecessor, successor, representative or affiliate of the Trust, but not ALPS or any of ALPS' current, former and future officers, trustees, beneficial interest holders, employees, agents, attorneys, predecessors, successors or representatives; (iii) any successor, assign, heir, estate or legal representative of any of the parties described in clauses (i) or (ii); and (iv) any series or portfolio of the Trust. "PLAN OF CONSOLIDATION" shall mean the plan for the combination and transfer of assets of the series or portfolios of the Trust, for which FI or its affiliates have acted as investment adviser or sub-adviser (which does not relate to the Colorado Tax-Exempt, Equity Income, Intermediate-Term Bond, MIDCO Growth, Modern Value Equity, Small Cap-Opportunity and Long-Term Bond Funds), with and into various series or portfolios of Pacifica Funds Trust, for which FI or its affiliates now act as investment adviser, which Plan has been proposed by FI to the Board of Trustees of the Trust. "IMPLEMENTATION OF THE PLAN OF CONSOLIDATION" shall mean the consummation of the Plan, following approval of it by the board and shareholders of the subject Westcore Funds. 2. INDEMNIFICATION. (a) FI shall defend, indemnify and hold harmless each Indemnified Party from and against all Damages arising out of or resulting from any Claims against such Indemnified Party related to or arising out of (i) any allegation made by ALPS or any other person that the implementation of the Plan of Consolidation constitutes a breach of the ALPS Agreements or is otherwise in violation of the terms of the ALPS Agreements or (ii) any untrue or alleged untrue statement of a material fact contained in information furnished by or on behalf of FI intended for use in (x) the proxy materials to be prepared to seek authorization of the Plan of Consolidation or (y) amendments or supplements to the Trust's registration statement under the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended, and applicable state securities laws in connection with the Plan of Consolidation; or that shall arise out of or be based upon any omission or alleged omission to state a material fact in connection with such information, PROVIDED THAT, information provided "on behalf" of FI, if furnished other than by FI or a direct or indirect subsidiary of FI, includes only information furnished with the approval of FI or a direct or indirect subsidiary. -2- (b) If any Indemnified Party receives notice of the assertion of any Claim with respect to which FI is or may be obligated to provide indemnification (an "Indemnifiable Claim"), the Indemnified Party shall promptly notify FI in writing (the "Claim Notice") of the Indemnifiable Claim; provided, however, that the failure to provide such notice shall not relieve or otherwise affect the obligation of FI to provide indemnification hereunder, except to the extent that any Damages directly resulted or were caused by such failure. (c) FI shall have thirty (30) days after receipt of the Claim Notice to undertake, conduct and control, through counsel of its own choosing (subject to the consent of the Indemnified Party, which consent shall not be unreasonably withheld), and at its expense, the settlement or defense thereof, and the Indemnified Party shall cooperate with FI in connection therewith; provided, however, that (i) FI shall permit the Indemnified Party to participate in such settlement or defense through separate counsel chosen by the Indemnified Party (subject to the consent of FI, which consent shall not be unreasonably withheld), provided that the fees and expenses of such counsel shall not be borne by FI unless one of the following conditions shall exist: (x) FI shall have failed to assume the defense of such claim or employ counsel reasonably satisfactory to the Indemnified Party, or (y) the defendants in any such action include both FI and the Indemnified Party and the Indemnified Party has reasonably concluded that there may be legal defenses available to it which are different from or additional to those available to FI, or (z) there exists or will exist a conflict of interest between the Indemnified Party and FI which would make it inappropriate in the reasonable judgment of the Indemnified Party for the same counsel to represent both FI and the Indemnified Party and (ii) FI, in defense of any action assumed by it, shall not, without the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement of such action which does not include as an unconditional term thereof the giving by the claimant or plaintiff to the Indemnified Party of a release from all liability in respect to such action. So long as FI is vigorously contesting an Indemnifiable Claim in good faith, the Indemnified Party shall not pay or settle any Indemnifiable Claim without FI's consent. (d) If FI does not notify the Indemnified Party within thirty (30) days after receipt of the Claim Notice that it elects to undertake the defense of the Indemnifiable Claim described therein, the Indemnified Party shall have the right to contest, settle or compromise the Indemnifiable Claim in the exercise of its reasonable discretion; provided, however, that the Indemnified Party shall notify FI of any compromise or settlement of any such Indemnifiable Claim. -3- 3. COMPLETE AGREEMENT. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and replaces all prior negotiations and agreements, written or oral. 4. AMENDMENT AND WAIVER. This Agreement may be amended, modified, superseded, canceled, renewed or extended and the terms or covenants hereof may be waived only by a written instrument executed by the parties hereto or, in the case of a waiver, by the party waiving compliance. The failure of any party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by any party of the breach of any term or provision contained in this Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any other term or covenant contained in this Agreement. 5. NOTICES. All notices and other communications provided for hereunder shall be in writing and shall be given by personal delivery, overnight air courier (with signed receipt of acknowledgement) or by telecopy (with "answerback" confirmation of receipt), addressed to the parties at their respective addresses set forth on the signature page hereto, or at such other address as shall be designated by either party in a written notice to the other party. All such notices and other communications shall be deemed to have been delivered upon receipt. 6. MISCELLANEOUS. (a) This Agreement shall be binding upon each of the undersigned and its representatives and assigns and shall inure to the benefit of (and may be enforced by) each Indemnified Party. (b) In the event any Indemnified Party seeks to enforce his, her or its rights hereunder, such Indemnified Party shall be entitled to recover all reasonable fees and costs incurred in connection therewith, including reasonable attorneys' fees. (c) This Agreement shall in all respects be governed under the internal laws (and not the laws of conflicts) of the State of California. (d) If any provision of this Agreement is held to be illegal or invalid by a court of competent jurisdiction, such provision shall be severed and deleted, and neither such provision nor its severance and deletion shall affect the validity of the remaining provisions hereof. -4- (e) This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which counterparts shall together constitute a single agreement. (f) The section headings of this Agreement are inserted for reference purposes only and shall not affect the meaning or interpretation of this Agreement. (g) This Agreement shall continue from the day first above written until the expiration of all applicable statutes of limitations for any Claims. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the date first above written. FIRST INTERSTATE BANCORP BY: /s/ Illegible -------------------------------------- Its: -------------------------------------- Address for Notices: First Interstate Bancorp P.O. Box 54068 Mail Sort T72-10 Los Angeles, CA 90054 Attention: William J. Bogaard, Esq. Telecopy: (213) 614-3741 WESTCORE TRUST By:/s/Jack D. Henderson ---------------------------------------------- Its:Chairman and President --------------------------------------------- Address for Notices: Jack D. Henderson, Esq., Chairman Clanahan, Tanner, Downing & Knowlton, P.C. 1600 Broadway, Suite 2400 Denver, CO 80202 Telecopy: (303) 830-0299 cc: W. Bruce McConnel, III, Esq. Drinker Biddle & Reath Philadelphia National Bank Building 1345 Chestnut Street Philadelphia, PA 19107-3496 Telecopy: (215) 988-2757 -5- EX-9.(E) 26 EXHIBIT 9(E) RETIREMENT PLAN ORDER PROCESSING AMENDMENT TO THE OPERATING AGREEMENT This Retirement Plan Order Processing Amendment is made as of February 15, 1996, by and between Charles Schwab & Co., Inc. ("Schwab"), a California corporation; The Charles Schwab Trust Company ("CSTC"), a California banking corporation; and Westcore Trust, a registered investment company ("Fund Company") listed on Schedule I hereto, executing this Amendment on its own behalf and on behalf of each of its series or classes of shares ("Fund(s)"), which are parties to an Operating Agreement with Schwab, made as of November 27, 1995, as amended thereafter ("Operating Agreement"), except such Funds as are listed on Schedule II hereto, which are excluded from this Amendment ("Excluded Funds"). This Amendment amends the Operating Agreement. In the event that there are no Funds, then the term "Fund(s)" shall mean "Fund Company." WHEREAS, Schwab and Fund Company, on its own behalf and on behalf of the Funds, have entered into the Operating Agreement pursuant to which shares of the Funds are made available for purchase and redemption by Schwab's brokerage customers through Schwab's Mutual Fund Marketplace-Registered Trademark- ("MFMP"); WHEREAS, Schwab has designated CSTC as its agent to perform certain functions under the Operating Agreement, including communication of aggregate purchase and redemption orders for Fund shares to each Fund, for which Schwab remains fully responsible to Fund Company and the Funds; WHEREAS, Schwab and Fund Company desire to amend the Operating Agreement to facilitate the purchase and redemption of Fund shares on behalf of certain retirement plans ("Plans") for which CSTC acts as trustee of the trust funds under the Plans and for which an entity identified on Schedule III, as amended by Schwab from time to time, acts as recordkeeper ("Recordkeeper"), subject to the terms and conditions of this Amendment; and WHEREAS, Fund Company wishes to appoint CSTC as a limited purpose co- transfer agent to each Fund's named transfer agent to facilitate such purchases and redemptions on behalf of the Plans, and CSTC wishes to accept this appointment. NOW THEREFORE, in consideration of the foregoing, and the mutual promises set forth below, the parties hereto agree as follows: 1. AGENCY APPOINTMENT AND ACCEPTANCE. Fund Company hereby appoints CSTC to be a limited purpose co-transfer agent to each Fund's named transfer agent for the purpose of receiving instructions in proper form from the persons designated to direct investment of the Plan assets ("Instructions") from which are derived orders for purchases and redemptions of Fund shares ("Orders"). CSTC hereby accepts the appointment as limited purpose co-transfer agent to each Fund's named transfer agent. 2. AGENTS OF CSTC. CSTC, as a co-transfer agent, may engage such subagents as it deems necessary, appropriate or desirable to carry out its obligation as a limited purpose co-transfer agent to each Fund's named transfer agent under Section 1 of this Amendment, pursuant to such terms as are consistent with the agreements set forth in this Amendment and as CSTC deems necessary, appropriate or desirable. CSTC shall, however, remain fully responsible to Fund Company and the Funds for any obligations performed by CSTC's agents under this Section 2. These agents of CSTC shall be the Recordkeepers and shall each be a service company and a limited purpose sub- transfer agent to CSTC as co-transfer agent to each Fund's named transfer agent. 3. CSTC'S RECEIPT AND TRANSMISSION OF ORDERS. CSTC agrees that (a) Orders derived from Instructions received by Recordkeepers prior to the close of the New York Stock Exchange (generally, 4:00 p.m. Eastern Time) ("Market Close") on any Business Day ("Day 1") will be transmitted by CSTC to the Fund by 10:00 a.m. Eastern Time on the next Business Day ("Day 2") provided that such Orders were funded by Day 1 Market Close (such Orders are referred to herein as "Day 1 Trades"); and (b) Orders derived from Instructions received by Recordkeepers after Market Close on any Business Day ("Day 1") will be transmitted by CSTC to the Fund by 10:00 a.m. Eastern Time -2- on the second Business Day following Day 1 ("Day 3") provided that such Orders were funded by Day 2 Market Close (such Orders are referred to herein as "Day 2 Trades"). 4. FUND'S PRICING OF ORDERS. Fund Company agrees that Day 1 Trades will be effected at the net asset value of each Fund's shares ("Net Asset Value") calculated as of Market Close on Day 1, provided such trades are received by the Fund by 10:00 a.m. Eastern Time on Day 2; and Day 2 Trades will be effected at the Net Asset Value calculated as of Market Close on Day 2, provided such trades are received by the Fund by 10:00 a.m. Eastern Time on Day 3 Fund Company agrees that, consistent with the foregoing, Day 1 Trades will have been received by the Fund prior to Market Close on Day 1, and Day 2 Trades will have been received by the Fund prior to Market Close on Day 2 for all purposes, including, without limitation, effecting distributions. 5. SETTLEMENT. In accordance with the Operating Agreement, Schwab and Fund Company will settle Day 1 Trades on Day 2 and will settle Day 2 Trades on Day 3. 6. PROVISION OF NET ASSET VALUE. In accordance with the Operating Agreement, Fund Company will provide Schwab the Net Asset Value calculated as of Market Close on each Business Day by 7:00 p.m. Eastern Time on such Business Day. 7. REPRESENTATIONS AND WARRANTIES AS TO TRANSFER AGENCY. CSTC represents and warrants that it is registered as a transfer agent under Section 17A of the Securities Exchange Act of 1934, as amended ("1934 Act"), and CSTC will amend its TA-1 filing to disclose its appointment pursuant to this Amendment as a limited purpose co-transfer agent to each Fund's named transfer agent. CSTC further represents and warrants that each Recordkeeper appointed by CSTC pursuant to Section 2 of this Amendment shall be registered as a transfer agent under Section 17A of the 1934 Act, and that it shall cause each Recordkeeper to amend its TA-1 to disclose its appointment as a service -3- company and a limited purpose sub-transfer agent to CSTC as co-transfer agent to each Fund's named transfer agent. Fund Company represents and warrants that the Funds' named transfer agent is set forth on Schedule IV hereto, as revised by Fund Company from time to time. 8. BOOKS AND RECORDS. To the extent required under the Investment Company Act of 1940, as amended ("1940 Act"), and the rules thereunder, CSTC agrees that such records maintained by it or each Recordkeeper hereunder are the property of the Funds and will be preserved, maintained, and made available in accordance with the 1940 Act and the rules thereunder. Copies, or if required originals, of such records shall be surrendered promptly to a Fund and its agents (or independent accountants) upon request. This Section 8 shall survive termination of this Amendment. 9. ROLE AND RELATIONSHIP OF CSTC. The parties acknowledge and agree that, except as specifically provided in this Amendment, and for the sole and limited purpose set forth herein, CSTC acts as an agent for Schwab under the Operating Agreement in connection with the effectuation of Orders subject to this Amendment. CSTC shall not be nor hold itself out as an agent of any Fund other than as provided herein. 10. ROLE AND RELATIONSHIP OF RECORDKEEPERS. The parties acknowledge and agree that, except as specifically provided in this Amendment and for the sole and limited purpose set forth herein, the Recordkeepers act as agents of the Plans in connection with the effectuation of Orders subject to this Amendment. The parties agree that the Recordkeepers are not agents of the Funds other than as provided herein, and CSTC shall ensure that the Recordkeepers do not hold themselves out as an agent of any Fund other than as provided herein. 11. INSURANCE COVERAGE. CSTC shall maintain, and shall cause each Recordkeeper to maintain, general liability insurance, at all times that this Amendment is in effect, that is reasonable and customary in light of its -4- duties hereunder. Such general liability insurance coverage shall be issued by a qualified insurance carrier, with limits of not less than $5 million. 12. EFFECTIVENESS AND TERMINATION. This Amendment shall become effective 10 days after written notice by Schwab to Fund Company. Once effective, Fund Company will provide Schwab and CSTC 90 days' prior written notice if purchase orders for a Fund's shares may no longer be effected in accordance with this Amendment. Such termination shall not affect the remaining provisions of this Amendment as to such Fund, and redemption orders shall continue to be effected pursuant to this Amendment. Schwab and CSTC may terminate this Amendment as to a Fund upon 90 days' prior written notice to Fund Company. Any termination of the Operating Agreement by Fund Company shall not apply to transactions effected pursuant to this Amendment prior to 90 days after the date the Fund Company provides written notice of such termination to Schwab and CSTC. 13. INDEMNIFICATION. Schwab and CSTC, on the one hand, and Fund Company, on the other, agree to indemnify and hold harmless Fund Company, on the one hand, and Schwab and CSTC, on the other, together with each of its trustees, directors, officers, employees and agents, from and against any and all losses, liabilities, demands, claims, actions and expenses (including, without limitation, reasonable attorney's fees) ("Losses") arising out of or in connection with any breach by Schwab or CSTC, on the one hand, and Fund Company, on the other, of its obligations under this Amendment, except to the extent such breach was a direct consequence of an act or omission of an indemnified party constituting negligence or willful misconduct. In no event will any party be liable for consequential, incidental, special or indirect damages resulting to an indemnified party subject to this Amendment. This Section 13 shall survive termination of this Amendment. 14. PROPRIETARY INFORMATION. The parties agree that all books, records, information, and data pertaining to the business of the other party which are exchanged or received pursuant to the negotiation or carrying out of -5- this Amendment, including but not limited to the information on Schedule III, as amended by Schwab from time to time, and any reports regarding Fund shareholdings of the Plans or the Recordkeepers that CSTC may provide to Fund Company from time to time as part of its obligations as a limited purpose co- transfer agent to each Fund's named transfer agent, shall be kept confidential and shall not be otherwise used or voluntarily disclosed to any other person, except as may be required by law or judicial process. Fund Company expressly agrees not to use nor permit others to use any such books, records, information, or data to solicit Plans, sponsors of Plans, or Recordkeepers. This Section 14 shall survive termination of this Amendment. 15. EFFECT OF AMENDMENT. This Amendment is intended to amend and supplement the provisions of the Operating Agreement. In the event of a conflict between the provisions of this Amendment and the provisions of the Operating Agreement, the provisions of this Amendment shall control. All other provisions of the Operating Agreement shall remain in full force and effect. 16. The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987 (the "Trust Instrument"), which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made no individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust Property (as defined in the Trust Instrument, and all persons dealing with any class of shares of the -6- Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. CHARLES SCHWAB & CO., INC. WESTCORE TRUST, on its own behalf and on behalf of each Fund, except Excluded Funds listed on Schedule II By: hereto --------------------------- Colleen Hummer Senior Vice President/ Mutual Funds Operations Administration By: -------------------------------- Date: 4/15/96 Name: Kenneth V. Penland ------------------------- ------------------------------ Title: President THE CHARLES SCHWAB ----------------------------- TRUST COMPANY Date: 3/29/96 ------------------------------ By: --------------------------- Joann Ferguson Vice President Date: 4/25/96 ------------------------- -7- SCHEDULE I TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996 FUND COMPANY Westcore Trust Date: February 15, 1996 -8- SCHEDULE II TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996 EXCLUDED FUNDS Westcore Colorado Tax-Exempt Fund Date: February 15, 1996 -9- SCHEDULE III TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996 RECORDKEEPERS The Hampton Company Date: February 15, 1996 -10- SCHEDULE IV TO THE RETIREMENT PLAN ORDER PROCESSING AMENDMENT TO THE OPERATING AGREEMENT, MADE AS OF FEBRUARY 15, 1996 NAMED TRANSFER AGENT State Street Bank and Trust Company Date: February 15, 1996 -11- March 5, 1996 WESTCORE TRUST c/o ALPS Mutual Funds Services, Inc. 370 Seventeenth Street, Suite 2700 Denver, CO 80202 ALPS Mutual Funds Services, Inc. 370 Seventeenth Street, Suite 2700 Denver, CO 80202 Denver Investment Advisors LLC 1225 17th Street - 26th Floor Denver, CO 80202 State Street Bank & Trust Company 225 Franklin Street Boston, MA 02110 Re: Operating Agreement dated as of November 27, 1995 between Westcore Trust (the "Trust") and Charles Schwab & Co., Inc. ("Schwab") and Institutional Services Agreement dated as of November 27, 1995 among the Trust, Schwab, Denver Investment Advisors LLC and ALPS Mutual Funds Services, Inc. (the "Agreements") ------------------------------------------------------------ Dear Sirs: The Agreements referred to above require the Trust to adhere to certain requirements and procedures which the Trust accomplishes through you, as the Trust's service providers. By your signatures below, please signify that you will adhere to the requirements and procedures set forth in the Agreements, including, without limitation, as indicated on the attachment hereto. Yours truly, Westcore Trust By:/s/Kenneth V. Penland --------------------- Title: President ALPS Mutual Funds Services, Inc., Administrator Distributor and Bookkeeping and Pricing Agent By:/s/Jim Hyatt -------------------------------- Title: General Counsel Denver Investment Advisers LLC, as Administrator and Adviser By:/s/Illegible -------------------------------- Title: State Street Bank & Trust Company, as Transfer Agent -12- By:/s/Illegible -------------------------------- Title: -13- Certain Westcore Duties under Schwab Agreements for which Service Providers Acknowledge Responsibility Administrators will comply with Services Agreement Section 6(b) (relating to furnishing copies of prospectus/SAI changes to Schwab). Administrators, Distributor and Transfer Agent will comply with Operating Agreement Section 5(a) (including provision that Schwab's name will not be used without Schwab's prior written consent). Administrators, Distributor and Transfer Agent will comply with Operating Agreement Section 6 (relating to confidentiality). Transfer Agent will comply with Operating Procedures Section 1(d) (including provision relating to keeping the Schwab account open even if it shrinks below minimum size, and giving Schwab notice before closing an inactive account). Transfer Agent and Administrators will comply with Section 3 of Operating Procedures (relating to Settlement of Transaction procedures). Transfer Agent and Administrators will comply with Operating Procedures Section 4(c) (relating to timely provision of statements to Schwab). Administrators and Bookkeeping and Pricing Agent will comply with Operating Procedures Section 5 (relating to providing pricing information to Schwab). Administrators, Transfer Agent and Bookkeeping and Pricing Agent will comply with Operating Procedures Section 6 (relating to distributions). Bookkeeping and Pricing Agent, Administrators and Transfer Agent will comply with Operating Procedures Section 7(a), (c) and (d) (relating to communicating pricing errors to Schwab and making adjustments as indicated in the procedures). Transfer Agent will comply with Operating Procedures Section 9 (relating to account transfer procedures). Administrators and Transfer Agent will comply with Operating Procedures Section 10(a) and 10(b) (relating to Schwab's procedures for mailing proxies, annual reports, prospectuses, supplements etc.). Administrators will comply with Operating Procedures Section 10(d) (relating to maintaining Schwab's requested language in the prospectus). Administrators will comply with Operating Procedures Section 11 (relating to cooperation with Schwab regarding new processing systems for MFMP). Administrators will be responsible for notifying Schwab of any changes in the information in the Fund Information Questionnaire in Exhibit B or in the Fund Contacts Sheet in Exhibit C. The Administrators, Distributor, Transfer Agent and Adviser are responsible for the matters set forth in Operating Agreement Sections 2(a) and (b), 3(a) and (b) and 4(a) in accordance with their respective service agreements with the Trust. (These sections relate, in general, to Blue Sky compliance; compliance with laws, rules and regulations and rules and regulations of self-regulatory organizations; gathering of 5% shareholder information.) The Distributor makes the representation set forth in Operating Agreement Section 4(a) (relating to compliance by each Fund with NASD Rules of Fair Practice Article III, Section 26, with enables a NASD member to offer or self- fund the share). - 2 - CHARLES SCHWAB Mutual Fund Marketplace-Registered Trademark- INSTITUTIONAL SERVICES AGREEMENT This Agreement is made as of November 27, 1995, between Charles Schwab Co., Inc. ("Schwab"), a California corporation, each registered investment company ("Fund Company") executing this Agreement, on its own behalf and on behalf of each of the series or classes of shares, if any, listed on Schedule I, as amended from time to time (such series or classes being referred to as the "Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement. Fund Company and Fund Affiliate are collectively referred to herein as "Fund Parties." In the event that there are no series or classes of shares listed on Schedule I, the term "Fund(s)" shall mean "Fund Company". WHEREAS, Fund Affiliate is either (i) an investment adviser to or administrator for the Funds or (ii) the principal underwriter or distributor for the Funds. WHEREAS, Fund Parties wish to have Schwab perform certain recordkeeping, shareholder communication, and other services for each Fund; and WHEREAS, Schwab is willing to perform such services on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. SERVICES a. During the term of this Agreement, Schwab shall perform the services set forth on Exhibit A hereto, as such exhibit may be amended from time to time by mutual consent of the parties (the "Services"). b. In processing purchase, redemption, transfer and exchange orders placed by Schwab on behalf of its customers, and in order to facilitate Schwab's performance of Services, the parties agree that the Operating Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as amended from time to time ("Operating Agreement"), is incorporated herein by this reference. All terms and conditions of the Operating Agreement shall be binding as between Schwab and Fund Parties, and the references to Fund Company therein shall be deemed to mean Fund Parties for the purposes of this Agreement. In the event of any inconsistency between the Operating Agreement and this Agreement, this Agreement shall control. 2. FEES For the Services, Schwab shall receive a fee (the "Fee") which shall be calculated and paid in accordance with Exhibit B hereto. Schedule II reflects the amount of the Fee that each Fund Party has agreed, as between them, to pay. Should Exhibit A be amended to revise the Services, the parties shall also amend Exhibit B and Schedule II, if necessary, in order to reflect any changes in the Fee. 3. TRANSACTION CHARGES Schwab shall not, during the term of this Agreement, assess against or collect from its customers any transaction fee upon the purchase or redemption of any Fund's shares that are considered in calculating the Fee. The parties acknowledge and agree that Schwab may collect such transaction fees from certain customers (including "Active Traders," as Schwab may define that term) for certain special trading services and from other customers upon such other customers' redemption of certain shares. The value of shares as to which such transaction fees are charged will not be included in the calculation of the Fee. 4. INDEMNIFICATION a. Schwab shall indemnify and hold harmless Fund Parties and their directors, officers, employees, and agents ("Indemnified Parties") from and against any and all losses, claims, liabilities and expenses (including reasonable attorney's fees) ("Losses") incurred by any of them arising out of (i) Schwab's dissemination of information regarding Fund Parties or a Fund that is materially incorrect and that was not provided to Schwab, or approved, by a Fund Party, its affiliated persons ("Affiliates") as defined under the Investment Company Act of 1940, as amended (the "1940 Act"), or agents or (ii) Schwab's willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement, except to the extent such Losses result from the negligence, willful misconduct or breach of this Agreement by an Indemnified Party. b. In any event, no party shall be liable for any special, consequential or incidental damages. 5. ROLE AND RELATIONSHIP OF SCHWAB The parties acknowledge and agree that the Services under this Agreement are recordkeeping, shareholder communication and related services only and are not the services of an underwriter or a principal underwriter of any Fund within the meaning of the Securities Act of 1933, as amended, or the 1940 Act. This Agreement does not grant Schwab any right to purchase shares from any Fund (although it does not preclude Schwab from purchasing any such shares), nor does it constitute Schwab an agent of Fund Parties or any Fund for purposes of selling shares of any Fund to any dealer or the public. To the extent Schwab is involved in the purchase of shares of any Fund by Schwab's customers, such involvement will be is agent of such customer only. 6. INFORMATION TO BE PROVIDED Fund Parties shall provide to Schwab prior to the effectiveness of this Agreement or as soon thereafter as practicable: a. Certified resolutions of the board of directors of each Fund Party authorizing the Fund Party to enter into this Agreement and indicating the officers authorized to execute this Agreement on behalf of the Fund Party; and b. Two (2) copies of the then-current prospectus and statement of additional information of each Fund. Fund Party shall provide Schwab with written copies of any amendments to or changes in the Fund's prospectus or statement of additional information as soon at practicable after such amendments or changes become available. -2- 7. NOTICES All notices required by this Agreement (excluding the Operating Agreement) shall be in writing and delivered personally or sent by first class mail. Such notices will be deemed to have been received as of the earlier of actual physical receipt or three (3) days after deposit, first class postage prepaid, in the United States mail. All such notices shall be made: if to Schwab, to: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 Attention: John McGonigle Senior Vice President/Mutual Funds with a copy to: General Counsel, at the same address; if to Fund Party, to the address given below in the signature block. 8. NONEXCLUSIVITY Each Party acknowledges that the other may enter into agreements similar to this Agreement with other parties for the performance of services similar to those to be provided under this Agreement, unless otherwise agreed to in writing by the parties. 9. ASSIGNABILITY This Agreement is not assignable by any party without the other parties' prior written consents and any attempted assignment in contravention hereof shall be null and void; provided, however, that Schwab may, without the consent of Fund Parties, assign its rights and obligations under this Agreement to any Affiliate. 10. EXHIBITS AND SCHEDULES All Exhibits and Schedules attached to this Agreement, as they may be amended from time to time. are by this reference incorporated into and made a part of this Agreement. 11. ENTIRE AGREEMENT: AMENDMENT This Agreement (including the Exhibits and Schedules hereto), together with the Operating Agreement, constitute the entire agreement between the parties as to the subject matter hereof and supersede any and all agreements, representations and warranties, written or oral, regarding such subject matter made prior to the time at which this Agreement has been executed and delivered by Schwab and Fund Parties. This Agreement and the Exhibits and Schedules hereto may be amended only by a writing executed by each party hereto that is to be bound by such amendment. 12. GOVERNING LAW This Agreement will be governed by and interpreted under the laws of the State of California as applied to contracts entered into and to be performed entirely within that state. -3- 13. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 14. EFFECTIVENESS OF AGREEMENT; TERMINATION a. This Agreement will become effective as to a Fund as of the later of (i) the date set forth on Schedule I opposite the name of the Fund or (ii) such later date as Schwab may, in its discretion, designate. b. This Agreement may be terminated as to a Fund by any party (i) upon ninety (90) days' written notice to the other parties or (ii) upon such shorter notice as is required by law, order, or instruction by a court of competent jurisdiction or a regulatory body or self-regulatory organization with jurisdiction over the terminating party or (iii) automatically, effective on the day following the termination of any plan of distribution ("Rule 12b Plan") adopted and maintained pursuant to Rule 12b under the 1940 Act by any Fund that has a Rule 12b Plan in effect as of the effective date of this Agreement, provided that a portion of the Fee is paid pursuant to the Rule 12b Plan. c. After the date of termination as to a Fund, Fund Parties will not be obligated to pay the Fee with respect to any shares of the Fund that are first held in Schwab customer accounts after the date of such termination. However, notwithstanding any such termination, Fund Parties will remain obligated to pay Schwab the Fee as to each share of the Fund that was considered in the calculation of the Fee as of the date of termination (a "Pre-Termination Share"), for so long as such Pre-Termination Share is held in any Schwab brokerage account and Schwab continues to perform substantially all of the Services as to such Pre-Termination Share. Further, for so long as Schwab continues to perform the Services as to any Pre-Termination Shares, this Agreement will otherwise remain in full force and effect as to such Pre- Termination Shares. Fund Parties shall reimburse Schwab promptly for any reasonable expenses Schwab incurs in affecting any termination of this Agreement, including delivery to a Fund Party of any records, instruments, or documents reasonably requested by the Fund Party. 15. The name "Westcore Trust" and references in this Agreement to "Fund Company" refer to the Trust created under an Amended and Restated Declaration of Trust dated November 19, 1987, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of Westcore Trust entered into the name or on behalf thereof by any of its Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust, and all persons dealing with the Trust must look solely to the Trust for the enforcement of any claims against the Trust. -4- IN WITNESS WHEREOF, the parties have executed this Agreement by a duly authorized representative of the parties hereto. CHARLES SCHWAB & CO., INC. By: --------------------------------- John McGonigle Senior Vice President/Mutual Funds Date: ------------------------------- DENVER INVESTMENT ADVISORS LLC WESTCORE TRUST [Name of Fund Affiliate] [Name of Fund Company] By: By: --------------------------- --------------------------- Name: Kenneth V. Penland Name: Kenneth V. Penland -------------------------- --------------------------- Title: Chairman Title: Chairman -------------------------- --------------------------- Address: 1225 17th St., 26th Fl. Address: 370 17th St., Suite 2700 ------------------------ ------------------------- Denver, CO 80202 Denver, CO 80202 - -------------------------------- --------------------------------- Attn: Steve Wine Attn: Nancy Timm --------------------------- ---------------------------- Date: 11/27/95 Date: 11/27/95 --------------------------- ---------------------------- -5- EXHIBIT A SERVICES 1. RECORD MAINTENANCE Schwab shall maintain the following records with respect to a Fund for each customer who holds Fund shares in a Schwab brokerage account: a. Number of shares; b. Date, price and amount of purchases and redemptions (including dividend reinvestments) and dates and amounts of dividends paid for at least the current year to date; c. Name and address of the customer, including zip codes and social security numbers or taxpayer identification numbers; d. Records of distributions and dividend payments; e. Any transfers of shares; and f. Overall control records. 2. SHAREHOLDER COMMUNICATIONS Schwab shall: a. Provide to a shareholder mailing agent employed by each Fund for the purpose of mailing certain Fund-related materials the names and addresses of all Schwab customers who hold shares of such Fund in their Schwab brokerage accounts. Such shareholder mailing agent shall be a person or entity engaged by such Fund in accordance with the Operating Agreement and the Fund- related materials to be sent by such agent shall consist of updated prospectuses and any supplements and amendments thereto, annual and other periodic reports, proxy or information statements and other appropriate shareholder communications; b. Mail current Fund prospectuses and statements of additional information and annual and other periodic reports upon customer request and, as applicable, with confirmation statements; c. Mail statements to customers on a monthly basis (or, as to accounts in which there has been no activity in a particular month, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset value of such Fund as of a recent date; d. Produce and mail to customers confirmation statements reflecting purchases and redemptions of shares of each Fund in Schwab brokerage accounts; e. Respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates; and f. With respect to Fund shares purchased by customers after the effective date of this Agreement, provide average cost basis reporting to the customers to assist them in preparation of income tax returns. 3. TRANSACTIONAL SERVICES Schwab shall communicate, as to shares of each Fund, purchase, redemption and exchange orders reflecting the orders it receives from its A-1 customers. Schwab shall also communicate, as to shares of each Fund, mergers, splits and other reorganization activities. 4. TAX INFORMATION RETURNS AND REPORTS Schwab shall prepare and File with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting (i) dividends and other distributions made, (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations, and (iii) gross proceeds of sales transactions as required. 5. FUND COMMUNICATIONS Schwab shall, on a daily basis and for each Fund, report the number of shares on which the Fee is to be paid pursuant to this Agreement and the number of shares on which no such Fee is to be paid. Schwab shall also provide each Fund with monthly summaries of reports. Such summaries shall be expressed in both shares and dollar amounts. A-2 EXHIBIT B CALCULATION OF FEE 1. The Fee shall be calculated by multiplying the Daily Value of Qualifying Shares (defined below) times the appropriate Fee Rate (indicated below). The Fee shall be computed daily and paid monthly in arrears. 2. The Daily Value of Qualifying Shares is the aggregate daily value of all shares of the Fund held in Schwab brokerage accounts, subject to the following exclusions ("Qualifying Shares"). There shall be excluded from the shares (i) shares as to which a brokerage customer paid Schwab a transaction fee upon the purchase of such shares, (ii) shares held in a Schwab brokerage account prior to the effective date of this Agreement as to the Fund and (iii) shares first held in a Schwab brokerage account after the termination of this Agreement as to the Fund. 3. The Fee Rate is determined based on the aggregate value of the Qualifying Shares of all Funds listed on all Schedule I's, as amended from time to time, as of the prior review date. The review dates are December 31 and June 30. The Fee Rate is effective from the next business day following the review date up to and including the next review date. The Fee Rates are as follows: Aggregate Value of Qualifying Shares Fee Rate ------------------ -------- Up to and including $500 million basis points per annum Over $500 million basis points per annum The rate scale is not intended to produce a "blended rate." Rather, once a threshold is reached, the rate applicable to the total amount of assets will be used for all assets. Thus, if the aggregate value of Qualifying Shams of all such Funds is $501 million as of a review date, the Fee Rate will be basis points (to be applied to the Daily Value of Qualifying Shares) until the next review date. 4. For purposes of this Exhibit, the daily value of the shares of each Fund will be the net asset value reported by such Fund to the National Association of Securities Dealers, Inc. Automated Quotation System. No adjustments will be made to the net asset values to correct errors in the net asset values so reported for any day unless such error is corrected and the corrected net asset value per share is reported to Schwab before 5 o'clock. p.m., San Francisco time, on the first business day after the day to which the error relates. 5. At the request of Fund Parties, Schwab shall provide, on each business day, a statement detailing the calculation for each Fund, the aggregate value of the Qualifying Shares of each Fund and the amount of the Fee for each Fund. As soon as practicable after the end of the month, Schwab shall also provide to Fund Parties an invoice for the amount of the Fee due for each Fund. In the calculation of such Fee, Schwab's records shall govern unless an error can be shown in the number of shares used in such calculation. 6. Fund Parties shall pay Schwab the Fee within thirty (30) days after Fund Parties' receipt of such statement. Such payment shall be by wire transfer, unless the amount thereof is less than $250. Such wire transfers shall be separate from wire transfers of redemption proceeds or distributions under the Operating Agreement. Amounts less than $250 may, at Fund Parties' discretion, be paid by check. B-1 SCHEDULE I TO THE SERVICES AGREEMENT Fund Effective Date ---- -------------- Westcore Midco Growth Fund* November 27, 1995 Westcore Blue Chip Fund* November 27, 1995 Westcore Equity Income Fund* November 27, 1995 Westcore Small-Cap Opportunity Fund* November 27, 1995 Westcore Long-Term Bond Fund* November 27, 1995 Westcore Intermediate-Term Bond Fund* November 27, 1995 Westcore Colorado Tax-Exempt Fund* November 27, 1995 *Indicates that Fund is a "no load" or "no sales charge" Fund as defined in Section 26 of the NASD's Rules of Fair Practice. WESTCORE TRUST [Name of Fund Company] By: --------------------------------- Name: Kenneth V. Penland ------------------------------- Title: President ------------------------------ Date: 11/27/95 ------------------------------ ACKNOWLEDGED BY DENVER INVESTMENT ADVISORS LLC ACCEPTED BY CHARLES SCHWAB & CO., INC. [Name of Fund Affiliate] By: By: --------------------------- ----------------------------------- Name: Kenneth V. Penland John McGonigle ------------------------- Senior Vice President/Mutual Funds Title: Chairman Date: ------------------------ --------------------------------- Date: 11/27/95 ------------------------ SCHEDULE II TO THE SERVICES AGREEMENT Aggregate Value of Qualifying Shares ------------------------------------ Up to and including $500 Million Over $500 Million ------------- ----------------- Fund Company: - ------------ % % ---------- ---------- Fund Affiliate: - -------------- Denver Investment Advisors LLC % % ---------- ---------- Fee Rate Percentage Per Annum of Average Daily Value of Fund Shares % % CHARLES SCHWAB Mutual Fund Marketplace-Registered Trademark- OPERATING AGREEMENT This Agreement is made as of November 27, 1995, between Charles Schwab & Co., Inc. ("Schwab"), a California corporation, and each registered investment company executing this Agreement ("Fund Company"), on its own behalf and on behalf of each of the series or classes of shares, if any, listed on Schedule I, as amended from time to time (such series or classes being referred to as the "Fund(s)"). In the event there are no series or classes of shares listed on Schedule I, then the term "Fund(s)" shall mean "Fund Company". WHEREAS, Fund Company wishes to have shares of the Fund(s) available for purchase and redemption by Schwab's brokerage customers through Schwab's Mutual Fund Marketplace-Registered Trademark- ("MFMP"); WHEREAS, certain policies, procedures and information are necessary to enable the Fund(s) to participate in the MFMP; and WHEREAS, Schwab is willing to permit the Fund(s) to participate in its MFMP pursuant to the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. OPERATING PROCEDURES Schwab will open an omnibus account (the "Account") with each Fund through which it will purchase and redeem shares, settle transactions, reconcile transactions, obtain pricing, reinvest distributions and maintain records in accordance with the Operating Procedures set forth in Exhibit A hereto. In addition, the parties agree to transfer accounts, communicate with Fund shareholders and perform other obligations in accordance with the Operating Procedures. 2. REGISTRATION REQUIREMENTS a. Schwab will only place purchase orders for shares of a Fund on behalf of its customers whose addresses recorded on Schwab's books are in states or other jurisdictions in which Fund Company has advised Schwab that such Fund has registered or qualified its shares for sale under applicable law. Fund Company shall advise Schwab immediately if any such registration or qualification is terminated or if it wishes Schwab not to place purchase orders for a Fund on behalf of its customers who reside in a particular state or jurisdiction. b. Schwab will, upon request, (i) furnish Fund Company with monthly written statement the number of shares of each Fund purchased on behalf of Schwab customers resident in one or more states or jurisdictions indicated by Fund Company or (ii) on a daily basis, transmit to an electronic database provider with whom Schwab has established effective systems interfaces information regarding the number of shares of each Fund sold in each state for retrieval by Fund Company. Fund Company shall be responsible for all reasonable fees and other reasonable charges of such database provider in connection with Schwab's transmission of such information to and Fund Company's retrieval of such information from such database provider. c. Fund Company agrees that any recession offer that is made to shareholders who own shares directly with a Fund will also be made to Schwab customers who would be entitled to such remission offer if they owned shares directly with the Fund. Fund Company will provide Schwab with a letter on Fund Company letterhead containing the terms of any such recission offer, and Schwab may send this writing, or any derivation thereof, to the affected Schwab customers. To assist Fund Company in effecting any such recission offer, Schwab agrees to provide Fund Company with relevant information regarding any affected Schwab customer, including the account number, the number of shares purchased and redeemed, if any, the dates of the purchase(s) and redemption(s), if any, and the dollar amount of such transactions. 3. COMPLIANCE RESPONSIBILITIES a. Fund Company is responsible for (i) the compliance of each prospectus, registration statement, annual or other periodic report, proxy statement and item of advertising or marketing material of or relating to each Fund with all applicable laws, rules and regulations (except for advertising or marketing material prepared by Schwab that was not published or provided to Schwab by Fund Company or any Affiliate (defined below) or accurately derived from information published or provided by them), (ii) the distribution and tabulation of proxies in accordance with all applicable laws, regulations (except for such proxy related services provided by Schwab's mailing agent), (iii) the registration or qualification of the shares of each Fund under all applicable laws, rules and regulations, and (iv) the compliance by Fund Company and each "affiliated person" of Fund Company as that term is defined under the Investment Company of 1940, as amended ("1940 Act"), herein referred to as "Affiliate" with all applicable laws, rules and regulations (including the 1940 Act and the Investment Advisers Act of 1940, as amended), and the rules and regulations of each self-regulatory organization with jurisdiction over Fund Company or Affiliate, except to the extent that the failure to so comply by Fund Company or any Affiliate is caused by Schwab's breach of this Agreement. b. In the event that the Account holds more than five percent (5%) of the outstanding Fund shares, Fund Company will be responsible for requesting Schwab to confirm its status as shareholder of record and to confirm whether any Schwab customer beneficially owns more than five percent (5%) of the outstanding Fund shares through its Schwab brokerage account. For this purpose, Fund Company shall indicate in its inquiry the number of Fund shares that equal five percent (5%) of outstanding Fund shares. Schwab shall promptly reply to any such inquiries. c. Schwab is responsible for Schwab's compliance with all applicable laws, rules and regulations governing Schwab's performance under this Agreement, except to the extent that Schwab's failure to comply with any law, rule or regulation is caused by Fund Company's breach of this Agreement. d. Except as set forth in this Agreement or as otherwise agreed upon in writing by the parties, any communication, instruction or notice made pursuant to this Agreement shall be made orally, provided that such oral communication is on a recorded telephone line or is promptly confirmed in writing by facsimile transmission. Schwab is entitled to rely on any communications, instructions or notices which it reasonably believes were provided to it by Fund Company, any Affiliate or their agents authorized to provide such communications, instructions or notices to Schwab, and on communications, instructions or notices provided to it by its customers. Fund Company is entitled to rely on any communications, instructions or notices it reasonably believes were provided to it by Schwab, or its agents authorized to provide such communications, instructions or notices to Fund Company. -2- e. Except to the extent otherwise expressly provided in this Agreement, neither party assumes any responsibility hereunder, or will be liable to the other, for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control. f. Fund Company and each Fund shall indemnify and hold harmless Schwab and each director, officer, employee and agent of Schwab from and against any and all losses, claims, liabilities and expenses (including reasonable attorney's fees) ("Losses") incurred by any of them arising out of (i) any untrue statement of material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in any prospectus, registration statement, annual or other periodic report or proxy statement of the Fund or in any advertising or promotional material generated by Fund Company or any Affiliate or accurately derived from information published or provided by Fund Company or any Affiliate, (ii) any violation or any law, rule or regulation relating to the registration or qualification of shares of the Fund, (iii) any breach by Fund Company of any representation, warranty or agreement contained in this Agreement, or (iv) any willful misconduct or negligence by Fund Company or a Fund in the performance of, or failure to perform, its obligations under this Agreement, except to the extent such Losses are caused by Schwab's breach of this Agreement or its willful misconduct or negligence in the performance, or failure to perform, its obligations under this Agreement. This Section 3(f) shall survive termination of this Agreement. 4. REPRESENTATIONS AND WARRANTIES a. Fund Company represents and warrants to Schwab that each Fund is in compliance with the conditions and qualifications set forth in the Rules of Fair Practice of the National Association of Securities Dealers, Inc. ("NASD"), Article III, Section 26, as amended from time to time ("Section 26"), which enable an NASD member to offer or sell shares in the Fund. Fund Company represents and warrants that each Fund marked with an asterisk on Schedule I is a "no load" or "no sales charge" Fund as defined in Section 26. If a Fund, for any reason, fails to satisfy the terms and conditions of Section 26, Fund Company will notify Schwab immediately of the Fund's disqualification and the reason therefor. b. Schwab represents and warrants that Schwab is a member of the NASD. 5. USE OF PARTIES' NAMES a. Without Schwab's prior written consent, Fund Company will not cause or permit the use, description, or reference to Schwab, or to the relationship contemplated by this Agreement in any advertisement or promotional materials or activities. b. Fund Company authorizes Schwab to use the names or other identifying marks of, and certain information about, Fund Company and Fund in connection with the operation of the MFMP. Fund Company may withdraw this authorization as to any particular use of any such name or identifying marks at any time (i) upon Fund Company's reasonable determination that such use would have a material adverse effect on the reputation or marketing efforts of Fund Company or such Fund, or (ii) if any of the Funds cease to be available through the MFMP; provided, however, that Schwab may, in its discretion, continue to use materials prepared or printed prior to the withdrawal of such authorization or in the process of being prepared or printed at the time of such withdrawal. -3- 6. PROPRIETARY INFORMATION Each party hereto acknowledges that the identities of the other party's customers, information maintained by such other party regarding those customers, and all computer programs and procedures developed by such other party or such other party's Affiliates or agents in connection with such other party's performance of its duties hereunder constitute the valuable property of such other party. Each party agrees that should it come into possession of any list or compilation of the identities of or other information about the other party's customers, or any other property of such party, pursuant to this Agreement or any other agreement related to services under this Agreement, the party who acquired such information or property shall use its best efforts to hold such information or property in confidence and refrain from using, disclosing, or distributing any of such information or other property, except (i) with the other party's prior written consent, or (ii) as required by law or judicial process. Each party acknowledges that any breach of the foregoing agreements as to another party would result in immediate and irreparable harm to such other party for which there would be no adequate remedy at law and agrees that in the event of such a breach such other party will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 7. ASSIGNABILITY This Agreement is not assignable by either party without the other party's prior written consent, and any attempted assignment in contravention hereof shall be null and void; provided, however, that Schwab may, without the consent of Fund Company, assign its rights and obligations under this Agreement to any Affiliate. 8. EXHIBITS AND SCHEDULES All Exhibits and Schedules to this Agreement, as they may be amended from time to time, are by this reference incorporated into and made a part of this Agreement. 9. AMENDMENT This Agreement may be amended only by a writing executed by each party hereto that is to be bound by such amendment, except as provided in this Section 9. Exhibit A may be amended by Schwab on forty (40) days' written notice to Fund Company or such earlier time as shall be agreed to by the parties. Exhibits B and C shall be amended by Fund Company in the event of any change to the information contained therein. 10. GOVERNING LAW This Agreement will be governed by and interpreted under the laws of the State of California, as applied to contracts entered into and to be performed entirely within the state. 11. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. -4- 12. EFFECTIVENESS AND TERMINATION a. The effective date of this Agreement as to any Fund is the later of the date set forth opposite the name of the Fund on Schedule I or the date Schedule I is accepted by Schwab. b. This Agreement may be terminated as to any Fund by Schwab immediately upon written notice to Fund Company. This Agreement may be terminated as to any Fund by Fund Company upon thirty (30) days' written notice to Schwab. c. Upon the termination date for any Fund, Schwab will no longer make the Fund shares available for purchase by Schwab's customers through the MFMP. Schwab reserves the right to transfer the Fund shares of its customers out of the Account. If Schwab continues to hold the Fund shares on behalf of its customers in the Account, the parties agree to be obligated under, and act in accordance with, the terms and conditions of this Agreement with respect to such shares. 13. The name "Westcore Trust" and references in this Agreement to "Fund Company" refer to the Trust created under an Amended and Restated Declaration of Trust dated November 19, 1987, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of Westcore Trust entered into the name or on behalf thereof by any of its Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust, and all persons dealing with the Trust must look solely to the Trust for the enforcement of any claims against the Trust. IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized representative of the parties hereto. CHARLES SCHWAB & CO., INC. WESTCORE TRUST, on its own behalf and on behalf of each of its Funds listed on Schedule I hereto as amended from time to time By: By: --------------------------- ------------------------------------ Colleen Hummer Senior Vice President/ Name: Kenneth V. Penland Mutual Funds ---------------------------------- Operations Administration Title: President --------------------------------- Date: By: 11/27/95 ------------------------- ------------------------------------ -5- SCHEDULE I TO THE OPERATING AGREEMENT Fund Effective Date ---- -------------- Westcore Midco Growth Fund* November 27, 1995 Westcore Blue Chip Fund* November 27, 1995 Westcore Equity Income Fund* November 27, 1995 Westcore Small-Cap Opportunity Fund* November 27, 1995 Westcore Long-Term Bond Fund* November 27, 1995 Westcore Intermediate-Term Bond Fund* November 27, 1995 Westcore Colorado Tax-Exempt Fund* November 27, 1995 *Indicates that Fund is a "no load" or "no sales charge" Fund as defined in Section 26 of the NASD's Rules of Fair Practice. WESTCORE TRUST [Name of Fund Company] By: --------------------------------- Title: President ------------------------------ Date: 11/27/95 ------------------------------ Accepted by Charles Schwab & Co., Inc. By: --------------------------------- Colleen Hummer Senior Vice President/Mutual Funds Operations Administration Date: ------------------------------- -6- EXHIBIT A OPERATING PROCEDURES 1. THE ACCOUNT a. Schwab will open an omnibus account with each Fund. The Account shall be registered: Charles Schwab & Co., Inc. Special Custody Account for the Exclusive Benefits of Customers Attention: Mutual Funds 101 Montgomery Street San Francisco, California 94104 The Account will be set up for the reinvestment of capital gains and dividend distributions. b. The Fund shall designate the Account with account numbers. Account numbers will be the means of identification when the parties are transacting in the Account. c. The parties acknowledge that the Account is an omnibus account in Schwab's name with shares held by any number of beneficial owners. Schwab represents that the shares in the Account are customer securities and are segregated from Schwab's own assets. Fund Company represents that the shares in the Account are carried free of any charge, lien or payment of any kind in favor of the Fund or any person claiming through the Fund. d. The Account shall be kept open on the Fund's books regardless of a lack of activity or small position size, except to the extent that Schwab takes specific action to close the Account, or to the extent the Fund's prospectus reserves the right to close accounts that are inactive. In the latter case, Fund Company will give prior notice to Schwab before closing any Account. e. Schwab has the right to open additional accounts from time to time to accommodate other investment options and features, and to consolidate existing accounts if and when appropriate to meet the needs of the MFMP. In the event that it is necessary for Schwab to open an account with a Fund for the payment of distributions in cash, the term "Account" shall mean both the account for the reinvestment of capital gains and dividend distributions and the account for the payment of distributions in cash. f. Schwab reserves the right to issue instructions to each fund to move shares between the Account and any other account Schwab may open. 2. PURCHASE AND REDEMPTION ORDERS For each day on which any Schwab customer places with Schwab a purchase or redemption order for shares of a Fund, Schwab shall aggregate all such purchase orders and aggregate all such redemption orders and communicate to the Fund an aggregate purchase order and an aggregate redemption order. Schwab will accept orders to purchase and redeem Fund shares from its customers no later than 1:00 P.M. Pacific Time (market close). Schwab will communicate the order to the Fund prior to a mutually agreed upon time. 3. SETTLEMENT OF TRANSACTIONS a. Schwab will transmit the purchase price of the aggregate purchase order to the Fund by wire transfer on the next business day after the trade date. For purposes of this Agreement, a "business day" is any day the New York Stock Orange is open for trading. b. For each business day on which Schwab places a redemption order for a Fund within the time designated by the Fund, Fund Company will cause the Fund(s) to send to Schwab the aggregate proceeds of all redemption orders for the Fund(s) placed by Schwab on that day. Such redemption proceeds will be sent by wire transfer on the next business day following the trade date for the redemption orders; provided that Fund Company may, in its discretion, send such proceeds by check if the aggregate amount is less than $250. Wire transfers of redemption proceeds shall be separate from wire transfers for other purposes. c. Each wire transfer of redemption proceeds shall indicate, on the FedFund's wire system the amount thereof attributable to each Fund; provided, however, that if the number of entries would be too great to be transmitted through the FedFund's wire system, Fund Company shall, on the day the wire is sent, notify Schwab of such entries. The cost of the wire transfer is the responsibility of the party sending the wire. The interest cost associated with any delayed wire is the responsibility of the party sending the wire. d. Should a Fund need to extend settlement on a trade, Fund Company must contact Schwab on trade date to discuss the extension. For purposes of determining the length of settlement, Fund Company agrees to treat shareholders that hold Fund shares through the Account the same as it treats shareholders that hold Fund shares directly with the Fund. e. In the event that a Fund cannot verify redemption proceeds, Fund Company will settle trades and forward redemption proceeds in accordance with this Agreement based on the information provided by Schwab. Schwab will be responsible for the accuracy of all trade information provided by it. f. If a trade is settled in error, Fund Company shall notify Schwab orally and confirm in writing the name of the Fund, the Account number and the date and amount of the error. If the error results in an overpayment to Schwab, it shall be corrected by debiting the Account. If the error results in an underpayment to Schwab, it shall be corrected by crediting the Account. g. Fund Company represents that each Fund that has reserved the right to redeem in kind has filed Form N-18F-1 with the Securities and Exchange Commission. For purposes of complying with the Fund's election on Form N-18F-1, Fund Company agrees that it will treat as a "shareholder" each shareholder that holds Fund shares through the Account, provided that Schwab provides to Fund Company, upon request, the name or account number, number of Fund shares and other relevant information for each such shareholder. Fund Company acknowledges that treatment of Schwab as the sole shareholder of Fund shares held in the Account for purposes of applying the limits in Rule 18f-1 under the 1940 Act would be inconsistent with the intent of Rule 18f-1 and the Fund's election on Form N-18F-1 and could unfairly prejudice shareholders that hold Fund shares through the Account. A-2 4. ACCOUNT RECONCILIATION REQUIREMENTS a. Schwab shall verify, on a next-day basis, orders placed for the Account with each Fund. All activity in the Account must be reflected. Therefore, any "as of" activity must be shown with its corresponding "as of" dates. b. The parties agree to notify each other and correct any error in the Account with any Fund upon discovery. Fund Company agrees to make best efforts to avoid any errors, made by Fund Company, any Fund or agents of Fund Company or the Fund and not corrected on a next day basis, from hindering any routine daily requests such as transactions, transfer, dividends, etc. Fund Company agrees to promptly notify Schwab of any adjustments to an Account with any Fund initiated by Fund Company, any Fund or any agent of either. c. Schwab must receive statements on or before the eighth business day of each month, even if there has been no activity in the Account during the period, unless Schwab can verify transactions by direct or indirect systems access. 5. PRICING Every business day on which there is a transaction in the Account and for each month-end business day, Fund Company will provide to Schwab prior to 7:00 p.m., Eastern Time, each Fund's closing net asset value and public offering price (if applicable) for that day and/or notification of no price for that day. Fund Company shall provide such information on a best efforts basis taking into consideration any extraordinary circumstances arising at the Fund (e.g., natural disasters, etc.). 6. DISTRIBUTIONS a. Fund Company shall provide distribution information to Schwab in a timely manner to enable Schwab to pay distributions to its customers on or as close to payable date as practicable. As to each Fund, Fund Company or such Fund shall provide Schwab with (i) the record date, ex-dividend date, and payable date with respect to a Fund as soon as practicable after it is announced, but no later than three (3) business days prior to record date, (ii) the record date share balance in the Account and the distribution rate per share on the first business day after record date, and (iii) the reinvest price per share as soon as it is available. Other distribution information contained in, and in the same format as, Schwab's Dividend Information Sheet (provided separately) shall be provided on such dates as are agreed upon between Schwab and Fund Company, but no later than payable date. b. As to each Fund, Schwab shall hold the information as to the amount of the pending distribution in strictest confidence, and shall use such information only for the purpose of computing the amounts of cash distributions to be paid to Schwab customers until Fund or Fund Company shall have made such information generally available to the public. Schwab will maintain and enforce rules and policies designed to protect against unauthorized access to, or use of, the information during such period by anyone other than Schwab employees who have a need to know the information for this purpose. c. Prior to 10:00 a.m., Eastern Time on the next business day following receipt of the reinvest price per share as provided in paragraph 6(a)(iii) above, Schwab shall notify Fund Company of the aggregate number of Fund shares with respect to which the purchase is required to be rescinded in order to pay the distribution in cash to Schwab customers who have elected to A-3 receive their capital gain distributions and/or dividends in cash. Fund Company agrees that the purchase of such aggregate number of Fund shares may be rescinded. Fund Company or such Fund shall wire the proceeds of such rescission from the Fund to the Account on the same business day. d. For each Fund that pays daily dividends, Fund Company shall provide on a daily basis, the following record date information: daily rate, account share balance, account accrual dividend amount (for that day), account accrual dividend amount (for period to date), and account transfers and period- to-date accrual amounts. e. In the event that Schwab maintains an Account with a Fund for the payment of distributions in cash, Fund Company shall wire, on payable date, any cash distribution from the Fund to the Account. f. Each Fund that declares dividends daily shall accrue dividends, commencing on the settlement date for the purchase of Fund shares and terminating on the trade date for the redemption of Fund shares. g. For annual tax reporting purposes, Fund Company shall inform Schwab of the portion of each Fund's distribution that include any of the following: foreign source income, tax exempt income by state of origin or return of capital. h. Schwab shall prepare and file with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting (i) dividends and other distributions made, (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations and (iii) gross proceeds of sales transactions as required. i. Upon notice from Fund Company, Schwab shall effect mergers, splits and other reorganization activities of a Fund for its customers. 7. PRICE AND DISTRIBUTION RATE ERRORS a. In the event adjustments are required to correct any error in the computation of the net asset value or public offering price of a Fund's shares or in the distribution rate for a Fund's shares, Fund Company shall notify Schwab as soon as possible after discovering the need for such adjustments. Notification can be made orally, but must be confirmed in writing. The letter shall be written on Fund Company letterhead and must state for each day on which an error occurred the incorrect price or rate, the correct price or rate, and the reason for the price or rate change. Fund Company agrees that Schwab may send this writing, or derivation thereof, to Schwab's customers whose accounts are affected by the price or rate change. b. If Schwab's customers have received amounts in excess of the amounts to which they are entitled, Schwab will, when requested by Fund Company, and to the extent practicable and permitted by law, debit its customers' brokerage accounts in the amount of such excess and repay it to the Fund. In no event, however, shall Schwab be liable to Fund Company or the Fund for any such amounts. c. If adjustment is necessary to correct an error which has caused Schwab's customers to receive amounts less than the amounts to which they are entitled, the Fund shall make all necessary adjustments to the number of shares owned in the Account and distribute to Schwab any and all amounts of the underpayment. Schwab will credit the appropriate amount of such payment to each Schwab customer. A-4 d. For purposes of making adjustments, including the collection of overpayments, Fund Company agrees to treat shareholders that hold Fund shares through the Account the same as it treats shareholders that hold Fund shares directly with the Fund. When making adjustments for an error, a Fund shall not net same day transactions in the Account. Schwab and Fund Company shall agree promptly and in good faith to a resolution of the error, and no adjustment for the error shall be taken in the account until such agreement is reached. 8. RECORD MAINTENANCE a. Schwab shall maintain records for each of its customers who holds Fund shares through the Account, which records shall include: i. Number of shares; ii. Date, price and amount of purchases and redemptions (including dividend reinvestments) and date and amounts of dividends paid for at least the current year to date; iii. Name and address of each of its customers, including zip codes and social security numbers or taxpayer identification numbers; iv. Records of distributions and dividend payments; v. Any transfers of shares; and vi. Overall control records. b. Schwab will be responsible for accurately posting transactions in Fund shares to its customers' brokerage accounts. 9. TRANSFER OF ACCOUNTS a. Fund Company agrees to transfer shares between accounts for Schwab customers or other street name brokers held directly with a Fund and the Account on the Fund's records. For the purpose of expediting direct transfers from accounts for Schwab customers, Fund Company will accept by facsimile transmission a summary sheet of information indicating the customers' names, account numbers, the Fund affected and the number of shares to be re-registered. For record keeping purposes, actual copies of transfer forms will be forwarded to a Fund upon its request for such forms. b. Schwab represents and warrants that for each transfer indicated in the summary sheet of information, it holds each underlying instruction for re-registration signed by its customer, and that its customer's signature on such instruction is signature guaranteed by Schwab pursuant to the New York Stock Exchange's Medallion Signature Program. c. Schwab agrees to indemnify and hold harmless Fund Company, the Fund and each director, officer, employee and agent of Fund Company ("indemnified person") from and against any and all Losses incurred by any of them arising out of the impropriety of any transfer effected by the Fund in reliance on the summary sheet of information, except to the extent such Losses arise out of the failure of any indemnified person to comply with the instructions on the summary sheet of information. d. Fund Company shall process all transfer requests into the appropriate Account. Schwab as custodian is qualified to accept in the Accounts shares from Fund IRA, Keogh or 401(k) accounts. At no time shall any Fund establish separate accounts registered to Schwab for the benefit of individual shareholders. In the event any such account is mistakenly opened, A-5 Schwab reserves the right to instruct such Fund to move Fund shares to the Account. e. Fund Company must confirm to Schwab the completion of each transfer on the day it occurs. The confirming information shall include the number of shares, date ("as of" date if unavoidable delay), transaction date, account number of the customer and the Account, registration, accrued dividends and account type (i.e., IRA, Keogh, 401(k), etc.). f. Transfer processing after record date but prior to payable date will include all accrued dividends. Each Fund is responsible for monitoring all completed full transfers for "trailing" dividends. Should a "trailing" dividend appear in an account, a Fund shall send such dividend to Schwab within five (5) business days, along with a specific written notification thereof. Notification shall include details of the dividend and customer, including the customer's social security number or taxpayer identification number, and/or the account number for the Account to which the transfer was made. g. If Schwab customers submit share certificates for transfer into their Schwab brokerage accounts, Schwab will send such certificates, properly endorsed to the applicable Fund, for transfer into Account with such Fund. Upon Schwab's request, Fund Company agrees to provide the status of said certificates and book share balances. 10. SHAREHOLDER COMMUNICATION a. Fund Company shall arrange with a mailing agent designated by Schwab for the distribution of the materials listed below to all of Schwab's customers who hold Fund shares, which distribution shall be so arranged by Fund Company as to occur immediately upon the effective date of the materials: i. All proxy or information statements prepared for circulation to shareholders of record of such Fund; ii. Annual reports; iii. Semi-annual reports; iv. Quarterly reports (if applicable); and v. All updated prospectuses, supplements and amendments thereto. Fund Company shall be responsible for providing the materials and for the mailing agent's fees in connection with this service as well as for timely distribution. Fund Company agrees to have the mailing agent consolidate mailings of material to shareholders of more than one Fund if the mailing is identical for all Funds in the Fund Company family. b. In addition to the materials listed above, Fund Company agrees to provide directly to Schwab all prospectuses, statements of additional information and supplements and amendments thereto, and annual and other periodic reports for each Fund in amounts reasonably requested by Schwab for distribution to its customers. Fund Company is obligated to supply these materials to Schwab in a timely manner so as to allow Schwab, at its expense, to send current prospectuses and statements of additional information and periodic reports, immediately upon their effective dates, to customers and prospective customers requesting them through Schwab. Schwab will also send a current Fund prospectus with purchase trade confirmations for the initial purchase of a Fund. Fund Company shall notify Schwab immediately of any change to a Fund's prospectus. c. Fund Company shall ensure that the foregoing materials shall be in compliance with all applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the A-6 Shareholder Communications Improvement Act of 1990, all applicable rules and regulations under any of such statutes, and any and all laws, rules and regulations that may be adopted and become applicable in the future. d. Fund Company shall ensure that the prospectus of each of its Funds discloses (i) that a broker may charge transaction fees on the purchase and/or sale of Fund shares, (ii) that the performance of the Fund may be compared in publications to the performance of various indices and investments for which reliable performance data is available, (iii) that the performance of the Fund may be compared in publications to averages, performance rankings, or other information prepared by recognized mutual fund statistical services, and (iv) that the annual report contains additional performance information and will be made available to investors upon request and without charge. e. Schwab shall mail statements to its customers on a monthly basis (or as to accounts in which there has been no activity in a particular month, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset value of each such Fund as of a recent date. f. Schwab shall respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates. With respect to Fund shares purchased by customers after the effective date of this Agreement, Schwab shall provide average cost basis reporting to assist customers in the preparation of income tax returns. 11. NEW PROCESSING SYSTEMS Fund Company agrees to cooperate to the extent possible with Schwab as Schwab develops and seeks to implement new processing systems for the MFMP. A-7 CHARLES SCHWAB May 15, 1996 Steve Wine Denver Investment Advisors, LLC 1225 17th Street, 26th Floor Denver, CO 80202 Dear Steve: Enclosed for your files are fully executed copies of the Retail Services Agreement and Confidentiality Agreement between Charles Schwab & Co., Inc. and Westcore Trust. If you have any questions, please give me a call. Sincerely, Charles Schwab Mutual Fund Marketplace-Registered Trademark- RETAIL SERVICES AGREEMENT This Agreement is made as of March 26, 1996, between Charles Schwab & Co., Inc. ("Schwab"), a California corporation, each registered investment company ("Fund Company") executing this Agreement, on its own behalf and on behalf of each of the series or classes of shares, if any, listed on Schedule I, as amended from time to time (such series or classes being referred to as the "Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement. Fund Company and Fund Affiliate are collectively referred to herein as "Fund Parties." In the event that there are no series or classes of shares listed on Schedule I, the term "Fund(s)" shall mean "Fund Company." WHEREAS, Fund Affiliate is either (i) an investment adviser to or administrator for the Funds or (ii) the principal underwriter or distributor for the Funds. WHEREAS, Fund Parties wish to have Schwab perform certain recordkeeping, shareholder communication, and other services for each Fund; and WHEREAS, Schwab is willing to perform such services on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. SERVICES a. During the term of this Agreement, Schwab shall perform the services set forth on Exhibit A hereto, as such exhibit may be amended from time to time by mutual consent of the parties (the "Services"). b. In processing purchase, redemption, transfer and exchange orders placed by Schwab on behalf of its customers, and in order to facilitate Schwab's performance of Services, the parties agree that the Operating Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as amended from time to time ("Operating Agreement"), is incorporated herein by this reference. All terms and conditions of the Operating Agreement shall be binding as between Schwab and Fund Parties, and the references to Fund Company therein shall be deemed to mean Fund Parties for the purposes of this Agreement. In the event of any inconsistency between the Operating Agreement and this Agreement, this Agreement shall control. 2. FEES For the Services, Schwab shall receive a fee (the "Fee") which shall be calculated and paid in accordance with Exhibit B hereto. Schedule II reflects the amount of the Fee that each Fund Party has agreed to pay. Should Exhibit A be amended to revise the Services, the parties shall also amend Exhibit B and Schedule II, if necessary, in order to reflect any changes in the Fee. 3. TRANSACTION CHARGES Schwab shall not, during the term of this Agreement, assess against or collect from its customers any transaction fee upon the purchase or redemption of any Fund's shares that are considered in calculating the Fee. The parties acknowledge and agree that Schwab may collect such transaction fees from certain customers (including "Active Traders," as Schwab may define that term) for certain special trading services and from other customers upon such other customers' redemption of certain shares. The value of shares as to which such transaction fees are charged will not be included in the calculation of the Fee. 4. INDEMNIFICATION a. Schwab shall indemnify and hold harmless Fund Parties and their directors, officers, employees, and agents ("Indemnified Parties") from and against any and all losses, claims, liabilities and expenses (including reasonable attorney's fees) ("Losses") incurred by any of them arising out of (i) Schwab's dissemination of information regarding Fund Parties or a Fund that contains an untrue statement of material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading and that was not published or provided to Schwab by or on behalf of Fund Company or its affiliated persons ("Affiliates") as defined under the Investment Company Act of 1940, as amended (the "1940 Act"), or accurately derived from information published or provided by or on behalf of Fund Company or any Affiliate, (ii) any breach by Schwab of any representation, warranty or agreement contained in this Agreement, or (iii) any willful misconduct or negligence by Schwab in the performance of, or failure to perform, its obligations under this Agreement, except to the extent such Losses are caused by Fund Company or Fund's breach of this Agreement or Fund Company or Fund's willful misconduct or negligence in the performance, or failure to perform, its obligations under this Agreement. This Section 4(a) shall survive termination of this Agreement. b. In any event, no party shall be liable for any special, consequential or incidental damages. 5. ROLE AND RELATIONSHIP OF SCHWAB The parties acknowledge and agree that the Services under this Agreement are recordkeeping, shareholder communication and related services only and are not the services of an underwriter or a principal underwriter of any Fund within the meaning of the Securities Act of 1933, as amended, or the 1940 Act. This Agreement does not grant Schwab any right to purchase shares from any Fund (although it does not preclude Schwab from purchasing any such shares), nor does it constitute Schwab an agent of Fund Parties or any Fund for purposes of selling shares of any Fund to any dealer or the public. To the extent Schwab is involved in the purchase of shares of any Fund by Schwab's customers, such involvement will be as agent of such customer only. 6. INFORMATION TO BE PROVIDED Fund Parties shall provide to Schwab prior to the effectiveness of this Agreement or as soon thereafter as practicable: a. Certified resolutions of the board of directors of each Fund Party authorizing the Fund Party to enter into this Agreement and indicating the officers authorized to execute this Agreement on behalf of the Fund Party; and b. Two (2) copies of the then-current prospectus and statement of additional information of each Fund. Fund Party shall provide Schwab with written copies of any amendments to or changes in the Fund's -2- prospectus or statement of additional information immediately upon their effective date. 7. NOTICES All notices required by this Agreement (excluding the Operating Agreement) shall be in writing and delivered personally or sent by first class mail. Such notices will be deemed to have been received as of the earlier of actual physical receipt or three (3) days after deposit, first class postage prepaid, in the United States mail. All such notices shall be made: if to Schwab, to: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 Attention: John McGonigle Senior Vice President/Mutual Funds with a copy to: General Counsel, at the same address; if to Fund Party, to the address given below in the signature block. 8. NONEXCLUSIVITY Each Party acknowledges that the other may enter into agreements similar to this Agreement with other parties for the performance of services similar to those to be provided under this Agreement, unless otherwise agreed to in writing by the parties. 9. ASSIGNABILITY This Agreement is not assignable by any party without the other parties' prior written consents and any attempted assignment in contravention hereof shall be null and void; provided, however, that Schwab may, without the consent of Fund Parties, assign its rights and obligations under this Agreement to any Affiliate. 10. EXHIBITS AND SCHEDULES; ENTIRE AGREEMENT All Exhibits and Schedules to this Agreement, as they may be amended from time to time, are by this reference incorporated into and made a part of this Agreement. This Agreement (including the Exhibits and Schedules hereto), together with the Operating Agreement, constitute the entire agreement between the parties as to the subject matter hereof and supersede any and all agreements, representations and warranties, written or oral, regarding such subject matter made prior to the time at which this Agreement has been executed and delivered by Schwab and Fund Parties. 11. AMENDMENT This Agreement and the Exhibits and Schedules hereto may be amended only by a writing executed by each party hereto that is to be bound by such amendment. 12. GOVERNING LAW This Agreement will be governed by and interpreted under the laws of the State of California as applied to contracts entered into and to be performed entirely within that state. -3- 13. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 14. EFFECTIVENESS OF AGREEMENT; TERMINATION a. Upon Schwab's acceptance of Schedule I, as amended from time to time, the effective date of this Agreement as to any Fund shall be the later of the date on which this Agreement is made or the date set forth opposite the name of the Fund on Schedule I. b. This Agreement may be terminated as to a Fund by any party (i) upon ninety (90) days' written notice to the other parties or (ii) upon such shorter notice as is required by law, order, or instruction by a court of competent jurisdiction or a regulatory body or self-regulatory organization with jurisdiction over the terminating party or (iii) automatically, effective on the day following the termination of any plan of distribution ("Rule 12b Plan") adopted and maintained pursuant to Rule 12b under the 1940 Act by any Fund that has a Rule 12b Plan in effect as of the effective date of this Agreement, provided that a portion of the Fee is paid pursuant to the Rule 12b Plan. c. After the date of termination as to a Fund, Fund Parties will not be obligated to pay the Fee with respect to any shares of the Fund that are first held in Schwab customer accounts after the date of such termination. However, notwithstanding any such termination, Fund Parties will remain obligated to pay Schwab the Fee as to each share of the Fund that was considered in the calculation of the Fee as of the date of termination (a "Pre-Termination Share"), for so long as such Pre-Termination Share is held in any Schwab brokerage account and Schwab continues to perform substantially all of the Services as to such Pre-Termination Share. Further, for so long as Schwab continues to perform the Services as to any Pre-Termination Shares, this Agreement will otherwise remain in full force and effect as to such Pre- Termination Shares. Fund Parties shall reimburse Schwab promptly for any reasonable expenses Schwab incurs in effecting any termination of this Agreement, including delivery to a Fund Party of any records, instruments, or documents reasonably requested by the Fund Party. 15. NAMES The names "Westcore Trust" and "Trustees of Westcore Trust" refer respectively to the Trust created and the Trustees, as trustees but not individually or personally, acting from time to time under an Amended and Restated Declaration of Trust dated November 19, 1987, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of "Westcore Trust" entered into in the name or on behalf thereof by any of the Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust Property, and all persons dealing with any class of shares of the Trust must look solely to the Trust Property belonging to such class for the enforcement of any claims against the Trust. -4- IN WITNESS WHEREOF, the parties have executed this Agreement by a duly authorized representative of the parties hereto. Charles Schwab & CO., Inc. Westcore Trust ------------------------------------ Name of Fund Company By: By: --------------------------- --------------------------------- John McGonigle Senior Vice President/ Name: Kenneth V. Penland Mutual Funds ------------------------------- Title: President ------------------------------ Date: Date: 3/29/96 ------------------------- ------------------------------- Address: 370 17th St., Suite 2700 ---------------------------- Denver, CO 80202 ------------------------------------ ------------------------------------ Attn: Jasper Frontz ------------------------------- Date: 3/29/96 ------------------------------- Denver Investment Advisors LLC ------------------------------------ Name of Fund Affiliate By: --------------------------------- Name: Kenneth V. Penland ------------------------------- Title: Chairman ----------------------------- Address: 1225 17th St., 26th Floor ---------------------------- Denver, CO 80202 ------------------------------------ ------------------------------------ Attn: Steve Wine ------------------------------- Date: 3/29/96 ------------------------------- -5- EXHIBIT A SERVICES 1. RECORD MAINTENANCE Schwab shall maintain the following records with respect to a Fund for each customer who holds Fund shares in a Schwab brokerage account: a. Number of shares; b. Date, price and amount of purchases and redemptions (including dividend reinvestments) and dates and amounts of dividends paid for at least the current year to date; c. Name and address of the customer, including zip codes and social security numbers or taxpayer identification numbers; d. Records of distributions and dividend payments; e. Any transfers of shares; and f. Overall control records. 2. SHAREHOLDER COMMUNICATIONS Schwab shall: a. Provide to a shareholder mailing agent for the purpose of mailing certain Fund-related materials the names and addresses of all Schwab customers who hold shares of such Fund in their Schwab brokerage accounts. The shareholder mailing agent shall be a person or entity with whom the Fund has arranged for the distribution of certain Fund-related material in accordance with the Operating Agreement. The Fund-related materials shall consist of updated prospectuses and any supplements and amendments thereto, annual and other periodic reports, proxy or information statements and other appropriate shareholder communications. In the alternative, in accordance with the Operating Agreement, Schwab may distribute the Fund-related materials to its customers. b. Mail current Fund prospectuses and statements of additional information and annual and other periodic reports upon customer request and, as applicable, with confirmation statements; c. Mail statements to customers on a monthly basis (or, as to accounts in which there has been no activity in a particular month, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset value of such Fund as of a recent date; d. Produce and mail to customers confirmation statements reflecting purchases and redemptions of shares of each Fund in Schwab brokerage accounts; e. Respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates; and f. With respect to Fund shares purchased by customers after the effective date of this Agreement, provide average cost basis reporting to the customers to assist them in preparation of income tax returns. 3. TRANSACTIONAL SERVICES Schwab shall communicate, as to shares of each Fund, purchase, redemption and exchange orders reflecting the orders it receives -6- from its customers. Schwab shall also communicate, as to shares of each Fund, mergers, splits and other reorganization activities. 4. TAX INFORMATION RETURNS AND REPORTS Schwab shall prepare and file with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting (i) dividends and other distributions made, (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations, and (iii) gross proceeds of sales transactions as required. 5. FUND COMMUNICATIONS Schwab shall, on a daily basis and for each Fund, report the number of shares on which the Fee is to be paid pursuant to this Agreement and the number of shares on which no such Fee is to be paid. Schwab shall also provide each Fund with monthly summaries of reports. Such summaries shall be expressed in both shares and dollar amounts. -7- EXHIBIT B CALCULATION OF FEE 1. The Fee shall be calculated by multiplying the Daily Value of Qualifying Shares (defined below) times the appropriate Fee Rate (indicated below). The Fee shall be computed daily and paid monthly in arrears. 2. The Daily Value of Qualifying Shares is the aggregate daily value of all shares of the Fund held in Schwab brokerage accounts, subject to the following exclusions ("Qualifying Shares"). There shall be excluded from the shares (i) shares as to which a brokerage customer paid Schwab a transaction fee upon the purchase of such shares, (ii) shares held in a Schwab brokerage account prior to the effective date of this Agreement as to the Fund and (iii) shares first held in a Schwab brokerage account after the termination of this Agreement as to the Fund. 3. The Fee Rate is determined based on the aggregate value of the Qualifying Shares of all Funds listed on all Schedule I's, as amended from time to time, as of the prior review date. The review dates are December 31 and June 30. The Fee Rate is effective from the next business day following the review date up to and including the next review date. The Fee Rates are as follows: Aggregate Value of Qualifying Shares Fee Rate ----------------- -------- Up to and including $500 million 35 basis points per annum Over $500 million and up to and 30 basis points per annum including $1.5 billion Over $1.5 billion 25 basis points per annum The rate scale is not intended to produce a "blended rate." Rather, once a threshold is reached, the rate applicable to the total amount of assets will be used for all assets. Thus, if the aggregate value of Qualifying Shares of all such Funds is $501 million as of a review date, the Fee Rate will be 30 basis points (to be applied to the Daily Value of Qualifying Shares) until the next review date. 4. For purposes of this Exhibit, the daily value of the shares of each Fund will be the net asset value reported by such Fund to the National Association of Securities Dealers, Inc. Automated Quotation System. No adjustments will be made to the net asset values to correct errors in the net asset values so reported for any day unless such error is corrected and the corrected net asset value per share is reported to Schwab before 5 o'clock, p.m., San Francisco time, on the first business day after the day to which the error relates. 5. At the request of Fund Parties, Schwab shall provide, on each business day, a statement detailing the calculation for each Fund, the aggregate value of the Qualifying Shares of each Fund and the amount of the Fee for each Fund. As soon as practicable after the end of the month, Schwab shall also provide to Fund Parties an invoice for the amount of the Fee due for each Fund. In the calculation of such Fee, Schwab's records shall govern unless an error can be shown in the number of shares used in such calculation as indicated on Schedule II. 6. Fund Parties shall pay Schwab the Fee within thirty (30) days after Fund Parties' receipt of such statement. Such payment shall be by -8- wire transfer, unless the amount thereof is less than $250. Such wire transfers shall be separate from wire transfers of redemption proceeds or distributions under the Operating Agreements. Amounts less than $250 may, at Fund Parties' discretion, be paid by check. -9- SCHEDULE I TO THE SERVICES AGREEMENT Fund Effective Date ---- -------------- Westcore Blue Chip Fund* 3/26/96 Westcore Colorado Tax-Exempt Fund* 3/26/96 Westcore Growth & Income Fund* 3/26/96 Westcore Intermediate Term Bond Fund* 3/26/96 Westcore Long Term Bond Fund* 3/26/96 Westcore Midco Growth Institutional* 3/26/96 Westcore Small-Cap Opportunity Fund* 3/26/96 *Indicates that Fund is a "no load" or "no sales charge" Fund as defined in Section 26 of the NASD's Rules of Fair Practice. Westcore Trust ----------------------------------------- Name of Fund Company By: -------------------------------------- Name: ------------------------------------ Title: ----------------------------------- Date: ------------------------------------ Acknowledged by Accepted by Charles Schwab & Co. Inc. - ------------------------------ Name of Fund Affiliate By: By: --------------------------- -------------------------------------- John McGonigle Name: Senior Vice President/Mutual Funds ------------------------- Title: ------------------------ Date: Date: ------------------------- ------------------------------------ -10- SCHEDULE II TO THE SERVICES AGREEMENT Aggregate Value of Qualifying Shares ------------------------------------- Up to and including Over $500M and up Above $1.5 $500 Million to $1.5 Billion Billion -------------------- ----------------- ---------- Fund Company - ------------ N/A 0% 0% 0% - ----------------- ---- ---- ---- (Name) Fund Affiliate - -------------- Denver Investment Advisors LLC .35% .30% .25% - ----------------- ---- ---- ---- (Name) Fee Rate 0.35% 0.30% 0.25% Percentage Per Annum ---- ---- ---- of Average Daily Value of Fund Shares -11- CHARLES SCHWAB Mutual Fund Marketplace-Registered Trademark- CONFIDENTIALITY AGREEMENT This Agreement is made as of the 26th day of March, 1996, between Charles Schwab & Co., Inc. ("Schwab"), a California corporation, and DENVER INVESTMENT ADVISORS LLC ("Fund Affiliate"), an affiliate of the registered investment company(ies), Westcore Trust, which entered into an Operating Agreement with Schwab dated November 27, 1995 ("Operating Agreement"). RECITALS A. Fund Affiliate wishes Schwab to provide it with the names and addresses of investment managers and retirement plan administrators, whose clients hold positions in any of the funds (as defined in the Operating Agreement), for purposes of Fund Affiliate's direct marketing and communication with these investment managers and retirement plan administrators and for purposes of tracking the demographics of sale of the Fund shares. Fund Affiliate mailings using this confidential, proprietary information may occur through a mailing agent for the Fund Affiliate. B. Subject to the terms and conditions herein or as may be mutually agreed upon in writing from time to time, Schwab is willing to provide to Fund Affiliate such confidential, proprietary information. AGREEMENT THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. DEFINITIONS. As used in this Agreement, each of the following terms will have the meaning ascribed thereto: a. "Schwab Institutional Customer" means a Schwab customer who is an investment manager or retirement plan administrator whose client(s) hold position(s) in any of the Funds. b. "Mailing Agent" means the person or entity with whom Fund Affiliate contracts to act as its agent in performing mailings to Schwab Institutional Customers and to whom Fund Affiliate provides names and addresses of Schwab Institutional Customers received from Schwab under this Agreement; c. "Objecting Customer" means any Schwab Institutional Customer who has made objection to the release of his or her name or address. d. "Proprietary Information" means the lists of names and addresses of Schwab Institutional Customers, other than Objecting Customers, together with the opening and closing position in the Fund(s) by each master account and any activity which has occurred in the master account subsequent to any previous reporting, which will be provided to Fund Affiliate under this Agreement. 2. ACCESS TO PROPRIETARY INFORMATION. a. During the term of this Agreement, Schwab will provide to Fund Affiliate on a monthly basis, the Proprietary Information for that month. The Proprietary Information shall be provided together with the master accounts of Objecting Customers - which shall be identified only by coded account number. b. Fund Affiliate will hold the Proprietary Information in strictest confidence and will use the Proprietary Information solely for the business purposes set forth in Recital A above. Fund Affiliate will have in effect, and enforce, rules and policies designed to protect against unauthorized access to or use of the Proprietary Information, including instruction of and written agreements with their employees and Mailing Agent to insure that they protect the confidentiality of the Proprietary Information. Fund Affiliate may disclose Proprietary Information to its responsible employees and Mailing Agent only to the extent necessary to carry out the purpose for which Proprietary Information is disclosed. Fund Affiliate shall instruct its employees not to disclose Proprietary Information to third parties, except to Mailing Agent. c. Fund Affiliate shall not be prevented from using or disclosing any information or material, or any element thereof, whether or not such information or material is Proprietary Information for the purposes of this Agreement, to the extent any such information or material, or any element thereof: i. has been previously published or is published hereafter, unless such publication is itself a breach of this Agreement or a similar confidential disclosure agreement with Schwab; ii. was already known to Fund Affiliate prior to being disclosed by Schwab as evidenced by written records kept in the ordinary course of business of Fund Affiliate or by proof of actual use by Fund Affiliate; iii. has been or is hereafter rightfully received by Fund Affiliate from a third person without restriction on disclosure and without breach of this Agreement; or iv. has been independently developed by Fund Affiliate. It shall be presumed that any Proprietary Information in Fund Affiliate's possession is not within exceptions (iii) or (iv) above, and the burden is on Fund Affiliate to prove otherwise by records and documentation. d. Fund Affiliate may release Proprietary Information if required by law or by order or requirement of any court or governmental authority; provided that prior to releasing Proprietary Information pursuant to any such requirement or order, Fund Affiliate shall so notify Schwab. If feasible, such notice shall be provided not less than five (5) business days prior to the required disclosure. Fund Affiliate will use reasonable efforts not to release the Proprietary Information pending the outcome of any measures taken by Schwab to contest the requirement or order. e. Fund Affiliate acknowledges and agrees that it or its agent's breach of any part of this Agreement will result in irreparable harm to Schwab for which an adequate remedy is not available at law. Accordingly, in such event, Schwab shall be entitled, in addition to any other remedies available, to equitable relief, including preliminary injunction and restraining order. f. Fund Affiliate shall receive Proprietary Information back from any Mailing Agent, and destroy all tangible and non-tangible representations of Proprietary Information, within thirty (30) days of its receipt, upon receipt of Proprietary Information for a more recent month, or at termination of this Agreement, whichever is sooner. Fund Affiliate shall, if so requested by Schwab, deliver a letter to Schwab confirming the return and the destruction of the Proprietary Information. -12- g. Schwab reserves all rights in the Proprietary Information pursuant to any patents and copyrights contained therein. Fund Affiliate recognizes and agrees that nothing contained in this Agreement shall be construed as granting any rights, license or otherwise, to any Proprietary Information disclosed pursuant to this Agreement. h. Fund Affiliate shall, at its own expense, take all reasonable steps, including the initiation and prosecution of actions at law or in equity, necessary to prevent disclosure of any Proprietary Information by any representative or employee of Fund Affiliate or Mailing Agent and to prevent the unauthorized use or disclosure of any Proprietary Information by any other person who gained such Proprietary Information from Fund Affiliate or its agent, representatives, or employee in violation of the terms of this Agreement. 3. RESPONSIBILITY FOR COMMUNICATIONS. Fund Affiliate acknowledges its sole responsibility for any communication made with or mailings sent to Schwab Institutional Customers hereunder, and the compliance of such communications and mailings with all applicable laws and regulations. 4. INDEMNIFICATION. Fund Affiliate shall indemnify and hold harmless Schwab and each director, officer, employee and agent of Schwab from and against any and all claims, liabilities, losses, damages, and expenses of any nature, including counsel fees ("Losses") arising out of (i) any use made by Fund Affiliate or Mailing Agent of the Proprietary Information, (ii) any failure by Fund Affiliate or Mailing Agent to comply with any applicable laws and regulations, and (iii) any action taken or omitted to be taken by Schwab in observance of the terms of this Agreement. 5. LIABILITY. Fund Affiliate shall cause Mailing Agent to enter into a contract with Fund Affiliate, in which Schwab shall be named as an express third party beneficiary, requiring that the Proprietary Information be kept confidential as provided in this Agreement and not used for any other purpose than envisioned under this Agreement. Fund Affiliate understands and agrees that it shall be liable for any failure of the Mailing Agent to keep the Proprietary Information confidential to the extent provided in this Agreement. 6. ASSIGNABILITY. This Agreement shall be binding upon, and shall inure to the benefit of, the parties and their respective successors and assigns. Any assignment (within the meaning of Section 2(a)(4) of the Investment Company Act of 1940, as amended) of this Agreement by Fund Affiliate is prohibited without Schwab's prior written consent. 7. TERMINATION. Schwab may terminate this Agreement by giving Fund Affiliate ten (10) days prior written notice. The termination of the Agreement shall not affect Fund Affiliate's obligations or rights with respect to Proprietary Information disclosed prior to the effective date of termination. 8. CHOICE OF LAW. This Agreement shall be governed by and interpreted in accordance with the laws of the State of California applicable to agreements made and performed in California by California residents. If any provision of this Agreement is determined to be illegal or unenforceable by competent judicial authority, all other terms and provisions shall nevertheless remain effective and shall be enforced to the fullest extent permitted by law. 9. SINGLE AGREEMENT. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement. -13- 10. WAIVER. No delay or omission by a party in exercising any rights under this Agreement will operate as a waiver of that or any other right. A waiver or consent given by a party on one occasion is effective only in that instance and will not be construed as bar to or waiver of any right on any other occasion. 11. ENTIRE AGREEMENT. This Agreement contains the entire agreement between the parties with respect to the subject matter hereof. Any modification to this Agreement must be in writing and signed by both parties. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. CHARLES SCHWAB & CO., INC. - -------------------------------- Name of Fund Affiliate By: By: ----------------------------- --------------------------------- Name: Name: --------------------------- ------------------------------- Title: Title: -------------------------- ------------------------------ Date: Date: --------------------------- ------------------------------- -14- CHARLES SCHWAB Mutual Fund Marketplace-Registered Trademark- OPERATING AGREEMENT This Agreement is made as of November 27, 1995, between Charles Schwab & Co., Inc. ("Schwab"), a California corporation, and each registered investment company executing this Agreement ("Fund Company"), on its own behalf and on behalf of each of the series or classes of shares, if any, listed on Schedule I, as amended from time to time (such series or classes being referred to as the "Fund(s)"). In the event there are no series or classes of shares listed on Schedule I, then the term "Fund(s)" shall mean "Fund Company." WHEREAS Fund Company wishes to have shares of the Fund(s) available for purchase and redemption by Schwab's brokerage customers through Schwab's Mutual Fund Marketplace-Registered Trademark- ("MFMP"); WHEREAS certain policies, procedures and information are necessary to enable the Fund(s) to participate in the MFMP; and WHEREAS Schwab is willing to permit the Fund(s) to participate in its MFMP pursuant to the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. OPERATING PROCEDURES Schwab will open an omnibus account (the "Account") with each Fund through which it will purchase and redeem shares, settle transactions, reconcile transactions, obtain pricing, reinvest distributions and maintain records in accordance with the Operating Procedures set forth in Exhibit A hereto. In addition, the parties agree to transfer accounts, communicate with Fund shareholders and perform other obligations in accordance with the Operating Procedures. 2. REGISTRATION REQUIREMENTS a. Schwab will only place purchase orders for shares of a Fund on behalf of its customers whose addresses recorded on Schwab's books are in states or other jurisdictions in which Fund Company has advised Schwab that such Fund has registered or qualified its shares for sale under applicable law. Fund Company shall advise Schwab immediately if any such registration or qualification is terminated or if it wishes Schwab not to place purchase orders for a Fund on behalf of its customers who reside in a particular state or other jurisdiction. b. Schwab will, upon request, (i) furnish Fund Company with monthly written statements of the number of shares of each Fund purchased on behalf of Schwab customers resident in one or more states or other jurisdictions indicated by Fund Company or (ii) on a daily basis, transmit to an electronic database provider with whom Schwab has established effective systems interfaces information regarding the number of shares of each Fund sold in each state for retrieval by Fund Company. Fund Company shall be responsible for all reasonable fees and other reasonable charges of such database provider in connection with Schwab's transmission of such information to and Fund Company's retrieval of such information from such database provider. c. Fund Company agrees that any recession offer that is made to shareholders who own shares directly with a Fund will also be made to Schwab customers who would be entitled to such recession offer if they owned shares directly with the Fund. Fund Company will provide Schwab with a letter on Fund Company letterhead containing the terms of any such recission offer, and Schwab may send this writing, or any derivation thereof, to the affected Schwab customers. To assist Fund Company in effecting any such recission offer, Schwab agrees to provide Fund Company with relevant information regarding any affected Schwab customer, including the account number, the number of shares purchased and redeemed, if any, the dates of the purchase(s) and redemption(s), if any, and the dollar amount of such transactions. 3. COMPLIANCE RESPONSIBILITIES a. Fund Company is responsible for (i) the compliance of each prospectus, registration statement, annual or other periodic report, proxy statement and item of advertising or marketing material of or relating to each Fund with all applicable laws, rules and regulations (except for advertising or marketing material prepared by Schwab that was not published or provided to Schwab by Fund Company or any Affiliate (defined below) or accurately derived from information published or provided by them), (ii) the distribution and tabulation of proxies in accordance with all applicable laws, rules and regulations (except for such proxy related services provided by Schwab's mailing agent), (iii) the registration or qualification of the shares of each Fund under all applicable laws, rules and regulations, and (iv) the compliance by Fund Company and each "affiliated person" of Fund Company as that term is defined under the Investment Company Act of 1940, as amended ("1940 Act"), herein referred to as "Affiliate" with all applicable laws, rules and regulations (including the 1940 Act and the Investment Advisers Act of 1940, as amended), and the rules and regulations of each self-regulatory organization with jurisdiction over Fund Company or Affiliate, except to the extent that the failure to so comply by Fund Company or any Affiliate is caused by Schwab's breach of this Agreement. b. In the event that the Account holds more than five percent (5%) of the outstanding Fund shares, Fund Company will be responsible for requesting Schwab to confirm its status as shareholder of record and to confirm whether any Schwab customer beneficially owns more than five percent (5%) of the outstanding Fund shares through its Schwab brokerage account. For this purpose, Fund Company shall indicate in its inquiry the number of Fund shares that equal five percent (5%) of outstanding Fund shares. Schwab shall promptly reply to any such inquiries. c. Schwab is responsible for Schwab's compliance with all applicable laws, rules and regulations governing Schwab's performance under this Agreement, except to the extent that Schwab's failure to comply with any law, rule or regulation is caused by Fund Company's breach of this Agreement. d. Except as set forth in this Agreement or as otherwise agreed upon in writing by the parties, any communication, instruction or notice made pursuant to this Agreement shall be made orally, provided that such oral communication is on a recorded telephone line or is promptly confirmed in writing by facsimile transmission. Schwab is entitled to rely on any communications, instructions or notices which it reasonably believes were provided to it by Fund Company, any Affiliate or their agents authorized to provide such communications, instructions or notices to Schwab, and on communications, instructions or notices provided to it by its customers. Fund Company is entitled to rely on any communications, instructions or notices it reasonably believes were provided to it by Schwab, or its agents authorized to provide such communications, instructions or notices to Fund Company. -2- e. Except to the extent otherwise expressly provided in this Agreement, neither party assumes any responsibility hereunder, or will be liable to the other, for any damage, loss of data, delay or any other loss whatsoever caused by events beyond its reasonable control. f. Fund Company and each Fund shall indemnify and hold harmless Schwab and each director, officer, employee and agent of Schwab from and against any and all losses, claims, liabilities and expenses (including reasonable attorney's fees) ("Losses") incurred by any of them arising out of (i) any untrue statement of material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in any prospectus, registration statement, annual or other periodic report or proxy statement of the Fund or in any advertising or promotional material generated by Fund Company or any Affiliate or accurately derived from information published or provided by Fund Company or any Affiliate, (ii) any violation or any law, rule or regulation relating to the registration or qualification of shares of the Fund, (iii) any breach by Fund Company of any representation, warranty or agreement contained in this Agreement, or (iv) any willful misconduct or negligence by Fund Company or a Fund in the performance of, or failure to perform, its obligations under this Agreement, except to the extent such Losses are caused by Schwab's breach of this Agreement or its willful misconduct or negligence in the performance, or failure to perform, its obligations under this Agreement. This Section 3(f) shall survive termination of this Agreement. 4. REPRESENTATIONS AND WARRANTIES a. Fund Company represents and warrants to Schwab that each Fund is in compliance with the conditions and qualifications set forth in the Rules of Fair Practice of the National Association of Securities Dealers, Inc. ("NASD"), Article III, Section 26, as amended from time to time ("Section 26"), which enable an NASD member to offer or sell shares in the Fund. Fund Company represents and warrants that each Fund marked with an asterisk on Schedule I is a "no load" or "no sales charge" Fund as defined in Section 26. If a Fund, for any reason, fails to satisfy the terms and conditions of Section 26, Fund Company will notify Schwab immediately of the Fund's disqualification and the reason therefor. b. Schwab represents and warrants that Schwab is a member of the NASD. 5. USE OF PARTIES' NAMES a. Without Schwab's prior written consent, Fund Company will not cause or permit the use, description, or reference to Schwab, or to the relationship contemplated by this Agreement in any advertisement or promotional materials or activities. b. Fund Company authorizes Schwab to use the names or other identifying marks of, and certain information about, Fund Company and Fund in connection with the operation of the MFMP. Fund Company may withdraw this authorization as to any particular use of any such name or identifying marks at any time (i) upon Fund Company's reasonable determination that such use would have a material adverse effect on the reputation or marketing efforts of Fund Company or such Fund, or (ii) if any of the Funds cease to be available through the MFMP; provided, however, that Schwab may, in its discretion, continue to use materials prepared or printed prior to the withdrawal of such authorization or in the process of being prepared or printed at the time of such withdrawal. -3- 6. PROPRIETARY INFORMATION Each party hereto acknowledges that the identities of the other party's customers, information maintained by such other party regarding those customers, and all computer programs and procedures developed by such other party or such other party's Affiliates or agents in connection with such other party's performance of its duties hereunder constitute the valuable property of such other party. Each party agrees that should it come into possession of any list or compilation of the identities of or other information about the other party's customers, or any other property of such party, pursuant to this Agreement or any other agreement related to services under this Agreement, the party who acquired such information or property shall use its best efforts to hold such information or property in confidence and refrain from using, disclosing, or distributing any of such information or other property, except (i) with the other party's prior written consent, or (ii) as required by law or judicial process. Each party acknowledges that any breach of the foregoing agreements as to another party would result in immediate and irreparable harm to such other party for which there would be no adequate remedy at law and agrees that in the event of such a breach such other party will be entitled to equitable relief by way of temporary and permanent injunctions, as well as such other relief as any court of competent jurisdiction deems appropriate. 7. ASSIGNABILITY This Agreement is not assignable by either party without the other party's prior written consent, and any attempted assignment in contravention hereof shall be null and void; provided, however, that Schwab may, without the consent of Fund Company, assign its rights and obligations under this Agreement to any Affiliate. 8. EXHIBITS AND SCHEDULES All Exhibits and Schedules to this Agreement, as they may be amended from time to time, are by this reference incorporated into and made a part of this Agreement. 9. AMENDMENT This Agreement may be amended only by a writing executed by each party hereto that is to be bound by such amendment, except as provided in this Section 9. Exhibit A may be amended by Schwab on forty (40) days' written notice to Fund Company or such earlier time as shall be agreed to by the parties. Exhibits B and C shall be amended by Fund Company in the event of any change to the information contained therein. 10. GOVERNING LAW This Agreement will be governed by and interpreted under the laws of the State of California, as applied to contracts entered into and to be performed entirely within the state. 11. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 12. EFFECTIVENESS AND TERMINATION a. The effective date of this Agreement as to any Fund is the later of the date set forth opposite the name of the Fund on Schedule I or the date Schedule I is accepted by Schwab. -4- b. This Agreement may be terminated as to any Fund by Schwab immediately upon written notice to Fund Company. This Agreement may be terminated as to any Fund by Fund Company upon thirty (30) days' written notice to Schwab. c. Upon the termination date for any Fund, Schwab will no longer make the Fund shares available for purchase by Schwab's customers through the MFMP. Schwab reserves the right to transfer the Fund shares of its customers out of the Account. If Schwab continues to hold the Fund shares on behalf of its customers in the Account, the parties agree to be obligated under, and act in accordance with, the terms and conditions of this Agreement with respect to such shares. 13. The name "Westcore Trust" and references in this Agreement to "Fund Company" refer to the Trust created under an Amended and Restated Declaration of Trust dated November 19, 1987, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of Westcore Trust entered into the name or on behalf thereof by any of its Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust, and all persons dealing with the Trust must look solely to the Trust for the enforcement of any claims against the Trust. IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized representative of the parties hereto. CHARLES SCHWAB & CO., INC. WESTCORE TRUST, on its own behalf and on behalf of each of its Funds listed on Schedule I hereto as amended from time to time By: By: ---------------------------- --------------------------------------- Colleen Hummer Senior Vice President/ Name: Mutual Funds Operations ------------------------------------- Administration Title: ------------------------------------ Date: Date: -------------------------- ------------------------------------- -5- SCHEDULE I TO THE OPERATING AGREEMENT FUNDS EFFECTIVE DATE ----- -------------- Westcore Midco Growth Fund* November 27, 1995 Westcore Blue Chip Fund* November 27, 1995 Westcore Equity Income Fund* November 27, 1995 Westcore Small-Cap Opportunity Fund* November 27, 1995 Westcore Long-Term Bond Fund* November 27, 1995 Westcore Intermediate-Term Bond Fund* November 27, 1995 Westcore Colorado Tax-Exempt Fund* November 27, 1995 *Indicates that Fund is a "no load" or "no sales charge" Fund as defined in Section 26 of the NASD's Rules of Fair Practice. WESTCORE TRUST [Name of Fund Company] By: ----------------------------------------- Title: -------------------------------------- Date: --------------------------------------- Accepted by Charles Schwab & Co., Inc. By: ----------------------------------------- Colleen Hummer Senior Vice President/Mutual Funds Operations Administration Date: --------------------------------------- -6- EXHIBIT A OPERATING PROCEDURES 1. THE ACCOUNT a. Schwab will open an omnibus account with each Fund. The Account shall registered: Charles Schwab & Co., Inc. Special Custody Account for the Exclusive Benefit of Customers Attention: Mutual Funds 101 Montgomery Street San Francisco, California 94104 The Account will be set up for the reinvestment of capital gains and dividend distributions. b. The Fund shall designate the Account with account numbers. Account numbers will be the means of identification when the parties are transacting in the Account. c. The parties acknowledge that the Account is an omnibus account in Schwab's name with shares held by any number of beneficial owners. Schwab represents that the shares in the Account are customer securities and are segregated from Schwab's own assets. Fund Company represents that the shares in the Account are carried free of any charge, lien or payment of any kind in favor of the Fund or any person claiming through the Fund. d. The Account shall be kept open on the Fund's books regardless of a lack of activity or small position size, except to the extent that Schwab takes specific action to close the Account, or to the extent the Fund's prospectus reserves the right to close accounts that are inactive. In the latter case, Fund Company will give prior notice to Schwab before closing any Account. e. Schwab has the right to open additional accounts from time to time to accommodate other investment options and features, and to consolidate existing accounts if and when appropriate to meet the needs of the MFMP. In the event that it is necessary for Schwab to open an account with a Fund for the payment of distributions in cash, the term "Account" shall mean both the account for the reinvestment of capital gains and dividend distributions and the account for the payment of distributions in cash. f. Schwab reserves the right to issue instructions to each Fund to move shares between the Account and any other account Schwab may open. 2. PURCHASE AND REDEMPTION ORDERS For each day on which any Schwab customer places with Schwab a purchase or redemption order for shares of a Fund, Schwab shall aggregate all such purchase orders and aggregate all such redemption orders and communicate to the Fund an aggregate purchase order and an aggregate redemption order. Schwab will accept orders to purchase and redeem Fund shares from its customers no later than 1:00 P.M. Pacific Time (market close). Schwab will communicate the order to the Fund prior to a mutually agreed upon time. A-1 3. SETTLEMENT OF TRANSACTIONS a. Schwab will transmit the purchase price of the aggregate purchase order to the Fund by wire transfer on the next business day after the trade date. For purposes of this Agreement, a "business day" is any day the New York Stock Exchange is open for trading. b. For each business day on which Schwab places a redemption order for a Fund within the time designated by the Fund, Fund Company will cause the Fund(s) to send to Schwab the aggregate proceeds of all redemption orders for the Fund(s) placed by Schwab on that day. Such redemption proceeds will be sent by wire transfer on the next business day following the trade date for the redemption orders; provided that Fund Company may, in its discretion, send such proceeds by check if the aggregate amount is less than $250. Wire transfers of redemption proceeds shall be separate from wire transfers for other purposes. c. Each wire transfer of redemption proceeds shall indicate, on the Fed Funds wire system, the amount thereof attributable to each Fund; provided, however, that if the number of entries would be too great to be transmitted through the Fed Funds wire system, Fund Company shall, on the day the wire is sent, notify Schwab of such entries. The cost of the wire transfer is the responsibility of the party sending the wire. The interest cost associated with any delayed wire is the responsibility of the party sending the wire. d. Should a Fund need to extend settlement on a trade, Fund Company must contact Schwab on trade date to discuss the extension. For purposes of determining the length of settlement, Fund Company, agrees to treat shareholders that hold Fund shares through the Account the same as it treats shareholders that hold Fund shares directly with the Fund. e. In the event that a Fund cannot certify redemption proceeds, Fund Company will settle trades and forward redemption proceeds in accordance with this Agreement based on the information provided by Schwab. Schwab will be responsible for the accuracy of all trade information provided by it. f. If a trade is settled in error, Fund Company shall notify Schwab orally and confirm in writing the name of the Fund, the Account number and the date and amount of the error. If the error results in an overpayment to Schwab, it shall be corrected by debiting the Account. If the error results in an underpayment to Schwab, it shall be corrected by crediting the Account. g. Fund Company represents that each Fund that has reserved the right to redeem in kind has filed Form N-18F-1 with the Securities and Exchange Commission. For purposes of complying with the Fund's election on Form N-18F-1, Fund Company agrees that it will treat as a "shareholder" each shareholder that holds Fund shares through the Account, provided that Schwab provides to Fund Company, upon request, the name or account number, number of Fund shares and other relevant information for each such shareholder. Fund Company acknowledges that treatment of Schwab as the sole shareholder of Fund shares held in the Account for purposes of applying the limits in Rule 18f-1 under the 1940 Act would be inconsistent with the intent of Rule 18f-1 and the Fund's election on Form N-18F-1 and could unfairly prejudice shareholders that hold Fund shares through the Account. 4. ACCOUNT RECONCILIATION REQUIREMENTS a. Schwab shall verify, on a next day basis, orders placed for the Account with each Fund. All activity in the Account must be A-2 reflected. Therefore, any "as of" activity must be shown with its corresponding "as of" dates. b. The parties agree to notify each other and correct any error in the Account with any Fund upon discovery. Fund Company agrees to make best efforts to avoid any errors, made by Fund Company, any Fund or agents of Fund Company or the Fund and not corrected on a next day basis, from hindering any routine daily requests such as transactions, transfer, dividends, etc. Fund Company agrees to promptly notify Schwab of any adjustments to an Account with any Fund initiated by Fund Company, any Fund or any agent of either. c. Schwab must receive statements on or before the eighth business day of each month, even if there has been no activity in the Account during the period, unless Schwab can verify transactions by direct or indirect systems access. 5. PRICING Every business day on which there is a transaction in the Account and for each month-end business day, Fund Company will provide to Schwab prior to 7:00 p.m., Eastern Time, each Fund's closing net asset value and public offering price (if applicable) for that day and/or notification of no price for that day. Fund Company shall provide such information on a best efforts basis taking into consideration any extraordinary circumstances arising at the Fund (e.g. natural disasters, etc.). 6. DISTRIBUTIONS a. Fund Company shall provide distribution information to Schwab in a timely manner to enable Schwab to pay distributions to its customers on or as close to payable date as practicable. As to each Fund, Fund Company or such Fund shall provide Schwab with (i) the record date, ex-dividend date, and payable date with respect to a Fund as soon as practicable after it is announced, but no later than three (3) business days prior to record date, (ii) the record date share balance in the Account and the distribution rate per share on the first business day after record date, and (iii) the reinvest price per share as soon as it is available. Other distribution information contained in, and in the same format as, Schwab's Dividend Information Sheet (provided separately) shall be provided on such dates as are agreed upon between Schwab and Fund Company, but no later than payable date. b. As to each Fund, Schwab shall hold the information as to the amount of the pending distribution in strictest confidence, and shall use such information only for the purpose of computing the amounts of cash distributions to be paid to Schwab customers until Fund or Fund Company shall have made such information generally available to the public. Schwab will maintain and enforce rules and policies designed to protect against unauthorized access to, or use of, the information during such period by anyone other than Schwab employees who have a need to know the information for this purpose. c. Prior to 10:00 a.m., Eastern Time on the next business day following receipt of the reinvest price per share as provided in paragraph 6(a)(iii) above, Schwab shall notify Fund Company of the aggregate number of Fund shares with respect to which the purchase is required to be rescinded in order to pay the distribution in cash to Schwab customers who have elected to receive their capital gain distributions and/or dividends in cash. Fund Company agrees that the purchase of such aggregate number of Fund shares may be rescinded. Fund Company or such Fund shall wire the proceeds of such rescission from the Fund to the Account on the same business day. A-3 d. For each Fund that pays daily dividends, Fund Company shall provide on a daily basis, the following record date information: daily rate, account share balance, account accrual dividend amount (for that day), account accrual dividend amount (for period to date), and account transfers and period- to-date accrual amounts. e. In the event that Schwab maintains an Account with a Fund for the payment of distributions in cash, Fund Company shall wire on payable date, any cash distribution from the Fund to the Account. f. Each Fund that declares dividends daily shall accrue dividends, commencing on the settlement date for the purchase of Fund shares and terminating on the trade date for the redemption of Fund shares. g. For annual tax reporting purposes, Fund Company shall inform Schwab of the portion of each Fund's distribution that include any of the following: foreign source income, tax exempt income by state of origin or return of capital. h. Schwab shall prepare and file with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting (i) dividends and other distributions made, (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations and (iii) gross proceeds of sales transactions as required. i. Upon notice from Fund Company, Schwab shall effect mergers, splits and other reorganization activities of a Fund for its customers. 7. PRICE AND DISTRIBUTION RATE ERRORS a. In the event adjustments are required to correct any error in the computation of the net asset value or public offering price of a Fund's shares or in the distribution rate for a Fund's shares, Fund Company shall notify Schwab as soon as possible after discovering the need for such adjustments. Notification can be made orally, but must be confirmed in writing. The letter shall be written on Fund Company letterhead and must state for each day on which an error occurred the incorrect price or rate, the correct price or rate, and the reason for the price or rate change. Fund Company agrees that Schwab may send this writing, or derivation thereof to Schwab's customers whose accounts are affected by the price or rate change. b. If Schwab's customers have received amounts in excess of the amounts to which they are entitled, Schwab will, when requested by Fund Company, and to the extent practicable and permitted by law, debit its customers' brokerage accounts in the amount of such excess and repay it to the Fund. In no-event, however, shall Schwab be liable to Fund Company or the Fund for any such amounts. c. If adjustment is necessary to correct an error which has caused Schwab's customers to receive amounts less than the amounts to which they are entitled, the Fund shall make all necessary adjustments to the number of shares owned in the Account and distribute to Schwab any and all amounts of the underpayment. Schwab will credit the appropriate amount of such payment to each Schwab customer. d. For purposes of making adjustments, including the collection of overpayments, Fund Company agrees to treat shareholders that hold Fund shares through the Account the same as it treats shareholders that hold Fund shares directly with the Fund. When making adjustments for an error, a Fund shall not net same day transactions in the Account. Schwab and A-4 Fund Company shall agree promptly and in good faith to a resolution of the error, and no adjustment for the error shall be taken in the account until such agreement is reached. 8. RECORD MAINTENANCE a. Schwab shall maintain records for each of its customers who holds Fund shares through the Account, which records shall include: i. Number of shares; ii. Date, price and amount of purchases and redemptions (including dividend reinvestments) and date and amounts of dividends paid for at least the current year to date; iii. Name and address of each of its customers, including zip codes and social security numbers or taxpayer identification numbers; iv. Records of distributions and dividend payments; v . Any transfers of shares; and vi. Overall control records. b. Schwab will be responsible for accurately posting transactions in Fund shares to its customers' brokerage accounts. 9. TRANSFER OF ACCOUNTS a. Fund Company agrees to transfer shares between accounts for Schwab customers or other street name brokers held directly with a Fund and the Account on the Fund's records. For the purpose of expediting direct transfers from accounts for Schwab customers, Fund Company will accept by facsimile transmission a summary sheet of information indicating the customers' names, account numbers, the Fund affected and the number of shares to be re-registered. For record keeping purposes, actual copies of transfer forms will be forwarded to a Fund upon its request for such forms. b. Schwab represents and warrants that for each transfer indicated in the summary sheet of information, it holds each underlying instruction for re-registration signed by its customer, and that its customer's signature on such instruction is signature guaranteed by Schwab pursuant to the New York Stock Exchange's Medallion Signature Program. c. Schwab agrees to indemnify and hold harmless Fund Company, the Fund and each director, officer, employee and agent of Fund Company ("indemnified person") from and against any and all Losses incurred by any of them arising out of the impropriety of any transfer effected by the Fund in reliance on the summary sheet of information, except to the extent such Losses arise out of the failure of any indemnified person to comply with the instructions on the summary sheet of information. d. Fund Company shall process all transfer requests into the appropriate Account. Schwab as custodian is qualified to accept in the Accounts shares from Fund IRA, Keogh or 401(k) accounts. At no time shall any Fund establish separate accounts registered to Schwab for the benefit of individual shareholders. In the event any such account is mistakenly opened, Schwab reserves the right to instruct such Fund to move Fund shares to the Account. e. Fund Company must confirm to Schwab the completion of each transfer on the day it occurs. The confirming information shall include the number of shares, date ("as of" date if unavoidable delay), transaction A-5 date, account number of the customer and the Account, registration, accrued dividends and account type (i.e., IRA, Keogh, 401(k), etc.). f. Transfer processing after record date but prior to payable date will include all accrued dividends. Each Fund is responsible for monitoring all completed full transfers for "trailing" dividends. Should a "trailing" dividend appear in an account, a Fund shall send such dividend to Schwab within five (5) business days, along with a specific written notification thereof. Notification shall include details of the dividend and customer, including the customer's social security number or taxpayer identification number, and/or the account number for the Account to which the transfer was made. g. If Schwab customers submit share certificates for transfer into their Schwab brokerage accounts, Schwab will send such certificates, properly endorsed to the applicable Fund, for transfer into the Account with such Fund. Upon Schwab's request, Fund Company agrees to provide the status of said certificates and book share balances. 10. SHAREHOLDER COMMUNICATION a. Fund Company shall arrange with a mailing agent designated by Schwab for the distribution of the materials listed below to all of Schwab's customers who hold Fund shares, which distribution shall be so arranged by Fund Company as to occur immediately upon the effective date of the materials: i. All proxy or information statements prepared for circulation to shareholders of record of such Fund; ii. Annual reports; lii. Semi-annual reports; iv. Quarterly reports (if applicable); and v. All updated prospectuses, supplements and amendments thereto. Fund Company shall be responsible for providing the materials and for the mailing agent's fees in connection with this service as well as for timely distribution. Fund Company agrees to have the mailing agent consolidate mailings of material to shareholders of more than one Fund if the mailing is identical for all Funds in the Fund Company family. b. In addition to the materials listed above, Fund Company agrees to provide directly to Schwab all prospectuses, statements of additional information and supplements and amendments thereto, and annual and other periodic reports for each Fund in amounts reasonably requested by Schwab for distribution to its customers. Fund Company is obligated to supply these materials to Schwab in a timely manner so as to allow Schwab, at its expense, to send current prospectuses and statements of additional information and periodic reports, immediately upon their effective dates, to customers and prospective customers requesting them through Schwab. Schwab will also send a current Fund prospectus with purchase trade confirmations for the initial purchase of a Fund. Fund Company shall notify Schwab immediately of any change to a Fund's prospectus. c. Fund Company shall ensure that the foregoing materials shall be in compliance with all applicable provisions of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the Shareholder Communications Improvement Act of 1990, all applicable rules and regulations under any of and such statutes, and any and all laws, rules and regulations that may be adopted and become applicable in the future. A-6 d. Fund Company shall ensure that the prospectus of each of its Funds discloses (i) that a broker may charge transaction fees on the purchase and/or sale of Fund shares, (ii) that the performance of the Fund may be compared in publications to the performance of various indices and investments for which reliable performance data is available, (iii) that the performance of the Fund may be compared in publications to averages, performance rankings, or other information prepared by recognized mutual fund statistical services, and (iv) that the annual report contains additional performance information and will be made available to investors upon request and without charge. e. Schwab shall mail statements to its customers on a monthly basis (or as to accounts in which there has been no activity in a particular month, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset value of each such Fund as of a recent date. f. Schwab shall respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates. With respect to Fund shares purchased by customers after the effective date of this Agreement, Schwab shall provide average cost basis reporting to assist customers in the preparation of income tax returns. 11. NEW PROCESSING SYSTEMS Fund Company agrees to cooperate to the extent possible with Schwab as Schwab develops and seeks to implement new processing systems for the MFMP. A-7 CHARLES SCHWAB MUTUAL FUND MARKETPLACE-Registered Trademark- INSTITUTIONAL SERVICES AGREEMENT This Agreement is made as of November 27, 1995, between Charles Schwab & Co., Inc. ("Schwab"), a California corporation, each registered investment company ("Fund Company") executing this Agreement, on its own behalf and on behalf of each of the series or classes of shares, if any, listed on Schedule I, as amended from time to time (such series or classes being referred to as the "Fund(s)"), and Fund Affiliate (defined below) that has executed this Agreement. Fund Company and Fund Affiliate are collectively referred to herein as "Fund Parties." In the event that there are no series or classes of shares listed on Schedule I, the term "Fund(s)" shall mean "Fund Company." WHEREAS Fund Affiliate is either (i) an investment adviser to or administrator for the Funds or (ii) the principal underwriter or distributor for the Funds. WHEREAS Fund Parties wish to have Schwab perform certain recordkeeping, shareholder communication, and other services for each Fund; and WHEREAS Schwab is willing to perform such services on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows: 1. SERVICES a. During the term of this Agreement, Schwab shall perform the services set forth on Exhibit A hereto, as such exhibit may be amended from time to time by mutual consent of the parties (the "Services"). b. In processing purchase, redemption, transfer and exchange orders placed by Schwab on behalf of its customers, and in order to facilitate Schwab's performance of Services, the parties agree that the Operating Agreement, dated as of November 27, 1995, between Schwab and Fund Company, as amended from time to time ("Operating Agreement"), is incorporated herein by this reference. All terms and conditions of the Operating Agreement shall be binding as between Schwab and Fund Parties, and the references to Fund Company therein shall be deemed to mean Fund Parties for the purposes of this Agreement. In the event of any inconsistency between the Operating Agreement and this Agreement, this Agreement shall control. 2. FEES For the Services, Schwab shall receive a fee (the "Fee") which shall be calculated and paid in accordance with Exhibit B hereto. Schedule II reflects the amount of the Fee that each Fund Party has agreed, as between them, to pay. Should Exhibit A be amended to revise the Services, the parties shall also amend Exhibit B and Schedule II, if necessary, in order to reflect any changes in the Fee. 3. TRANSACTION CHARGES Schwab shall not, during the term of this Agreement, assess against or collect from its customers any transaction fee upon the purchase or redemption of any Fund's shares that are considered in calculating the Fee. The parties acknowledge and agree that Schwab may collect such transaction fees from certain customers (including "Active Traders," as Schwab may define that term) for certain special trading services and from other customers upon such other customers' redemption of certain shares. The value of shares as to which such transaction fees are charged will not be included in the calculation of the Fee. 4. INDEMNIFICATION a. Schwab shall indemnify and hold harmless Fund Parties and their directors, officers, employees, and agents ("Indemnified Parties") from and against any and all losses, claims, liabilities and expenses (including reasonable attorney's fees) ("Losses") incurred by any of them arising out of (i) Schwab's dissemination of information regarding Fund Parties or a Fund that is materially incorrect and that was not provided to Schwab, or approved, by a Fund Party, its affiliated persons ("Affiliates") as defined under the Investment Company Act of 1940, as amended (the "1940 Act"), or agents or (ii) Schwab's willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement, except to the extent such Losses result from the negligence, willful misconduct or breach of this Agreement by an Indemnified Party. b. In any event, no party shall be liable for any special, consequential or incidental damages. 5. ROLE AND RELATIONSHIP OF SCHWAB The parties acknowledge and agree that the Services under this Agreement are recordkeeping, shareholder communication and related services only and are not the services of an underwriter or a principal underwriter of any Fund within the meaning of the Securities Act of 1933, as amended, or the 1940 Act. This Agreement does not grant Schwab any right to purchase shares from any Fund (although it does not preclude Schwab from purchasing any such shares), nor does it constitute Schwab an agent of Fund Parties or any Fund for purposes of selling shares of any Fund to any dealer or the public. To the extent Schwab is involved in the purchase of shares of any Fund by Schwab's customers, such involvement will be as agent of such customer only. 6. INFORMATION TO BE PROVIDED Fund Parties shall provide to Schwab prior to the effectiveness of this Agreement or as soon thereafter as practicable: a. Certified resolutions of the board of directors of each Fund Party authorizing the Fund Party to enter into this Agreement and indicating the officers authorized to execute this Agreement on behalf of the Fund Party; and b. Two (2) copies of the then-current prospectus and statement of additional information of each Fund. Fund Party shall provide Schwab with written copies of any amendments to or changes in the Fund's prospectus or statement of additional information as soon as practicable after such amendments or changes become available. -2- 7. NOTICES All notices required by this Agreement (excluding the Operating Agreement) shall be in writing and delivered personally or sent by first class mail. Such notices will be deemed to have been received as of the earlier of actual physical receipt or three (3) days after deposit, first class postage prepaid, in the United States mail. All such notices shall be made: if to Schwab, to: Charles Schwab & Co., Inc. 101 Montgomery Street San Francisco, CA 94104 Attention: John McGonigle Senior Vice President/Mutual Funds with a copy to: General Counsel, at the same address; if to Fund Party, to the address given below in the signature block. 8. NONEXCLUSIVITY Each Party acknowledges that the other may enter into agreements similar to this Agreement with other parties for the performance of services similar to those to be provided under this Agreement, unless otherwise agreed to in writing by the parties. 9. ASSIGNABILITY This Agreement is not assignable by any party without the other parties' prior written consents and any attempted assignment in contravention hereof shall be null and void; provided, however, that Schwab may, without the consent of Fund Parties, assign its rights and obligations under this Agreement to any Affiliate. 10. EXHIBITS AND SCHEDULES All Exhibits and Schedules attached to this Agreement, as they may be amended from time to time, are by this reference incorporated into and made a part of this Agreement. 11. ENTIRE AGREEMENT; AMENDMENT This Agreement (including the Exhibits and Schedules hereto), together with the Operating Agreement, constitute the entire agreement between the parties as to the subject matter hereof and supersede any and all agreements, representations and warranties, written or oral, regarding such subject matter made prior to the time at which this Agreement has been executed and delivered by Schwab and Fund Parties. This Agreement and the Exhibits and Schedules hereto may be amended only by a writing executed by each party hereto that is to be bound by such amendment. 12. GOVERNING LAW This Agreement will be governed by and interpreted under the laws of the State of California as applied to contracts entered into and to be performed entirely within that state. -3- 13. COUNTERPARTS This Agreement may be executed in one or more counterparts, each of which will be deemed an original, but all of which together shall constitute one and the same instrument. 14. EFFECTIVENESS OF AGREEMENT; TERMINATION a. This Agreement will become effective as to a Fund as of the later of (i) the date set forth on Schedule I opposite the name of the Fund or (ii) such later date as Schwab may, in its discretion, designate. b. This Agreement may be terminated as to a Fund by any party (i) upon ninety (90) days' written notice to the other parties or (ii) upon such shorter notice as is required by law, order, or instruction by a court of competent jurisdiction or a regulatory body or self-regulatory organization with jurisdiction over the terminating party or (iii) automatically, effective on the day following the termination of any plan of distribution ("Rule 12b-1 Plan") adopted and maintained pursuant to Rule 12b-1 under the 1940 Act by any Fund that has a Rule 12b-1 Plan in effect as of the effective date of this Agreement, provided that a portion of the Fee is paid pursuant to the Rule 12b-1 Plan. c. After the date of termination as to a Fund, Fund Parties will not be obligated to pay the Fee with respect to any shares of the Fund that are first held in Schwab customer accounts after the date of such termination. However, notwithstanding any such termination, Fund Parties will remain obligated to pay Schwab the Fee as to each share of the Fund that was considered in the calculation of the Fee as of the date of termination (a "Pre-Termination Share"), for so long as such Pre-Termination Share is held in any Schwab brokerage account and Schwab continues to perform substantially all of the Services as to such Pre-Termination Share. Further, for so long as Schwab continues to perform the Services as to any Pre-Termination Shares, this Agreement will otherwise remain in full force and effect as to such Pre- Termination Shares. Fund Parties shall reimburse Schwab promptly for any reasonable expenses Schwab incurs in effecting any termination of this Agreement, including delivery to a Fund Party of any records, instruments, or documents reasonably requested by the Fund Party. 15. The name "Westcore Trust" and references in this Agreement to "Fund Company" refer to the Trust created under an Amended and Restated Declaration of Trust dated November 19, 1987, which is hereby referred to and a copy of which is on file at the office of the State Secretary of the Commonwealth of Massachusetts and at the principal office of the Trust. The obligations of Westcore Trust entered into the name or on behalf thereof by any of its Trustees, representatives or agents are made not individually, but in such capacities, and are not binding upon any of the Trustees, shareholders, or representatives of the Trust personally, but bind only the Trust, and all persons dealing with the Trust must look solely to the Trust for the enforcement of any claims against the Trust. -4- IN WITNESS WHEREOF, the parties have executed this Agreement by a duly authorized representative of the parties hereto. CHARLES SCHWAB & CO., INC. By: ------------------------------------- John McGonigle Senior Vice President/Mutual Funds Date: ----------------------------------- DENVER INVESTMENT ADVISORS LLC WESTCORE TRUST [Name of Fund Affiliate] [Name of Fund Company] By: By: --------------------------- ----------------------------- Name: Name: ------------------------- --------------------------- Title: Title: ------------------------ -------------------------- Address: Address: ---------------------- ------------------------ - ------------------------------ -------------------------------- Attn: Attn: ------------------------- --------------------------- Date: Date: ------------------------- --------------------------- -5- EXHIBIT A SERVICES 1. RECORD MAINTENANCE Schwab shall maintain the following records with respect to a Fund for each customer who holds Fund shares in a Schwab brokerage account: a. Number of shares: b. Date, price and amount of purchases and redemptions (including dividend reinvestments) and dates and amounts of dividends paid for at least the current year to date; c. Name and address of the customer, including zip codes and social security numbers or taxpayer identification numbers; d. Records of distributions and dividend payments; e. Any transfers of shares; and f. Overall control records. 2. SHAREHOLDER COMMUNICATIONS Schwab shall: a. Provide to a shareholder mailing agent employed by each Fund for the purpose of mailing certain Fund-related materials the names and addresses of all Schwab customers who hold shares of such Fund in their Schwab brokerage accounts. Such shareholder mailing agent shall be a person or entity engaged by such Fund in accordance with the Operating Agreement and the Fund-related materials to be sent by such agent shall consist of updated prospectuses and any supplements and amendments thereto, annual and other periodic reports, proxy or information statements and other appropriate shareholder communications; b. Mail current Fund prospectuses and statements of additional information and annual and other periodic reports upon customer request and, as applicable, with confirmation statements; c. Mail statements to customers on a monthly basis (or, as to accounts in which there has been no activity in a particular month, no less frequently than quarterly) showing, among other things, the number of shares of each Fund owned by such customer and the net asset value of such Fund as of a recent date; d. Produce and mail to customers confirmation statements reflecting purchases and redemptions of shares of each Fund in Schwab brokerage accounts; e. Respond to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates; and f. With respect to Fund shares purchased by customers after the effective date of this Agreement, provide average cost basis reporting to the customers to assist them in preparation of income tax returns. 3. TRANSACTIONAL SERVICES Schwab shall communicate, as to shares of each Fund, purchase, redemption and exchange orders reflecting the orders it receives from its customers. Schwab shall also communicate, as to shares of each Fund, mergers, splits and other reorganization activities. A-1 4. TAX INFORMATION RETURNS AND REPORTS Schwab shall prepare and file with the appropriate governmental agencies, such information, returns and reports as are required to be so filed for reporting (i) dividends and other distributions made, (ii) amounts withheld on dividends and other distributions and payments under applicable federal and state laws, rules and regulations, and (iii) gross proceeds of sales transactions as required. 5. FUND COMMUNICATIONS Schwab shall, on a daily basis and for each Fund, report the number of shares on which the Fee is to be paid pursuant to this Agreement and the number of shares on which no such Fee is to be paid. Schwab shall also provide each Fund with monthly summaries of reports. Such summaries shall be expressed in both shares and dollar amounts. A-2 EXHIBIT B CALCULATION OF FEE 1. The Fee shall be calculated by multiplying the Daily Value of Qualifying Shares (defined below) times the appropriate Fee Rate (indicated below). The Fee shall be computed daily and paid monthly in arrears. 2. The Daily Value of Qualifying Shares is the aggregate daily value of all shares of the Fund held in Schwab brokerage accounts, subject to the following exclusions ("Qualifying Shares"). There shall be excluded from the shares (i) shares as to which a brokerage customer paid Schwab a transaction fee upon the purchase of such shares, (ii) shares held in a Schwab brokerage account prior to the effective date of this Agreement as to the Fund and (iii) shares first held in a Schwab brokerage account after the termination of this Agreement as to the Fund. 3. The Fee Rate is determined based on the aggregate value of the Qualifying Shares of all Funds listed on all Schedule I's, as amended from time to time, as of the prior review date. The review dates are December 31 and June 30. The Fee Rate is effective from the next business day following the review date up to and including the next review date. The Fee Rates are as follows: Aggregate Value of Qualifying Shares Fee Rate ------------------ -------- Up to and including $500 million 35 basis points per annum Over $500 million 30 basis points per annum The rate scale is not intended to produce a "blended rate." Rather, once a threshold is reached, the rate applicable to the total amount of assets will be used for all assets. Thus, if the aggregate value of Qualifying Shares of all such Funds is $501 million as of a review date, the Fee Rate will be 30 basis points (to be applied to the Daily Value of Qualifying Shares) until the next review date. 4. For purposes of this Exhibit, the daily value of the shares of each Fund will be the net asset value reported by such Fund to the National Association of Securities Dealers, Inc. Automated Quotation System. No adjustments will be made to the net asset values to correct errors in the net asset values so reported for any day unless such error is corrected and the corrected net asset value per share is reported to Schwab before 5 o'clock, p.m., San Francisco time, on the first business day after the day to which the error relates. 5. At the request of Fund Parties, Schwab shall provide, on each business day, a statement detailing the calculation for each Fund, the aggregate value of the Qualifying Shares of each Fund and the amount of the Fee for each Fund. As soon as practicable after the end of the month, Schwab shall also provide to Fund Parties an invoice for the amount of the Fee due for each Fund. In the calculation of such Fee, Schwab's records shall govern unless an error can be shown in the number of shares used in such calculation. 6. Fund Parties shall pay Schwab the Fee within thirty (30) days after Fund Parties' receipt of such statement. Such payment shall be by wire transfer, unless the amount thereof is less than $250. Such wire transfers shall be separate from wire transfers of redemption proceeds or distributions under the Operating Agreement. Amounts less than $250 may, at Fund Parties' discretion, be paid by check. B-1 SCHEDULE I TO THE SERVICES AGREEMENT Fund Effective Date ---- -------------- Westcore Midco Growth Fund* November 27, 1995 Westcore Blue Chip Fund* November 27, 1995 Westcore Equity Income Fund* November 27, 1995 Westcore Small-Cap Opportunity Fund* November 27, 1995 Westcore Long-Term Bond Fund* November 27, 1995 Westcore Intermediate-Term Bond Fund* November 27, 1995 Westcore Colorado Tax-Exempt Fund* November 27, 1995 *Indicates that Fund is a "no load" or "no sales charge" Fund as defined in Section 26 of the NASD's Rules of Fair Practice. WESTCORE TRUST [Name of Fund Company] By: --------------------------- Name: ------------------------- Title: ------------------------ Date: ------------------------- ACKNOWLEDGED BY DENVER INVESTMENT ADVISORS LLC ACCEPTED BY CHARLES SCHWAB & CO. INC. [Name of Fund Affiliate] By: By: --------------------------- ------------------------------------- John McGonigle Senior Vice President/Mutual Funds Name: ------------------------- Title: ------------------------ Date: Date: ------------------------- ----------------------------------- SCHEDULE II TO THE SERVICES AGREEMENT Aggregate Value of Qualifying Shares ------------------------------------ Up to and including $500 Million Over $500 M ------------- ----------- Fund Company: 0% 0% - ------------ ---------- ----------- Fund Affiliate: - -------------- Denver Investment Advisors LLC 0.35% 0.30% ---------- ----------- Fee Rate Percentage Per Annum 0.35% 0.30% of Average Daily Value of Fund Shares A-23 EX-10.(B) 27 EXHIBIT 10(B) September 27, 1996 Westcore Trust 370 Seventeenth Street Suite 2700 Denver, CO 80202 RE: POST-EFFECTIVE AMENDMENT NO. 45 TO REGISTRATION STATEMENT ON FORM N-1A (FILE NO. 2-75677) Gentlemen: We have acted as counsel for Westcore Trust, a Massachusetts business trust (the "Trust"), in connection with the registration of 1,169,897,634 of its shares, no par value, (the "Shares") pursuant to Post-Effective Amendment No. 45 to the Trust's Registration Statement under the Securities Act of 1933, as amended. The registration of such Shares has been made in reliance upon Rule 24e-2 under the Investment Company Act of 1940. The Trust is an open-end investment company authorized to issue an unlimited number of each class of shares, without par value. We have reviewed the Trust's Declaration of Trust, its Code of Regulations, resolutions adopted by its Board of Trustees and shareholders, and such other legal and factual matters as we have deemed appropriate. In rendering this opinion, we have relied on the written advice of Massachusetts counsel as to all matters arising under the laws of the Commonwealth of Massachusetts. On the basis on the foregoing, we are of the opinion that, when issued for payment as described in the Trust's prospectus for the Shares, the Shares will be validly issued, fully paid and non-assessable by the Trust. Under Massachusetts law, shareholders of a Massachusetts business trust could, under certain circumstances, be held personally liable for the obligations of the trust. However, the Restated Declaration of Trust of the Trust, as amended, disclaims shareholder liability for acts or obligations of the Trust and requires that notice of such disclaimer be given in each note, bond, contract, order or other undertaking issued Westcore Trust September 27, 1996 Page 2 by or on behalf of the Trust or the Trustees relating to the Trust or any class of shares of beneficial interest of the Trust. The Restated Declaration of Trust, as amended, provides for indemnification out of the assets of the particular class of shares for all loss and expense of any shareholder of that class held personally liable solely by reason of his being or having been a shareholder. Thus, the risk of a shareholder's incurring financial loss on account of shareholder liability is limited to circumstances in which that class of shares itself would be unable to meet its obligations. We hereby consent to the filing of our opinion as an exhibit to the Trust's Registration Statement referred to above. Very truly yours, /s/ DRINKER BIDDLE & REATH DRINKER BIDDLE & REATH EX-11.(A) 28 EXHIBIT 11(A) CONSENT OF COUNSEL We hereby consent to use of our name and to the reference to our firm under the caption "Counsel" in the Statement of Additional Information that is included or incorporated by reference in Post-Effective Amendment No. 45 to the Registration Statement (No. 2-75677) on Form N-1A under the Securities Act of 1933, as amended, of Westcore Trust. This consent does not constitute a consent under Section 7 of the Securities Act of 1933, as amended, and in consenting to the use of our name and the references to our firm under such caption we have not certified any part of the Registration Statement and do not otherwise come within the categories of persons whose consent is required under Section 7 or the rules and regulations of the Securities and Exchange Commission thereunder. /s/ Drinker Biddle & Reath -------------------------- Drinker Biddle & Reath Philadelphia, Pennsylvania Dated: September 27, 1996 EX-11.(B) 29 EXHIBIT 11(B) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Post-Effective Amendment No. 45 to Registration Statement No. 2-75677 of our report dated June 28, 1996 of Westcore Trust appearing in the Statement of Additional Information, which is a part of such Registration Statement, and to the reference to us under the headings "Financial Highlights" appearing in the Prospectus and "Auditors" appearing in the Statement of Additional Information which are a part of such Registration Statement. /s/ Deloitte & Touche LLP - ------------------------- DELOITTE & TOUCHE LLP Denver, Colorado September 25, 1996 EX-14.(A) 30 EXHIBIT 14(A) Exhibit 14(a) WESTCORE IRA APPLICATION INSTRUCTIONS PLEASE USE THIS SHEET AS A GUIDE IN COMPLETING YOUR WESTCORE IRA APPLICATION AND ADOPTION AGREEMENT. To open your Westcore IRA, please complete all sections of this agreement. If you are transferring an existing IRA to WESTCORE Trust, complete am IRA Transfer form in addition to this application. The pink pages include your Disclosure Statement and Custodial Agreement. We urge you to read this material carefully. You may wish to contact your tax advisor to determine if an IRA will fit your present circumstances. Return your completed form, with your check to: WESTCORE IRA P.O. BOX 8319 BOSTON, MA 02266-8319 1. ACCOUNT HOLDER INFORMATION Please print or type the information requested. 2. ACCOUNT TYPE Regular IRA - For contributions of up to $2,000 annually. Rollover IRA - An IRA used to shelter eligible distributions from a qualified retirement plan or a rollover from another existing IRA. If you are opening a Rollover IRA, please read the ROLLOVER STATEMENT below. Spousal IRA - For contributions for up to $2,250 annually with a non- earning spouse. You must open two separate accounts for your spousal IRA. No more than $2,000 may be put in either account annually. Transfer IRA - If you already have an IRA established with another trustee and you wish to have those assets transferred directly into your WESTCORE IRA. SEP/IRA - A Simplified Employee Pension IRA set up for small business and sole proprietorships. The employer should sign an IRS Form 5305-SEP or an individually-drafted or prototype SEP plan before establishing a SEP/IRA. Employer contributions are limited to the lesser of $30,000 or 15% of compensation. Employees may also make their regular IRA contributions (up to $2,000) into their SEP. SAR-SEP/IRA - A Simplified Employee Pension IRA Plan which includes a salary reduction capability. Combined IRA - For annual contributions of up to $2,000 with a Rollover IRA from a qualified plan (either partial or lump sum ) as defined by Internal Revenue Code Section 402(a)(5)(D), in the same account. If you are opening a Combined IRA, please be sure to read the AUTHORIZATION TO COMBINE statement below. AUTHORIZATION TO COMBINE A CONTRIBUTORY IRA AND ROLLOVER IRA I elect to make this contribution(s) to my IRA Rollover account. I understand that by making such contribution(s), I waive any right to roll this IRA into a Qualified Trust F(as described in Internal Revenue Code Section 401(a)) in the future. I hereby release WESTCORE and the custodian from any loss, damage, or injury that I may sustain financially as a result of my election to waive any right of future rollover for the funds deposited to this account. ROLLOVER STATEMENT I certify that the assets I now deposit as a rollover contribution meet the requirements for a Qualifying Rollover Contribution as defined in the Disclosure Statement, including the requirement that deposit of such cash or property is being made within 60 days after receipt by me of the qualifying distribution. I understand that my designation as "rollover" of any assets deposited after March 20, 1986 is irrevocable unless I later determine all or any portion of such deposit(s) to be an excess contribution. 3. SPOUSE INFORMATION (SPOUSAL IRA ONLY) 4. CONTRIBUTION DESCRIPTION Please indicate the amount and tax year of each contribution you are making. Because your Regular, Spousal, SEP, SAR-SEP or Combined IRA may be opened and funded up until the regular tax-filing date (without extensions) for that year (for example April 15, 1992 for a 1991 plan) it is possible to contribute for two years at the same time. If you are making a rollover contribution, please show the amount of all cash to be included. Your annual administration fee may be included in the total amount of your check. SCHEDULE OF FEES The annual fee will be automatically debited from your account on the anniversary of your IRA's establishment date. 5. BENEFICIARY DESCRIPTION If you should die before your IRA account balance has been fully distributed, your IRA distributions will be made to your primary beneficiary(ies), or, if deceased, to the contingent beneficiary(ies) you designate. You may name as many beneficiaries as you wish; use a separate sheet if necessary. Please be certain to fill out all the requested information for each beneficiary. If you reside in a community property state, and are not naming your spouse as your primary beneficiary, your spouse must sign the Spouse's Agreement. 6. WESTCORE INVESTMENT INSTRUCTIONS You may select up to four funds for your IRA Investments. Be certain to indicate the amount to be invested for each fund. Please read the current prospectus(es) for each of the funds in which you intend to invest. They are available from your financial advisor. 7. AUTOMATIC INVESTMENT PLAN (OPTIONAL) If you would like to have funds transferred automatically on a regular basis from your existing bank account into your IRA, fill out this section and sign the Bank Authorization. You must include a voided personal check with your IRA Agreement Form. -2- 8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL) By checking this section, you authorize the Custodian to accept phone instructions regarding redemptions and exchanges of your fund(s). If you agree to this option, please be sure to read the following agreement statement: TELEPHONE REDEMPTION AND EXCHANGE AGREEMENT - -------------------------------------------------------------------------------- By checking 8 of the application, I have authorized the Custodian to act upon instructions received by phone by persons reasonably believed by the Transfer Agent to be the Registrant(s) or the broker/dealer, bank or other financial institution ("Service Organization") acting on behalf of the Registrant(s), for the redemption or exchange of shares owned by the Registrant(s), for shares of any other Fund within the WESTCORE Family of Funds, I understand that: 1. If any exchange involves an initial investment into the Fund into which the shares are to be exchanged, the account registration will carry the same registration as set forth above. 2. I relieve the Fund, or Custodian, or Service Organizations of any liability for the loss, cost, or expense for acting upon such instructions believed to be from me. 3. An exchange deemed to be the initial purchase of a Fund must meet the minimum size requirement specified for that Fund. 4. A $7.50 fee is charged to shareholders per exchange, and applicable sales load, if any. 9. & 10. QUALIFICATION FOR DISCOUNTS, LETTER OF INTENT, AND RIGHTS OF ACCUMULATION If your total funds purchase is, or will be $100,000.00 or more over a 13 month period, you may purchase shares at a reduced sales load. By signing the letter of intent, you agree that you intend to purchase the number of shares indicated by your check in the appropriate box. By signing the Rights of Accumulation statement, you attest to owning shares under the account numbers you so indicate. 11. YOUR ACCEPTANCE Please read the acceptance statement, then sign and date the Application. The pink pages are your copy of the WESTCORE IRA Agreement. Custodial Agreement, and Disclosure Statement. They should be kept with your financial records. Your financial advisor should receive the yellow copy. Attach your check to the original (white) copy, and include the Transfer Form, if applicable. If you have signed up for the Automatic Investment Program, be sure to attach your voided check. 12. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION This section will be completed by the vendor providing you with the WESTCORE IRA. APRIL 15 DEADLINE Your signed WESTCORE IRA Application/Adoption Agreement must be received by your financial advisor or the WESTCORE Custodian on or before April 15 following the calendar year for which the contribution is being made. Your -3- contribution check must also be postmarked no later than April 15. Individual tax filing extensions do not affect the April 15 deadline. -4- THE WESTCORE INDIVIDUAL RETIREMENT PLAN - IRA APPLICATION/ADOPTION AGREEMENT I/We, the individuals signing the Adoption Agreement establish an Individual Retirement Account (the "Account") with State Street Bank and Trust Company as Custodian. I/We agree to the terms of the Account, which are contained in the document entitled "State Street Bank and Trust Company Individual Retirement Custodial Account," Disclosure Statement and the IRA Application/Adoption Agreement. I/We certify the accuracy of the information in this Adoption Agreement. The Account will be effective upon acceptance by State Street Bank and Trust Company. 1. ACCOUNT HOLDER INFORMATION (PLEASE PRINT OR TYPE) Full Name --------------------------------------------------------------------- Address ----------------------------------------------------------------------- City State Zip ------------------------------- ---------- -------------------- Telephone: Day ( ) --------------------------------------------------------------- Evening ( ) ------------------------------------------------------------- Social Security Number Date of Birth ---------------- ------------------------- 2. ACCOUNT TYPE I am establishing a Regular IRA Combined IRA Transfer IRA --- --- --- Spousal IRA Rollover IRA SAR-SEP/IRA --- --- --- SEP/IRA --- 3. SPOUSE INFORMATION (FOR SPOUSAL IRA ONLY) Full Name --------------------------------------------------------------------- Address ----------------------------------------------------------------------- City State Zip ------------------------------- ---------- -------------------- Telephone: Day ( ) --------------------------------------------------------------- Evening ( ) ------------------------------------------------------------- Social Security Number Date of Birth ---------------- ------------------------- -5- 4. CONTRIBUTION DESCRIPTION Your Account Spouse's Account (if applicable) For the tax year 19____ Contribution amount $ $ ----------- ----------- For the tax year 19____ Contribution amount $ $ ----------- ----------- Employer SEP Contribution amount $ $ ----------- ----------- SAR-SEP Employee Contribution amount $ $ ----------- ----------- Cash Rollover Contribution amount $ $ ----------- ----------- Total Contribution Enclosed $ $ ----------- ----------- Annual Fee ($10 per fund, maximum $30) $ $ ----------- ----------- TOTAL AMOUNT OF CHECK $ -------------- (Please make checks payable to WESTCORE) 5. BENEFICIARY DESIGNATION I hereby designate the following persons as primary and secondary beneficiaries to receive my interest in my WESTCORE IRA according to the terms of the Custodial Agreement, hereby revoking any such prior designations made by me. (Attach additional sheet if necessary.) Primary Beneficiary Full Name ---------------------------------------------------------------------- Date of Birth Relationship ------------------------ ---------------------------- Secondary Beneficiary Full Name ---------------------------------------------------------------------- Date of Birth Relationship ------------------------ ---------------------------- SPOUSE'S AGREEMENT: (For community property states) By signing below, I give to my spouse any interest I may have in the funds deposited in this account and agree that you may pay the money in my spouse's IRA as directed in the above beneficiary designation. Spouse's Name (please print) ---------------------------------------------------- Spouse's Signature Date ---------------------------------- -------------------- -6- 6. WESTCORE INVESTMENT INSTRUCTIONS - SELECT UP TO FOUR FUNDS. Amount to be invested FUND NAME Your Account Spouse's Account (if applicable) $ $ ------------------------------------------ ----------- ----------- $ $ ------------------------------------------ ----------- ----------- $ $ ------------------------------------------ ----------- ----------- $ $ ------------------------------------------ ----------- ----------- The initial purchase minimum is $250.00 per Fund, subsequent minimum investments are $50. Do not send currency. I acknowledge that I have sole responsibility for my investment choices and that I have received a current prospectus for each Fund I select. PLEASE READ THE PROSPECTUS(ES) OF THE FUND(S) SELECTED BEFORE INVESTING. 7. AUTOMATIC INVESTMENT PLAN (OPTIONAL) / / Yes / / No I hereby authorize WESTCORE and/or its custodian to draw a check on my/our personal checking account on the designated dates in order to purchase shares in the WESTCORE _______________________________________________________ Fund at the Public Offering Price determined on that day and deposit to my IRA account number ______________________. / / Monthly _________________ / / Semi-annually / / Quarterly / / Annually on the _________ day. Amount of each check (minimum $50) $ ----------------------- NOTE: You must sign the Bank Authorization form below and attach a voided personal check to your WESTCORE IRA Agreement Form. BANK AUTHORIZATION Bank Name ---------------------------------------------------------------------- Bank Address ------------------------------------------------------------------- Bank Account Number ------------------------------------------------------------ I/We authorize you, the above named bank, to debt my/our account for amounts drawn by WESTCORE Trust and/or its Custodian acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in writing and you receive it. I/We agree that you shall incur no liability when honoring any such check. -7- I/We further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be so even though such dishonor results in the forfeiture of investment. - ----------------------------------- ---------------------------------------- Bank Account Holder's Name Joint Bank Account Holder's Name - ----------------------------------- ---------------------------------------- Bank Acct. Holder's Signature Date Joint Bank Acct. Holder's Signature Date 8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL) / / I authorize the Transfer Agent or any Organization to act upon instructions received by telephone to redeem or exchange shares owned by me. I understand that all redemptions and exchanges are subject to the terms and conditions as set out in the prospectus. 9. LETTER OF INTENT (OPTIONAL) I agree to the Letter of Intent conditions and terms as set forth in the Prospectus under the section Public Offering Price. Although I'm not obligated to do so, it is my intention to invest over a 13-month period shares in one or more of the Westcore Funds in an aggregate amount of at least: / / $100,000 - 249,999 / / $500,000 - 999,999 / / $250,000 - 499,999 / / $1 million or more Purchases made within the last 90 days will be included as part of your Letter of Intent. X ----------------------------------------- ------------------------------ Signature Date 10. RIGHT OF ACCUMULATION A reduced sales load applies to any purchase of WESTCORE shares that is sold with a sales load ("Eligible Funds") where an investor's then current Aggregate Investment is $100,000 or more. For applicable sales loads see "Public Offering Price" and "Aggregate Investment" as described in the Prospectus. The reduced sales load applies only to the dollar amount of the shares of the then current purchase. I own shares of one or more Funds in the Westcore Family of Funds listed in Section 6 and qualify for the cumulative quantity discount described above and in the prospectus. My account numbers are as follows: - ------------------------- -------------------- ------------------------- 11. CUSTOMER SIGNATURE AND CERTIFICATION I/We, the undersigned account owner(s) certify that I/we have the power and authority to establish this Individual Retirement Account and spousal IRA account, if applicable, and select the privileges requested. This order is subject to acceptance by Westcore Trust. I/We acknowledge that I/we have received, read, and understand the IRA Custodial Agreement, the IRA Disclosure Statement and the current prospectus(es) for the fund(s) elected. I/We -8- understand that a subsidiary of First Interstate Bank acts as the investment advisor and receives fees for so acting. I/We hereby adopt the Custodial Agreement which is incorporated by reference and I/we agree that Westcore Trust, the custodian, ALPS Mutual Funds Services, Inc., First Interstate Bancorp or any of its subsidiaries, affiliates, officers, directors, or employees will not be liable for any loss, claim, expense, or cost, and agree to indemnify the same from any losses and damages, for acting upon any instructions, including telephone exchanges and redemptions (if so indicated above), and inquiries, believed genuine. Shares of the funds are not bank deposits, are not insured by the FDIC and are not guaranteed or otherwise supported by First Interstate Bancorp or its affiliates. This account is subject to the terms of the prospectus, as amended from time to time. I consent to the shareholder account charges described in the prospectus and the IRA documents, and authorize the Transfer Agent of the Trust, as my agent, to redeem a sufficient number of shares from my account with the Trust on a quarterly basis to pay such charges. Under penalty of perjury, I certify that the Social Security or taxpayer's identification number entered above is correct. I acknowledge that I understand past performance is not indicative of future returns. X Date ----------------------------------------- ------------------------- Your Signature X Date ----------------------------------------- ------------------------- Signature: Spouse (if opening a Spousal IRA) 12. CUSTODIAL ACCEPTANCE Receipt by the Investor of the Westcore's Statement shall indicate State Street Bank & Trust Co.'s acceptance to act as Custodian. By Date ---------------------------------------- ------------------------- FOR WESTCORE IRA USE ONLY WESTCORE IRA Account Number ----------------------------------------------------- Spousal Account Number ---------------------------------------------------------- 13. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION (To be completed by the financial institution/advisor.) We submit this application for the purchase of shares in accordance with the terms of our selling agreement with ALPS Mutual Funds Services, Inc. (Distributor). We agree to notify the Distributor and Transfer Agent of any -9- purchases made under a Letter of Intent and escrow agreement or Right of Accumulation listed within this agreement. Firm ---------------------------------------------------------------------------- Financial Advisor Name ---------------------------------------------------------- Branch Number F/A Number ------------------------------------------ ------------ Office Telephone ( ) ---------------------------------------------------------------- Branch address ------------------------------------------------------------------ City State Zip code ------------------------------- ------------- --------------- By: ----------------------------------------------------------------------------- (Authorized signature of dealer/Title) -10- FOR ACTIVE PARTICIPANTS - -------------------------------------------------------------------------------- IF YOU ARE SINGLE IF YOU ARE MARRIED THEN YOUR IRA FILING JOINTLY CONTRIBUTION IS - -------------------------------------------------------------------------------- Up to $25,000 Up to $40,000 Fully Deductible - -------------------------------------------------------------------------------- Over $25,000 but less Over $40,000 but less Partly Deductible than $35,000 than $50,000 - -------------------------------------------------------------------------------- $35,000 and up $50,000 and up Not Deductible - -------------------------------------------------------------------------------- HOW DO I CALCULATE MY DEDUCTION IF I FALL IN THE "PARTLY DEDUCTIBLE" RANGE? If your AGI fails in the partly deductible range, you must calculate the portion of your contribution that is deductible. To do this, multiply your contribution by a fraction. The numerator is the amount by which your AGI exceeds the lower limit of the partly deductible range ($25,000 if single, or $40,000 if married filing jointly). The denominator is $10,000. Subtract this from your contribution and then round up to the nearest $10. The deductible amount is the greater of the amount calculated or $200 (provided you contributed at least $200). If your contribution was less than $200, then the entire contribution is deductible. For example, assume that you make a $2,000 contribution to your IRA in a year in which you are an active participant in your employer's retirement plan. Also assume that your AGI for the year is $47,555 and you are married, filing jointly. You would calculate the deductible portion of your contribution this way. 1. The amount by which your AGI exceeds the lower limit of the partly - deductible range (47,555-40,000) = 7,555 2. Divide this by 10,000 7,555 = 0.7555 ------ 10,000 3. Multiple this by your contribution: 0.7555 x $2,000 = $1,511 4. Subtract this from your contributions: ($2,000 - $1,551) = $489 5. Round this up to the nearest $10: = $490 6. Your deductible contribution is the greater of this amount or $200. Even though part or all of your contribution is not deductible, you may still contribute to your IRA up to the limit on contributions ($2,000 or $2,250 for spousal IRAs). When you file your tax return for the year, you must designate the amount of non-deductible IRA contributions for the year. See IRS Form 8606. HOW DO I DETERMINE MY AGI? AGI is your gross income minus those deductions which are available to all taxpayers even if they don't itemize. Instructions to calculate your AGI are provided with your income tax Form 1040 or 1040A. WHAT HAPPENS IF I CONTRIBUTE MORE THAN ALLOWED TO MY IRA? The maximum contribution you can make to an IRA is $2,000 ($2,250 for spousal IRAs) or 100% of compensation or earned income, whichever is less. Any amount contributed to the IRA above the maximum is considered an "excess -11- contribution." The excess is calculated using your CONTRIBUTION LIMIT, not the DEDUCTIBLE LIMIT. An excess contribution is subject to excise tax of 6% for each year it remains in the IRA. HOW CAN I CORRECT AN EXCESS CONTRIBUTION? Excess contributions may be corrected without paying a 6% penalty. To do so, you must withdraw the excess and any earnings on the excess before the due date (including extensions) for filing your federal income tax return for the year for which you made the excess contribution. A deduction should not be taken for any excess contribution. Earnings on the amount withdrawn must also be withdrawn. The earnings must be included in your income for the tax year for which the contribution was made and may be subject to a 10% premature withdrawal tax if you have not reached age 59 1/2. WHAT HAPPENS IF I DON'T CORRECT THE EXCESS CONTRIBUTION BY THE TAX RETURN DUE DATE? Any excess contribution withdrawn after the tax return due date (including any extensions) for the year for which the contribution was made will be subject to the 6% excise tax. There will be an additional 6% excise tax for each year the excess remains in your account. Under limited circumstances, you may correct an excess contribution after tax filing time by withdrawing the excess contribution (leaving the earnings in the account). This withdrawal will not be includible in income nor will it be subject to any premature withdrawal penalty if (1) your contributions to all IRAs do not exceed $2,250 and (2) you did not take a deduction for the excess amount (or you file an amended return (Form 1040X) which removes the excess deduction). HOW ARE EXCESS CONTRIBUTIONS TREATED IF NONE OF THE PRECEDING RULES APPLY? Unless an excess contribution qualifies for the special treatment outlined above, the excess contribution and any earnings on it withdrawn after tax filing time will be includible in taxable income and may be subject to a 10% premature withdrawal penalty. No deduction will be allowed for the excess contribution for the year in which it is made. Excess contributions may be corrected in a subsequent year to the extent that you contribute less than your maximum amount. As the prior excess contribution is reduced or eliminated, the 6% excise tax will become correspondingly reduced or eliminated for subsequent tax years. Also, you may be able to take an income tax deduction for the amount of excess that was reduced or eliminated, depending on whether you would be able to take a deduction if you had instead contributed the same amount. ROLLOVERS CAN I ROLL OVER A DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S RETIREMENT PLAN INTO AN IRA? If you receive a total distribution from a tax qualified retirement plan as a result of, for example, termination of employment, plan discontinuance, or retirement, all or part of the distribution may be deposited into your IRA. By doing so, you can defer income taxes on the amount rolled over until you subsequently make withdrawals from your IRA. The maximum amount you may roll over is the amount of employer contributions and earnings distributed. You may not roll over any after-tax employee contributions you made to the employer retirement plan. Also, if you -12- are over age 70 1/2 and are required to take minimum distributions under the tax laws, you may not roll over any amount required to be distributed to you under the minimum distribution rules. A rollover to an IRA must be completed within 60 days after the distribution from the employer retirement plan is to be valid. The rules governing rollovers are complicated. Be sure to consult your tax advisor or the IRS if you have a question about rollovers. ONCE I HAVE ROLLED OVER A PLAN DISTRIBUTION INTO AN IRA, CAN I SUBSEQUENTLY ROLL OVER INTO ANOTHER EMPLOYER'S QUALIFIED RETIREMENT PLAN? Yes. Part or all of a total distribution received from a qualified plan may be transferred to another qualified plan through the medium of an IRA. However, the IRA must have no assets other than those which were previously distributed to you from the qualified plan. Specifically, the IRA cannot contain any regular IRA contributions. Also, the new qualified plan must accept rollovers. CAN I ROLL OVER A PARTIAL DISTRIBUTION I RECEIVE FROM MY EMPLOYER'S PLAN? Yes, in some cases you may roll over a partial distribution you receive from your employer's plan. A rollover of a partial distribution is permitted only if (1) the distribution equals at least 50 percent of the balance to your credit determined immediately before the distribution; and (2) the distribution was made on account of death, disability or separation from service. If you elect to roll over a partial distribution, you may roll over only to an IRA; no portion of the distribution may be rolled over to another qualified plan or tax-sheltered annuity. Also, if you open an IRA by rolling over a partial distribution, you may later rollover a distribution from that IRA only to another IRA, not to an employer plan as is the case with rollovers of total distributions. HOW OFTEN CAN I ROLL OVER ASSETS FROM MY IRA TO ANOTHER IRA? You may roll over withdrawals from one IRA to another only once in any 365-day period. This rule applies to each individual IRA. WHAT HAPPENS IF I COMBINE ROLLOVER CONTRIBUTIONS WITH MY REGULAR CONTRIBUTIONS IN ONE IRA? If you wish to make both a regular annual contribution and a rollover contribution, you may wish to open two separate IRAs by completing two adoption agreements and two sets of forms. You should consult a tax advisor before making your regular contribution to the IRA you established with rollover contributions (or make a rollover contribution to the IRA to which you make your regular contributions). This is because combining your regular annual contributions and rollover contributions originating from an employer plan distribution would prohibit the future rollover contributions originating from an employer plan distribution would prohibit the future rollover of the assets of the IRA into another qualified plan. If despite this, you still wish to combine a rollover contribution and the IRA holding your regular contributions, you should establish the account as an Accumulation IRA on the Adoption Agreement and made the contributions to that account. -13- HOW DO ROLLOVERS AFFECT MY CONTRIBUTION OR DEDUCTION LIMITS? Rollover contributions, if properly made, do not count toward the maximum contribution. Also, rollovers are not deductible and they do not affect your deduction limits as described above. INVESTMENTS HOW ARE MY IRA CONTRIBUTIONS INVESTED? You control the investment and reinvestment of contributions to your IRA. Investments must be in one or more of the Fund(s) available from time to time as listed in the Adoption Agreement for your IRA or in an investment selection form included with your IRA Adoption Agreement. You direct the investment of your IRA by giving your investment instructions to the Distributor or Service Company for the Fund(s). Since you control the investment of your IRA, you are responsible for any losses; neither the Custodian, the Distributor, the Service Company, nor the Fund(s) has any responsibility for any loss or diminution in value occasioned by your exercise of investment control. Transactions for your IRA will generally be effected at the applicable public offering price or net asset value for shares of the Fund(s) involved next established after the Distributor or the Service Company (whichever may apply) receives proper investment instructions from you; consult the current prospectus for the Fund(s) involved for additional information. BEFORE MAKING ANY INVESTMENT, READ CAREFULLY THE CURRENT PROSPECTUS FOR ANY FUND YOU ARE CONSIDERING AS AN INVESTMENT FOR YOUR IRA. THE PROSPECTUS WILL CONTAIN INFORMATION ABOUT THE FUND'S INVESTMENT OBJECTIVES AND POLICIES, AS WELL AS ANY MINIMUM INITIAL INVESTMENT OR MINIMUM BALANCE REQUIREMENTS AND ANY SALES, REDEMPTION OR OTHER CHARGES. Because you control the selection of investments for your IRA, the growth in value of your IRA cannot be guaranteed or projected. ARE THERE ANY RESTRICTIONS ON THE USE OF MY IRA ASSETS? The tax-exempt status of your IRA will be revoked if you engage in any of the prohibited transactions listed in Section 4975 of the tax code. The fair market value of your IRA will be includible in your taxable income in the year in which such prohibited transaction takes place. The fair market value of your IRA may also be subject to a 10% penalty tax as a premature withdrawal if you have not yet reached the age of 59 1/2. Any investment in a collectible (for example, rare stamps) by your IRA is treated as a taxable withdrawal. WHAT IS A PROHIBITED TRANSACTION? Generally, a prohibited transaction is any improper use of the assets in your IRA. Some examples of prohibited transactions are: - - Direct or indirect sale or exchange of property between you and your IRA. - - Transfer of any property from your IRA to yourself or from yourself to your IRA. Your IRA could lose its tax exempt status if you use all or part of your interest in your IRA as security for a loan or borrow any money from your IRA. Any portion of your IRA used as security for a loan will be taxed as ordinary -14- income in the year in which the money is borrowed, if you are under age 59 1/2, this amount will also be subject to a 10% penalty tax as a premature distribution. WITHDRAWALS WHEN CAN I MAKE WITHDRAWALS FROM MY IRA? You may withdraw from your IRA at any time. However, withdrawals before age 59 1/2 may be subject to a 10% penalty tax in addition to regular income taxes (see below). WHEN MUST I START MAKING WITHDRAWALS? If you have not withdrawn your entire IRA by the April 1 following the year in which you reach 70 1/2, you must make minimum withdrawals in order to avoid penalty taxes. The minimum withdrawal amount is determined by dividing the balance in your IRA (or IRAs) by your life expectancy or the combined life expectancy of you and your designated beneficiary. The minimum withdrawal rules are complex. Consult your tax advisor for assistance. The penalty is 50% of the difference between the minimum withdrawal amount and your actual withdrawals during a year. The IRS may waive or reduce the penalty tax if you can show that your failure to make the required minimum withdrawals was due to reasonable cause and you are taking reasonable steps to remedy the problem. HOW ARE WITHDRAWALS FROM MY IRA TAXED? Amounts withdrawn by you are includible in your gross income in the taxable year that you receive them, and are taxable as ordinary income. Lump sum withdrawals from an IRA are not eligible for averaging treatment available to certain lump sum distributions from qualified employer retirement plans. Since the purpose of the IRA is to accumulate funds for retirement, your receipt or use of any portion of your IRA before you attain age 59 1/2 generally will be considered as an early withdrawal and subject to a 10% penalty tax. The 10% penalty tax for early withdrawal will not apply if the distribution - was a result of your death or disability, or - is one of a scheduled series of substantially equal periodic payments for your life or life expectancy (or the joint lives or life expectancies of you and your beneficiary). If there is an adjustment to the scheduled series of payments, the 10% penalty tax will apply. For example, if you begin receiving payments at age 50 under a withdrawal program providing for substantially equal payments over your life expectancy, and at age 58 you elect to receive the remaining amount in your IRA in a lump-sum, the 10% penalty tax will apply to the lump sum and to the amounts previously paid to you before age 59 1/2. HOW ARE NONDEDUCTIBLE CONTRIBUTIONS TAXED WHEN THEY ARE WITHDRAWN? A withdrawal of nondeductible contributions (not including earnings) will be tax-free. However, if you made both deductible and nondeductible IRA contributions, then each distribution will be treated as partly a return of your nondeductible contributions (not taxable) and partly a distribution of deductible contributions and earnings (taxable). The nontaxable amount is the -15- portion of the amount withdrawn which bears the same ratio as your total nondeductible IRA contributions bear to the total balance of all your IRAs (including rollover IRAs and SEPs). For example, assume that you made the following IRA contributions: Year Deductible Nondeductible 1985 $2,000 1986 $2,000 1987 $1,000 $1,000 1988 $1,000 ------ ------ $5,000 $2,000 In addition assume that your IRA has total investment earnings through 1989 of $1,000. During 1989 you withdraw $500. Your total account balance as of 12-31-89 is $7,500 as shown below. Deductible Contributions $5,000 Nondeductible Contributions $2,000 Earnings On IRAs $1,000 Less 1989 Withdrawal $ 500 ------ Total Account Balance as of 12/31/89 $7,500 To determine the nontaxable portion of your 1989 withdrawal, the total 1989 withdrawal ($500) must be multiplied by a fraction. The numerator of the fraction is the total of all nondeductible contributions remaining in the account before the 1989 withdrawal ($2,000). The denominator is the total account balance as of 12-31-89 ($7,500) plus the 1989 withdrawal ($500) or $8,000. The calculation is: Total Remaining Nondeductible Contributions $2,000 x $500 = $125 - ------------------------------------------- ------ Total Account Balance $8,000 Thus, $125 of the $500 withdrawal in 1989 will not be included in your taxable income. The remaining $375 will be taxable for 1989. In addition, for future calculations the remaining nondeductible contribution total will be $2,000 minus $125, or $1,875. A loss in your IRA investment may be deductible. You should consult your tax advisor for further details on the appropriate calculation for this deduction if applicable. TAX MATTERS WHAT IRA REPORTS DOES THE CUSTODIAN ISSUE? The Custodian will report all withdrawals to the IRS and the recipient on the appropriate form. For reporting purposes, a direct transfer of assets to a successor custodian or trustee is not considered a withdrawal. -16- The Custodian will report to the IRS the year-end value of your account and the amount of any rollover or accumulation contribution made during a calendar year, as well as the tax year for which a contribution is made. Unless the Custodian receives an indication from you to the contrary, it will treat any amount as a contribution for the tax year in which it is received. It is most important that a contribution between January and April 15th for the prior year be clearly designated as such. WHAT TAX INFORMATION MUST I REPORT TO THE IRS? You must file Form 5329 with the IRS for each taxable year for which you made an excess contribution, or you take a premature withdrawal, or you withdraw less than the required minimum amount from your IRA. You must also report each nondeductible contribution to the IRS by designating it a nondeductible contribution on your tax return. Use Form 8606. In addition, for any year in which you make a nondeductible contribution or take a withdrawal, you must include additional information on your tax return. The information required includes: (1) the amount of your nondeductible contributions for that year; (2) the amount of withdrawals from IRAs in that year; (3) the amount by which your total nondeductible contributions for all the years exceed the total amount of your distributions previously excluded from gross income; and (4) the total value of all your IRAs as of the end of the year. If you fail to report any of this information, the IRS will assume that all your contributions were deductible. This will result in the taxation of the portion of your withdrawals that should be treated as a nontaxable return of your nondeductible contributions. ARE IRA WITHDRAWALS SUBJECT TO WITHHOLDING? Federal income tax will be withheld at a flat rate of 10% from any withdrawal from your IRA, unless you elect not to have tax withheld. ARE THE EARNINGS ON MY IRA FUNDS TAXED? Any earnings on investments held in your IRA are generally exempt from federal income taxes and will not be taxed until withdrawn by you, unless the tax exempt status of your IRA is revoked. ACCOUNT TERMINATION You may terminate your IRA at any time after its establishment by sending a complete withdrawal form, or a transfer authorization form, to the address that appears at the end of the disclosure statement. Your IRA with State Street Bank will terminate upon the first to occur of the following: - - The date your properly executed withdrawal form (as described above) is received and accepted by the Custodian or, if later, the termination date specified in the withdrawal form. - - The date the IRA ceases to qualify under the tax code. This will be deemed a termination. - - The transfer of the IRA to another custodian/trustee. - - The rollover of the amounts in the IRA to another custodian/trustee. Any outstanding fees must be received prior to such a termination of your account. -17- The amount you receive from your IRA will be treated as a withdrawal, and thus the rules relating to IRA withdrawals will apply. For example, if the IRA is terminated before you reach age 59 1/2 the 10% early withdrawal penalty may apply on the amount you receive. IRA DOCUMENTS The terms contained in Articles I to VIII of the State Street Bank and Trust Company Individual Retirement Custodial Account document have been promulgated by the IRS in Form 5305-A for use in establishing an IRA custodial account that meets the requirements of the tax laws for a valid IRA. This IRS approval relates only to the form of Articles I to VIII and is not an approval of the merits of the IRA or of any investment permitted by the IRA. -18- THE WESTCORE INDIVIDUAL RETIREMENT PLAN - IRA APPLICATION/ADOPTION AGREEMENT I/We, the individuals signing the Adoption Agreement establish an Individual Retirement Account (the "Account") with State Street Bank and Trust Company as Custodian. I/We agree to the terms of the Account, which are contained in the document entitled "State Street Bank and Trust Company Individual Retirement Custodial Account," Disclosure Statement and the IRA Application/Adoption Agreement. I/We certify the accuracy of the information in this Adoption Agreement. The Account will be effective upon acceptance by State Street Bank and Trust Company. 1. ACCOUNT HOLDER INFORMATION (PLEASE PRINT OR TYPE) Full Name ----------------------------------------------------------------------- Address ------------------------------------------------------------------------- City State Zip ------------------------------- ---------- --------------------- Telephone: Day ( ) ---------------------------------------------------------------- Evening ( ) -------------------------------------------------------------- Social Security Number Date of Birth ---------------- --------------------------- 2. ACCOUNT TYPE Regular IRA Combined IRA Transfer IRA --- --- --- Spousal IRA Rollover IRA SAR-SEP/IRA --- --- --- SEP/IRA --- 3. SPOUSE INFORMATION (FOR SPOUSAL IRA ONLY) Full Name --------------------------------------------------------------------- Address ----------------------------------------------------------------------- City State Zip ------------------------------- ---------- -------------------- Telephone: Day ( ) --------------------------------------------------------------- Evening ( ) ------------------------------------------------------------- Social Security Number Date of Birth ---------------- ------------------------- -19- 4. CONTRIBUTION DESCRIPTION Your Account Spouse's Account (if applicable) For the tax year 19____ Contribution amount $ $ ----------- ----------- For the tax year 19____ Contribution amount $ $ ----------- ----------- Employer SEP Contribution amount $ $ ----------- ----------- SAR-SEP Employee Contribution amount $ $ ----------- ----------- Cash Rollover Contribution amount $ $ ----------- ----------- Total Contribution Enclosed $ $ ----------- ----------- Annual Fee ($10 per fund, maximum $30) $ $ ----------- ----------- TOTAL AMOUNT OF CHECK $ -------------- (Please make checks payable to WESTCORE) 5. BENEFICIARY DESIGNATION I hereby designate the following persons as primary and secondary beneficiaries to receive my interest in my WESTCORE IRA according to the terms of the Custodial Agreement, hereby revoking any such prior designations made by me. (Attach additional sheet if necessary.) Primary Beneficiary Full Name ---------------------------------------------------------------------- Date of Birth Relationship ------------------------ ---------------------------- Secondary Beneficiary Full Name ---------------------------------------------------------------------- Date of Birth Relationship ------------------------ ---------------------------- SPOUSE'S AGREEMENT: (For community property states) By signing below, I give to my spouse any interest I may have in the funds deposited in this account and agree that you may pay the money in my spouse's IRA as directed in the above beneficiary designation. Spouse's Name (please print) ---------------------------------------------------- Spouse's Signature Date ---------------------------------- -------------------- -20- 6. WESTCORE INVESTMENT INSTRUCTIONS - SELECT UP TO FOUR FUNDS. Amount to be invested FUND NAME Your Account Spouse's Account (if applicable) $ $ - ------------------------------------------- ----------- ----------- $ $ - ------------------------------------------- ----------- ----------- $ $ - ------------------------------------------- ----------- ----------- $ $ - ------------------------------------------- ----------- ----------- The initial purchase minimum is $250.00 per Fund, subsequent minimum investments are $50. Do not send currency. I acknowledge that I have sole responsibility for my investment choices and that I have received a current prospectus for each Fund I select. PLEASE READ THE PROSPECTUS(ES) OF THE FUND(S) SELECTED BEFORE INVESTING. 7. AUTOMATIC INVESTMENT PLAN (OPTIONAL) / / Yes / / No I hereby authorize WESTCORE and/or its custodian to draw a check on my/our personal checking account on the designated dates in order to purchase shares in the WESTCORE ____________________________________________________ Fund at the Public Offering Price determined on that day and deposit to my IRA account number _______________________. / / Monthly _________________ / / Semi-annually / / Quarterly / / Annually on the _________ day. Amount of each check (minimum $50) $ ----------------------- NOTE: You must sign the Bank Authorization form below and attach a voided personal check to your WESTCORE IRA Agreement Form. BANK AUTHORIZATION Bank Name ---------------------------------------------------------------------- Bank Address ------------------------------------------------------------------- Bank Account Number ------------------------------------------------------------ I/We authorize you, the above named bank, to debit my/our account for amounts drawn by WESTCORE Trust and/or its Custodian acting as my agent. I/We agree that your rights in respect to each withdrawal shall be the same as if it were a check drawn upon you and signed by me/us. This authority shall remain in effect until I/we revoke it in writing and you receive it. I/We agree that you shall incur no liability when honoring any such check. -21- I/We further agree that you will incur no liability to me/us if you dishonor any such withdrawal. This will be so even though such dishonor results in the forfeiture of investment. - ----------------------------------- ---------------------------------------- Bank Account Holder's Name Joint Bank Account Holder's Name - ----------------------------------- ---------------------------------------- Bank Acct. Holder's Signature Date Joint Bank Acct. Holder's Signature Date 8. TELEPHONE REDEMPTION AND EXCHANGE (OPTIONAL) / / I authorize the Transfer Agent or any Service Organization to act upon instructions received by telephone to redeem or exchange shares owned by me. I understand that all redemptions and exchanges are subject to the terms and conditions as set out in the prospectus. 9. LETTER OF INTENT (OPTIONAL) I agree to the Letter of Intent conditions and terms as set forth in the Prospectus under the section Public Offering Price. Although I'm not obligated to do so, it is my intention to invest over a 13-month period shares in one or more of the Westcore Funds in an aggregate amount of at least: / / $100,000 - 249,999 / / $500,000 - 999,999 / / $250,000 - 499,999 / / $1 million or more Purchases made within the last 90 days will be included as part of your Letter of Intent. X ----------------------------------------- ------------------------------ Signature(s) Date 10. RIGHT OF ACCUMULATION A reduced sales load applies to any purchase of WESTCORE shares that is sold with a sales load ("Eligible Funds") where an investor's then current Aggregate Investment is $100,000 or more. For applicable sales loads see "Public Offering Price" and "Aggregate Investment" as described in the Prospectus. The reduced sales load applies only to the dollar amount of the shares of the then current purchase. I own shares of one or more Funds in the Westcore Family of Funds listed in Section 6 and qualify for the cumulative quantity discount described above and in the prospectus. My account numbers are as follows: - ------------------------- -------------------- ------------------------- 11. CUSTOMER SIGNATURE AND CERTIFICATION I/We, the undersigned account owner(s) certify that I/we have the power and authority to establish this Individual Retirement Account and spousal IRA account, if applicable, and select the privileges requested. This order is subject to acceptance by Westcore Trust. I/We acknowledge that I/we have received, read, and understand the IRA Custodial Agreement, the IRA Disclosure Statement and the current prospectus(es) for the fund(s) elected. I/We -22- understand that a subsidiary of First Interstate Bank acts as the investment advisor and receives fees for so acting. I/We hereby adopt the Custodial Agreement which is incorporated by reference and I/we agree that Westcore Trust, the custodian, ALPS Mutual Funds Services, Inc., First Interstate Bancorp or any of its subsidiaries, affiliates, officers, directors, or employees will not be liable for any loss, claim, expense, or cost, and agree to indemnify the same from any losses and damages, for acting upon any instructions, including telephone exchanges and redemptions (if so indicated above), and inquiries, believed genuine. Shares of the funds are not bank deposits, are not insured by the FDIC and are not guaranteed or otherwise supported by First Interstate Bancorp or its affiliates. This account is subject to the terms of the prospectus, as amended from time to time. I consent to the shareholder account charges described in the prospectus and the IRA documents, and authorize the Transfer Agent of the Trust, as my agent, to redeem a sufficient number of shares from my account with the Trust on a quarterly basis to pay such charges. Under penalty of perjury, I certify that the Social Security or taxpayer's identification number entered above is correct. I acknowledge that I understand past performance is not indicative of future returns. X Date ----------------------------------------- ------------------------- Your Signature X Date ----------------------------------------- ------------------------- Signature: Spouse (if opening a Spousal IRA) 12. CUSTODIAL ACCEPTANCE Receipt by the Investor of the Westcore Confirmation Statement shall indicate State Street Bank & Trust Co.'s acceptance to act as Custodian. By Date ---------------------------------------- ------------------------- FOR WESTCORE IRA USE ONLY WESTCORE IRA Account Number ---------------------------------------------------- Spousal Account Number --------------------------------------------------------- 13. SERVICE ORGANIZATION OR BROKER/DEALER INFORMATION (To be completed by the financial institution/advisor.) We submit this application for the purchase of shares in accordance with the terms of our selling agreement with ALPS Mutual Funds Services, Inc. (Distributor). We agree to notify the Distributor and Transfer Agent of any -23- purchases made under a Letter of Intent and escrow agreement or Right of Accumulation listed within this agreement. Firm ---------------------------------------------------------------------------- Financial Advisor Name ---------------------------------------------------------- Branch Number F/A Number ------------------------------------------ ------------ Office Telephone ( ) --------------------------------------------------------------- Branch address ------------------------------------------------------------------ City State Zip code ------------------------------- ------------- -------------- By: ----------------------------------------------------------------------------- (Authorized signature of dealer/Title) -24- STATE STREET BANK AND TRUST COMPANY INDIVIDUAL RETIREMENT CUSTODIAL ACCOUNT The following provisions of Articles I to VIII are in the form promulgated by the Internal Revenue Service in Form 5305-A for use in establishing an individual retirement custodial account. ARTICLE I. The Custodian may accept additional cash contributions on behalf of the Depositor for a tax year of the Depositor. The total cash contributions are limited to $2,000 for the tax year unless the contribution is a rollover contribution described in section 402(a)(5), 402(a)(7), 403(a)(4), 403(b)(8) or 408(d)(3) of the Code or an employer contribution to a simplified employee pension plan as described in Section 408(k). ARTICLE II. The Depositor's interest in the balance in the custodial account is nonforfeitable. ARTICLE III. 1. No part of the custodial funds may be invested in life insurance contracts, nor may the assets of the custodial account be commingled with other property except in a common trust fund or common investment fund (within the meaning of section 408(a)(5) of the Code). 2. No part of the custodial funds may be invested in collectibles (within the meaning of section 408(m) of the Code). ARTICLE IV. 1. The Depositor's entire interest in the custodial account must be, or begin to be, distributed by the Depositor's required beginning date, the April 1 following the calendar year end in which the Depositor reaches age 701/2. By that date, the Depositor may elect, in a manner acceptable to the Custodian, to have the balance in the custodial account distributed in: (a) A single-sum payment. (b) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the life of the Depositor. The payments must begin by April 1 following the calendar year in which the Depositor reaches age 70 1/2. (c) An annuity contract that provides equal or substantially equal monthly, quarterly, or annual payments over the joint and last survivor lives of the Depositor and his or her designated beneficiary. The payments must begin by the April 1 following the calendar year in which the Depositor reaches age 70 1/2. (d) Equal or substantially equal annual payments over a specified period that may not be longer than the Depositor's life expectancy. (e) Equal or substantially equal annual payments over a specified period that may not be longer than the joint life and last survivor expectancy of the Depositor and his or her designated beneficiary. Even if distributions have begun to be made under option (d) or (e), the Depositor may receive a distribution of the balance in the custodial account -25- at any time by giving written notice to the Custodian. If the Depositor does not choose any of the methods of distribution described above by April 1 following the calendar year in which he or she reaches age 70 1/2, distribution to the Depositor will be made on that date by a single-sum payment. If the Depositor elects as a means of distribution (b) or (c) above, the annuity contract must satisfy the requirements of section 408(b)(1), (3) and (4) of the Code. 2. If the Depositor dies before his or her entire interest is distributed to him or her, the entire remaining interest will be distributed as follows: (a) If the Depositor dies on or after the Depositor's required beginning date, distribution must continue to be made in accordance with paragraph 1. (b) If the Depositor dies before the Depositor's required beginning date, the entire remaining interest will, at the election of the beneficiary or beneficiaries, either (i) Be distributed by the December 31 of the year containing the fifth anniversary of the Depositor's death, or (ii) Be distributed in equal or substantially equal payments over the life or life expectancy of the designated beneficiary or beneficiaries. The election of either (i) or (ii) must be made by December 31 of the year following the year of the Depositor's death. If the beneficiary or beneficiaries do not elect either of the distribution options described in (i) and (ii), distribution will be made in accordance with (ii) if the beneficiary is the Depositor's surviving spouse, and in accordance with (i) if the beneficiary or beneficiaries are or include anyone other than the surviving spouse. In the case of distributions under (ii), distributions must commence by the December 31 of the year following the year of the Depositor's death. If the Depositor's spouse is the beneficiary, distributions need not commence until the December 31 of the year the Depositor would have attained age 70 1/2, if later. (c) If the Depositor dies before his or her entire interest has been distributed and if the beneficiary is other than the surviving spouse, no additional cash contributions or rollover contributions may be accepted in the account. 3. In the case of distribution over life expectancy in equal or substantially equal annual payments to determine the minimum annual payment for each year, divide the Depositor's entire interest in the trust as of the close of business on December 31 of the preceding year by the life expectancy of the Depositor (or the joint life and last survivor expectancy of the Depositor and the Depositor's designated beneficiary, or the life expectancy of the designated beneficiary, whichever applies.) In the case of distributions under paragraph (1), determine the initial life expectancy (or joint life and last survivor expectancy) using the attained ages of the Depositor and designated beneficiary as of their birthdays in the year the Depositor reaches age 70 1/2. In the case of distributions under paragraph (2)(b)(ii), determine the expectancy using the attained age of the designated beneficiary as of the beneficiary's birthday in the year distributions are required to commence. Unless the Depositor (or spouse) elects not to have life expectancy recalculated, the Depositor's life expectancy (and the life expectancy of the Depositor's spouse, if applicable) will be recalculated annually using their attained ages as of their birthdays in the year for which the minimum annual payment is being determined. The life expectancy of the -26- designated beneficiary (other than the spouse) will not be recalculated. The minimum annual payment may be made in a series of installments (e.g., monthly, quarterly, etc.) as long as the total payments for the year made by the date required are not less than the minimum amounts required. ARTICLE V. Unless the Depositor dies, is disabled (as defined in section 72(m) of the Code), or reaches age 59 1/2 before any amount is distributed from the trust account, the Custodian must receive from the Depositor a statement explaining how he or she intends to dispose of the amount distributed. ARTICLE VI. 1. The Depositor agrees to provide the Custodian with information necessary for the Custodian to prepare any reports required under section 408(i) of the Code and the related regulations. 2. The Custodian agrees to submit reports to the Internal Revenue Service and the Depositor as prescribed by the Internal Revenue Service. ARTICLE VII. Notwithstanding any other articles which may be added or incorporated, the provisions of Articles I through III and this sentence will be controlling. Any additional articles that are not consistent with section 408(a) of the Code and related regulations will be invalid. ARTICLE VIII. This agreement will be amended from time to time to comply with the provisions of the Code and related regulations. Other amendments may be made with the consent of the person whose signature appears on the Adoption Agreement as Depositor. ARTICLE IX. 1. As used in this Article IX the following terms have the following meanings: "Custodian" means State Street Bank and Trust Company. "Fund" means a mutual fund or registered investment company which is specified in the Adoption Agreement, or which is designated by the Distributor named in the Adoption Agreement, as being available as an investment for the custodial account; provided, however, that such a mutual fund or registered investment company must be legally offered for sale in the state of the Depositor's residence in order to be a Fund hereunder. "Distributor" means the entity which has a contract with the Fund(s) to serve as distributor of the shares of such Fund(s). In any case where there is no Distributor, the duties assigned hereunder to the Distributor may be performed by the Fund(s) or by an entity that has a contract to perform management or investment advisory services for the Fund(s). "Service Company" means the Custodian or any entity employed by the Custodian to perform various administrative duties of the Custodian. 2. The Depositor may revoke the custodial account established hereunder by mailing or delivering a written notice of revocation to the -27- Custodian within seven days after the Depositor established the custodial account hereunder. Mailed notice is treated as given to the Custodian on date of the postmark (or on the date of Post Office certification or registration in the case of notice sent by certified or registered mail). Upon timely revocation, the Depositor's initial contribution will be returned, without adjustment for administrative expenses, commissions or sales charges, fluctuations in market value or other changes. 3. All contributions to the custodial account shall be invested and reinvested in full and fractional shares of one or more Funds. Such investments shall be made in such proportions and in such amounts as Depositor from time to time in the Adoption Agreement or by other written notice to the Service Company (in such form as may be acceptable to the Service Company) may direct. The Service Company shall be responsible for promptly transmitting all investment directions by the Depositor for the purchase or sale of shares of one or more Funds hereunder to the Funds' transfer agent for execution. However, if investment directions with respect to the investment of any contribution hereunder are not received from the Depositor as required or, if received, are unclear in the opinion of the Service Company, the contribution will be returned to the Depositor without liability for interest or for loss of income or appreciation. If any directions or other orders by the Depositor with respect to the sale or purchase of shares of one or more Funds for the custodial account are unclear in the opinion of the Service Company, the Service Company will refrain from carrying out such investment directions or from executing any such sale or purchase, without liability for loss of income or for appreciation or depreciation of any asset, pending receipt of clarification for the Depositor. All investment directions by Depositor will be subject to any minimum initial or additional investment or minimum balance rules applicable to a Fund as described in its prospectus. All dividends and capital gains or other distributions received on the shares of any Fund held in the Depositor's account shall be retained in the account and (unless received in additional shares) shall be reinvested in full and fractional shares of such Fund. 4. Subject to the minimum initial or additional investment, minimum balance and other exchange rules applicable to a Fund, the Depositor may at any time direct the Service Company to exchange all or a specified portion of the shares of the Fund in the Depositor's account for shares and fractional shares of one or more other Funds. The Depositor shall give such directions by written or telephonic notice acceptable to the Service Company, and the Service Company will process such directions as soon as practicable after receipt thereof. 5. Any purchase or redemption of shares of a Fund for or from the Depositor's account will be effected at the public offering price or net asset value of such Fund (as described in the then effective prospectus for such Fund) next established after the Service Company has transmitted the Depositor's investment directions to the transfer agent for the Fund(s). Any purchase, exchange, transfer or redemption of shares of a Fund for or from the Depositor's account will be subject to any applicable sales charge or redemption charge as described in the then effective prospectus for such Fund. 6. The Service Company shall maintain adequate records of all purchases or sales of shares of one or more Funds for the Depositor's custodial account. Any account maintained in connection herewith shall be in -28- the name of the Custodian for the benefit of the Depositor. All assets of the custodial account shall be registered in the name of the Custodian or of a suitable nominee. The books and records of the Custodian shall show that all such investments are part of the custodial account. The Custodian shall maintain or cause to be maintained adequate records reflecting transactions of the custodial account. In the discretion of the Custodian, records maintained by the Service Company with respect to the account hereunder will be deemed to satisfy the Custodian's recordkeeping responsibilities therefore. The Service Company agrees to furnish the Custodian with any information the Custodian requires to carry out the Custodian's recordkeeping responsibilities. 7. Neither the Custodian nor any other party providing services to the custodial account nor the Fund will have any responsibility for rendering advice with respect to the investment and reinvestment of Depositor's custodial account nor shall such parties be liable for any loss or diminution of value which results from Depositor's exercise or investment control over this custodial account. Depositor shall have and exercise exclusive responsibility for and control over the investment of the assets of the custodial account and neither Custodian nor any other such party nor the Fund shall have any duty to question the directors on that regard or to advise him regarding the purchase, retention or sale of shares of one or more Funds for the custodial account. 8. The Depositor may appoint an investment advisor with respect to the custodian account in a form acceptable to the Custodian and the Service Company. The investment advisors appointment will be effective upon written notice to the contrary is received by the Custodian and the Service Company. While an investment advisor's appointment is in effect the investment advisor may issue investment directions or may issue orders for the sale or purchase of shares of one or more Funds to the Service Company and the Service Company will be fully protected in carrying out such investment directions or orders to the same extent as they had been given by the Depositor. The Depositor's appointment of any investment advisor will also be deemed to be instructions to the Custodian and the Service Company to pay such investment advisor's fees to the investment advisor from the custodial account hereunder without additional authorization by the Depositor or the Custodian. 9. Distribution of the assets of the custodial account shall be made at such time and in such form as Depositor for the Beneficiary if Depositor is deceased shall elect by written order to the Custodian. Depositor acknowledges that any distribution (except for distribution on account of Depositor's disability or death return of an excess contribution referred to in Code Section 408(d), or a "rollover" from this custodial account made earlier than age 59 1/2 may subject Depositor to an additional tax on early distributions under Code Section 72(t). For that purpose, Depositor will be considered disabled if Depositor can prove as provided in Code Section 72(m)(7), that Depositor is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or be of long-continued and indefinite duration. It is the responsibility of the Depositor or the Beneficiary) by appropriate distribution instructions to the Custodian to insure that the distribution requirements of Code Section 401(a)(9) and Articles IV and V above are met. Neither Custodian nor any other party providing services to the custodial account assumes any responsibility for the tax treatment of any distribution from the custodial account; such responsibility rests solely with the person ordering the distribution. 10. Custodian assumes (and shall have) no responsibility to make any distribution except upon the written order of Depositor (or Beneficiary if -29- Depositor is deceased) containing such information as the Custodian may reasonably request. Also, before making any distribution or honoring any assignment of the custodial account. Custodian shall be furnished with any and all applications certificates, tax waivers, signature guarantees and other documents (including proof of any legal representative's authority) deemed necessary or advisable by Custodian, but Custodian shall not be responsible for complying with an order which appears on its face to be genuine, or for refusing to comply if not satisfied it is genuine, and Custodian has no duty of further inquiry. Any distributions from the account may be mailed, first-class postage prepaid, to the last known address of the person who is to receive such distribution, as shown on the Custodian's records, and such distribution shall to the extent thereof completely discharge the Custodian's liability for such payment. 11. The term "Beneficiary" means the person or persons designated as such by the "designating person" (as defined below) on a form acceptable to the Custodian for use in connection with the custodial account, signed by the designating person, and filed with the Custodian. The form may name individuals, trusts, estates, or other entities as either primary or contingent beneficiaries. However, if the designation does not effectively dispose of the entire custodial account as of the time distribution is to commence, the term "Beneficiary" shall then mean the designating person's estate with respect to the assets of the custodial account not disposed of by the designation form. The form last accepted by the Custodian before such distribution is to commence provided it was received by the Custodian (or deposited in the U.S. Mail or with a delivery service) during the designating person's lifetime, shall be controlling and whether or not fully dispositive of the custodial account, thereupon shall revoke all such forms previously filed by that person. The term "designating person" means Depositor during his/her lifetime; after Depositor's death, it also means Depositor's spouse if the spouse begins to receive a portion of the custodial account (pursuant to such a designation by Depositor; under a form of distribution permitted by Article IV. A designation by Depositor's spouse shall relate solely to the balance remaining in the spouse's portion of the custodial account after the death of the spouse. (a) When and after distributions from the custodial account to Depositor's Beneficiary commence all rights and obligations assigned to Depositor hereunder shall inure to, and be enjoyed and exercised by, Beneficiary instead of Depositor. 12.(i) The Depositor agrees to provide information to the Custodian at such time and in such manner as may be necessary for the Custodian to prepare any reports required under Section 408(i) of the Code and the regulations thereunder or otherwise. (a) The Custodian or the Service Company will submit reports to the Internal Revenue Service and the Depositor at such time and manner and containing such information as is prescribed by the Internal Revenue Service. (b) The Depositor, Custodian and Service Company shall furnish to each other such information relevant to the custodial account as may be required under the Code and any regulations issued or forms adopted by the Treasury Department thereunder or as may otherwise been necessary for the administration of the custodial account. (c) The Depositor shall file any reports to the Internal Revenue service which are required of him by law (including Form 5329), and neither the Custodian nor Service Company shall have any duty to advise Depositor concerning or monitor Depositor's compliance with such requirement. -30- 13.(i) Depositor hereby delegates to the Fund the right to amend this custodial account document in any respect at any time, and hereby consents to such amendments. Such amendments shall be effective on a stated date which shall be at least 60 days after giving written notice of the amendment (including its exact terms) to Custodian by registered or certified mail, unless Custodian waives notice as to such amendment. If the Custodian does not wish to continue serving as such under this custodial account document as so amended, it may resign in accordance with Section 17 below. (a) Depositor also delegates to the Custodian the Depositor's right so to amend, provided the Custodian amends in the same manner all agreements comparable to this one, having the same Custodian, permitting comparable investments, which have been approved by the Fund, and under which such power has been delegated to it; this includes the power to amend retroactively if necessary or appropriate in the opinion of the Custodian in order to conform this custodial account to pertinent provisions of the Code and other laws or successor provisions of law or to obtain a governmental ruling that such requirements are met to adopt a prototype or master form of agreement in substitution for this Agreement, provided such substitute agreement has been approved by the Fund, or as otherwise may be advisable in the opinion of the Custodian. Such an amendment by the Custodian shall be communicated in writing to Depositor, and Depositor shall be deemed to have consented thereto unless, within 30 days after such communication to Depositor is mailed. Depositor either (i) gives Custodian a written order for a complete distribution or transfer of the custodian account or (ii) removes the Custodian and appoints a successor under Section 17 below. (b) Notwithstanding the provisions of subsections (i) and (a) above, no amendment shall increase the responsibilities or duties of Custodian without its prior written consent. (c) This Section 13 shall not be construed to restrict the Custodian's right to substitute fee schedules in the manner provided by Section 16 below, and no such substitution shall be deemed to be an amendment of this Agreement. 14.(i) Custodian shall terminate the custodial account if this Agreement is terminated or if within 30 days or such longer time as Custodian may agree after resignation or removal of Custodian under Section 17 Depositor has not appointed a successor which has accepted such appointment. Termination of the custodial account shall be effected by distributing all assets thereof in a single payment in cash or in kind to Depositor, or to another custodian in accordance with Section 17 subject to Custodian's right to reserve funds as provided in Section 17. (a) Upon termination of the custodial account, this custodial account document shall have no further force and effect, and Custodian shall be relieved from all further liability hereunder or with respect to the custodial account and all assets thereof so distributed. 15.(i) In its discretion the Custodian may appoint one or more contractors or service providers to carry out any of its functions and may compensate them from the custodial account for expenses attendant to those functions. (a) The Service Company shall be responsible for receiving all instructions, notices, forms and remittances from Depositor and for dealing with or forwarding the same to the transfer agent for the Fund(s). (b) The parties do not intend to confer any fiduciary duties on Custodian or Service Company (or any other party providing services to the custodial account) or the Fund, and none shall be implied. Neither shall be -31- liable (or assumes any responsibility) for the collection of contributions, the proper amount, time or deductibility of any contribution to the custodial account or the propriety of any contributions under this Agreement, or the purpose, time, amount (including any minimum distribution amounts) or propriety of any distribution hereunder, which matters are the responsibility of Depositor and Depositor's Beneficiary. (c) Not later than 60 days after the close of each calendar year (or after the Custodian's resignation or removal), the Custodian and Service Company shall each file with Depositor a written report or reports reflecting the transactions effected by it during such period and the assets of the custodial account at its close. Upon the expiration of 60 days after such a report is sent to Depositor (or Beneficiary), the Custodian and Service Company and Fund shall be forever released and discharged from all liability and accountability to anyone with respect to transactions shown in or reflected by such report except with respect to any such acts or transactions as to which Depositor shall have filed written objections with the Custodian or Service Company within such 60 days period. (d) The Service Company shall deliver, or cause to be delivered, to Depositor all notices, prospectuses, financial statements and other reports to shareholders, proxies and proxy soliciting materials relating to the shares of the Fund(s) credited to the custodial account. No shares shall be voted, and no other action shall be taken pursuant to such documents, except upon receipt of adequate written instructions from Depositor. (e) Depositor shall always fully indemnify Service Company, Distributor, the Fund(s), and Custodian and save them harmless from any and all liability whatsoever which may arise either (i) in connection with this Agreement and the matters which it contemplates, except that which arises directly out of the Service Company's, Distributor's or Custodian's negligence or willful misconduct, or (ii) with respect to making or failing to make any distribution, other than for failure to make distribution in accordance with an order therefore which is in full compliance with Section 10. Neither Service Company nor Custodian shall be obligated or expected to commence or defend any legal action or proceeding in connection with this Agreement or such matters unless agreed upon by that party and Depositor, and unless fully indemnified for so doing to that party's satisfaction. (f) The Custodian and Service Company shall each be responsible solely for performance of those duties expressly assigned to it in this Agreement, and neither assumes any responsibility as to duties assigned to anyone else hereunder or by operation of law. (g) Custodian and Service Company may each conclusively rely upon and shall be protected in acting upon any written order from Depositor or Beneficiary, or any investment advisor appointed under Section 8, or any other notice, request, consent, certificate or other instrument or paper believed by it to be genuine and to have been properly executed, and so long as it acts in good faith, in taking or omitting to take any other action in reliance thereon. In addition, Custodian will carry out the requirements of any apparently valid court order relating to the custodial account and will incur no liability or responsibility for so doing. 16.(i) The Custodian, in consideration of its services under this Agreement, shall receive the fees specified on the applicable fee schedule. The fee schedule originally applicable shall be the one specified in the Disclosure Statement furnished to the Depositor. The Custodian may substitute a different fee schedule at any time upon 30 days written notice to Depositor. The Custodian shall also receive reasonable fees for any services not contemplated by any applicable fee schedule and either deemed by it to be necessary or desirable or requested by Depositor. -32- (a) Any income, gift, estate and inheritance taxes and other taxes at any kind whatsoever, including transfer taxes incurred in connection with the investment or reinvestment of the assets of the custodial account, that may be levied or assessed in respect to such assets, and all other administrative expenses incurred by the Custodian in the performance of its duties (including fees for legal services rendered to it in connection with the custodial account) shall be charged to the custodial account. (b) All such fees and taxes and other administrative expenses charged to the custodial account shall be collected either from the amount of any contribution or distribution to or from the account, or (at the option of the person entitled to collect such amounts) to the extent possible under the circumstances by the conversion into cash of sufficient shares of one or more Funds held in the custodial account (without liability for any loss incurred thereby). Notwithstanding the foregoing, the Custodian or Service Company may make demand upon the Depositor for payment of the amount of such fees, taxes and other administrative expenses. Fees which remain outstanding after 60 days may be subject to a collection charge. 17.(i) Upon 30 days prior written notice to the Custodian, the Fund or Depositor may remove it from its office hereunder. Such notice, to be effective, shall designate a successor custodian and shall be accompanied by the successor's written acceptance. The Custodian also may at any time resign upon 30 days' prior written notice to the Fund and Depositor, whereupon the Fund shall appoint a successor to the Custodian. (a) The successor custodian shall be a bank, insured credit union, or other person satisfactory to the Secretary of the Treasury under Code Section 408(a)(2). Upon receipt by Custodian of written acceptance by its successor of such successor's appointment, Custodian shall transfer and pay over to such successor the assets of the custodial account and all records (or copies thereof) of Custodian pertaining thereto, provided that the successor custodian agrees not to dispose of any such records without the Custodian's consent. Custodian is authorized, however, to reserve such sum of money or property as it may deem advisable for payment of all its fees, compensation, costs, and expenses, or for payment of any other liabilities constituting a charge on or against the assets of the custodial account or on or against the Custodian, with any balance of such reserve remaining after the payment of all such items to be paid over to the successor custodian. (b) The Custodian shall not be liable for the acts or omissions of its successor. 18. References herein to the "Internal Revenue Code" or "Code" and sections thereof shall mean the same as amended from time to time, including successors to such sections. 19. Except where otherwise specifically required in this Agreement, any notice from Custodian to any person provided for in this Agreement shall be effective if sent by first-class mail to such person at that person's last address on the Custodian's records. 20. Neither Depositor nor Depositor's Beneficiary shall have the right or power to anticipate any part of the custodial account or to sell, assign, transfer, pledge or hypothecate any part thereof. The custodial account shall not be liable for the debts of Depositor or Depositor's Beneficiary or subject to any seizure, attachment, execution or other legal process in respect thereof. At no time shall it be possible for any part of the assets of the custodial account to be used for or diverted to purposes other than for the exclusive benefit of the Depositor or his/her Beneficiary. -33- 21. When accepted by the Custodian, this agreement is accepted in and shall be construed and administered in accordance with the laws of the Commonwealth of Massachusetts. Any action involving the Custodian brought by any other party must be brought in a state or federal court in such Commonwealth. This Agreement is intended to qualify under Code Section 408(a) as an individual retirement custodial account and to entitle Depositor to the retirement savings deduction under Code Section 219 if available, and if any provision hereof is subject to more than one interpretation or any term used herein is subject to more than one construction, such ambiguity shall be resolved in favor of that interpretation or construction which is consistent with that intent. However, Custodian shall not be responsible for whether or not such intentions are achieved through use of this Agreement, and Depositor is referred to Depositor's attorney for any such assurances. 22. Depositor should seek advice from Depositor's attorney regarding the legal consequences (including but not limited to federal and state tax matters) of entering into this Agreement, contributing to the custodial account, and ordering Custodian to make distributions from the account. Depositor acknowledges that Custodian and Service Company (and any company associated therewith) are prohibited by law from rendering such advice. 23. Articles I through VIII of this Agreement are in the form promulgated by the Internal Revenue Service. It is anticipated that if and when the Internal Revenue Service promulgates changes to Form 5305-A, the Custodian will amend this Agreement correspondingly. 24. The Depositor acknowledges that he or she has received and read the current prospectus for each Fund in which his or her account is invested and the Individual Retirement Account Disclosure Statement related to the Account. The Depositor represents under penalties of perjury that his or her Social Security number (or other Taxpayer Identification Number) as stated in the Adoption Agreement is correct. DISCLOSURE STATEMENT ESTABLISHING YOUR IRA ----------------------------------------------------------- This disclosure statement contains information about your Individual Retirement Custodial Account with State Street Bank and Trust Company as Custodian. Your IRA gives you several tax benefits. Earnings on the assets held in your IRA are not subject to federal income tax until withdrawn by you. You may be able to deduct all or part of your IRA contribution on your federal income tax return. State income tax treatment of your IRA may differ from federal treatment; ask your state tax department or your personal tax advisor for details. All IRAs meet certain requirements. Contributions generally must be made in cash. The IRA trustee or custodian must be a bank or other person who has been approved by the Secretary of the Treasury. Your contributions may not be invested in life insurance or be commingled with other property except in a common trust or investment fund. Your interest in the amount must be nonforfeitable at all times. You may obtain further information on IRAs from any district office of the Internal Revenue Service. You may revoke a newly established IRA at any time within seven days after the date on which you established the IRA. To revoke your IRA, mail or deliver a written notice of revocation to the Custodian at the address which appears at the end of this Disclosure Statement. Mailed notice will be deemed given on the date that it postmarked -34- (or, if sent by certified or registered mail, on the date of certification or registration). If you revoke your IRA within the seven-day period, you are entitled to a return of the entire amount you contributed into your IRA, without adjustment for such items as sales charges, administrative expenses or fluctuations in market value. FEES AND EXPENSES --------------------------------------------------------------- CUSTODIAN'S FEES The annual fee is $10.00 per fund to a maximum of $30.00. This fee is charged by the Custodian for maintaining your IRA. GENERAL FEE POLICIES - - Fees may be paid by you directly or the Custodian may deduct them from your IRA. - - Fees may be changed upon 30 days written notice to you. - - The full annual maintenance fee will be charged for any calandar year during which you have an IRA with us. This fee is not prorated for periods of less than one full year. - - The Custodian may charge you for its reasonable expenses for services not covered by its fee schedule. OTHER CHARGES - - There may be sales or other charges associated with the purchase or redemption of shares of a Fund in which your IRA is invested. BE SURE TO READ CAREFULLY THE CURRENT PROSPECTUS OF ANY FUND YOU ARE CONSIDERING AS AN INVESTMENT FOR YOUR IRA FOR A DESCRIPTION OF APPLICABLE CHARGES. ELIGIBILITY --------------------------------------------------------------------- WHAT ARE THE ELIGIBILITY REQUIREMENTS FOR AN IRA? You are eligible to establish and contribute to an IRA for a year if: - - You received compensation (or earned income if you are self employed) during the year for personal services you rendered. If you received taxable alimony, this is treated like compensation for IRA purposes. - - You did not reach age 70 1/2 during the year. CAN I CONTRIBUTE TO AN IRA FOR MY SPOUSE? For each year before the year when your spouse attains age 70 1/2, you can contribute to a separate IRA for your spouse, regardless of whether your spouse had any compensation or earned income in that year. This is called a "spousal IRA." To make a contribution to a spousal IRA for your spouse, you must file a joint tax return and your spouse must elect on the return to be treated as having no compensation or earned income for that year. For a spousal IRA, your spouse must set up a different IRA, separate from yours, to which you contribute. -35- CONTRIBUTIONS ------------------------------------------------------------------- WHEN CAN I MAKE CONTRIBUTIONS TO AN IRA? You may make a contribution to your existing IRA or establish a new IRA for a taxable year by the due date (not including any extensions) for your federal income tax return for the year. Usually this is April 15 of the following year. HOW MUCH CAN I CONTRIBUTE TO MY IRA? For each year when you are eligible (see above), you can contribute up to the lesser of $2,000 or 100% of your compensation (or earned income, if you are self-employed). However, as a result of recent tax laws, all or a portion of your contribution may not be deductible. If you and your spouse have spousal IRAs, you may contribute each year up to a maximum of $2,250 from your compensation (or earned income) to both spousal IRAs. You may divide the contribution between the spousal IRAs as you wish, as long as you do not contribute more than $2,000 to either of the spousal IRAs. HOW DO I KNOW IF MY CONTRIBUTION IS TAX DEDUCTIBLE? The deductibility of your contribution depends upon whether you are (or your spouse is) an active participant in any employer-sponsored retirement plan. If neither you nor your spouse is an active participant, the entire IRA contribution is deductible. If either you or your spouse is an active participant, your IRA contribution may still be completely or partly deductible on your tax return. This depends on the amount of your income. HOW DO I DETERMINE MY OR MY SPOUSE'S "ACTIVE PARTICIPANT" STATUS? Your Form W-2 (or your spouse's W-2) should indicate if you were an active participant in an employer-sponsored retirement plan for a year. If you have a question, you should ask your employer or the plan administrator. In one situation, your spouse's "active participant" status will not affect the deductibility of your contributions to your IRA. This rule applies only if you and your spouse file separate tax returns for the taxable year and you lived apart at all times during the taxable year. WHAT ARE THE DEDUCTION RESTRICTIONS? The portion of your contribution that is deductible depends upon your filing status and the amount of your adjusted gross income ("AGI"). The following table shows the deduction rules. -36- EX-14.(B) 31 EXHIBIT 14(B) 155 Bovet Road, Suite 200 San Mateo, CA 94402 415-378-8700 Exhibit 14(b) TRUST CONSULTANTS INC Part of Seabury & Smith February 25, 1993 Mr. Jack Henderson Chairman The WESTCORE Trust 600 17th Street, Suite 1605 South Denver, Colorado 80202 ENGAGEMENT LETTER Dear Mr. Henderson: This engagement letter (hereinafter referred to as "Agreement") will serve as an agreement as to WESTCORE Trust's (WESTCORE) use of Trust Consultant's Inc.'s (TCI) services in the areas of prototypes, plan administration services, 401(k) plan services, broker and headquarters training and support, and the fees for the foregoing. The provisions of this Agreement are as follows: 1. PROTOTYPES TCI grants a non-exclusive right to WESTCORE and its authorized agent ALPS Mutual Funds Services, Inc. ("ALPS") collectively referred to as the "Sponsoring Organization" to adopt as "identical adopter" the two 401 (k) plan documents (the "Plans") which are sponsored by TCI as mass submitter plans (the "Mass Submitter Plans"). TCI has submitted each Mass Submitter Plan using the Internal Revenue Service Form 4461 and each Plan has received approval as a mass submitter document (Copies of opinion letters attached as Appendix D). Each opinion letter takes into account the requirements of the Tax Reform Act of 1986 and later laws amending the Internal Revenue Code of 1986 to the extent possible as of the date the letters were issued. TCI will prepare, execute and forward to the Sponsoring Organization the Internal Revenue Service Forms 4461(b) Application and 8717 User Fee for review and use by the Sponsoring Organization in submitting the Mass Submitter Plans for identical adopter approval. The Sponsoring Organization will be responsible for the submission as identical adopter to the Internal Revenue Service in Washington, D.C. and for payment of the Internal Revenue Service User Fee of $100 per adoption agreement submitted. TCI makes no representations that the submissions will ultimately result in Internal Revenue Service opinion letters. TCI will amend the Mass Submitter Plans in a timely manner to the extent necessary to comply with statutes, regulations and rules. TCI will notify the Sponsoring Organization of such amendment(s) in a timely fashion and shall submit the amended Mass Submitter Plans to the Internal Revenue Service in timely fashion for an opinion letter. TCI will notify the Internal Revenue Service as to whether the Sponsoring Organization wishes to adopt the amended Mass Submitter Plans. TCI will, at the request of the Sponsoring Organization, prepare and execute the needed forms for review and use by the Sponsoring Organization in applying for the amended prototype plan's approval. TCI will forward such forms and any attendant documents to the Internal Revenue Service. If the Sponsoring Organization does adopt such plans, it will notify each employer which has adopted one of the plans it sponsors (Adopting Employer) of such amendments. TCI will offer services to each Adopting Employer which has engaged the administrative services of TCI for assuring the timely completion of needed amendments. If appropriate and the Adopting Employer so elects, TCI will also prepare forms for submission of the Adopting Employer's plan to the Internal Revenue Service. TCI will arrange for the payments of any fees for these services to the Adopting Employer with the individual Adopting Employer. The Sponsoring Organization shall be responsible for such amendments as to those Adopting Employers which have adopted the Sponsoring Organization plans but which have not also engaged TCI for administrative services. 2. 401 (k) PLAN PROPOSAL SYSTEM TCI will make available to the Sponsoring Organization (i) standard employee communication materials and (ii) the "401(k) Plan Proposal System," a software system developed by TCI which prepares qualified 401(k) plan proposals on IBM or IBM compatible machines with MS-DOS and Lotus 1-2-3 systems. Both items may be used on a nationwide basis by the Sponsoring Organization personnel who are involved in the sale and promotion of 401(k) plans and promotion of the plan administrative services of TCI. There is no limit to the number of proposals which may be run using this software by the Sponsoring Organization . Such proposals shall contain a description of TCI's fees and services as exemplified by the attached appendices and an outline of the basic plan provisions. The materials produced by the system will be coordinated with the Sponsoring Organization 401(k) materials as agreed to in writing by both parties. Cost of the plan proposal system is included in the fees on Appendix C. -2- 3. 401(k) PLAN ADMINISTRATION TCI will provide plan setup and administration services, as outlined in Appendices A and B, to each Adopting Employer where the Adopting Employer has engaged TCI to provide such services. TCI will charge Adopting Employers the fees for such services exemplified by those set forth in Appendix B. For all types of plan setup and administration fees, TCI reserves the right to make reasonable changes in its fee schedules. TCI will review its fee schedules at least once annually, and reserves the right to adjust its fees effective each January 1. In addition to each annual review and adjustment, TCI may determine, based on such things as general business conditions, legislative acts which become law, or regulatory policy or rules published by the Internal Revenue Service, that it is necessary to review and reasonably adjust its fee schedules at other times besides annually. In all cases of fee schedule changes, TCI will apprise the Sponsoring Organization of such change 60 days in advance of the effective date of the change and will be available to discuss any and all changes with the Sponsoring Organization. TCI will apprise the Adopting Employers who had been referred by the Sponsoring Organization of such changes in a timely manner. Plans set-up prior to December 31, 1992 will be guaranteed the 1992 plan set-up fee for the 1993 plan year. Plan administration services and fees are not included in this guarantee. TCI will provide each Adopting Employer with "401(k) Plan Manager". 401(k) Plan Manager is an IBM, MS-DOS compatible software package which can be used by individual Adopting Employers to record and transmit salary data, generate employee enrollment forms, generate personalized plan savings analysis, and perform other functions to assist the Adopting Employer in administering its 401(k) Plan. The fee charged for 401(k) Plan Manager is included in the administrative fees set forth in Appendix B. TCI shall not share in any fees paid to the Sponsoring Organization in connection with the Sponsoring Organization's services to retirement plans, and the Sponsoring Organization shall not share in any fees paid to TCI in connection with TCI's services to retirement plans. It is recognized that the Sponsoring Organization has sole responsibility for setting fees charged by the Sponsoring Organization and that TCI has sole responsibility for setting fees charged by TCI. All setup fees to TCI are payable by the Adopting Employer in advance and must accompany the signed adoption agreement. It is recognized that TCI will not accept for administration plan documents which it has reason to believe may not have been signed within the appropriate time period for the year in question. TCI's annual administration fees will be billed directly by TCI to each -3- Adopting Employer on the first of each quarter in the amount of one forth of the estimated annual fee. Within 60 days of adoption of a plan by an Adopting Employer, TCI will provide a representative, at First Interstate Bank's or the Sponsoring Organization's discretion, for one full business day at the Adopting Employer's principal place of business to assist with employee enrollment meetings, provided the Adopting Employer has over 100 employees who are eligible to participate in the plan. The fee charged for such service is included in the administrative fees set forth in Appendix B. TCI fees do not include on site meetings by TCI personnel for any Adopting Employer with less than 100 eligible employees. Such meetings must be preapproved by First Interstate Bank and TCI and will be billed to the Adopting Employer at the regular billing rate of the TCI person involved. 4. MARKETING SUPPORT TCI will promptly answer questions from First Interstate Bank retirement plans' headquarters and regional staff concerning 401(k) plans which are or have the potential of being administered by TCI. There is no limit to the number of questions to be replied to by TCI personnel and there will be no additional charge for such questions. TCI will refer questions which do not relate to actual or potential clients of TCI to the Sponsoring Organization or appropriate departments within First Interstate Bank. Any Adopting Employers or plan participants who inquire about or request the Sponsoring Organization information which is non 401(k) related will be promptly referred to the Sponsoring Organization at 1-800-392-2673. An initial two day training session will be conducted with TCI participating in these two days. This will occur within thirty days of the signing of this Agreement, and will include any First Interstate Bank staff deemed necessary by First Interstate Bank as well as representatives of ALPS. The travel and other expenses of First Interstate Bank and ALPS personnel shall be the responsibility of their respective organizations. 5. FEES See Appendix C. Fees agreed to between Boston Financial Data Services ("BFDS") and TCI are not a subject of this contract. 6. STANDARD OF CARE AND CONFIDENTIALITY All confidential information furnished by the Sponsoring Organization to TCI or by TCI to the Sponsoring Organization shall be held in confidence and shall not be disclosed to third parties or used in any manner except in connection with the provision of services hereunder, or in furtherance of the purposes of this Agreement. Such requirements shall survive -4- termination of this Agreement for three years from the date of termination of this Agreement. The foregoing restrictions shall not apply to such information which is in or enters into public domain without fault on the part of the party who disclosed such information, or is required to be disclosed pursuant to law or legal process. The Sponsoring Organization and TCI will each exercise diligence and reasonable care in providing to each other and to each Adopting Employer the advice and services set forth in this Agreement. In addition to any liability to each other the parties may have arising under this Agreement, the Sponsoring Organization and TCI each shall indemnify the other against all losses, liabilities, claims, demands, suits, costs and expenses (including reasonable attorney's fees) asserted against either or both of them by third parties and arising out of, or attributable to, any negligence or willful misconduct of the indemnifying party in discharging the responsibilities or obligations imposed upon it by this Agreement. 7. LENGTH OF AGREEMENT This agreement shall be in effect until cancelled by the Sponsoring Organization or by TCI. Written notice of intended cancellation must be given at least ninety days prior to any such cancellation. 8. MISCELLANEOUS This agreement shall not be assigned by either party, including by operation of law, except with the prior written consent of the other party. This Agreement, including all appendices, constitutes the complete and full understanding of the parties. This Agreement may only be amended by written agreement of both parties. This Agreement shall be governed by and construed in accordance with the laws of the State of Colorado. If any provisions of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision, and the Agreement shall be construed and enforced as if such provision had not been included. -5- The foregoing correctly sets forth the agreement between the Sponsoring Organization and TCI. Sponsoring Organization: Westcore Trust Consultants, Inc. Trust and Alps Mutual Funds Services, Inc. ______________________________ __________________________ Jack D. Henderson, Chairman Mark P. Weimer, President on behalf of Sponsoring Organization: on behalf of Trust Consultants, Westcore Trust and Alps Mutual Inc. Funds Services, Inc. -6- APPENDIX A 401(k) SET UP AND ADMINISTRATIVE SERVICES PLAN SET UP: Preparation of Plan Document Summary Plan Description IRS Submission (if required) Notice to Interested Parties Operations Manual Designation of Beneficiary Forms EMPLOYEE COMMUNICATION: Provide to Employer: Payroll Stuffer Employee Brochure Video or Slide Show Enrollment Forms ADMINISTRATION Participant Recordkeeping Discrimination Testing Preparation of: 5500's (and required schedules) Summary Annual Report Participant Statement Assistance in contribution calculation Daily Valuations Calculation of Vested Benefits Preparation of 1099R APPENDIX B TRUST CONSULTANTS AND TRANSFER AGENCY FEES TRAC-2000 401(K) PLANS FOR PLAN YEARS BEGINNING 01/01/92 ONE TIME SET UP FEES Base Fee 1100 Per Eligible Employee (New Plans) 3 Per Eligible Employee (Existing Plans) 16 If IRS Submit is required, there is an additional fee of $300 plus the $125 IRS User Fee. ANNUAL ADMINISTRATION FEES Base Fee (includes 5500) 1100 Per Eligible Employee (1-60) 37 (60-300) 27 (300+) 23 Minimum Annual Base Plus Eligible Employee Fee of $1600 TRUSTEE FEES Up to 500 Eligible Employees 300 Above 500 Eligible Employees 1000 ADDITIONAL POTENTIAL ANNUAL FEES Participant Terminations and Withdrawals 35 (Plus $30 for 1099 and W-2P if Self-Trusteed) Per Loan Per Year 100 Per Insurance Policy Per Year 30 Correction of Actual or Projected Failure to Pass Discrimination Test 160 GIC or Other Outside Investment from Prior Plan (Plus $15 Per Participant) 300 B-1 Employer Contributions other than Match (Per Eligible Employee) 5 IF DATA IS NOT TRANSMITTED TO TRUST CONSULTANTS USING 401(k) PLAN MANAGER OR OTHER COMPATIBLE ELECTRONIC MEDIA, THERE WILL BE AN ADDITIONAL FEE OF $100 PER YEAR PLUS $1 PER ELIGIBLE EMPLOYEE PER PAYROLL PERIOD. ABOVE SCHEDULE ASSUMES DAILY VALUATIONS, QUARTERLY REPORTS AND DISCRIMINATION TESTS; ALL ASSETS HELD IN MAXIMUM OF SIX FUNDS IN ONE FAMILY OF FUNDS. ADDITIONAL CALCULATIONS IF EMPLOYER HAS CURRENT OR PAST DEFINED BENEFIT PLAN; WORK REDONE DUE TO EMPLOYER SUPPLIED INCORRECT DATA; AND SPECIAL SERVICES SUCH AS AMENDMENTS OR PLAN TERMINATIONS WILL BE BILLED EXTRA. B-2 TRAC-2000 401(K) PLANS FOR PLAN YEARS BEGINNING 01/01/93 ONE TIME SET UP FEES New Plans: Base Fee 1180 Per Eligible Employee 6 Takeover Plans: Base Fee 1300 Per Eligible Employee 16 IF IRS SUBMIT IS REQUIRED, THERE IS AN ADDITIONAL FEE OF $360 PLUS THE IRS USER FEE. ANNUAL ADMINISTRATION FEES Base Fee (includes 5500) 1180 Per Eligible Employee (1 -75) 38 (76-300) 28 (301+) 20 MINIMUM ANNUAL BASE PLUS ELIGIBLE EMPLOYEE FEE OF $1800. TRUSTEE FEES Up to 500 Eligible Employees 300 Above 500 Eligible Employees 1000 ADDITIONAL POTENTIAL ANNUAL FEES Participant Terminations and Withdrawals (Plus $40 for 1099R if Self-Trusteed) 40 Loans Set-Up 30 Loans Annual 80 Per Insurance Policy Per Year 30 B-3 Correction of Actual or Projected Failure to Pass Discrimination Test (Per Quarter) (Plus $1.25 Per Eligible Employee Per Quarter) 180 GIC or Other Outside Investment from Prior Plan (Plus $15 Per Participant Account) 300 Employer Contribution Other Than Match or Rollover Acct (Per Eligible Employee) 6 IRS or CPA Audit (Minimum) 300 IF DATA IS NOT TRANSMITTED TO TRUST CONSULTANTS USING 401(k) PLAN MANAGER OR OTHER COMPATIBLE ELECTRONIC MEDIA, THERE WILL BE AN ADDITIONAL FEE OF $100 PER YEAR PLUS $1 PER ELIGIBLE EMPLOYEE PER PAYROLL PERIOD. ABOVE SCHEDULE ASSUMES DAILY VALUATIONS, QUARTERLY REPORTS AND DISCRIMINATION TESTS: ALL ASSETS HELD IN MAXIMUM OF SIX FUNDS IN ONE FAMILY OF FUNDS. ADDITIONAL CALCULATIONS IF EMPLOYER HAS CURRENT OR PAST DEFINED BENEFIT PLAN: WORK REDONE DUE TO EMPLOYER SUPPLIED INCORRECT DATA: AND SPECIAL SERVICES SUCH AS AMENDMENTS OR PLAN TERMINATIONS WILL BE BILLED EXTRA. B-4 APPENDIX C Trust Consultants fees charged to WESTCORE/First Interstate Bank ANNUAL ENGAGEMENT FEE $10,000 For the Rights and Services described in Sections 1,2, and 4 of the Agreement. Reduced in second and future years by a credit of $100 per plan sold. ASSISTANCE WITH CUSTOMIZATION OF AND/OR $10,000 MARKETING MATERIALS (Year One Only) OPTIONAL SERVICES (Not Elected in Year One): PROPOSAL PREPARATION (per year) $10,000 (TCI prepares proposals at TCI on behalf of Westcore) ROLLOUT SALES MEETINGS (per year) $10,000 The optional services above may be elected in subsequent years and will be offered directly to First Interstate Bank. The Rollout Sales meetings would cover ten one-day training sessions, purchased as a package of ten meetings, at a fee of $10,000 ($1,000 per meeting). Travel expenses are included in this fee; additional meetings will be billed extra at the hourly billing rate of the TCI individual who conducts the meeting, determined in advance of the meeting. The fee for TCI's assistance with the customization of the marketing materials done in the first year of this Agreement is payable in the first year only. This covers initial and ongoing review of the marketing materials prepared by TCI during the first year which may, in WESTCORE's discretion, be included in the marketing materials. Any production and printing costs incurred by TCI are additional costs and will be billed to WESTCORE at cost. APPENDIX D Internal Revenue Service Description: Prototype Standardized Profit Sharing Plan with CODA 50299484802-009 Case: 8902010 EIN: 94-1735408 02 Plan: 003 Letter Serial No: 0240142a Washington, DC 20224 Trust Consultants Inc. Person to Contact: Mrs. Fleming 155 Bovet Road, Suite 201 Telephone Number: (202) 566-6421 San Mateo, CA 94402 Refer Reply to: E:EP:2:1 Date: 01/03/90 Dear Applicant: In our opinion, the form of the plan identified above is acceptable under section 401 of the Internal Revenue Code for use by employers for the benefit of their employees. This opinion relates only to the acceptability of the form of the plan under the Internal Revenue Code. It is not an opinion of the effect of other Federal or local statutes. Because you are not a sponsoring organization as defined in section 3.07 of Rev. Proc. 89-9, 1989-6 I.R.B. 14, you may not use this letter as a basis for marketing to employers the form of the plan identified above as an approved master or prototype plan. Our opinion on the acceptability of the form of the plan is not a ruling or determination as to whether an employer's plan qualifies under Code section 401(a). An employer who adopts this plan will be considered to have a plan qualified under Code section 401(a) provided all the terms of the plan are followed, and the eligibility requirements and contribution or benefit provisions are not more favorable for officers, owners, or highly compensated employees than for other employees. Except as stated below, the Key District Director will not issue a determination letter with regard to this plan. Our opinion does not apply to the form of the plan for purposes of Code section 401(a)(16) if: (1) an employer ever maintained another qualified plan for one or more employees who are covered by this plan, other than a specified paired plan within the meaning of section 7 of Rev. Proc. 39-9, 1989-6 I.R.B. 14; or (2) after December 31, 1985, the employer maintains a welfare benefit fund defined in Code section 419(e), which provides postretirement medical benefits allocated to separate accounts for key employees as defined in Code section 419A(d)(3). In such situations, the employer should request a determination as to whether the plan, considered with all related qualified plans and, if appropriate, welfare benefit funds, satisfies the requirements of Code section 401(a)(16) as to limitations on benefits and contributions in Code section 415. If you, the plan sponsor, have any questions concerning the IRS processing of this case, please call the above telephone number. This number is only for use of the plan sponsor. Individual participants and/or adopting employers with questions concerning the plan should contact the plan sponsor. The plan's adoption agreement must include the sponsor's address and telephone number for inquiries by adopting employers. If you write to the IRS regarding this plan, please provide your telephone number and the most convenient time for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. You should keep this letter as a permanent record. Please notify us if you modify or discontinue sponsorship of this plan. Sincerely yours, Chief, Employee Plans Qualifications Branch -2- Internal Revenue Service Description: Prototype Standardized Profit Sharing Plan with CODA 50399484802-010 Case: 8902011 EIN: 94-1735408 02 Plan: 001 Letter Serial No: 0340142a Washington, DC 20224 Trust Consultants Inc. Person to Contact: Mrs. Fleming 155 Bovet Road, Suite 201 Telephone Number: (202) 566-6421 San Mateo, CA 94402 Refer Reply to: E:EP:2:1 Date: 01/08/90 Dear Applicant: In our opinion, the form of the plan identified above is acceptable under section 401 of the Internal Revenue Code for use by employers for the benefit of their employees. This opinion relates only to the acceptability of the form of the plan under the Internal Revenue Code. It is not an opinion of the effect of other Federal or local statutes. Because you are not a sponsoring organization as defined in section 3.07 of Rev. Proc. 89-9, 1989-6 I.R.B. 14, you may not use this letter as a basis for marketing to employers the form of the plan identified above as an approved master or prototype plan. Our opinion on the acceptability of the form of the plan is not a ruling or determination as to whether an employer's plan qualifies under Code section 401(a). Therefore, an employer adopting the form of the plan should apply for a determination letter by filing an application with the Key District Director of Internal Revenue Service on Form 5307, Short Form Application for Determination for Employee Benefit Plan. If you, the plan sponsor, have any questions concerning the IRS processing of this case, please call the above telephone number. This number is only for use of the plan sponsor. Individual participants and/or adopting employers with questions concerning the plan should contact the plan sponsor. The plan's adoption agreement must include the sponsor's address and telephone number for inquiries by adopting employers. If you write to the IRS regarding this plan, please provide your telephone number and the most convenient time for us to call in case we need more information. Whether you call or write, please refer to the Letter Serial Number and File Folder Number shown in the heading of this letter. You should keep this letter as a permanent record. Please notify us if you modify or discontinue sponsorship of this plan. Sincerely yours, Chief, Employee Plans Qualifications Branch PROTOTYPE 401(k) PROFIT SHARING PLAN ADOPTION AGREEMENT The undersigned employer(s) __________________________________________________ hereinafter referred to as the "Employer", hereby adopts the WESTCORE Trust Prototype 401(k) Profit Sharing Plan and Trust. 1. EMPLOYER TAX IDENTIFICATION NUMBER _______________________________ 2. The EFFECTIVE DATE of the Plan shall be __________________________ 3. The EFFECTIVE DATE of this amendment _____________________________ 4. The ANNIVERSARY DATE of the Plan shall be 5. The ENTRY DATE(S) of the Plan: 5.1 _________________________ shall be the first Entry Date. 5.2 _________________________ shall be the second Entry Date. 5.3 _________________________ shall be the third Entry Date. 5.4 _________________________ shall be the fourth Entry Date. (The Entry Date(s) may not postpone entry into the Plan later than the earlier of (a) the first day of the Plan Year beginning after the date on which an Employee satisfies the requirements of Section 6 below, or (b) the date 6 months after the date such requirements were satisfied). 6. ELIGIBILITY REQUIREMENTS - Each Employee will be eligible to participate in this Plan in accordance with Section 5 of this Adoption Agreement, except the following: 6.1 ___Employees who have not attained the age of _____ (cannot exceed 21). 6.2 ___Employees who have not completed _____ Year(s) of Service (cannot exceed 1 year unless the Plan provides a nonforfeitable right to 100% of the Participant's account balance derived from Employer contributions after not more than 2 Years of Service, in which case, up to 2 years is permissible. If the Year(s) of Service selected is, or includes, a fractional year, an Employee will not be required to complete any specified Hours of Service to receive credit for such fractional year.) 6.3 ___Employees included in a unit of Employees covered by a collective bargaining agreement between the Employer and Employee Representatives, if retirement benefits were the subject of good faith bargaining. For this purpose, the term "Employee Representatives" does not include any organization more than half of whose members are employees who are owners, officers, or executives of the Employer. 6.4 ___Employees who are nonresident aliens and who earn no earned income from the Employer which constitutes income from sources within the United States. The term "Employee" shall include all Employees of this Employer and any other employer aggregated with this Employer under Internal Revenue Code Section 414(b), (c) or (m) and individuals required to be considered Employees or any such Employer under Code Section 414(n) or under regulations under Code Section 414(o). Page 1 7. COMPENSATION shall mean all of each Participant's: 7.1 ___W-2 earnings 7.2 ___Compensation (as that term is defined in Section 415(c)(3) of the Code) Which is actually paid to the Participant during: 7.3 ___The Plan Year 7.4 ___The taxable year ending with or within the Plan Year. 7.5 ___The Limitation Year ending with or within the Plan Year. Compensation: 7.6 ___Shall include 7.7 ___Shall not include Employer contributions made pursuant to a salary reduction agreement which are not includable in the gross income of the employee under sections 125, 402(a)(8), 402(h) or 403(b) of the Code. 8. NORMAL RETIREMENT AGE shall mean: The later of age ___ (not to exceed age 65) or the ___ (not to exceed 5th) anniversary of the first day of the First Plan Year in which the Participant commenced participation in the Plan. 9. VESTING If a Participant terminates prior to Normal Retirement Age he shall receive a percentage of his Accrued Benefit according to the vesting schedule checked below: 9.1 ___One Hundred Percent schedule. 100% at all times. 9.2 ___Twenty Percent Schedule 20% after the second Covered Year of Service and 20% for each additional Covered Year of Service. 9.3 ___Variable Schedule Based on Covered Years of Service after Year: 1 __________ 4 __________ (at least 60%) 2 __________ (at least 20%) 5 __________ (at least 80%) 3 __________ (at least 40%) 6 100% 9.4 ___Three Year Vesting Schedule 100% vested after the completion of three (3) Covered Years of Service. If the vesting schedule under the Plan(s) shifts in or out of the above vesting schedule for any Plan Year because of the Plan's top heavy status, such shift is an amendment to the vesting schedule and the election in Section 1.4 of the Plan applies. Page 2 Notwithstanding the above, the Accrued Benefit shall become fully vested at Normal Retirement Age. 10. CONTRIBUTIONS 10.1 ___EMPLOYER CONTRIBUTIONS - The Employer may make contributions to the Plan without regard to current or accumulated earnings and profits for the taxable year or years ending with or within the Plan Year. Unless this option is elected, the Plan will be subject to the requirement that employer contributions be made out of current or accumulated net profits. Accordingly, all employer contributions under the Plan, including Employer discretionary contributions, Elective Deferrals and Qualified Non-elective Contributions, will be limited to the Employer's net profits. 10.2 ___ELECTIVE DEFERRALS - A Participant may elect to have his or her Compensation reduced by the following percentage or amount per pay period, or for a specified pay period or periods, as designated in writing to the Plan Administrator: a. ___An amount not in excess of _____ percent of a Participant's Compensation. b. ___An amount not in excess of $_________ of a Participant's Compensation. No Participant shall be permitted to have Elective Deferrals made under this plan during any calendar year in excess of $7,000, multiplied by the Adjustment Factor. c. A Participant may elect to commence Elective Deferrals as of __________ (ENTER AT LEAST ONE DATE OR PERIOD DURING A CALENDAR YEAR). Such election shall become effective as of the __________ (ENTER NUMBER) pay period following the pay period during which the Participant's election to commence Elective Deferrals was made, or as soon as administratively feasible thereafter. d. A Participant's election to have Elective Deferrals made pursuant to a salary reduction agreement shall remain in effect until modified or terminated. A Participant may modify the amount of Elective Deferrals as of __________ (ENTER AT LEAST ONE DATE OR PERIOD DURING A CALENDAR YEAR). Such election shall become effective as of the __________(ENTER NUMBER) pay period following the pay period during which the Participant's election to modify Elective Deferrals was made, or as soon as administratively feasible thereafter. e. ___A Participant may base Elective Deferrals on cash bonuses that, at the Participant's election, may be contributed to the plan or received by the Participant in cash. f. A Participant shall be afforded a reasonable period to elect to defer amounts described above. Such election shall become effective as of the __________ (ENTER NUMBER) pay period following the pay period during which the Participant's election to make such Elective Deferrals was made, or as soon as administratively feasible thereafter. g. A Participant shall designate the amount and frequency of his or her Elective Deferrals in the form and manner specified by the Plan Administrator. Page 3 10.3 ___EMPLOYER PROFIT SHARING CONTRIBUTIONS - In addition to Elective Deferrals, Qualified Non-elective Contributions, Qualified Matching Contributions and Matching Contributions, the Employer may make additional contributions under the Plan which shall be made solely at the discretion of the Employer but not in excess of 15% of Participant Compensation, up to the maximum amount specified in Section 5.5 of the Plan. Employer contributions under this Section 10.3 shall be allocated in proportion to compensation and shall vest in accordance with the vesting schedule specified in Section 9 of this Adoption Agreement. Forfeitures of Profit Sharing Contributions shall be: a. _____ added to and allocated in the same manner as the Contribution b. _____ applied to reduce the Contribution. 11. QUALIFIED NON-ELECTIVE CONTRIBUTIONS 11.1 ___The Employer will make Qualified Non-elective Contributions to the plan. If the Employer does make Qualified Non-elective Contributions to the plan, then the amount of such contributions to the plan for each Plan Year shall be: a. ___ _______ percent (not to exceed 15 percent) of the Compensation of all Participants eligible to share in the allocation. b. ___ _______ percent of the net profits, but in no event more than $__________ for any Plan Year. c. ___An amount as determined by the Employer. The amount of the special Qualified Non-elective Contributions allocated under section 11.2 below will be the amount needed to meet the Average Actual Deferral Percentage test stated in section 11.4 of the Plan. 11.2 Allocations of Qualified Non-elective Contributions to each Participant's account shall be made to the accounts of: a. ___All Participants. b. ___Only Non-highly compensated Participants. 11.3 Allocations of Qualified Non-elective Contributions to each Participant's account shall be made (elect one): a. ___In the ratio in which each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year. b. ___In the ratio in which each Participant's Compensation not in excess of $_______ for the Plan Year bears to the total Compensation of all Participants not in excess of $_______ for such Plan Year. 12. QUALIFIED MATCHING CONTRIBUTIONS 12.1 ___The Employer will make Qualified Matching Contributions to the plan on behalf of Participants who make Elective Deferrals. Page 4 12.2 ___The Employer will make Qualified Matching Contributions to the plan on behalf of: a. ___All Participants who make Elective Deferrals. b. ___All Participants who are Non-highly Compensated Employees and who make Elective Deferrals. 12.3 The amount of such Qualified Matching Contributions made on behalf of each Participant as specified in section 12.2 of this adoption agreement shall be: a. ___ _______ percent of the Elective Deferral made for each Plan Year. b. ___the sum of _______ percent of the portion of the Elective Deferral which does not exceed _______ percent of the portion of the Participant's Compensation, plus _______ percent of the portion of the Elective Deferral which exceeds _______ percent of the Participant's Compensation, but does not exceed _______ percent of the Participant's Compensation. c. ___The Employer shall not match Elective Deferrals as provided in a or b above in excess of $_______ or in excess of ___ percent of the Participant's Compensation. 12.4 Qualified Matching Contributions and Qualified Non-Elective Contributions may be taken into account as Elective Deferrals for purposes of calculating the Actual Deferral Percentages. In deter- mining Elective Deferrals for the purpose of the ADP test, the Employer shall include: a. ___Qualified Matching Contributions b. ___Qualified Non-Elective Contributions under this Plan or any other Plan of the Employer as provided by regulations under the Code. 12.5 The amount of qualified Matching Contributions made under Section 12.1 of this plan and taken into account as Elective Deferrals for purposes of calculating the Actual Deferral Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: a. ___All such Qualified Matching Contributions. b. ___Such Qualified Matching Contributions that are needed to meet the Actual Deferral Percentage test. 12.6 The amount of Qualified Non-Elective Contributions made under Section 11 of this plan and taken into account as Elective Deferrals for purposes of calculating the Actual Deferral Percentages, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: a. ___All such Qualified Non-elective Contributions. b. ___Such Qualified Non-elective Contributions that are needed to meet the Actual Deferral Percentage test stated in section 11.4(F) of the plan. Page 5 13. MATCHING CONTRIBUTIONS 13.1 ___The Employer will make Matching Contributions to the plan on behalf of Participants who make Elective Deferrals. The Employer will make Matching Contributions to the plan on behalf of: a. ___All Participants who make Elective Deferrals. b. ___All Participants who are Non-highly Compensated Employees and who make Elective Deferrals. 13.2 Matching contributions will be: a. ___Nonforfeitable when made. b. ___Subject to the vesting schedule applicable to employer contributions, other than Elective Deferrals and Qualified Non- elective Contributions, under the plan. 13.3 The amount of such Matching Contributions made on behalf of each Participant shall be: a. ___ _______ percent of the Elective Deferral made for each Plan Year. b. ___ the sum of _______ percent of the portion of the Elective Deferral which does not exceed _____ percent of the Participant's Compensation plus _____ percent of the portion of the Elective Deferral which exceeds _____ percent of the Participant's Compensation, but does not exceed _____ percent of the Participant's Compensation. c. ___The Employer shall not match Elective Deferrals as provided in a or b above in excess of $_______ or in excess of _____ percent of the Participant's Compensation. The level of contributions chosen by the Employer is subject to both the section 401(m)(2) discrimination test and the section 415 limitations. 14. SPECIAL DISTRIBUTIONS Elective Deferrals, Qualified Matching Contributions, Qualified Non- elective Contributions and income allocable to such amounts shall be distributable upon separation from service, death, or disability, as defined in the underlying plan document, and, in addition: 14.1 ___Termination of the plan without the establishment of another defined contribution plan. 14.2 ___As soon as administratively feasible after the disposition by the Employer to an unrelated corporation of substantially all of the assets (within the meaning of Code Section 409(d)(2)) used in a trade or business of the Employer if the Employer continues to maintain this Plan after such disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets. 14.3 ___As soon as administratively feasible after the disposition by the Employer to an unrelated entity of the Employer's interest in a subsidiary (within the meaning of Code Section 409(d)(3)) if the Employer continues to maintain this Plan, but only with respect to Employees who continue employment with such subsidiary. Page 6 14.4 ___Upon the hardship of the Participant, to the extent provided for in Section 11.6(C) of the Plan, and subject to applicable regulations prescribed by the Secretary of the Treasury. 15. CLAIMS FOR EXCESS ELECTIVE DEFERRALS - Participants who claim Excess Elective Deferrals for the preceding calendar year must submit their claims in writing to the plan administrator by ____________ (SPECIFY A DATE BETWEEN MARCH 1 AND APRIL 15). Excess Elective Deferrals that are distributed after April 16 are not only includable in the Participant's gross income in the taxable year when made, but are also includable in the Participant's gross income again in the year when distributed. The Plan permits distributions of Excess Contributions and Excess Aggregate Contributions on or before the last day of the Plan Year after the Plan Year in which such excess amounts arose. Distribution of such amounts, or other corrective action, is required under sections 401(k)(8) and 401(m)(6) of the Code if the plan is to maintain its tax-qualified status. However, if such excess amounts, plus any income and minus any loss allocable thereto, are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, then section 4979 of the Code imposes a ten (10) percent excise tax on the Employer maintaining the plan with respect to such amounts. The Employer may choose to limit its acceptance of claims to a date that is no later than March 1. 16. Average Contribution Percentage 16.1 In computing the Average Contribution Percentage, the employer shall take into account, and include as Contribution Percentage Amounts: a. ___Elective Deferrals b. ___Qualified Non-elective Contributions under this plan or any employer, as provided by regulations. 16.2 The amount of Qualified Non-elective Contributions that are made under Section 11.4(I) of this plan and taken into account as Contribution Percentage Amounts for purposes of calculating the Average Contribution Percentage, subject to such other requirements as may be prescribed by Secretary of the Treasury, shall be: a. ___All such Qualified Non-elective Contributions. b. ___Such Qualified Non-elective Contributions that are needed to meet the Average Contribution Percentage test stated in section 11.8 of the plan. 16.3 The amount of Elective Deferrals made under Section 11.4(B) of this plan and taken into account as Contribution Percentage Amounts for purposes of calculating the Average Contribution Percentage, subject to such other requirements as may be prescribed by the Secretary of the Treasury, shall be: a. ___All such Elective Deferrals. b. ___Such Elective Deferrals that are needed to meet the Average Contribution Percentage test stated in Section 11.8 of the Plan. Page 7 17. FORFEITURES - Forfeitures of Matching Contributions shall be: (Required if the Employer elects to make Matching Contributions in this Adoption Agreement) 17.1 ___Applied in the current year of forfeiture to reduce employer contributions. 17.2 ___Allocated in the current year of forfeiture, after all other forfeitures under the plan, to each Participant's Matching Contribution account in the ratio which each Participant's Compensation for the Plan Year bears to the total Compensation of all Participants for such Plan Year. Such forfeitures will not be allocated to the account of any Highly Compensated Employee. 18. INDIVIDUAL INVESTMENT ACCOUNTS: Individual Investment Accounts for Elective Deferrals, Qualified Non-elective Contributions, Qualified Matching Contributions and Matching Contributions: 18.1 ___Will not be used. 18.2 ___Will be used as follows: Each Participant will have a separate Individual Investment Account which will contain the amount allocated to the Participant Account. Each Participant will have the power to direct the investment with respect to his Individual Investment Account subject to such rules as the Administrator and the Trustee may deem necessary. Gains and losses of the Account shall accrue to such Account only. Individual Investment Accounts for Employer Contributions under Section 10.3 of this Adoption Agreement 18.3 ___Will not be used. 18.4 ___Will be used as follows: Each Participant will have a separate Individual Investment Account which will contain the amount allocated to the Participant Account. Each Participant will have the power to direct the investment with respect to his Individual Investment Account subject to such rules as the Administrator and the Trustee may deem necessary. Gains and losses of the Account shall accrue to such Account only. 19. LIMITATION YEAR shall mean each 12 consecutive month period ending on ____________. NOTE: A written resolution must be adopted by the Employer if the Limitation Year is other than the calendar year. 20. LIMITATION IN BENEFITS - If the Employer maintains or has ever, maintained, in addition to this Plan, one or more plans which are either qualified defined benefit plans or qualified defined contribution plans other than paired plan: Plan #01 - Adoption Agreement 001 in which any Participant in this Plan is (or was) a participant or could possibly become a participant, the Employer must complete this Section. The Employer must also complete this Section if it maintains a welfare benefit fund, as defined in Code Section 419(e), or an individual medical account, as Page 8 defined in Code Section 415(l)(2) under which amounts are treated as annual additions with respect to any Participant in this Plan. If the Participant is covered under another qualified defined contribution plan maintained by the Employer, other than a master or prototype plan: 20.1 ___The provisions of Section 5.5(B) of the Plan will apply as if the other plan were a master or prototype plan. 20.2 ___The total Annual Additions will be limited to the maximum permissible amount and excess amounts will be reduced in a manner that precludes Employer discretion, as follows: ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 20.3 ___If the Participant is or has ever been a Participant in a defined benefit plan maintained by the Employer, the benefits under the plans will be limited as follows (this method must preclude Employer discretion): ______________________________________________________________________ ______________________________________________________________________ ______________________________________________________________________ 21. MINIMUM CONTRIBUTION FOR TOP HEAVY PLAN - If the Employer maintains one or more defined benefit plans in which a Participant participates in addition to this Plan and does not maintain any other defined contribution plans in which a Participant participates, the minimum benefit requirement applicable to Top Heavy Plans shall be met under this Plan. If the minimum benefit requirement is met under this Plan, the additional minimum benefit: 21.1 ___Shall be provided. 21.2 ___Shall not be provided. 22. YEAR OF SERVICE shall mean 22.1 ___1000 Hours of Service 22.2 ___Hours of Service (less than 1000 Hours of Service). In the event the plan would otherwise fail the nondiscrimination tests of Code Sections 401(a)(26) or 410(b), for purposes of allocating Employer Profit Sharing Contribution the above Hour of Service requirement shall be changed for that Year to a 500 hour requirement. 23. PREDECESSOR EMPLOYER - Service with the following Predecessor Employer(s): _______________________________________________________________________ shall be counted for purposes of: 23.1 ___eligibility Years of Service 23.2 ___vesting (Covered Years of Service) 24. ADMINISTRATOR shall mean: Page 9 24.1 ___The Employer 24.2 ___Individuals specified in Section 28. 25. OTHER BENEFITS 25.1 ___Early Retirement Benefit (fully vested): Subject to the Joint and Survivor Annuity requirements, any Participant may retire and receive the entire amount in his Participant Account provided he has attained age _____ and has at least _____ Covered Years of Service. 26. ACTUARIAL EQUIVALENT For purposes of establishing present value to compute the top heavy ratio, benefit payments shall be discounted only for mortality and interest based on the following: 26.1 ___Pre-Retirement Interest Rate _______%. 26.2 ___Post-Retirement Mortality Table: __________ with _______% interest. 27. PARTICIPATING AFFILIATES - Each Affiliate (i.e., each member of a controlled group of corporations, commonly controlled group of businesses, or an affiliated service group within the meaning of section 414 of the Code) must adopt this Plan as a Participating Affiliate. [Attach additional signature pages if there is more than one Participating Affiliate.] Participating Affiliate Name_____________________ Employer I.D.________ Address______________________________________ Taxable Year_____________ By_______________________ Title________________________ Date____________ 28. ADMINISTRATOR - If Option 24.2 is elected the following named individuals shall serve as Plan Administrator. Signature by the Administrator (if other than the Employer) is in acknowledgment of acceptance of appointment. Administrator(s) Name(s) Signature(s): __________________________________ ____________________________________ __________________________________ ____________________________________ __________________________________ ____________________________________ 29. Appointment of Trustee or Custodian (Select 29.1 or 29.2) Incorporated businesses must name a Trustee. Unincorporated businesses covering one or more Self Employed Individuals may appoint a Custodian or a Trustee. 29.1 _____Trustee - Signature by the Trustee is in acknowledgement of acceptance of appointment. Trustee Name: Signature: __________________________________ ____________________________________ 29.2 _____Custodian - ___________________ is hereby appointed as Custodian. ________________________________________________________ Signature of Authorized Individual Accepting Appointment Page 10 30. ADOPTION AGREEMENT USAGE This Adoption Agreement is only to be used with basic Defined Contribution Plan document 02. An Employer who has ever maintained or who later adopts any plan (including a welfare benefit fund, as defined in Section 419(e) of the Code, which provides post-retirement medical benefits allocated to separate accounts for key employees as defined in Code Section 419A(d)(3), or an individual medical account, as defined in Section 415(l)(2) of the code) in addition to this Plan other than paired plans: Plan #01 - Adoption Agreement 001 may not rely on the opinion letter issued by the National Office of the Internal Revenue Service as evidence that this Plan is qualified under Section 401 of the Internal Revenue Code. If the Employer who adopts or maintains multiple plans other than the paired plans identified above wishes to obtain reliance that its plans are qualified, application for a determination letter should be made to the appropriate Key District Director of Internal Revenue. Failure of the Employer to properly complete this Adoption Agreement may result in the disqualification of this Plan. 31. SPONSORING ORGANIZATION - The Sponsoring organization or its authorized representative identified below will inform the adopting employer of any amendments made to the Plan or of the discontinuance or abandonment of the Plan. The organization sponsoring this Plan is WESTCORE Trust. The authorized representative of the sponsoring organization is Mark Pougnet WESTCORE Trust 600 17th St. Suite 1605 So. Denver, Colorado 80202 The Employer represents that the legal and tax aspects of this Plan and Trust have been duly considered and passed upon by its attorney and/or tax advisor who has determined that it is suitable and has been properly completed and adopted. ADOPTION FOR THE EMPLOYER Date of Execution __________ ________________________ Title_____________ Signature Page 11 Table of Contents 1.0 GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.1 PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.2 NAME OF PLAN. . . . . . . . . . . . . . . . . . . . . . . . . 1 1.3 APPROVAL OF INTERNAL REVENUE SERVICE. . . . . . . . . . . . . 1 1.4 AMENDMENT OR TERMINATION. . . . . . . . . . . . . . . . . . . 2 2.0 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 2.1 ACCRUED BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 4 2.2 ACTIVE PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . 4 2.3 ACTUARIAL EQUIVALENT. . . . . . . . . . . . . . . . . . . . . 4 2.4 ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . 4 2.5 ADOPTION AGREEMENT. . . . . . . . . . . . . . . . . . . . . . 4 2.6 ANNIVERSARY DATE. . . . . . . . . . . . . . . . . . . . . . . 4 2.7 ANNUAL ADDITIONS. . . . . . . . . . . . . . . . . . . . . . . 5 2.8 AVERAGE ANNUAL COMPENSATION . . . . . . . . . . . . . . . . . 5 2.9 BENEFICIARY . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.10 BOARD . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2.11 COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . . 6 2.12 COVERED YEARS OF SERVICE. . . . . . . . . . . . . . . . . . . 7 2.13 EARLY RETIREMENT DATE . . . . . . . . . . . . . . . . . . . . 7 2.14 EARNED INCOME . . . . . . . . . . . . . . . . . . . . . . . . 7 2.15 EFFECTIVE DATE. . . . . . . . . . . . . . . . . . . . . . . . 8 2.16 ELIGIBLE CLASS. . . . . . . . . . . . . . . . . . . . . . . . 8 2.17 EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.18 EMPLOYER. . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.19 ENTRY DATE. . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.20 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2.21 FORMER PARTICIPANT. . . . . . . . . . . . . . . . . . . . . . 8 2.22 FUTURE SERVICE. . . . . . . . . . . . . . . . . . . . . . . . 9 2.23 HIGHLY COMPENSATED EMPLOYEE . . . . . . . . . . . . . . . . . 9 2.24 HOUR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 10 2.25 INACTIVE PARTICIPANT. . . . . . . . . . . . . . . . . . . . . 12 2.26 INSURER . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.27 INVESTMENT MANAGER. . . . . . . . . . . . . . . . . . . . . . 12 2.28 JOINT AND SURVIVOR ANNUITY. . . . . . . . . . . . . . . . . . 12 2.29 LATE RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . . 13 2.30 LIMITATION YEAR . . . . . . . . . . . . . . . . . . . . . . . 13 2.31 NET PROFITS . . . . . . . . . . . . . . . . . . . . . . . . . 13 2.32 NORMAL RETIREMENT AGE . . . . . . . . . . . . . . . . . . . . 13 2.33 NORMAL RETIREMENT DATE. . . . . . . . . . . . . . . . . . . . 13 2.34 ONE YEAR BREAK IN SERVICE . . . . . . . . . . . . . . . . . . 13 2.35 OWNER-EMPLOYEE. . . . . . . . . . . . . . . . . . . . . . . . 14 2.36 PARTICIPANT . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.37 PARTICIPANT ACCOUNT . . . . . . . . . . . . . . . . . . . . . 14 2.38 PLAN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.39 PLAN YEAR . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.40 PREDECESSOR EMPLOYER. . . . . . . . . . . . . . . . . . . . . 15 2.41 PARTICIPANT CONTRIBUTION ACCOUNT. . . . . . . . . . . . . . . 15 2.42 QUALIFIED LEAVE OF ABSENCE. . . . . . . . . . . . . . . . . . 15 2.43 SELF-EMPLOYED INDIVIDUAL. . . . . . . . . . . . . . . . . . . 16 2.435 SHORT FORM ADOPTION AGREEMENT . . . . . . . . . . . . . . . . 16 2.44 SOCIAL SECURITY COVERED COMPENSATION. . . . . . . . . . . . . 16 2.45 TAXABLE WAGE BASE . . . . . . . . . . . . . . . . . . . . . . 16 2.46 TOTAL AND PERMANENT DISABILITY. . . . . . . . . . . . . . . . 16 2.47 TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.48 TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.49 YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 2.50 YEAR OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . 17 Page i 3.0 ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 3.1 ELIGIBILITY REQUIREMENTS. . . . . . . . . . . . . . . . . . . 18 3.2 RE-ELIGIBILITY. . . . . . . . . . . . . . . . . . . . . . . . 19 3.3 LEAVE OF ABSENCE. . . . . . . . . . . . . . . . . . . . . . . 20 4.0 FUNDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.1 CONTRIBUTION FORMULA. . . . . . . . . . . . . . . . . . . . . 20 4.2 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.3 MISTAKE OF FACT . . . . . . . . . . . . . . . . . . . . . . . 21 4.4 DISALLOWANCE OF DEDUCTION . . . . . . . . . . . . . . . . . . 21 4.5 VOLUNTARY CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . 21 4.6 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS. . . . . . . . . . 22 4.7 ROLLOVER ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . 22 4.8 EMPLOYER CONTRIBUTION ACCOUNT . . . . . . . . . . . . . . . . 23 4.9 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES . . . . . . . . . 23 4.10 ALLOCATION OF TRUST GAINS AND LOSSES. . . . . . . . . . . . . 24 4.11 SEGREGATION OF PARTICIPANT ACCOUNTS . . . . . . . . . . . . . 24 5.0 BENEFIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.1 AMOUNT OF DISTRIBUTION. . . . . . . . . . . . . . . . . . . . 25 5.2 FORM OF BENEFIT . . . . . . . . . . . . . . . . . . . . . . . 26 5.3 DISTRIBUTION OF BENEFITS. . . . . . . . . . . . . . . . . . . 27 5.4 VESTING ON TERMINATION AND RE-EMPLOYMENT. . . . . . . . . . . 34 5.5 LIMITATION ON BENEFITS AND CONTRIBUTIONS. . . . . . . . . . . 37 5.6 ALIENATION PROHIBITED . . . . . . . . . . . . . . . . . . . . 44 5.7 JOINT AND SURVIVOR ANNUITY REQUIREMENTS . . . . . . . . . . . 44 5.8 PERMITTED DISPARITY IN PLAN CONTRIBUTIONS . . . . . . . . . . 51 6.0 LIFE INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 6.1 AUTHORIZATION TO PURCHASE . . . . . . . . . . . . . . . . . . 55 6.2 PAYMENT OF PREMIUMS . . . . . . . . . . . . . . . . . . . . . 55 6.3 DISPOSITION OF POLICIES AT RETIREMENT . . . . . . . . . . . . 55 6.4 LIMITATION ON AMOUNTS . . . . . . . . . . . . . . . . . . . . 55 6.5 CONFLICT WITH INSURANCE CONTRACTS . . . . . . . . . . . . . . 56 7.0 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 7.1 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 56 7.2 DISCHARGE RIGHTS PRESERVED. . . . . . . . . . . . . . . . . . 58 7.3 BENEFICIARY DESIGNATED BY PARTICIPANT . . . . . . . . . . . . 59 7.4 PRIORITY OF ADOPTION AGREEMENT. . . . . . . . . . . . . . . . 59 7.5 REFERENCE TO INTERNAL REVENUE CODE. . . . . . . . . . . . . . 59 7.6 SAVING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . 59 7.7 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 59 7.8 MERGER OR CONSOLIDATION OF PLAN . . . . . . . . . . . . . . . 60 7.9 AGREEMENT BINDING ON ALL PARTIES. . . . . . . . . . . . . . . 60 7.10 HEADINGS. . . . . . . . . . . . . . . . . . . . . . . . . . . 60 7.11 SINGULAR INCLUDES PLURAL, ETC.. . . . . . . . . . . . . . . . 60 7.12 FORFEITURE OF BENEFITS. . . . . . . . . . . . . . . . . . . . 60 7.13 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDER . 61 8.0 TOP HEAVY PLAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 8.1 PRECEDENCE OF SECTION . . . . . . . . . . . . . . . . . . . . 61 8.2 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 61 8.3 COMPENSATION IN TOP HEAVY PLAN YEAR . . . . . . . . . . . . . 64 8.4 VESTING IN TOP HEAVY PLAN YEAR. . . . . . . . . . . . . . . . 64 8.5 MINIMUM CONTRIBUTION UNDER TOP HEAVY PLAN . . . . . . . . . . 65 8.6 MINIMUM CONTRIBUTION UNDER MULTIPLE PLANS . . . . . . . . . . 66 8.7 NONFORFEITABILITY OF MINIMUM BENEFIT. . . . . . . . . . . . . 66 8.8 ADJUSTMENT TO DEFINED BENEFIT AND DEFINED CONTRIBUTION FRACTION FOR SUPER TOP-HEAVY PLAN. . . . . . . . . . . . . . . . . . . 66 9.0 AFFILIATED EMPLOYER. . . . . . . . . . . . . . . . . . . . . . . . . . 67 Page ii 9.1 MEMBERS OF CONTROLLED GROUP . . . . . . . . . . . . . . . . . 67 9.2 LEASED EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . 67 9.3 PLAN OF A PREDECESSOR EMPLOYER. . . . . . . . . . . . . . . . 68 9.4 CONTROLLED TRADES OR BUSINESS OF OWNER-EMPLOYEES. . . . . . . 68 10.0 TRUST PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . 69 10.1 ESTABLISHMENT OF TRUST. . . . . . . . . . . . . . . . . . . . 69 10.2 APPOINTMENT OF ADMINISTRATOR AND TRUSTEE. . . . . . . . . . . 69 10.3 ADMINISTRATOR FUNCTIONS . . . . . . . . . . . . . . . . . . . 70 10.4 TRUSTEE FUNCTIONS . . . . . . . . . . . . . . . . . . . . . . 73 10.5 INVESTMENT OF TRUST ASSETS. . . . . . . . . . . . . . . . . . 79 10.6 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 82 10.7 INSURANCE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 84 10.8 SPECIAL RULES FOR VOTING INVESTMENT COMPANY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . 84 10.9 SPECIAL RULES FOR VOTING OF EMPLOYER STOCK. . . . . . . . . . 85 10.10 LOANS TO PARTICIPANTS . . . . . . . . . . . . . . . . . . . . 85 11.0 CASH OR DEFERRED ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . 85 11.1 PURPOSE AND EFFECTIVE DATE. . . . . . . . . . . . . . . . . . 85 11.2 ELIGIBILITY TO PARTICIPATE. . . . . . . . . . . . . . . . . . 85 11.3 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 85 11.4 ELECTIVE DEFERRALS. . . . . . . . . . . . . . . . . . . . . . 88 11.5 TOP-HEAVY REQUIREMENTS. . . . . . . . . . . . . . . . . . . . 94 11.6 SPECIAL DISTRIBUTION RULES. . . . . . . . . . . . . . . . . . 94 11.7 MATCHING CONTRIBUTIONS. . . . . . . . . . . . . . . . . . . . 97 11.8 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS. . . . . . . . . . . . . . . . . . 97 11.9 PROFITS NOT REQUIRED UNDER THE CODA . . . . . . . . . . . . . 102 11.10 FORFEITURES . . . . . . . . . . . . . . . . . . . . . . . . . 102 Defined Contribution Plan and Trust Document 1.0 GENERAL 1.1 PURPOSE This Prototype Defined Contribution Plan and Trust with its Adoption Agreement constitute an employee pension benefit plan created hereby for the exclusive Benefit of eligible Employees of the Employer. All contributions thereto shall be made for the purpose of distributing to such eligible Employees their Accrued Benefit. Prior to satisfaction of all liabilities with respect to the Participants and their Beneficiaries, no part of the corpus or income of the Trust shall at any time be used for or diverted to purposes other than for the exclusive benefit of such Participants or their Beneficiaries. It is further the purpose of the Plan to provide benefits in accordance herewith for those Participants who remain in the employ of the Employer until their Accrued Benefit is vested or until they reach Normal Retirement Age, at which time benefits will be distributed in accordance herewith. It is further the intent to provide other benefits as are set forth in the Adoption Agreement. 1.2 NAME OF PLAN The name of the Plan shall be the legal name of the Employer as set forth in the Adoption Agreement followed by the name of the plan as set forth in the Adoption Agreement followed by the words "and Trust". 1.3 APPROVAL OF INTERNAL REVENUE SERVICE Page 1 This Plan is contingent upon and subject to obtaining such initial approval of the District Director of Internal Revenue as may be necessary to establish the qualification for income tax purposes pursuant to Section 401 of the Internal Revenue Code of 1986 (Code) and as may be necessary to qualify for tax exemption under the provisions of Section 501 or other applicable provisions of the Code. Any modification or amendment of the Plan may be made if necessary or appropriate to initially qualify or maintain qualification of the Plan. If a final adverse action with respect to initial qualification or requalification is issued by the Internal Revenue Service, the Plan shall be treated as an individually designed plan and the Employer shall no longer participate in this prototype Plan. 1.4 AMENDMENT OR TERMINATION (A) Amendment (1) The sponsoring organization may amend any part of the Plan. For purposes of sponsoring organization amendments, the mass submitter shall be recognized as the agent of the sponsoring organization. If the sponsoring organization does not adopt the amendments made by the mass submitter, it will no longer be identical to or a minor modifier of the mass submitter plan. The Employer may: (a) Change the choice of options in the Adoption Agreement, (b) Add overriding language in the Adoption Agreement when such language is necessary to satisfy Section 415 or Section 416 of the Code because of the required aggregation of multiple plans, and (c) Add certain model amendments published by the Internal Revenue Service which specifically provide that their adoption will not cause the Plan to be treated as individually designed. An Employer that amends the Plan for any other reason including a waiver of the minimum funding requirement under Code Section 412(d), will no longer participate in this prototype plan and will be considered to have an individually designed plan. When this Plan is used to amend an existing plan, the terms and conditions of the prior plan document shall prevail as to obligations and rights of the parties to the Plan during the effective period of the prior plan document. No amendment to the Plan shall decrease the Accrued Benefit of any Participant. If the Employer amends any of the provisions of this Plan, it will be considered to be an individually designed plan. (2) No amendment to the Plan shall be effective to the extent that it has the effect of decreasing a Participant's Accrued Benefit. Notwithstanding the preceding sentence, a Participant's Accrued Benefit may be reduced to the extent permitted under Code Section 412(c)(8). For purposes of this paragraph, a Plan amendment which has the effect of: (a) Decreasing a Participant's Accrued Benefit, or (b) Eliminating an optional form of benefit, with respect to benefits attributable to service before the amendment, shall be treated as reducing Accrued Benefits. Furthermore, if the vesting schedule of the Plan is amended, in the case of an Employee who is a Participant as of the later of the date such amendment is adopted or the date it becomes effective, the nonforfeitable percentage (determined as of such date) of such Employee's Employer - derived accrued benefit will not be less than the percentage computed under the Plan without regard to such amendment. (3) If the Plan's vesting schedule is amended or the Plan is amended in any way that directly or indirectly affects the computation of a Participant's nonforfeitable percentage, or if the Plan is deemed amended by an automatic change to or from a top-heavy vesting schedule, each Participant with at least three (3) Years of Service with the Employer may elect within a reasonable Page 2 period after the adoption of the amendment or change, to have his nonforfeitable percentage computed under the Plan without regard to such amendment or change. For Participants who do not have at least one (1) Hour of Service in any Plan Year beginning after December 31, 1988, the preceding sentence shall be applied by substituting "five (5) Years of Service" for "three (3) Years of Service" where such language appears. The period during which the election may be made shall commence with the date the amendment is adopted or deemed to be made and shall end on the latest of: (a) Sixty (60) days after the amendment is adopted; (b) Sixty (60) days after the amendment becomes effective; or (c) Sixty (60) days after the Participant is issued written notice of the amendment by the Employer or Administrator. (B) The Employer also reserves the right to terminate the Plan and Trust at any time. In the event of the termination or partial termination of the Plan, or the complete discontinuance of contributions under a Profit Sharing Plan, the rights of all affected Active Participants and Inactive Participants to their Accrued Benefit as of the date of the termination or partial termination or the complete discontinuance of contributions under a Profit Sharing Plan, shall be non-forfeitable. Former Participants shall vest according to the vesting schedule in effect on their date of termination of service with the Employer. In no event, however, shall any amount be allocated to a Participant under this Section 1.4 which would cause the Plan to fail to meet the integration requirements of Revenue Ruling 71-446 or the limitation specified under Section 5.8 of the Plan. 2.0 DEFINITIONS 2.1 ACCRUED BENEFIT "Accrued Benefit" shall mean the balance of the Participant Account of each Participant. 2.2 ACTIVE PARTICIPANT "Active Participant" means each Participant who is a member of the Eligible Class on the Anniversary Date or such other date as of which the Accrued Benefit of a Participant is determined. 2.3 ACTUARIAL EQUIVALENT (A) "Actuarial Equivalent" shall mean a benefit payable in an alternative mode which is equivalent to a benefit payable in a given mode under the Plan when computed using the rate of interest and the Mortality Table specified in the Adoption Agreement. (B) Anything in Section 2.3(A) notwithstanding, for purposes of the Short Form Adoption Agreement and for purposes of establishing present value to compute the top heavy ratio, benefit payments shall be discounted only for mortality and interest based upon a pre-retirement interest rate of 6.0% and the 83IAM Mortality Table at 6.0% interest. 2.4 ADMINISTRATOR (A) "Administrator" shall mean the Employer or other entity designated in the Adoption Agreement. (B) For purposes of the Short Form Adoption Agreement, "Administrator" shall mean the Employer. Page 3 (C) For purposes of the EZFLEX Adoption Agreement the "Administrator" shall always be the employer. 2.5 ADOPTION AGREEMENT "Adoption Agreement" shall mean that document which is attached hereto and is made a part hereof and which is an integral part of this document. It sets forth the detailed specifications of the Plan. 2.6 ANNIVERSARY DATE "Anniversary Date" shall mean the date as of which the Plan shall be evaluated, which date shall be specified in the Adoption Agreement. 2.7 ANNUAL ADDITIONS "Annual Additions" shall mean, with respect to each Participant for any Plan Year, the sum of the following amounts credited to a Participant's account for the Limitation Year: (A) Contributions made by the Employer on behalf of the Participant to all qualified defined contribution plans of the Employer, (B) Forfeitures allocated to the account(s) of the Participant, (C) The Participant's contributions, and (D) Amounts allocated after March 31, 1984 to an individual medical account, as defined in Code Section 415 (l)(2), which is part of a pension or annuity plan maintained by the Employer, are treated as Annual Additions to a defined contribution plan; and amounts derived from contributions paid or accrued after December 31, 1985, in taxable years ending after such date, which are attributable to post-retirement medical benefits allocated to the separate account of a key Employee, as defined in Code Section 419(A)(d)(3), under a welfare benefit fund, as defined in Code Section 419(e), maintained by the Employer, are treated as Annual Additions to a defined contribution plan. (E) For this purpose, any excess amount applied pursuant to the provisions of Section 5.5 in the Limitation Year to reduce Employer Contributions will be considered Annual Additions for such Limitation Year. 2.8 AVERAGE ANNUAL COMPENSATION "Average Annual Compensation" shall mean: (A) The average of a Participant's Compensation over the period of time specified in the Adoption Agreement, which shall not be less than three (3) consecutive Plan Years which produce the highest average. If the Participant has less than the period of time specified in the Adoption Agreement, Compensation is averaged over the Participant's total period of service. Compensation shall be annualized for any period of service which is less than twelve (12) months. (B) If the Adoption Agreement provides for permitted disparity under Internal Revenue Code Section 401(1), Final Average Compensation shall mean the greater of: (1) The Participant's Average Annual Compensation over: (a) The three (3) consecutive year period ending with the current year, or (b) If shorter, the Participant's full period of service, or Page 4 (2) The Participant's highest Average Annual Compensation for any other period of three (3) consecutive years. 2.9 BENEFICIARY "Beneficiary" shall mean the person or persons or legal entity designated as such by a Participant and which is entitled to receive benefits under the Plan. 2.10 BOARD "Board" shall mean the Board of Directors of the Employer. Board shall also mean the sole proprietor of a sole proprietorship or the directing partners of a partnership. 2.11 COMPENSATION As elected by the Employer in the Adoption Agreement, Compensation will mean all of each Participant's: (A) W-2 earnings or (B) Compensation (as that term is defined in section 415(c)(3) of the Code). (1) For any Self-Employed Individual covered under the plan, compensation will mean Earned Income. Compensation shall include only that Compensation which is actually paid to the Participant during the applicable period. Except as provided elsewhere in this Plan, the applicable period shall be the period elected by the Employer in the Adoption Agreement. If the Employer makes no election, the applicable period shall be the Plan Year. (2) Notwithstanding the above, if elected by the Employer in the Adoption Agreement, Compensation shall include any amount which is contributed by the Employer pursuant to a salary reduction agreement and which is not includible in the gross income of the Employee under Sections 125, 402(a)(8), 402(h) or 403(b) of the Code. (3) The annual Compensation of each Participant taken into account under the Plan for any year shall not exceed $200,000, as adjusted by the Secretary at the same time and in the same manner as under Section 415(d) of the Code. In determining the Compensation of a Participant for purposes of this limitation, the rules of Section 414(q)(6) of the Code shall apply, except in applying such rules, the term "family" shall include only the Spouse of the Participant and any lineal descendants of the Participant who have not attained age 19 before the close of the year. If, as a result of the application of such rules the adjusted $200,000 limitation is exceeded, then (except for purposes of determining the portion of Compensation up to the integration level if this Plan provides for permitted disparity), the limitation shall be prorated among the affected individuals in proportion to each such individual's Compensation as determined under this Section 2.11 prior to the application of this limitation. (C) Anything in Section 2.11(A) or (B) notwithstanding, for purposes of the Short Form Adoption Agreement, "Compensation" shall mean Compensation as that term is defined in Section 415(c)(3) of the Code which is actually paid to an Employee during the Plan Year. 2.12 COVERED YEARS OF SERVICE "Covered Years of Service" shall mean each Year of Service with which a Participant is credited for purposes of computing his vested interest in his Accrued Benefit, as determined under the vesting schedule specified in the Adoption Agreement. Page 5 2.13 EARLY RETIREMENT DATE (A) "Early Retirement Date" shall mean the Anniversary Date nearest the date on which a Participant meets the requirements for early retirement specified in the Adoption Agreement. (B) Anything in Section 2.13(A) notwithstanding, for purposes of the Short Form Adoption Agreement, early retirement shall not be permitted under the Plan. 2.14 EARNED INCOME "Earned Income" shall mean the net earnings from self-employment with the Employer for which the personal services of the individual are a material income producing factor. Net earnings will be determined without regard to items not included in gross income and the deductions allocable to such items. Net earnings are reduced by contributions by the Employer to a qualified plan to the extent deductible under Code Section 404. Net earnings shall be determined with regard to the deduction allowed to the Employer by Code Section 164(f) for taxable years beginning after December 31, 1989. 2.15 EFFECTIVE DATE "Effective Date" of the Plan shall mean the date specified in the Adoption Agreement. 2.16 ELIGIBLE CLASS "Eligible Class" shall mean any Employee who is not excluded from participation under the Adoption Agreement. 2.17 EMPLOYEE (A) "Employee" shall mean any employee of the Employer maintaining the Plan or of any other employer required to be aggregated with such Employer as a related business under Sections 414(b), (c), (m) or (o) of the Code. The term Employee shall also include any leased employee deemed to be an employee of any employer described in the previous paragraph as provided in sections 414(n) or (o) of the Code. (B) Anything in Section 2.17(A) notwithstanding, for purposes of eligibility under Section 6 of the Short Form Adoption Agreement, the term "Employee" shall include all Employees of the Employer adopting the Plan and any other employer aggregated with this Employer under Internal Revenue Code Section 414(b), (c), or (m) and individuals required to be considered Employees of any such Employer under Code Section 414(n). 2.18 EMPLOYER "Employer" shall mean the Employer named in the Adoption Agreement. 2.19 ENTRY DATE "Entry Date" shall mean the date the Participant enters the Plan, as specified in the Adoption Agreement. 2.20 ERISA "ERISA" shall mean the Employee Retirement Income Security Act of 1974 and any amendments thereto. Page 6 2.21 FORMER PARTICIPANT "Former Participant" shall mean any former Employee who is entitled to receive a distribution from the Trust. 2.22 FUTURE SERVICE "Future Service" shall mean each Year of Participation by an Active Participant prior to his Normal Retirement Date. 2.23 HIGHLY COMPENSATED EMPLOYEE (A) Highly Compensated Employee includes highly compensated active Employees and highly compensated former Employees. (B) A highly compensated active Employee includes any Employee who performs service for the Employer during the determination year and who, during the look-back year: (1) Received Compensation from the Employer in excess of $75,000 (as adjusted pursuant to section 415(d) of the Code); (2) Received Compensation from the Employer in excess of $50,000 (as adjusted pursuant to section 415(d) of the Code) and was a member of the top-paid group for such year; or (3) Was an officer of the Employer and received Compensation during such year that is greater than 50 percent of the dollar limitation in effect under section 415(b)(1)(A) of the Code. (C) The term Highly Compensated Employee also includes: (1) Employees who are both described in Section 2.23(B) if the term "determination year" is substituted for the term "look-back year" and the Employee is one of the 100 Employees who received the most Compensation from the Employer during the determination year; and (2) Employees who are 5 percent owners at any time during the look-back year or determination year. (D) If no officer has satisfied the Compensation requirement of Section 2.23(B)(3) above during either a determination year or look-back year, the highest paid officer for such year shall be treated as a Highly Compensated Employee. (E) For this purpose, the determination year shall be the Plan Year. The look-back year shall be the twelve-month period immediately preceding the determination year. (F) A highly compensated former employee includes any Employee who separated from service (or was deemed to have separated) prior to the determination year, performs no service for the Employer during the determination year, and was a highly compensated active Employee for either the separation year or any determination Year ending on or after the Employee's 55th birthday. (G) If an Employee is, during a determination year or look-back year, a family member of either a 5 percent owner who is an active or former Employee or a Highly Compensated Employee who is one of the 10 most Highly Compensated Employees ranked on the basis of Compensation paid by the Employer during such year, then the family member and the 5 percent owner or top-ten Highly Compensated Employee shall be aggregated. In such case, the family member and 5 percent owner or top-ten Highly Compensated Employee shall be treated as a single Employee receiving Compensation and Plan contributions or benefits equal to the sum of such Page 7 Compensation and contributions or benefits of the family member and 5 percent owner or top-ten Highly Compensated Employee. For purposes of this Section 2.23(G), family member includes the spouse, lineal ascendants and descendants of the Employee or former Employee and the spouses of such lineal ascendants and descendants. (H) The determination of who is a Highly Compensated Employee, including the determinations of the number and identity of Employees in the top-paid group, the top 100 Employees, the number of Employees treated as officers and the Compensation that is considered, will be made in accordance with Section 414(q) of the Code and the regulations thereunder. 2.24 HOUR OF SERVICE (A) "Hour of Service" shall mean each Hour of Service for which: (1) An Employee is directly or indirectly paid or entitled to payment by the Employer for the performance of duties. These hours shall be credited to the Employee for the period or periods in which the duties were performed; (2) An Employee is paid or entitled to payment by the Employer on account of a period of time during which no duties are performed (irrespective of whether the employment relationship has terminated) due to vacation, holiday, illness, incapacity (including disability), layoff, jury duty, military duty, Qualified Leave of Absence, or other leave of absence. No more than five hundred one (501) Hours of Service will be credited under this Section 2.24(A)(2) for a single computation period (whether or not the period occurs in a single computation period). These hours shall be credited to the Employee for the period or periods the payment pertains to rather than the period or periods in which the payment is made; and (3) Back pay, irrespective of mitigation of damage, has been either awarded or agreed to by the Employer. These hours shall be credited to the Employee for the period or periods to which the award or agreement pertains. In no event shall an Employee be credited with an Hour of Service under this Section 2.24(A)(3) for a period or periods in which he was credited with Hours of Service under Section 2.24(A)(1) or 2.24(A)(2). (B) Where the Employer uses this Plan to maintain a plan of a Predecessor Employer, an Hour of Service for purposes of eligibility, vesting and accrual for such Predecessor Employer shall be treated as an Hour of Service for the Employer. Where the Employer is a member of a controlled group of corporations, a group of trades or businesses under common control or an affiliated service group, as defined in Code Section 414(b), (c) or (m), an Hour of Service for purposes of eligibility or vesting for a member of the above groups shall be treated as an Hour of Service for the Employer. Hours of Service will also be credited for any individual considered an employee under Section 414(n) and any other entity required to be aggregated with the Employer pursuant to Code Section 414(o) and the regulations thereunder. Notwithstanding the foregoing, nothing in this Section shall be construed as denying an Employee credit for Hours of Service pursuant to Section 2530.200(b)-2 of the Department of Labor Regulations which are hereby incorporated herein by this reference. Nothing herein shall be construed as denying an Employee credit for an Hour of Service if credit is required by separate federal law. (C) Solely for purposes of determining whether a One Year Break in Service, as defined in Section 2.34, for participation and vesting purposes has occurred in a computation period, an individual who is absent from work for maternity or paternity reasons shall receive credit for the Hours of Service which would otherwise have been credited to such individual but for such absence, or in any case in which such hours cannot be determined, eight (8) Hours of Service per Page 8 day of such absence. For purposes of this Section 2.24(C), an absence from work for maternity or paternity reasons means an absence: (1) By reason of the pregnancy of the individual, (2) By reason of a birth of a child of the individual, (3) By reason of the placement of a child with the individual in connection with the adoption of such child by such individual, or (4) For purposes of caring for such child for a period beginning immediately following such birth or placement. (D) The Hours of Service credited under Section 2.24(C), above, shall be credited: (1) In the computation period in which the absence begins if the crediting is necessary to prevent a One Year Break in Service in that period, or (2) In all other cases, in the following computation period. 2.25 INACTIVE PARTICIPANT "Inactive Participant" shall mean any current Employee who was a Participant in the Plan who is currently excluded from participation as a result of his loss of status as a member of the Eligible Class. 2.26 INSURER "Insurer" shall mean any insurance company selected by the Administrator to issue any life insurance or annuity contracts. 2.27 INVESTMENT MANAGER "Investment Manager" shall mean any fiduciary (other than the Trustee or Administrator): (A) Who has the power to manage, acquire, or dispose of any asset of the Plan; (B) Who is (1) registered as an investment advisor under the Investment Advisors Act of 1940, (2) is a bank as defined in that Act; or (3) is an insurance company qualified to perform services described in paragraph 2.27(A), above, under the laws of more than one state, and; (C) Has acknowledged in writing that he is a fiduciary with respect to the Plan. 2.28 JOINT AND SURVIVOR ANNUITY "Joint and Survivor Annuity" shall mean an immediate annuity for the life of the Participant with a survivor annuity for the life of his spouse which is not less than one-half (1/2), nor greater than, the annuity payable during the joint lives of the Participant and his spouse. The Joint and Survivor Annuity will be the amount of benefit which can be purchased with the Participant's account balance. The percentage of the survivor annuity shall be fifty percent (50%). The consent of the Participant's spouse is required if the account balance is payable in any form other than a qualified Joint and Survivor Annuity and the Plan is required by law to offer a Qualified Joint and Survivor Annuity. Page 9 2.29 LATE RETIREMENT DATE "Late Retirement Date" shall mean the first day of the month following a Participant's separation from service with the Employer after his Normal Retirement Date. 2.30 LIMITATION YEAR (A) "Limitation Year" shall mean the twelve (12) consecutive month period ending on the date specified in the Adoption Agreement. (B) Anything in 2.30(A) notwithstanding, for purposes of the Short Form Adoption Agreement "Limitation Year" shall mean the twelve (12) consecutive month period ending on December 31. 2.31 NET PROFITS "Net Profits" shall mean the current and accumulated earnings of the Employer before Federal and State taxes and contributions to this Plan and any other qualified Plan. 2.32 NORMAL RETIREMENT AGE (A) "Normal Retirement Age" shall mean the age specified in the Adoption Agreement. Notwithstanding the vesting schedule elected under the Adoption Agreement, a Participant's Accrued Benefit shall be fully vested and non-forfeitable upon attainment of his Normal Retirement Age. If the Employer enforces a mandatory retirement age, the Normal Retirement Age is the lesser of that mandatory age or the age specified in the Adoption Agreement. (B) Anything in 2.32(A) notwithstanding, for purposes of the Short Form Adoption Agreement, "Normal Retirement Age" shall mean age 65. 2.33 NORMAL RETIREMENT DATE "Normal Retirement Date" shall mean the Anniversary Date nearest the Participant's Normal Retirement Age. 2.34 ONE YEAR BREAK IN SERVICE "One Year Break in Service" shall mean a twelve (12) consecutive month period (computation period) during which a Participant has not completed more than 500 Hours of Service. For purposes of determining a One Year Break in Service, the twelve (12) consecutive month computation period shall be the same computation period used in determining Years of Service. 2.35 OWNER-EMPLOYEE "Owner-Employee" shall mean a sole-proprietor or a partner who owns more than ten percent (10%) of either the capital or profits interest of the Employer. 2.36 PARTICIPANT (A) "Participant" shall mean any Employee who has fulfilled the eligibility requirements as specified in the Adoption Agreement and has become a member of the Plan. (B) Anything in 2.36(A) notwithstanding, for purposes of the Short Form Adoption Agreement, Participant shall not include any Employee who is included in a unit of Employees covered by a collective bargaining agreement between the Employer Page 10 and Employee representatives, if retirement benefits were the subject of good faith bargaining. For this purpose, the term "Employee Representative" does not include any organization more than half of whose members are Employees who are owners, officers or executives of the Employer. 2.37 PARTICIPANT ACCOUNT "Participant Account" shall mean the records maintained to record a Participant's (or his Beneficiary's) interest in the Trust. Each Participant (or, when applicable, Beneficiary) shall have an Employer Contribution Account and, when applicable, a Participant Contribution Account, a Participant Deductible Contribution Account and those accounts necessary for a cash or deferred arrangement. If this Plan is part of a qualified cash or deferred arrangement, Employee deferrals shall be allocated to the Employer Contribution Account established for such Participant. 2.38 PLAN "Plan" shall mean this Prototype Defined Contribution Plan together with its related Adoption Agreement, as adopted by the Employer. 2.39 PLAN YEAR "Plan Year" shall mean the period between the Effective Date and the first Anniversary Date following the Effective Date, and thereafter the twelve (12) consecutive calendar month period ending on each subsequent Anniversary Date. For periods prior to the Effective Date of the Plan, Plan Year shall mean each 12 month period ending on the Anniversary Date of the Plan, had the Plan then been in place. 2.40 PREDECESSOR EMPLOYER (A) "Predecessor Employer" shall mean any predecessor corporation, partnership or sole proprietorship to the Employer. For purposes of determining a Participant's Years of Service for eligibility and Covered Years of Service for vesting, service with the Predecessor Employer shall be considered service with the Employer, if elected in the Adoption Agreement. (B) Anything in Section 2.40(A) notwithstanding, for purposes of the Short Form Adoption Agreement, service with a Predecessor Employer, as defined in Section 2.40(A), shall be counted for purposes of eligibility Years of Service and Vesting (covered Years of Service). 2.41 PARTICIPANT CONTRIBUTION ACCOUNT "Participant Contribution Account" shall mean that portion of the Participant Account which is established to record a Participant's voluntary, nondeductible contributions to the Plan as adjusted for allocations of gains and losses and withdrawals. 2.42 QUALIFIED LEAVE OF ABSENCE "Qualified Leave of Absence" shall mean a leave of absence granted by the Employer on a uniform basis for service in the Armed Forces, or for sickness, accident, or other cause, provided, however, that a Participant granted such leave of absence for service in the Armed Forces shall be required to report for work within ninety (90) days following the date he was first eligible for discharge from such service; and provided further that any Active Participant or Inactive Participant who fails to return to active employment at or before the expiration of his leave of absence, shall, for the purposes of this Plan, be deemed to have terminated his employment as of the date of commencement of his leave of absence; provided further, however, that should he fall to return to work because of death or disability, his service, and participation if he was an Active Participant at the Page 11 time such leave of absence commenced, shall be deemed to have continued until the date of his death or of the termination of his employment for disability. In granting Qualified Leaves of Absence pursuant to the provisions of this paragraph, the Employer shall not discriminate as between individuals covered by the Plan, and shall apply the same rules with respect to Qualified Leaves of Absence to all individuals covered thereby. 2.43 SELF-EMPLOYED INDIVIDUAL "Self-Employed Individual" means any person who has Earned Income from the Employer for which the Plan is established for the taxable Year or who would have had Earned Income but for the fact that the Employer had no net profits for the taxable Year. 2.435 SHORT FORM ADOPTION AGREEMENT "Short Form Adoption Agreement" shall mean Money Purchase Pension Plan Adoption Agreement 001 and Profit Sharing Adoption Agreement 003. 2.44 SOCIAL SECURITY COVERED COMPENSATION "Social Security Covered Compensation" shall mean either: (A) The amount of Compensation which would be used to calculate the Participant's old age and survivor insurance benefits under the Social Security Act if the Participant's annual compensation for each year until age sixty-five (65) equaled the taxable wage base. Social Security Covered Compensation shall be determined according to the table specified in the Adoption Agreement. However, no amendment increasing the amount of Social Security Covered Compensation shall reduce anyone's Accrued Benefit under the Plan. (B) The dollar amount specified in the Adoption Agreement. Such amount shall not exceed the maximum Social Security Covered Compensation under Section 2.44(A) above for the oldest possible Participant in the Plan. No amendment which increases a Participant's Social Security Covered Compensation shall reduce the Accrued Benefit of any Participant. 2.45 TAXABLE WAGE BASE "Taxable Wage Base" shall mean the maximum amount of earnings which may be considered wages for such Year under Code Section 3121(a)(1) in effect as of the beginning of the Plan Year. 2.46 TOTAL AND PERMANENT DISABILITY "Total and Permanent Disability" shall mean a disability where a licensed medical practitioner satisfactory to the Administrator certifies: (A) That a Participant has become totally disabled by bodily injury or disease so as to be prevented from engaging in any occupation suited to him by reason of education, training and experience. (B) That such disability can be expected to result in death or shall have continued or be expected to continue for a period of not less than twelve (12) consecutive months, and will be permanent and continuous during the remainder of his lifetime. The rules with respect to disability shall be uniformly and consistently applied to all Participants in similar circumstances. If the Plan is integrated with Social Security, the Participant must have commenced to receive disability benefits under the Federal Old Age Survivor and Disability Insurance Act. Page 12 2.47 TRUST "Trust" shall mean the legal entity created under the trust agreement relating to the Plan to hold all monies, securities, and assets held by the Trustee for the benefit of Participants and Beneficiaries. 2.48 TRUSTEE "Trustee" shall mean the Trustee(s) appointed by the Board under the trust agreement relating to the Plan and any duly appointed successor(s). 2.49 YEAR "Year" shall mean twelve (12) consecutive calendar months. 2.50 YEAR OF SERVICE (A) "Year of Service" shall mean each Plan Year in which an Employee is credited with at least one thousand (1000) Hours of Service, unless a lesser number of Hours of Service is elected in the Adoption Agreement. For purposes of determining an Employee's eligibility to participate in the Plan, Year of Service shall also mean the twelve (12) consecutive months of employment with the Employer beginning on the date for which the Employee is first credited with an Hour of Service for the Employer (Employment Commencement Date) and ending on the anniversary of such date during which he is credited with at least one thousand (1000) Hours of Service or the Hours of Service specified in the Adoption Agreement as constituting a Year of Service, if less than one thousand (1000). For purposes of computing an Employee's nonforfeitable right to the account balance derived from Employer contributions, Years of Service and One Year Breaks in Service will be measured by the Plan Year. (B) Short Form Adoption Agreement. (1) Anything in Section 2.50(A) notwithstanding, for purposes of the Short Form Adoption Agreement, a Year of Service shall mean each Plan Year in which an Employee is credited with at least one thousand (1000) Hours of Service. (2) If the Years of Service selected in Option 6.2 of the Short Form Adoption Agreement is or includes a fraction of a Year of Service, an Employee shall not be required to complete any specified number of Hours of Service to receive credit for such fractional year. (C) Where this definition is used for purposes of contributions and allocations, it is possible that the Plan can fail the nondiscrimination tests under Code Sections 401(a)(26) and 410(b) by creating a group of nonbenefitting employees who have not incurred a Break in Service and because of the Year of Service requirement, are not entitled to receive an allocation of the Employer contribution. Each Nonstandard Adoption Agreement shall specifically address and remedy this problem so that the Plan will pass the required nondiscrimination tests. Each Standardized and Standardized Short Form Adoption Agreement will require that a Participant who has not incurred a Break in Service will be entitled to receive an allocation of the Employer contribution. For purposes of the EZFLEX Adoption Agreement only, an Employer may elect with regard to a Profit Sharing Discretionary Contribution that a Participant who terminates Employment for reasons other than death, disability or retirement, who is not employed on the last day of the Plan Year and who is not credited with at least 501 hours of services shall not receive a contribution. 3.0 ELIGIBILITY Page 13 3.1 ELIGIBILITY REQUIREMENTS (A) Initial Eligibility. An Employee shall become a Participant in the Plan on the Entry Date coinciding with or next following the date he satisfies the requirements for eligibility specified in the Adoption Agreement, provided that he is then a member of the Eligible Class. For purposes of determining Years of Service and One Year Breaks in Service for purposes of eligibility, the initial eligibility computation period is the twelve (12) consecutive month period beginning on the date the Employee first performs an Hour of Service for the Employer (Employment Commencement Date). (B) Subsequent Eligibility. An Employee who fails to meet the requirements for participation in the Plan on the Entry Date on which he would otherwise commence participation in the Plan shall become a Participant on the Entry Date coinciding with or next following his completion of twelve (12) consecutive month period commencing on the date the Participant is first credited with one (1) Hour of Service with the Employer (Employment Commencement Date) and each subsequent anniversary thereof. The succeeding twelve (12) consecutive month periods commence with the first anniversary of the Employee's Employment Commencement Date. Where an Employer has specified an eligibility computation period which is greater than one (1) Year of Service, the number of Years of Service (and fractions thereof, if any) specified in the Adoption Agreement shall be substituted for one (1) Year of Service in Section 3.1 (B), above. (C) All Years of Service with the Employer are counted toward eligibility except the following: (1) If an Employee has a One Year Break in Service before satisfying the Plan's requirement for eligibility, service before such break will not be taken into account. This Section 3.1 (C)(1) shall apply only if a participant is 100% vested upon completion of not more than two (2) Years of Service. (2) In the case of a Participant who does not have any nonforfeitable right to the account balance derived from Employer contributions, Years of Service before a period of consecutive One Year Breaks in Service will not be taken into account in computing eligibility service if the number of consecutive One Year Breaks in Service in such period equals or exceeds the greater of 5 or the aggregate number of Years of Service. Such aggregate number of Years of Service will not include any Years of Service disregarded under the preceding sentence by reason of prior breaks in service. (3) If a Participant's Years of Service are disregarded pursuant to the preceding paragraph, such Participant will be treated as a new Employee for eligibility purposes. If a Participant's Years of Service may not be disregarded pursuant to the preceding paragraph, such Participant shall continue to participate in the Plan, or, if terminated, shall participate immediately upon reemployment. 3.2 RE-ELIGIBILITY If a Participant terminates employment, incurs a One Year Break in Service and is subsequently re-employed, such Former Participant shall become a Participant immediately upon his re-employment. In the event an Active Participant becomes ineligible to participate because he is no longer a member of the Eligible Class, but has not incurred a One Year Break in Service, such Employee shall again become an Active Participant as of the date on which he again becomes a member of the Eligible Class. If such Participant incurs a One Year Break in Service, eligibility will be determined under the break in service rules of the Plan. In the event an Employee who is not a member of the Eligible Class becomes a member of the Eligible Class, such Employee shall participate immediately if such Employee has satisfied the requirements for eligibility specified in the Adoption Agreement and would have Page 14 previously become an Active Participant had he then been a member of the Eligible Class. 3.3 LEAVE OF ABSENCE If an Employee leaves the employment of the Employer for the expressed purpose of a Qualified Leave of Absence authorized by the Employer, or for the expressed purpose of entering the Armed Forces and serves therein, the time spent on such Qualified Leave of Absence or the time spent in the Armed Forces shall be included in determining his eligibility to participate in the Plan, provided that re-employment occurs within ninety (90) days following such Qualified Leave of Absence. If re-employment does not occur within said ninety (90) day period, his rights under the Plan, if any, shall be determined as of the date the absence began. All Employees, under similar circumstances, shall be treated alike according to uniform and impartial rules. 4.0 FUNDING 4.1 CONTRIBUTION FORMULA (A) Profit Sharing Plan. The Employer contribution for each Plan Year will be such amount as may be approved by the Board, in its sole discretion, without regard to the Net Profits of the Employer. In no event, however, shall such contribution exceed, in total, the maximum amount which is deductible under Code Section 404. Except as required by Section 8.5, no contribution shall be made on behalf of a Participant who has not been credited with a Year of Service during the Plan Year for which the contribution is made. (B) Money Purchase Pension Plan. The Employer contribution for each Plan Year shall be determined according to the formula specified in the Adoption Agreement. (B) Target Benefit Pension Plan. The Employer contribution for each Plan Year shall be determined according to the formula specified in the Adoption Agreement. 4.2 FORFEITURES Forfeitures shall be added to the Employer contribution for the current Plan Year and allocated therewith, in accordance with the Adoption Agreement. Forfeitures arising hereunder will be allocated only for the benefit of Employees of the Employer who adopted this Plan. 4.3 MISTAKE OF FACT In the event that the Employer shall make a contribution by reason of a mistake of fact, the Employer shall be entitled to recover from the Trustee that portion of the contribution contributed by virtue of the mistake of fact within one (1) Year of the date the contribution is made by reason of a mistake of fact. 4.4 DISALLOWANCE OF DEDUCTION In the event that the deduction for a contribution made by the Employer is not allowed under Section 404(a) of the Code, the Employer shall be entitled to recover from the Trustee that portion of such contribution which is in excess of the allowable deduction under Section 404(a) of the Code within one (1) Year of the date the deduction is disallowed. However, any income attributable to the portion of the contribution made in excess of the allowable deduction shall not revert to the Employer and any loss attributable thereto shall be used to reduce the amount to be returned. Page 15 4.5 VOLUNTARY CONTRIBUTIONS (A) Beginning with the Plan Year in which this Plan is adopted by the Employer, this Plan will no longer accept nondeductible Employee contributions and matching contributions. Employee contributions for Plan Years beginning after December 31, 1986, together with any matching contributions as defined in Section 401(m) of the Code, will be limited so as to meet the nondiscrimination test of section 401(m). (B) A separate "Participant Contribution Account" shall be maintained by the Trustee for the nondeductible voluntary contributions of each Participant. The assets of the Trust shall be valued annually at fair market value as of the last day of the Plan Year. On such date, the earnings and losses attributable to the Participant Contribution Account will be added to each Participant's Participant Contribution Account in the ratio that such account balance bears to all such account balances. The total market value of the Employee contributions shall be nonforfeitable at all times. No forfeitures will occur solely as a result of a Participant's withdrawal of voluntary contributions. (C) A Participant may request withdrawal of an amount not to exceed the lesser of the total amount of actual contributions made by him or the total market value of said contributions, subject to the following conditions: (1) The Participant shall bear the administrative expense incident to this withdrawal of contributions. (2) Each Participant shall be limited to one such withdrawal in any Plan Year. (D) Subject to the Joint and Survivor Annuity requirements of Section 5.7, but notwithstanding any other provisions of this Plan to the contrary, the Participant Contribution Account, adjusted for gains and losses, of a Participant shall be paid to him, as the Administrator shall direct, upon his termination of employment for any reason (including retirement), or to his beneficiary in the event of his death while a Participant. (E) Neither the Employer, the Trustee, nor the Administrator to any extent warrants or represents that the value of a Participant Contribution Account at any time shall equal the total of the amounts previously credited thereto. (F) All amounts allocated to the Participant's Participant Contribution Account shall be invested in the same manner as Employer contributions to the Plan unless directed by the Participant pursuant to the provisions of Section 4.11. 4.6 QUALIFIED VOLUNTARY EMPLOYEE CONTRIBUTIONS The Administrator will not accept deductible employee contributions which are made for a taxable year beginning after December 31, 1986. Contributions made prior to that date will be maintained in a separate account which will be nonforfeitable at all times. The assets of the trust will be valued annually at fair market value as of the last day of the Plan Year. On such date, the earnings and losses of the trust attributable to the accumulated deductible voluntary contribution will be allocated to each Participant's deductible voluntary contributions account in the ratio that such account balance bears to all such account balances. No part of the deductible voluntary contribution account will be used to purchase life insurance. Subject to Section 5.7, Joint and Survivor Annuity requirements (if applicable), the Participant may withdraw any part of the deductible voluntary contribution account by making a written application to the Plan Administrator. Page 16 4.7 ROLLOVER ACCOUNT (A) If permitted by the Administrator and under rules established by the Administrator on a non-discriminatory basis, any Employee who is or will become eligible to participate in the Plan may at the sole discretion of the Administrator roll over to the Trust any lump sum distribution received by such Employee from a tax-qualified plan under Code Section 401(a) or 408(k), an annuity plan qualified under Code Section 403(a) or 403(b) or accumulated deductible employee contributions as defined in Code Section 72(o)(5) that were distributed from a qualified retirement plan and rolled over pursuant to Code Sections 402(a)(5), 402(a)(7), 403(a)(4) or 409(d)(3) within sixty (60) days of the date such distribution occurred. Provided, however, that any Employee who transferred such lump sum distribution into an Individual Retirement Account under Code Section 408 within sixty (60) days of the date such distribution occurred may roll over such transferred amount to this Plan. The Plan will not accept rollovers of accumulated deductible employee contributions from a plan in which the Employee was covered as a Self-Employed Individual under Code Section 401(c). (B) The Employee's rollover contribution shall be maintained in a separate "Rollover Account" in which the Employee will be one hundred percent (100%) vested at all times. (C) An Employee may withdraw his Rollover Account at any time with the approval of the Administrator, in its sole discretion. (D) An Employee shall receive the benefits attributable to his Rollover Account in the manner specified in Section 5.2 and at the time specified in Section 5.3 of the Plan. (E) All amounts allocated to an Employee's Rollover Account shall be invested in the same manner as Employer contributions to the Plan unless directed by the Participant pursuant to the Provisions of Section 4.11. 4.8 EMPLOYER CONTRIBUTION ACCOUNT A separate Employer Contribution Account shall be opened and maintained by the Administrator for each Participant who has become eligible to participate in the Plan in which shall be recorded the amounts of the Employer's contribution allocated to such Participant, adjustments for allocation of Trust earnings, forfeitures, distributions, and all other information affecting the value of such Employer Contribution Account. This account shall include such subaccounts as required to meet accounting rules for the plan. 4.9 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES (A) The Employer's contributions to the Trust for each Plan Year, together with any forfeitures, shall be allocated to the Employer Contribution Account for each Active Participant as specified in the Adoption Agreement. (B) Anything in Section 4.9(A) notwithstanding, for purposes of the Short Form Adoption Agreement, Employer contributions shall be allocated among Participant Accounts in the ratio which each Active Participant's Compensation bears to the Compensation paid to all Active Participants. 4.10 ALLOCATION OF TRUST GAINS AND LOSSES (A) The Participant's account balance attributable to his Employer Contribution Account, Participant Contribution Account, Participant Deductible Contribution Account and his Rollover Account (Participant Account) shall be determined on each Anniversary Date in the following manner: Page 17 (1) The Participant's Participant Account on the preceding Anniversary Date; plus (2) Any contributions to such Participant's Participant Account with respect to the Plan Year ended on the current Anniversary Date; minus (3) The amount of any withdrawals from such Participant Account during the Plan Year ended on the current Anniversary Date; plus or minus (4) The Participant's pro-rata share of the earnings or losses of that portion of the Trust, since the preceding Anniversary Date, attributable to all Participant Accounts, as determined under Section 4.10(B). (B) The earnings or losses of the Trust fund attributable to Participant Accounts shall be valued annually at fair market value and allocated as of the last day of each Plan Year and any other interim date selected by the Administrator for valuing the Trust ("Valuation Date") to each Participant in the ratio that his Participant Account on such Valuation Date bears to the total of all Participant Accounts on such Valuation Date. For purposes of this Section 4.10(B), in determining a Participant's Participant Account on such Valuation Date, any Participant contributions or rollovers actually contributed subsequent to the next preceding Valuation Date shall be disregarded. 4.11 SEGREGATION OF PARTICIPANT ACCOUNTS (A) Subject to uniform rules established by the Administrator on a non-discriminatory basis, a Participant may request, subject to the approval of the Administrator, that his Participant Account and/or Participant Deductible Contribution Account and/or his Rollover Account be segregated in a separate account. The Administrator shall establish rules regarding the manner and the times by which such request can be made and/or revoked. The Plan Administrator shall adopt rules and regulations concerning all aspects of the segregated account including the adjustment of the segregated account for earnings and losses generated by the general Trust Fund if and where applicable. If the Plan Administrator authorized the segregation of any such Participant's account, such Participant shall have the full authority to direct the investment of such segregated account, held on his behalf, by written instruction delivered to the Trustee, in which event the Trustee shall follow, as soon as practicable, the directions of the Participant with respect to the investment of such segregated account, provided, however, that such an investment is not prohibited by statute or by any other provision of the Plan and Trust. In so doing, the Trustee shall be completely exonerated from any liability and held harmless by the Participant and the Plan Administrator with respect to such investments. Contributions made during the period in which a segregated account is maintained for the Participant shall be allocated appropriately to such segregated account. Notwithstanding the provisions of Section 4.10, the Participant's applicable segregated account shall be increased and/or decreased solely by the net earnings and/or losses resulting from the investments of the segregated account. All expenses incurred as a result of such an election and operation of the segregated account shall be charged to and deducted directly from said account. Upon retirement of the Participant, if any of his account balances are still segregated, his benefits shall be equal to the assets in his segregated account. (B) For purposes of the Short Form Adoption Agreement, each Participant will have a separate Individual Investment Account which will contain the amount allocated to the Participant Account. Each Participant will have the power to direct the investment with respect to his Individual Investment Account, as provided in Section 4.11(A). Page 18 5.0 BENEFIT 5.1 AMOUNT OF DISTRIBUTION (A) A Participant who attains Normal Retirement Age or who terminates his employment with the Employer by reason of death or Total and Permanent Disability shall be entitled to receive one hundred percent (100%) of the amount credited to his Employer Contribution Account as of the preceding valuation date together with one hundred percent (100%) of the amounts credited to his Participant Contribution Account and his Participant Deductible Contribution Account, if any. (B) A Participant who terminates his employment with the Employer for any reason other than death, Total and Permanent Disability or attainment of Normal Retirement Age will be entitled to receive his vested account balance. (C) For purposes of the Short Form Adoption Agreement, a Participant shall be vested 100% in his account balance at all times. (D) Anything in this Plan and Trust to the contrary notwithstanding; (1) A Participant under a Profit Sharing Plan may be able to take an in-service withdrawal of the funds which have accumulated in the Plan after two years provided that (a) such a distribution is on account of hardship, and (b) the Administrator approves such hardship as qualifying under the plan. (2) For purposes of this Section 5.1(D), a distribution will be on account of hardship if the distribution is necessary in light of immediate and heavy financial needs of the Employee. A distribution based upon financial hardship cannot exceed the amount required to meet the immediate need created by the hardship and the Employee lacks other available resources. 5.2 FORM OF BENEFIT (A) If this plan is a new profit sharing plan or an amended profit sharing plan which does not and has never permitted benefit forms subject to the joint and survivor requirements of Code Sections 401 (a)(11) or 417, and meets the requirements of Section 5.7(F) of this Plan, the Participant may elect to receive his benefit in one of the following optional forms: (1) a single lump sum payment, or (2) substantially equal monthly, quarterly or annual installments over a period of years not to exceed the life expectancy of the Participant or that of the Participant and his spouse. (B) In all cases to which Section 5.2(A) does not apply, notwithstanding anything in this document to the contrary, the Participant may elect, subject to the requirements of Section 5.7 of this document, to receive his benefit in one of the following optional forms: (1) In the form of a single lump sum payment, (2) In the form of substantially equal monthly, quarterly or annual installments over a period of years which does not exceed the life expectancy of the Participant or the life expectancy of the Participant and his spouse; (3) In the form of an annuity for the life of the Participant; Page 19 (4) In the form of an annuity for the life of the Participant, with the provision that if he dies prior to having received monthly benefit payments for a period of five (5), ten (10) or fifteen (15) years, the benefit payments remaining for the balance of the specified period shall continue to be paid to his Beneficiary; (5) In the form of a Joint and Survivor Annuity where the monthly amount payable to the contingent annuitant is fifty percent (50%) or one hundred percent (100%) of the amount payable during the joint lives of the Participant and the contingent annuitant. (C) The terms of any annuity contract purchased and distributed by the Plan to a Participant or spouse shall comply with the requirements of this Plan. If the Participant's Benefit is distributed in the form of an annuity purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of section 401(a)(9) of the Code and the Proposed Regulations thereunder. 5.3 DISTRIBUTION OF BENEFITS (A) Unless the Participant elects otherwise, distribution of benefits will begin no later than the 60th day after the latest of the close of the Plan Year in which: (1) The Participant attains age 65 (or Normal Retirement Age, if earlier); (2) Occurs the 10th anniversary of the year in which the Participant commenced participation in the Plan; or, (3) The Participant terminates service with the Employer. Notwithstanding the foregoing, the failure of a Participant and spouse to consent to a distribution while a benefit is immediately distributable, within the meaning of section 5.4(D) of the Plan, shall be deemed to be an election to defer commencement of payment of any benefit sufficient to satisfy this Section. A Participant who has satisfied the service requirement for Early Retirement, but separated from service (with any non-forfeitable right to his Accrued Benefit) before satisfying the age requirement for such Early Retirement, shall be entitled to elect upon the satisfaction of such age requirement a benefit equal to the benefit to which he would be entitled at Normal Retirement Age. Any annuity contract distributed under this Plan shall be non-transferable. (B) Subject to Section 5.7, Joint and Survivor Annuity Requirements, the requirements of this Section 5.3 shall apply to any distribution of a Participant's interest and will take precedence over any inconsistent provisions of this Plan. Unless otherwise specified, the provisions of this Section 5.3 apply to calendar years beginning after December 31, 1984. All distributions required under this Section 5.3 shall be determined and made in accordance with the Proposed Regulations under Section 401(a)(9) of the Code, including the minimum distribution incidental benefit requirement of Section 1.401(a)(9)-2 of the Proposed Regulations. (C) Required Beginning Date. The entire interest of a Participant must be distributed or begin to be distributed no later than the Participant's required beginning date. (D) Limits on Distribution Periods. As of the first distribution calendar year, distributions, if not made in a single-sum, may only be made over one of the following periods (or a combination thereof): Page 20 (1) The life of the Participant, (2) The life of the Participant and a designated Beneficiary, (3) A period certain not extending beyond the life expectancy of the Participant, or (4) A period certain not extending beyond the joint and last survivor expectancy of the Participant and a designated Beneficiary. (E) Determination of amount to be distributed each year. If the Participant's interest is to be distributed in other than a single sum, the following minimum distribution rules shall apply on or after the required beginning date: (1) Individual Account. (a) If a Participant's benefit is to be distributed over (i) a period not extending beyond the life expectancy of the Participant or the joint life and last survivor expectancy of the Participant and the Participant's designated Beneficiary or (ii) a period not extending beyond the life expectancy of the designated Beneficiary, the amount required to be distributed for each calendar year, beginning with distributions for the first distribution calendar year, must at least equal the quotient obtained by dividing the Participant's benefit by the applicable life expectancy. (b) For calendar years beginning before January 1, 1989, if the Participant's spouse is not the designated Beneficiary, the method of distribution selected must assure that at least 50% of the present value of the amount available for distribution is paid within the life expectancy of the Participant. (c) For calendar years beginning after December 31, 1988, the amount to be distributed each year, beginning with distributions for the first distribution calendar year shall not be less than the quotient obtained by dividing the Participant's benefit by the lesser of: (i) The applicable life expectancy or (ii) If the Participant's spouse is not the designated Beneficiary, the applicable divisor determined from the table set forth in Q&A-4 of section 1.401(a)(9)-2 of the Proposed Regulations. Distributions after the death of the Participant shall be distributed using the applicable life expectancy in section 5.3(E)(1)(a) above as the relevant divisor without regard to Proposed Regulations section 1.401(a)(9)-2. (d) The minimum distribution required for the Participant's first distribution calendar year must be made on or before the Participant's required beginning date. The minimum distribution for other calendar years, including the minimum distribution for the distribution calendar year in which the Employee's required beginning date occurs, must be made on or before December 31 of that distribution calendar year. (2) If the Participant's benefit is distributed in the form of an annuity Purchased from an insurance company, distributions thereunder shall be made in accordance with the requirements of section 401(a)(9) of the Code and the Proposed Regulations thereunder. (F) Death Distribution Provisions. (1) Distribution beginning before death. If the Participant dies after distribution of his interest has begun, the remaining portion of such interest Page 21 will continue to be distributed at least as rapidly as under the method of distribution being used prior to the Participant's death. (2) Distribution beginning after death. If the Participant dies before distribution of his interest begins, distribution of the Participant's entire interest shall be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death except to the extent that an election is made to receive distributions in accordance with (a) or (b) below: (a) If any portion of the Participant's interest is payable to a designated Beneficiary, distributions may be made over the life or over a period certain not greater than the life expectancy of the designated Beneficiary commencing on or before December 31 of the calendar year immediately following the calendar year in which the Participant died; (b) If the designated Beneficiary is the Participant's surviving Spouse, the date distributions are required to begin in accordance with (a) above shall not be earlier than the later of (1) December 31 of the calendar year immediately following the calendar year in which the Participant died and (2) December 31 of the calendar year in which the Participant would have attained age 70 1/2. If the Participant has not made an election pursuant to this Section 5.3(F)(2) by the time of his or her death, the Participant's designated Beneficiary must elect the method of distribution no later than the earlier of (1) December 31 of the calendar year in which distributions would be required to begin under this Section, or (2) December 31 of the calendar year which contains the fifth anniversary of the date of death of the Participant. If the Participant has no designated Beneficiary, or if the designated Beneficiary does not elect a method of distribution, distribution of the Participant's entire interest must be completed by December 31 of the calendar year containing the fifth anniversary of the Participant's death. (3) For purposes of Section 5.3(F)(2) above, if the surviving spouse dies after the Participant, but before payments to such spouse begin, the provisions of Section 5.3(F)(2), with the exception of paragraph (b) therein, shall be applied as if the surviving spouse were the Participant. (4) For purposes of this Section (F), any amount paid to a child of the Participant will be treated as if it had been paid to the surviving spouse if the amount becomes payable to the surviving spouse when the child reaches the age of majority. (5) For the purposes of this Section (F), distribution of a Participant's interest is considered to begin on the Participant's required beginning date (or, if Section 5.3(F)(3) above is applicable, the date distribution is required to begin to the surviving spouse pursuant to Section 5.3(F)(2) above). If distribution in the form of an annuity irrevocably commences to the Participant before the required beginning date, the date distribution is considered to begin is the date distribution actually commences. (G) Definitions (1) Applicable life expectancy. The life expectancy (or joint and last survivor expectancy) calculated using the attained age of the Participant (or designated Beneficiary) as of the Participant's (or designated Beneficiary's) birthday in the applicable calendar year reduced by one for each calendar year which has elapsed since the date life expectancy was first calculated. If life expectancy is being recalculated, the applicable life expectancy shall be the life expectancy as so recalculated. The applicable calendar year shall be the first distribution calendar year, and if life expectancy is being recalculated such succeeding calendar year. Page 22 (2) Designated beneficiary. The individual who is designated as the Beneficiary under the Plan in accordance with Section 401(a)(9) of the Code and the regulations thereunder. (3) Distribution calendar year. A calendar year for which a minimum distribution is required. For distributions beginning before the Participant's death, the first distribution calendar year is the calendar year immediately preceding the calendar year which contains the Participant's required beginning date. For distributions beginning after the Participant's death, the first distribution calendar year is the calendar year in which distributions are required to begin pursuant to Section F above. (4) Life expectancy. Life expectancy and joint and last survivor expectancy are computed by use of the expected return multiples in Tables V and VI of Section 1.72-9 of the Income Tax Regulations. Unless otherwise elected by the Participant (or spouse, in the case of distributions described in Section 5.3(F)(2)(b) above) by the time distributions are required to begin, life expectancies shall be recalculated annually. Such election shall be irrevocable as to the Participant (or spouse) and shall apply to all subsequent years. The life expectancy of a nonspouse Beneficiary may not be recalculated. (5) Participant's benefit. (a) The account balance as of the last valuation date in the calendar year immediately preceding the distribution calendar year (valuation calendar year) increased by the amount of any contributions or forfeitures allocated to the account balance as of dates in the valuation calendar year after the valuation date and decreased by distributions made in the valuation calendar year after the valuation date. (b) Exception for second distribution calendar year. For purposes of paragraph (a) above, if any portion of the minimum distribution for the first distribution calendar year is made in the second distribution calendar year on or before the required beginning date, the amount of the minimum distribution made in the second distribution calendar year shall be treated as if it had been made in the immediately preceding distribution calendar year. (6) Required beginning date. (a) General rule. The required beginning date of a Participant is the first day of April of the calendar year following the calendar year in which the Participant attains age 70 1/2. (b) Transitional rule. The required beginning date of a Participant who attains age 70 1/2 before January 1, 1988, shall be determined in accordance with (i) or (ii) below: (i) Non-5-percent owners. The required beginning date of a Participant who is not a "5-percent owner" (as defined in (c) below) is the first day of April of the calendar year following the calendar year in which the later of retirement or attainment of age 70 1/2 occurs. (ii) 5-percent owners. The required beginning date of a Participant who is a 5-percent owner during any year beginning after December 31, 1979, is the first day of April following the later of: (1) The calendar year in which the Participant attains age 70 1/2, or Page 23 (2) The earlier of the calendar year with or within which ends the Plan Year in which the Participant becomes a 5-percent owner, or the calendar year in which the Participant retires. The required beginning date of a Participant who is not a 5-percent owner who attains age 70 1/2 during 1988 and who has not retired as of January 1, 1989, is April 1, 1990. (c) 5-percent owner. A Participant is treated as a 5-percent owner for purposes of this Section if such Participant is a 5-percent owner as defined in Section 416(i) of the Code (determined in accordance with Section 416 but without regard to whether the Plan is top-heavy) at any time during the Plan Year ending with or within the calendar year in which such owner attains age 66 1/2 or any subsequent Plan Year. (d) Once distributions have begun to a 5-percent owner under this Section, they must continue to be distributed, even if the Participant ceases to be a 5-percent owner in a subsequent year. (H) Transitional Rule (1) Notwithstanding the other requirements of this Section 5.3 and subject to the requirements of Section 5.7, Joint and Survivor Annuity Requirements, distribution on behalf of any Employee, including a 5-percent owner, may be made in accordance with all of the following requirements (regardless of when such distribution commences): (a) The distribution by the trust is one which would not have disqualified such trust under Section 401(a)(9) of the Internal Revenue Code as in effect prior to amendment by the Deficit Reduction Act of 1984. (b) The distribution is in accordance with a method of distribution designated by the Employee whose interest in the trust is being distributed or, if the Employee is deceased, by a Beneficiary of such Employee. (c) Such designation was in writing, was signed by the Employee or the Beneficiary, and was made before January 1, 1984. (d) The Employee had accrued a benefit under the Plan as of December 31, 1983. (e) The method of distribution designated by the Employee or the Beneficiary specifies the time at which distribution will commence, the period over which distributions will be made, and in the case of any distribution upon the Employee's death, the Beneficiaries of the Employee listed in order of priority. (2) A distribution upon death will not be covered by this transitional rule unless the information in the designation contains the required information described above with respect to the distributions to be made upon the death of the Employee. (3) For any distribution which commences before January 1, 1984, but continues after December 31, 1983, the Employee, or the Beneficiary, to whom such distribution is being made, will be presumed to have designated the method of distribution under which the distribution is being made if the method of distribution was specified in writing and the distribution satisfies the requirements in Sections 5.3(H)(1)(a) and (e). (4) If a designation is revoked any subsequent distribution must satisfy the requirements of Section 401(a)(9) of the Code and the Proposed Regulations thereunder. If a designation is revoked subsequent to the date distributions are required to begin, the trust must distribute by the end of the Page 24 calendar year following the calendar year in which the revocation occurs the total amount not yet distributed which would have been required to have been distributed to satisfy Section 401(a)(9) of the Code and the Proposed Regulations thereunder, but for the Section 242(b)(2) election. For calendar years beginning after December 31, 1988, such distributions must meet the minimum distribution incidental benefit requirements in Section 1.401(a)(9)-2 of the Proposed Regulations. Any changes in the designation will be considered to be a revocation of the designation. However, the mere substitution or addition of another Beneficiary (one not named in the designation) under the designation will not be considered to be a revocation of the designation, so long as such substitution or addition does not alter the period over which distributions are to be made under the designation, directly or indirectly (for example, by altering the relevant measuring life). In the case in which an amount is transferred or rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A J-3 of Section 1.401(a)(9)-1 of the Proposed Regulations shall apply. 5.4 VESTING ON TERMINATION AND RE-EMPLOYMENT (A) If a Participant terminates employment, incurs a One Year Break in Service and is subsequently re-employed, Covered Years of Service completed prior to such break shall not be counted for vesting purposes until such time as the Participant has been re-employed by the Employer and has completed a Year of Service after his return to service. Such Year of Service will be measured by the twelve (12) month period beginning on the first day on which the Employee is credited with an Hour of Service for the performance of duties after the first eligibility computation period in which the Employee incurs a One Year Break in Service and on each subsequent anniversary of such date. After that time, that Year of Service shall be counted as a Covered Year of Service for vesting purposes, and all Covered Years of Service prior to the One Year Break in Service, except as provided in paragraph (C) below, shall be included in the aggregate of Covered Years of Service for vesting purposes. (B) If an Employee terminates service: (1) And the value of the Employee's Employer Contribution Account and Participant Contribution Account is not greater than $3,500, the Employee will receive a distribution of the value of the entire vested portion of such account balance and the non-vested portion will be treated as a forfeiture. For purposes of this Section 5.4(B)(1), if the value of a Participant's vested account balance is zero, the Employee shall be deemed to have received a distribution of such vested account balance. A Participant's vested account balance shall not include accumulated deductible employee contributions within the meaning of Section 7.2(o)(5)(B) of the Code for Plan Years beginning prior to January 1, 1989. (2) And elects, in accordance with the requirements of Section 5.4(D), to receive the value of the Employee's Employer Contribution Account and Participant Contribution Account, the non-vested portion will be treated as a forfeiture. If the Employee elects to have distributed less than the entire vested portion of the Employer Contribution Account, the part of the non-vested portion that will be treated as a forfeiture is the total non-vested portion multiplied by a fraction, the numerator of which is the amount of the distribution attributable to Employer contributions and the denominator of which is the total value of the vested Employer Contribution Account. (3) And receives or is deemed to receive a distribution pursuant to this Section 5.4(B) which is less than the value of the Employee's account balance derived from Employer contributions, and resumes employment covered under this Plan, the Employee's account will be restored to the amount on the date of distribution if the Employee repays to the Plan the full amount of the distribution on or before the Employee incurs five (5) consecutive One Year Breaks in Service following the date of distribution. Page 25 If a distribution is made at a time when a Participant has a nonforfeitable right to less than 100 percent of the account balance derived from Employer contributions and the Participant may increase the nonforfeitable percentage in the account: (a) A separate account will be established for the Participant's interest in the Plan as of the time of the distribution, and (b) At any relevant time the Participant's nonforfeitable portion of the separate account will be equal to an amount ("X") determined by the formula: X=P(AB + (R x D)) - (R x D) For purposes of applying the formula: P is the nonforfeitable percentage at the relevant time, AB is the account balance at the relevant time, D is the amount of the distribution, and R is the ratio of the account balance at the relevant time to the account balance after distribution. (C) In the case of a Participant who has 5 or more consecutive One Year Breaks in Service, all service after such One Year Breaks in Service will be disregarded for the purpose of vesting the Employer-derived account balance that accrued before such One Year Breaks in Service. Such Participant's pre-break service will count in vesting the post-break Employer-derived account balance only if either: (1) such Participant has any nonforfeitable interest in the account balance attributable to Employer contributions at the time of separation from service; or (2) upon returning to service the number of consecutive One Year Breaks in Service is less than the number of Years of Service. Separate accounts will be maintained for the Participant's pre-break and post-break Employer-derived account balance. Both accounts will share in the earnings and losses of the fund. If a Participant's Years of Service are disregarded pursuant to the preceding paragraph, such Participant will be treated as a new Employee for eligibility purposes. If a Participant's Years of Service may not be disregarded pursuant to the preceding paragraph, such Participant shall continue to participate in the Plan, or, if terminated, shall participate immediately upon reemployment. (D) If the value of a Participant's vested account balance derived from Employer and Employee contributions exceeds (or at the time of any prior distribution exceeded) $3,500, and the account balance is immediately distributable, the Participant and the Participant's spouse (or where either the Participant or the spouse has died, the survivor) must consent to any distribution of such account balance. The consent of the Participant and the Participant's spouse shall be obtained in writing within the 90-day period ending on the annuity starting date. The annuity starting date is the first day of the first period for which an amount is paid as an annuity or any other form. The Plan Administrator shall notify the Participant and the Participant's spouse of the right to defer any distribution until the Participant's account balance is no longer immediately distributable. Such notification shall include a general description of the material features, and an explanation of the relative values of, the optional forms of benefit available under the Plan in a manner that would satisfy the notice requirements of section 417(a)(3), and shall be provided no less than 30 days and no more than 90 days prior to the annuity starting date. Notwithstanding the foregoing, only the Participant need consent to the commencement of a distribution in the form of a qualified Joint and Survivor Annuity while the account balance is immediately distributable. (Furthermore, if payment in the form of a qualified Joint and Survivor Annuity is not required with respect to the Participant pursuant to Page 26 Section 5.7 of the Plan, only the Participant need consent to the distribution of an account balance that is immediately distributable.) Neither the consent of the Participant nor the Participant's spouse shall be required to the extent that a distribution is required to satisfy section 401(a)(9) or section 415 of the Code. In addition, upon termination of this Plan if the Plan does not offer an annuity option (purchased from a commercial provider), the Participant's account balance may, without the Participant's consent, be distributed to the Participant or transferred to another defined contribution plan (other than an employee stock ownership plan as defined in section 4975(e)(7) of the Code) within the same controlled group. An account balance is immediately distributable if any part of the account balance could be distributed to the Participant (or surviving spouse) before the Participant attains or would have attained if not deceased) the later of Normal Retirement Age or age 62. (E) For purposes of determining the applicability of the foregoing consent requirements to distributions made before the first day of the first Plan Year beginning after December 31, 1988, the Participant's vested account balance shall not include amounts attributable to accumulated deductible employee contributions within the meaning of section 72(o)(5)(B) of the Code. 5.5 LIMITATION ON BENEFITS AND CONTRIBUTIONS (A) No Participation in Another Qualified Plan or Welfare Benefit Fund (1) If the Participant does not participate in, and has never participated in another qualified plan or a welfare benefit fund, as defined in Section 419(e) of the Code, maintained by the adopting Employer or an individual medical account, as defined in Code Section 415(i)(2) of the Code, maintained by the Employer, which provides an Annual Addition as defined in Section 2.7, the amount of Annual Additions which may be credited to the Participant's account for any Limitation Year will not exceed the lesser of the Maximum Permissible Amount or any other limitation contained in this Plan. If the Employer contribution that would otherwise be contributed or allocated to the Participant's account would cause the Annual Additions for the Limitation Year to exceed the Maximum Permissible Amount, the amount contributed or allocated will be reduced so that the Annual Addition for the Limitation Year will equal the Maximum Permissible Amount. (2) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant on the basis of a reasonable estimation of the Participant's Compensation for the Limitation Year, uniformly determined for all Participants similarly situated. (3) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (4) If pursuant to Section 5.5(A)(3) or as the result of the allocation of forfeitures, there is an excess amount, the excess will be disposed of as follows: (a) Any non-deductible voluntary employee contributions, to the extent they would reduce the excess amount, will be returned to the Participant; (b) If after the application of Section 5.5(A)(4)(a) an excess amount still exists, and the Participant is covered by the Plan at the end of the Limitation Year, the excess amount in the Participant's account will be used to reduce Employer contributions (including any allocation of forfeitures) for such Page 27 Participant in the next Limitation Year, and each succeeding Limitation Year, if necessary; (c) If after the application of Section 5.5(A)(4)(a) an excess amount still exists, and the Participant is not covered by the Plan at the end of a Limitation Year, the excess amount will be held unallocated in a suspense account. The suspense account will be applied to reduce future Employer contributions (including allocation of any forfeitures) for all remaining Participants in the next Limitation Year, and each succeeding Limitation Year, if necessary; (d) If a suspense account is in existence at any time during a Limitation Year pursuant to this Section 5.5, it will not participate in the allocation of the Trust's investment gains and losses. If a suspense account is in existence at any time during a particular Limitation Year, all amounts in the suspense account must be allocated and reallocated to Participant's accounts before Employer contributions or any Employee contributions may be made to the Plan for that Limitation Year. Excess amounts may not be distributed to Participants or Former Participants. (B) Participation in Another Qualified Master or Prototype Plan or Welfare Benefit Fund. (1) This Section 5.5(B)(1) applies if, in addition to this Plan, the Participant is covered under another qualified master or prototype defined contribution plan maintained by the Employer, a welfare benefit fund, as defined in Section 419(e) of the Code, maintained by the Employer or an individual medical account, as defined in Code Section 415(l)(2) of the Code, maintained by the Employer, which provides an Annual Addition as defined in Section 2.7, during any Limitation Year. The Annual Additions which may be credited to a Participant's account under this Plan for any such Limitation Year will not exceed the Maximum Permissible Amount reduced by the Annual Additions credited to a Participant's account under the other plans and welfare benefit funds for the same Limitation Year. If the Annual Additions with respect to the Participant under other defined contribution plans and welfare benefit funds maintained by the Employer are less than the Maximum Permissible Amount, and the Employer contribution that would otherwise be contributed or allocated to the Participant's account under this Plan would cause the Annual Additions for the Limitation Year to exceed this limitation, the amount contributed or allocated will be reduced so that the Annual Additions under all such plans and funds for the Limitation Year will equal the Maximum Permissible Amount. If the Annual Additions with respect to the Participant under such other defined contribution plans and welfare benefit funds in the aggregate are equal to or greater than the Maximum Permissible Amount, no amount will be contributed or allocated to the Participant's account under this Plan for the Limitation Year. (2) Prior to determining the Participant's actual Compensation for the Limitation Year, the Employer may determine the Maximum Permissible Amount for a Participant in the manner described in Section 5.5(A)(2). (3) As soon as is administratively feasible after the end of the Limitation Year, the Maximum Permissible Amount for the Limitation Year will be determined on the basis of the Participant's actual Compensation for the Limitation Year. (4) If, pursuant to Section 5.5(B)(3) or as a result of the allocation of forfeitures, a Participant's Annual Additions under this Plan and such other plans would result in an excess amount for a Limitation Year, the excess amount will be deemed to consist of the Annual Additions last allocated, except that Annual Additions attributable to a welfare benefit fund or individual medical account will be deemed to have been allocated first regardless of the actual allocation date. Page 28 (5) If an excess amount was allocated to a Participant on an allocation date of this Plan which coincides with an allocation date of another plan, the excess amount attributed to this Plan will be the product of: The total excess amount allocated as of such date, times the ratio of the Annual Additions allocated to the Participant for the Limitation Year, as of such date under this Plan to the total Annual Additions allocated to the Participant for the Limitation Year as of such date under this and all the other qualified master or prototype defined contribution plans. (6) Any excess amount attributed to this Plan will be disposed in the manner described in Section 5.5(A)(4). (C) If the Participant is covered under another qualified defined contribution plan maintained by the Employer which is not a master or prototype plan, Annual Additions which may be credited to the Participant's account under this Plan for any Limitation Year will be limited in accordance with Section 5.5(B) as though the other plan were a master or prototype plan, unless the Employer provides other limitations in the Adoption Agreement. For purposes of the Short Form Adoption Agreement, the provisions of Section 5.5(B) of the Plan will apply as if the other plan were a master or prototype plan. (D) If the Employer maintains, or at any time maintained, a qualified defined benefit plan (other than paired plan #01) covering any Participant in this Plan, the sum of the Participant's defined benefit plan fraction and defined contribution plan fraction will not exceed 1.0 in any Limitation Year. The Annual Additions which may be credited to the Participant's account under this Plan for any Limitation Year will be limited in accordance with the Adoption Agreement. If the Employer maintains, or at any time maintained, a qualified defined benefit plan other than paired plan #01, the Employer cannot adopt the Short Form Adoption Agreement. (E) Definitions (1) Compensation: A Participant's earned income, wages, salaries, and fees for professional services and other amounts received for personal services actually rendered in the course of employment with the Employer maintaining the Plan (including, but not limited to, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips and bonuses), and excluding the following: (a) Employer contributions to a plan of deferred compensation which are not includible in the Employee's gross income for the taxable year in which contributed, or Employer contributions under a simplified employee pension plan to the extent such contributions are deductible by the Employee, or any distributions from a plan of deferred compensation; (b) Amounts realized from the exercise of a nonqualified stock option, or when restricted stock (or property) held by the Employee either becomes freely transferable or is no longer subject to a substantial risk of forfeiture; (c) Amounts realized from the sale, exchange or other disposition of stock acquired under a qualified stock option; and (d) Other amounts which received special tax benefits, or contributions made by the Employer (whether or not under a salary reduction agreement) towards the purchase of an annuity described in Section 403(b) of the Internal Revenue Code (whether or not the amounts are actually excludable from the gross income of the Employee). Page 29 For purposes of applying the limitations of this Section 5.5, Compensation for a Limitation Year is the Compensation actually paid or includible in gross income during such year. Notwithstanding the preceding sentence, Compensation for a Participant in a defined contribution plan who is permanently and totally disabled (as defined in Section 22(e)(3) of the Internal Revenue Code) is the Compensation such Participant would have received for the Limitation Year if the Participant had been paid at the rate of Compensation paid immediately before becoming permanently and totally disabled; such imputed Compensation for the disabled Participant may be taken into account only if the Participant is not a highly compensated employee as defined in Code Section 414(q); and contributions made on behalf of such Participant are non-forfeitable when made. (2) Defined benefit fraction: A fraction, the numerator of which is the sum of the Participant's projected annual benefits under all the defined benefit plans (whether or not terminated) maintained by the Employer; and the denominator of which is the lesser of 125 percent of the dollar limitation determined for the Limitation Year under Sections 415(b) and (d) of the Internal Revenue Code, or 140 percent of the highest average compensation including any adjustments under Code Section 415(b). Notwithstanding the above, if the Participant was a participant as of the first day of the first Limitation Year beginning after December 31, 1986 in one or more defined benefit plans maintained by the Employer which were in existence on May 6, 1986, the denominator of this fraction will not be less than 125 percent of the sum of the annual benefits under such plans which the Participant had accrued as of the close of the last Limitation Year beginning before January 1, 1987 disregarding any changes in the terms and conditions of the Plan after May 5, 1986. The preceding sentence applies only if the defined benefit plans individually and in the aggregate satisfied the requirements of Section 415 for all Limitation Years beginning before January 1, 1987. (3) Defined contribution dollar limitation: $30,000 or if greater, one-fourth of the defined benefit dollar limitation set forth in section 415(b)(1) of the Code as in effect for the Limitation Year. (4) Defined contribution fraction: A fraction, the numerator of which is the sum of the Annual Additions to the Participant's account under all the defined contribution plans (whether or not terminated) maintained by the Employer for the current and all prior Limitation Years (including the Annual Additions attributable to the Participant's non-deductible employee contributions to all defined benefit plans, whether or not terminated, maintained by the Employer, and the Annual Additions attributable to all welfare benefit funds, as defined in Section 419(e) of the Code and individual medical accounts, as defined in Code Section 415(l)(2), maintained by the Employer); and the denominator of which is the sum of the maximum aggregate amounts for the current and all prior Limitation Years of service with the Employer (regardless of whether a defined contribution plan was maintained by the Employer). The maximum aggregate amount in any Limitation Year is the lesser of 125 percent of the dollar limitation determined under Code Sections 415(b) and (d) in effect under Section 415(c)(1)(A) of the Code or 35 percent of the Participant's Compensation for such year. If the Employee was a Participant as of the end of the first day of the first Limitation Year beginning after December 31, 1986, in one or more defined contribution plans maintained by the Employer which were in existence on May 6, 1986, the numerator of this fraction will be adjusted if the sum of this fraction and the defined benefit fraction would otherwise exceed 1.0 under the terms of this Plan. Under the adjustment, an amount equal to the product of the excess of the sum of the fractions over 1.0 times the denominator of this fraction, will be permanently subtracted from the numerator of this fraction. The adjustment is calculated using the fractions as they would be computed as of the end of the last Limitation Year beginning before January 1, 1987, and disregarding any changes in the terms and conditions of the Plan made after May 5, 1986, but using Page 30 the section 415 limitation applicable to the first Limitation Year beginning on or after January 1, 1987. The Annual Addition for any Limitation Year beginning before January 1, 1987, shall not be recomputed to treat all Employee contributions as Annual Additions. (5) Employer: For purposes of this Section 5.5, Employer shall mean the Employer that adopts this Plan, and all members of a controlled group of corporations (as defined in Section 414(b) of the Internal Revenue Code as modified by Section 415(h)), all commonly controlled trades or businesses (as defined in Section 414(c) as modified by Section 415(h) or affiliated service groups (as defined in Section 414(m)) of which the adopting Employer is a part, and any other entity required to be aggregated with the Employer pursuant to regulations under Code Section 414(o). (6) Excess amount: The excess of the Participant's Annual Additions for the Limitation Year over the maximum permissible amount. (7) Highest average compensation: The average compensation for the three consecutive Years of Service with the Employer that produces the highest average. A Year of Service with the Employer is the 12-consecutive month period ending on the Anniversary Date defined in Section 4 of the Adoption Agreement. (8) Limitation Year: A calendar year or the 12-consecutive month period elected by the Employer in the Adoption Agreement. All qualified plans maintained by the Employer must use the same Limitation Year. If the Limitation Year is amended to a different 12-consecutive month period, the new Limitation Year must begin on a date within the Limitation Year in which the amendment is made. (9) Master or prototype plan: A plan, the form of which, is the subject of a favorable option letter from the Internal Revenue Service. (10) Maximum permissible amount. The maximum Annual Addition that may be contributed or allocated to a Participant's account under the Plan for any Limitation Year shall not exceed the lesser of: (a) The defined contribution dollar limitation, or (b) 25 percent of the Participant's Compensation for the Limitation Year. The Compensation limitation referred to in (b) shall not apply to any contribution for medical benefits (within the meaning of Section 401(h) or Section 419A(f)(2) of the Code) which is otherwise treated as an Annual Addition under section 415(l)(1) or 419A(d)(2) of the Code. If a short Limitation Year is created because of an amendment changing the Limitation Year to be a different 12- consecutive month period, the maximum permissible amount will not exceed the defined contribution dollar limitation multiplied by the following fraction: Number of months in the short limitation year / 12 (11) Projected annual benefit: The annual retirement benefit (adjusted to an actuarially equivalent straight life annuity if such benefit is expressed in a form other than a straight life annuity or qualified Joint and Survivor Annuity) to which the Participant would be entitled under the terms of the Plan assuming: (a) the Participant will continue employment until Normal Retirement Age under the Plan (or current age, if later), and Page 31 (b) the Participant's Compensation for the current Limitation Year and all other relevant factors used to determine benefits under the Plan will remain constant for all future Limitation Years. 5.6 ALIENATION PROHIBITED No benefit or interest available under the Plan shall be subject in any manner to alienation, anticipation, assignment, charge, encumbrance, pledge, sale or transfer, either voluntary or involuntary, and any attempt to do so shall be void. No benefit under the Plan shall in any manner be liable or subject to the debts, contracts, liabilities, engagements, or torts of any person. The preceding sentences shall also apply to the creation, assignment, or recognition of a right to any benefit payable with respect to a Participant pursuant to a domestic relations order, unless such order is determined to be a qualified domestic relations order, as defined in Code Section 414(p), or any domestic relations order entered before January 1, 1985. 5.7 JOINT AND SURVIVOR ANNUITY REQUIREMENTS (A) The Provisions of this Section 5.7 shall apply to any Participant whose vested Accrued Benefit exceeds $3,500 and who is credited with at least one Hour of Service with the Employer on or after August 23, 1984, and such other Participants as provided in Section 5.7(G). (B) Unless an optional form of benefit is selected pursuant to a Qualified Election within the 90-day period ending on the annuity starting date, a married Participant's vested Accrued Benefit will be paid in the form of a qualified Joint and Survivor Annuity and an unmarried Participant's vested Accrued Benefit will be paid in the normal form of an immediate life annuity. The Participant may elect to have such annuity distributed upon attainment of the Earliest Retirement Age under the Plan. (C) Unless an optional form of benefit has been selected within the election period pursuant to a Qualified Election, if a Participant dies before the annuity starting date, then the Participant's vested account balance shall be applied toward the purchase of an annuity for the life of the surviving Spouse. The surviving Spouse may elect to have such annuity distributed within a reasonable period after the Participant's death. (D) Definitions. (1) Election Period: The period which begins on the first day of the Plan Year in which the Participant attains age 35 and ends on the date of the Participant's death. If a Participant separates from service prior to the first day of the Plan Year in which age 35 is attained, with respect to benefits accrued prior to separation, the Election Period shall begin on the date of separation. Pre-age 35 waiver: A Participant who will not yet attain age 35 as of the end of any current Plan Year may make a special qualified election to waive the qualified preretirement survivor annuity, for the period beginning on the date of such election and ending on the first day of the Plan Year in which the Participant will attain age 35. Such election shall not be valid unless the Participant receives a written explanation of the qualified preretirement survivor annuity in such terms as are comparable to the explanation required under Section 5.7(E). Qualified preretirement survivor annuity coverage will be automatically reinstated as of the first day of the Plan Year in which the Participant attains age 35. Any new waiver on or after such date shall be subject to the full requirements of this Section 5.7. (2) Earliest Retirement Age: The earliest date on which, under the Plan, the Participant could elect to receive retirement benefits. Page 32 (3) Qualified Election: A waiver of a qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity. Any waiver of a qualified Joint and Survivor Annuity or a qualified preretirement survivor annuity shall not be effective unless: (a) the Participant's Spouse consents in writing to the election; (b) the election designates a specific alternate Beneficiary, including any class of Beneficiaries or any contingent Beneficiaries, which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent; (c) the Spouse's consent acknowledges the effect of the election, and (d) the Spouse's consent is witnessed by a Plan representative or notary public. Additionally, a Participant's waiver of the qualified Joint and Survivor Annuity will not be effective unless the election designates a form of benefit payment which may not be changed without spousal consent (or the Spouse expressly permits designations by the Participant without any further spousal consent. If it is established to the satisfaction of a Plan representative that such written consent may not be obtained because there is no Spouse or the Spouse cannot be located, a waiver will be deemed a Qualified Election. Any consent by a Spouse obtained under this provision (or establishment that the consent of a Spouse may not be obtained) shall be effective only with respect to such Spouse. A consent that permits designations by the Participant without any requirement of further consent by such Spouse must acknowledge that the Spouse has the right to limit consent to a specific Beneficiary, and a specific form of benefit where applicable, and that the Spouse voluntarily elects to relinquish either or both of such rights. A revocation of a prior waiver may be made by a Participant without the consent of the Spouse at any time prior to the commencement of benefits. The number of revocations shall not be limited. No consent obtained under this provision shall be valid unless the participant has received notice as provided in Section 5.7(E) below. (4) Qualified Joint and Survivor Annuity: An immediate annuity for the life of the Participant with a survivor annuity for the life of the Spouse which is not less than 50 percent and not more than 100 percent of the amount of the annuity which is payable during the joint lives of the Participant and the Spouse and which is the amount of benefit which can be purchased with the Participant's vested account balance. (5) Spouse (Surviving Spouse): The Spouse or Surviving Spouse of the Participant, provided that a former Spouse will be treated as the Spouse or Surviving Spouse and a current Spouse will not be treated as the Spouse or surviving Spouse to the extent provided under a qualified domestic relations order as described in Section 414(p) of the Code. (6) Annuity Starting Date: The first day of the first period for which an amount is paid as an annuity or any other form. (7) Vested Account Balance: The aggregate value of the Participant's vested Account Balance derived from Employer and Employee contributions (including rollovers) whether vested before or upon death, including the proceeds of insurance contracts, if any, on the Participant's life. The provisions of this Section 5.7 shall apply to a Participant who is vested in amounts attributable to Employer contributions, Employee contributions (or both) at the time of death or distribution. Page 33 (E) Notice Requirements (1) In the case of a qualified Joint and Survivor Annuity as described in Section 5.7(B), the Plan Administrator shall provide each Participant no less than 30 days and no more than 90 days prior to the annuity starting date a written explanation of: (a) the terms and conditions of a qualified Joint and Survivor Annuity; (b) the Participant's right to make and the effect of an election to waive the qualified Joint and Survivor Annuity form of benefit; (c) the rights of a Participant's Spouse; and (d) the right to make, and the effect of, a revocation of a previous election to waive the qualified Joint and Survivor Annuity. (2) In the case of a qualified preretirement survivor annuity as described in Sections 5.7(C), the Plan Administrator shall provide each Participant within the applicable period for such Participant, a written explanation of the qualified preretirement survivor annuity in such terms and in such a manner as would be comparable to the explanation provided for meeting the requirements of Section 5.7(E)(1) applicable to a qualified Joint and Survivor Annuity. The applicable period for a Participant is whichever of the following periods ends last: (a) the period beginning with the first day of the Plan Year in which the Participant attains age 32 and ending with the close of the Plan Year preceding the Plan Year in which the Participant attains age 35; (b) a reasonable period ending after the individual becomes a Participant; (c) a reasonable period ending after Section 5.7(E)(3) ceases to apply to the Participant; (d) a reasonable period ending after this Section 5.7 first applies to the Participant. Notwithstanding the foregoing, notice must be provided within a reasonable period ending after separation of service in case of a Participant who separates from service before attaining age 35. For purposes of the preceding paragraph, a reasonable period ending after the enumerated events described in (b), (c) and (d) is the end of the two year period beginning one year prior to the date the applicable event occurs and ending one year after that date. In the case of a Participant who separates from service before the Plan Year in which age 35 is attained, notice shall be provided within the two year period beginning one year prior to separation and ending one year after separation, If such a Participant thereafter returns to employment with the Employer, the applicable period for such Participant shall be redetermined. (3) Notwithstanding the other requirements of this Section 5.7(E), the respective notices prescribed by this Section need not be given to the Participant if: (a) the Plan "fully subsidizes" the costs of a Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity, and (b) the Plan does not allow the Participant to waive the Qualified Joint and Survivor Annuity or qualified preretirement survivor annuity and does not allow a married Participant to designate a nonspouse beneficiary. For purposes of this Section 5.7(E)(3), a Plan fully subsidizes the costs of a benefit if no increase in cost, or decrease in benefits to the Participant may result from the Participant's failure to elect another benefit. (F) Safe harbor rules. (1) This Section 5.7(F) shall apply to a Participant in a profit sharing plan, and to any distribution, made on or after the first day of the first Plan Year beginning after December 31, 1988, from or under a separate account attributable solely to accumulated deductible employee contributions, as defined in section 72(o)(5)(B) of the Code, and maintained on behalf of a Participant in a money purchase pension plan (including a target benefit plan), if the following conditions are satisfied: (1) the Participant does not or cannot elect payments in the form of a life annuity; and (2) on the death of a Participant, the Participant's Page 34 vested account balance will be paid to the Participant's surviving Spouse, but if there is no surviving Spouse, or if the surviving Spouse has consented in a manner conforming to a qualified election, then to the Participant's designated Beneficiary. The surviving Spouse may elect to have distribution of the vested account balance commence within the 90-day period following the date of the Participant's death. The account balance shall be adjusted for gains or losses occurring after the Participant's death in accordance with the provisions of the Plan governing the adjustment of account balances for other types of distributions. This Section 5.7(F) shall not be operative with respect to a Participant in a profit sharing plan if the plan is a direct or indirect transferee of a defined benefit plan, money purchase plan, a target benefit plan, stock bonus, or profit sharing plan which is subject to the survivor annuity requirements of Section 401 (a)(11) and Section 417 of the Code. If this Section 5.7(F) is operative, then the provisions of this Section 5.7 other than Section 5.7(G), shall be inoperative. (2) The Participant may waive the spousal death benefit described in this Section 5.7 at any time provided that no such waiver shall be effective unless it satisfies the conditions described in Section 5.7(D)(3) (other than the notification requirement referred to therein) that would apply to the Participant's waiver of the qualified preretirement survivor annuity. (3) For purposes of this Section 5.7(F), vested account balance shall mean, in the case of a money purchase pension plan or a target benefit plan, the Participant's separate account balance attributable solely to accumulated deductible employee contributions within the meaning of Section 72(o)(5)(B) of the Code. In the case of a profit sharing plan, vested account balance shall have the same meaning as provided in Section 5.7(D)(7). (G) Transitional Rules. (1) Any living Participant not receiving benefits on August 23, 1984, who would otherwise not receive the benefits prescribed by the previous sections of this Section 5.7 must be given the opportunity to elect to have the prior sections of this Section 5.7 apply if such Participant is credited with at least one Hour of Service under this Plan or a predecessor plan in a Plan Year beginning on or after January 1, 1976, and such Participant had at least 10 years of vesting service when he separated from service. (2) Any living Participant not receiving benefits on August 23, 1984, who was credited with at least one Hour of Service under this Plan or a predecessor plan on or after September 2, 1974, and who is not otherwise credited with any service in a Plan Year beginning on or after January 1, 1976, must be given the opportunity to have his benefits paid in accordance with Section 5.7(G)(4). (3) The respective opportunities to elect (as described in Section 5.7(G)(1) and (2) above) must be afforded to the appropriate Participants during the period commencing on August 23, 1984, and ending on the date benefits would otherwise commence to said Participants. (4) Any Participant who has elected pursuant to Section 5.7(G)(2) and any Participant who does not elect under Section 5.7(G)(1) or who meets the requirement of Section 5.7(G)(1) except that such Participant does not have at least 10 years of vesting service when he separates from service, shall have his benefits distributed in accordance with all of the following requirements if benefits would have been payable in the form of a life annuity: (a) Automatic joint and survivor annuity. If benefits in the form of a life annuity become payable to a married Participant who: (i) Begins to receive payments under the plan on or after Normal Retirement Age; or Page 35 (ii) Dies on or after Normal Retirement Age while still working for the Employer; or (iii) Begins to receive payments on or after the qualified early retirement age, or (iv) Separates from service on or after attaining Normal Retirement Age (or the qualified early retirement age) and after satisfying the eligibility requirements for the payment of benefits under the Plan and thereafter dies before beginning to receive such benefits; then such benefits will be received under this Plan in the form of a qualified Joint and Survivor Annuity, unless the Participant has elected otherwise during the Election Period. The Election Period must begin at least 6 months before the Participant attains qualified early retirement age and end not more than 90 days before the commencement of benefits. Any election hereunder will be in writing and may be changed by the Participant at any time. (b) Election of early survivor annuity. A Participant who is employed after attaining the qualified early retirement age will be given the opportunity to elect, during the Election Period, to have a survivor annuity payable on death. If the Participant elects the survivor annuity, payments under such annuity must not be less than the payments which would have been made to the Spouse under the qualified Joint and Survivor Annuity if the Participant had retired on the day before his death. Any election under this provision will be in writing and may be changed by the Participant at any time. The election period begins on the later of (i) the 90th day before the Participant attains the qualified early retirement age, or (ii) the date on which participation begins, and ends on the date the Participant terminates employment. (c) For purposes of this Section 5.7(G)(4): (i) Qualified early retirement age is the latest of: (1) The earliest date, under the plan, on which the Participant may elect to receive retirement benefits, (2) The first day of the 120th month beginning before the Participant reaches Normal Retirement Age, or (3) The date the Participant begins participation. (ii) Qualified Joint and Survivor Annuity is an annuity for the life of the Participant with a survivor annuity for the life of the Spouse as described in Section 5.10(G)(4). 5.8 PERMITTED DISPARITY IN PLAN CONTRIBUTIONS (A) Profit Sharing Plan (1) A Profit Sharing Plan meets the requirements of Code Section 401 (1) if the Excess Contribution Percentage does not exceed the Base Contribution Percentage by more than the Profit Sharing Maximum Disparity Rate. (2) "Profit Sharing Maximum Disparity Rate" means the lesser of: (a) The greater of: (i) 2.7% (5.7% if not Top Heavy) (ii) The percentage equal to the portion of the rate of tax under Code Section 3111(a) (in effect as of the beginning of the Plan Year) Page 36 which is attributable to old age insurance, less the percentage allocated under Section 11.2(2) of the Adoption Agreement. (b) The applicable percentage determined in accordance with the table below: If the Integration Level: is more than but not the applicable more than percentage is: $0 X* 2.7% (5.7% if not Top Heavy) X* of TWB 80% of TWB 1.3% (4.3% If not Top Heavy) 80% of TWB Y** 2.4% (5.4% if not Top Heavy) TWB = Taxable Wage Base *X = the greater of $10,000 or 20 percent of the Taxable Wage Base. **Y = any amount more than 80% of the Taxable Wage Base but less than 100% of the Taxable Wage Base. If the Integration Level used is equal to the Taxable Wage Base, the applicable percentage is the percentage specified in Section 5.8(A)(2)(a) above. (B) Money Purchase Pension Plan (1) A Money Purchase Pension Plan meets the requirements of Code Section 401(l) if the Excess Contribution Percentage does not exceed the Base Contribution Percentage by more than the Money Purchase Maximum Disparity Rate. (2) "Money Purchase Maximum Disparity Rate" means the applicable of: (a) If Section 10.2 of the Adoption Agreement is elected, the lesser of: (i) The greater of: (aa) 5.7% (bb) The percentage equal to the portion of the rate of tax under Code Section 3111(a) (in effect as of the beginning of the Plan Year) which is attributable to old age insurance. (ii) If the Integration Level: is more than but not the applicable more than percentage is: $0 X* 5.7% X* of TWB 80% of TWB 4.3% 80% of TWB Y** 5.4% Page 37 TWB = Taxable Wage Base * X = the greater of $10,000 or 20 percent of the Taxable Wage Base. **Y = any amount more than 80% of the Taxable Wage Base but less than 100% of the Taxable Wage Base. If the Integration Level used is equal to the Taxable Wage Base, the applicable percentage is the percentage specified in Section 5.8(B)(2)(a)(i)(aa) above. (b) If Sections 10.1 and 11.2 of the Adoption Agreement are elected, the lesser of: (i) The greater of: (aa) 2.7% (5.7% if not Top Heavy) (bb) The percentage equal to the portion of the rate of tax under Code Section 3111(a) (in effect as of the beginning of the Plan Year) which is attributable to old age insurance, less the percentage allocated under Section 11.2(2) of the Adoption Agreement. (ii) If the integration level: is more than but not the applicable more than percentage is: $0 X* 2.7% (5.7% if not Top Heavy) X* of TWB 80% of TWB 1.3% (4.3% if not Top Heavy) 80% of TWB Y** 2.4% (5.4% if not Top Heavy) TWB = Taxable Wage Base *X = the greater of $10,000 or 20 percent of the Taxable Wage Base. **Y = any amount more than 80% of the Taxable Wage Base but less than 100% of the Taxable Wage Base. If the Integration Level used is equal to the Taxable Wage Base, the applicable percentage is the percentage specified in Section 5.8(B)(2)(b)(i) above. (C) Target Benefit Plan - See Adoption Agreement (D) Definitions The following definitions apply to Sections 5.8(A) and (B) above: (1) "Excess Contribution Percentage" means the percentage of Compensation which is contributed under the Plan with respect to that portion of each Participant's Compensation in excess of the Integration Level specified in the Adoption Agreement. (2) "Base Contribution Percentage" means the percentage of Compensation contributed under the Plan with respect to that portion of each Participant's Compensation which is not in excess of the Integration Level specified in the Adoption Agreement. Page 38 (3) "Integration Level" means the amount of Compensation specified under the Plan (by dollar amount or formula) at or below which the rate at which contributions or benefits are provided (expressed as a percentage) is less than such rate above such amount. The Integration Level shall be equal to the Taxable Wage Base or such lesser amount elected by the Employer in the Adoption Agreement. In no event shall the Integration Level exceed the contribution and benefit base in effect under Section 230 of the Social Security Act for such Plan Year. (4) "Compensation" shall mean compensation as defined in Code Section 414(S). (E) If this Plan is paired with another plan sponsored by the Employer, the permitted disparity under this Section 5.8 shall be in only one of the paired plans. Such permitted disparity shall be as follows: (1) If this Plan is paired with a Money Purchase Pension Plan, the permitted disparity shall be in the Money Purchase Pension Plan. (2) If this Plan is paired with a Defined Benefit Pension Plan, the permitted disparity shall be in the Defined Benefit Pension Plan. (3) If the paired plans are a Profit Sharing Plan and a Target Benefit Pension Plan, the permitted disparity shall be in the Target Benefit Pension Plan. 6.0 LIFE INSURANCE 6.1 AUTHORIZATION TO PURCHASE The Administrator may direct the Trustee to invest a portion of each Participant Account in an annual premium contract on a Participant's life issued by a legal reserve life insurance company. The Administrator shall direct the purchase of life insurance as an earmarked investment for a Participant, if said Participant consents to such purchase. If any life insurance is purchased, the option to purchase shall be available to each Participant in a nondiscriminatory manner. 6.2 PAYMENT OF PREMIUMS The Trustee shall normally pay premiums on any policy subject hereto as such premiums fall due. Dividends, experience rating credits, or surrender or cancellation credits shall be allocated to the Employer Contribution Account of the Participant for whose benefit the contract is held. If at any time the Administrator shall decide that the premium on any policy is not to be paid in cash, the Administrator, in its sole discretion, shall decide whether such premium is to be paid by policy loan (if the policy contains such a provision) or whether the policy is to be continued as a paid-up policy, or whether some other action is to be taken under the policy. Notwithstanding the above, policy loans may cause Unrelated Business Income tax to become payable by the Trust. 6.3 DISPOSITION OF POLICIES AT RETIREMENT Subject to Section 5.7, when any Participant whose policy is held hereunder shall reach his actual retirement date, or if this Trust shall terminate, the Trustee at the direction of the Administrator shall convert the contracts on a Participant's life to cash or an annuity or distribute such contracts to the Participant upon commencement of benefits. If insurance contracts are distributed, the modes of settlement under the contract shall be limited to those provided under the Plan. Any annuity contract distributed hereunder must be non-transferable. Page 39 6.4 LIMITATION ON AMOUNTS The amount of life insurance held by the Trustee on the life of any Participant shall be limited as follows: (A) Ordinary Life - For purposes of these incidental insurance provisions, ordinary life insurance contracts are contracts with both non-decreasing death benefits and non-increasing premiums. If such contracts are purchased, less than one-half (1/2) of the aggregate Employer contributions allocated to any Participant shall be used to pay premiums on ordinary life insurance contracts. (B) Term Life - No more than one-fourth (1/4) of the aggregate Employer contributions allocated to any Participant shall be used to pay premiums on term life insurance contracts and all other life insurance contracts which are not ordinary life. (C) Combination - The sum of one-half (1/2) of the ordinary life insurance premiums and all other life insurance premiums shall not exceed one-fourth (1/4) of the aggregate Employer contributions allocated to any Participant. 6.5 CONFLICT WITH INSURANCE CONTRACTS The Trustee shall apply for and will be the owner of any insurance contract purchased under the terms of this Plan. The insurance contract(s) must provide that proceeds will be payable to the Trustee; however, the Trustee shall be required to pay over all proceeds of the contract(s) to the Participant's designated Beneficiary in accordance with the distribution provisions of this Plan. A Participant's spouse will be the designated Beneficiary of the proceeds in all circumstances unless a qualified election has been made in accordance with Section 5.7, Joint and Survivor Annuity Requirements, if applicable. Under no circumstances shall the Trust retain any part of the proceeds. In the event of any conflict between the terms of this Plan and the terms of any insurance contract purchased hereunder, the Plan provisions shall control. 7.0 MISCELLANEOUS 7.1 LOANS TO PARTICIPANTS The Administrator may, in its sole discretion, establish a loan program and direct the Trustee to make a loan to a Participant or Beneficiary, other than shareholder-Employees or Owner-Employees. (A) Loans made pursuant to this program shall be subject to such rules as the Administrator, in its sole discretion, shall adopt, provided that such rules and regulations do not discriminate in favor of officers, shareholders or highly compensated Employees of the Employer and that loans shall be available to all Participants or Beneficiaries on a non-discriminatory basis. No loans shall be made under this Section 7.1 to any shareholder-Employees or Owner-Employees. (B) Any loan to a Participant made under this program shall comply with the following terms and conditions: (1) An application for a loan shall be made in writing to the Administrator, whose action thereon shall be final. (2) The loan shall be adequately secured, pursuant to Section 5, below. (3) The loan shall bear a reasonable rate of interest, as determined by the Plan Administrator in its sole discretion. The interest rate shall be comparable to the rate charged by commercial lenders in the geographical area of Page 40 the Employer for similar types of loans, as determined by conditions customarily taken into account by such lenders in the making of similar types of loans. (4) A loan shall be made for fixed period of time, as determined by the Plan Administrator in its sole discretion, which in no event shall exceed five (5) Years from the date of such loan, except that such five (5) Year repayment rule shall not apply to any loan used to acquire a dwelling unit which, within a reasonable period of time, will be used as a principal residence of the Participant. Security for Loans to Participants is described in section 10.6. (5) No distribution shall be made to any Active Participant, inactive Participant, Former Participant or Beneficiary of any such Participant unless and until all unpaid loans, including accrued interest thereon, have been satisfied. (6) Loans shall be made available to all Participants and Beneficiaries on a reasonably equivalent basis. (7) No loan to any Participant or Beneficiary can be made to the extent that the amount of the loan, when added to the outstanding balance of all other loans to the Participant or Beneficiary, would exceed the lesser of: (a) $50,000 reduced by the excess (if any) of the highest outstanding balance of loans during the one year period ending on the day before the loan is made, over the outstanding balance of loans from the Plan on the date the loan is made, or (b) one-half the value of the vested account balance of the Participant. For the purpose of the above limitation, all loans from all qualified plans of the Affiliated Employers are aggregated. (8) In the event of default, foreclosure on and attachment of security will not occur until a distributable event occurs in the Plan. (9) Loans shall not be made available to highly compensated employees (as defined in Section 414(g) of the Code) in an amount greater than the amount made available to other Employees. (10) A Participant must obtain the consent of his Spouse, if any, to use of the Accrued Benefit as security for the loan. Spousal consent shall be obtained no earlier than the beginning of the 90-day period that ends on the date on which the loan is to be so secured. The consent must be in writing, must acknowledge the effect of the loan, and must be witnessed by a Plan representative or notary public. Such consent shall thereafter be binding with respect to the consenting Spouse or any subsequent Spouse with respect to that loan. A new consent shall be required if the Accrued Benefit is used for renegotiation, extension, renewal, or other revision of the loan. If a valid spousal consent has been obtained in accordance with this Section 7.1(c)(11), then, notwithstanding any other provision of this Plan, the portion of the Participant's vested Accrued Benefit used as a security interest held by the Plan by reason of a loan outstanding to the Participant shall be taken into account for purposes of determining the amount of the Accrued Benefit payable at the time of death or distribution, but only if the reduction is used as repayment of the loan. If less than 100% of the Participant's vested Accrued Benefit (determined without regard to the preceding sentence) is payable to the surviving Spouse, then the Accrued Benefit shall be adjusted by first reducing the vested Accrued Benefit by the amount of the security used as repayment of the loan, and then determining the benefit payable to the surviving Spouse. (C) No loan may be made to any Owner Employee or shareholder Employee. For purposes of this requirement, a shareholder Employee means an Employee or officer of an electing small business (Sub Chapter S) corporation who owns (or is Page 41 considered as owning within the meaning of Code Section 318(a)(1)), on any day during the taxable year of such corporation, more than five percent (5%) of the outstanding stock of the corporation. 7.2 DISCHARGE RIGHTS PRESERVED The Plan shall not be deemed to constitute an employment contract or to be consideration for the employment of any Employee. 7.3 BENEFICIARY DESIGNATED BY PARTICIPANT Subject to the Joint and Survivor Annuity requirements of Section 5.7, a beneficiary designation shall be filed by all Participants with the Administrator at the time they become Participants. In the absence of a valid designation or the survival of any Beneficiary designated by the Participant, the Administrator may, either before or after the Participant's death, designate the Participant's Beneficiary or Beneficiaries from among the following order of Priority: spouse, children, grandchildren, parents, brothers and sisters, nephews and nieces, or his estate. 7.4 PRIORITY OF ADOPTION AGREEMENT Should the terms and conditions of this Plan and the related trust agreement conflict with the terms and conditions of the Adoption Agreement, the latter shall prevail. The Adoption Agreement, therefore, has the function of amending the terms of this Plan and trust agreement when necessary or appropriate. In the event of any conflict between the terms of the Plan or the Adoption Agreement and the terms of any insurance contract issued hereunder, the Plan or Adoption Agreement provisions shall control. 7.5 REFERENCE TO INTERNAL REVENUE CODE All references herein to Sections of the Internal Revenue Code, or any regulations or ruling thereunder shall be deemed to refer to such Sections as they may subsequently be modified, amended, replaced, or amplified by any Federal tax statutes, regulations or rulings of similar application and import. 7.6 SAVING CLAUSE In the event any provision of the Plan is held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts of the Plan, but this instrument shall be construed and enforced as if said provision had never been included. 7.7 GOVERNING LAW This Plan shall be construed, administered, and governed in all respects under and by ERISA and to the extent applicable, the laws of the Home State of the Employer, provided, however, that if any provision is susceptible to more than one interpretation, such interpretation shall be given thereto as is consistent with this Plan and Trust being a qualified employees' pension benefit plan and trust within the meaning of the Code and ERISA. 7.8 MERGER OR CONSOLIDATION OF PLAN In the case of a merger or consolidation of this Plan with another plan or transfer of assets or liabilities to another plan, each participant in the successor plan shall (if the Plan then terminated) receive a benefit immediately after the merger, consolidation or transfer which is at least equal to the benefit he would have been entitled to receive immediately before the merger, consolidation or transfer (if the Plan had then terminated). Page 42 7.9 AGREEMENT BINDING ON ALL PARTIES This Agreement shall be binding upon the heirs, executors, administrators, successors and assigns, as such terms shall apply, or any and all parties hereto, present and future. 7.10 HEADINGS Headings in this instrument are inserted for convenience of reference only. They constitute no part of this instrument. 7.11 SINGULAR INCLUDES PLURAL, ETC. Whenever appropriate, words used herein in the singular may include the plural or the plural may be read as the singular and the masculine may include the feminine. 7.12 FORFEITURE OF BENEFITS (A) If a retirement benefit become payable under this Plan to a Participant (or his Beneficiary) and such retirement benefit remains unpaid for a period of five (5) Years from the date such retirement benefit first became payable because the Participant (or his Beneficiary) cannot be located, the retirement benefit shall be deemed to be a forfeiture under the Plan and shall be used to reduce future Employer contributions to the Plan as soon as practicable after the deemed forfeiture. (B) Anything in this Section 7.12 to the contrary notwithstanding, if a retirement benefit is forfeited under the provisions of Section 7.12(A) and the Participant (or his Beneficiary) is located, the retirement benefit shall be reinstated and paid to the Participant (or his Beneficiary) under the terms of this Plan. The Employer shall make up any loss to the Plan as a result of the reinstatement of a retirement benefit as soon as practicable thereafter. 7.13 DISTRIBUTION PURSUANT TO QUALIFIED DOMESTIC RELATIONS ORDER Anything in Section 5.3 notwithstanding, the Plan Administrator may, pursuant to procedures which do not discriminate in favor of highly compensated employees as defined in Code Section 414(q), and at the request of the Participant and his former Spouse, elect to treat a Qualified Domestic Relations Order as immediately distributable even though the Participant had not yet attained the Earliest Retirement Age under the Plan. 8.0 TOP HEAVY PLAN 8.1 PRECEDENCE OF SECTION Anything in this Plan or the Adoption Agreement to the contrary notwithstanding, this Section 8 shall supersede and take precedence over any other provisions of the Plan or the Adoption Agreement for any Plan Year commencing on or after January 1, 1984, for which the Plan is determined to be a Top Heavy Plan or Super Top Heavy Plan under this Section 8. 8.2 DEFINITIONS For purposes of determining whether the Plan is a Top Heavy Plan or Super Top Heavy Plan for any Plan Year commencing on or after January 1, 1984, the following terms, wherever capitalized, shall have the meanings set forth below: (A) "Determination Date" shall mean the date on which the Plan is tested to determine if it is a Top Heavy Plan or Super Top Heavy Plan, which date Page 43 shall be the last day of the Plan Year for the first Plan Year and the last day of the preceding Plan Year for all subsequent Plan Years. (B) "Key Employee" shall mean any Employee or former Employee (or Beneficiary) in the Plan who, at any time during the "Determination Period," is or was: (1) An officer of the Employer if such individual's annual Compensation exceeds fifty percent (50%) of the dollar limitation under Code Section 415(b)(1)(A) (not more than 10% of the Employees of the Employer to a maximum of 50 such Employees shall be considered officers for this purpose); (2) An owner (or considered an owner under Code Section 3 18) of one (1) of the ten largest interests in the Employer if such individual's Compensation exceeds one hundred percent (100%) of the dollar limitation under Code Section 415(c)(1)(A); (3) An owner of five percent (5%) or more of an Employer; and (4) An owner of one percent (1%) or more of the Employer having an annual Compensation from the Employer which is in excess of $150,000.00. Annual Compensation means Compensation as defined in Section 415(c)(3) of the Code but includes amounts contributed by the Employer pursuant to a salary reduction agreement which are excludable from the Employee's gross income under Section 125, Section 402(a)(8), Section 402(h) or Section 403(b) of the Code. "Determination Period" is the Plan Year containing the Determination Date and the four (4) preceding Plan Years. The determination of who is a Key Employee and will be made in accordance with Code Section 416(i)(1) and the regulations thereunder. (C) "Permissive Aggregation Group" shall mean the Required Aggregation Group of plans plus any other plan or plans of the Employer which, when considered as a group with the Required Aggregation Group, would continue to satisfy the requirements of Section 401(a)(4) and 410 of the Code. (D) "Present Value" shall be based only on the interest and mortality rates specified in the Adoption Agreement. (E) "Required Aggregation Group" shall mean: (1) Each qualified plan of the Employer in which at least one Key Employee participates or participated at any time during the determination period (regardless of whether the Plan terminated); and (2) Any other qualified plan of the Employer which enables a plan described in Section 8.2(E)(1) above to meet the requirements of Sections 401(a)(4) or 410 of the Code. (F) "Top Heavy Plan" shall mean the Plan where, with respect to any Plan Year commencing after December 31, 1983, any of the following conditions exist: (a) If the Top-Heavy Ratio for this Plan exceeds 60 percent and this Plan is not part of any Required Aggregation Group or Permissive Aggregation Group of plans, (b) If this Plan is a part of a Required Aggregation Group of plans (but which is not part of a Permissive Aggregation Group) and the Top-Heavy Ratio for the group of plans exceeds 60 percent, or (c) If this Plan is a part of a Required Aggregation Group of plans and part of a Permissive Aggregation Group and the Top-Heavy Ratio for the Permissive Aggregation Group exceeds 60 percent. Page 44 (G) "Top-Heavy Ratio" shall mean: (1) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Employer has not maintained any defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio for this Plan alone or for the Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the account balances of all Key Employees as of the Determination Date(s) (including any part of any account balance distributed in the five-year period ending on the Determination Date(s)), and the denominator of which is the sum of all account balances (including any part of any account balances distributed in the five-year period ending on the Determination Date(s)), both computed in accordance with Code Section 416 and the regulations thereunder. Both the numerator and denominator of the Top-Heavy Ratio are increased to reflect any contribution not actually made as of the Determination Date, but which is required to be taken into account on that date under Section 416 of the Code and the regulations thereunder. (2) If the Employer maintains one or more defined contribution plans (including any Simplified Employee Pension Plan) and the Employer maintains or has maintained one or more defined benefit plans which during the 5-year period ending on the Determination Date(s) has or has had any accrued benefits, the Top Heavy Ratio for any Required or Permissive Aggregation Group as appropriate is a fraction, the numerator of which is the sum of the present value of accrued benefits under the aggregate defined benefit plan or plans for all Key Employees and the sum of account balances under the aggregated defined contribution plan or plans for all Key Employees, determined in accordance with (1) above, as of the Determination Date(s), and the denominator of which is the sum of the present values of accrued benefits under the aggregated defined benefit plan or plans for all Participants and the sum of the account balances under the aggregated defined contribution plan or plans, determined in accordance with (1) above, for all participants as of the Determination Date(s), all determined in accordance with Section 416 of the Code and the regulations thereunder. The accrued benefits under a defined benefit plan in both the numerator and denominator of the Top-Heavy Ratio are increased for any distribution of an accrued benefit made in the 5-year period ending on the Determination Date. (3) For purposes of (1) and (2) above, the value of account balances and the present value of accrued benefits will be determined as of the most recent Valuation Date that falls within or ends with the 12-month period ending on the Determination Date, except as provided in Section 416 of the Code and the regulations thereunder for the first and second plan years of a defined benefit plan. The account balances and accrued benefits of a Participant (a) who is not a Key Employee but who was a Key Employee in a prior year, or (b) who has not been credited with at least one (1) Hour of Service with any Employer maintaining the Plan at any time during the 5-year period ending on the Determination Date will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to which distributions, rollovers, and transfers are taken into account will be made in accordance with Section 416 of the Code and the regulations thereunder. Deductible employee contributions will not be taken into account for purposes of computing the Top-Heavy Ratio. When aggregating plans, the value of account balances and accrued benefits will be calculated with reference to the Determination Dates that fall within the same calendar year. The Accrued Benefit of a Participant other than a key employee shall be determined under (a) the method, if any, that uniformly applies for accrual purposes under all defined benefit plans maintained by the Employer, or (b) if there is no such method, as if such benefit accrued not more rapidly than the slowest accrual rate permitted under the fractional rule of section 41 l(b)(1)(C) of the Code. Page 45 (H) "Valuation Date" shall mean the date as of which account balances or accrued benefits are valued for purposes of calculating the Top-Heavy Ratio which date shall be the last day of the Plan Year. 8.3 COMPENSATION IN TOP HEAVY PLAN YEAR During any Plan Year in which the Plan is determined to be a Top Heavy Plan or Super Top Heavy Plan, the Compensation used to determine a Participant's Accrued Benefit under Section 11 of the Adoption Agreement shall be limited to $200,000.00, as adjusted annually for increases in the cost of living by the Secretary of the Treasury, as described in Code Section 416(d)(2). 8.4 VESTING IN TOP HEAVY PLAN YEAR When a Plan is determined to be a Top Heavy Plan or a Super Top Heavy Plan for a Plan Year, each Participant's Accrued Benefit shall be subject to the following vesting schedule provided that the Participant has at least (1) Hour of Service during any Plan Year in which the Plan is determined to be a Top Heavy Plan or Super Top Heavy Plan: Years of Service Vesting Percentage Less than 2 0% 2 but less than 3 20% 3 but less than 4 40% 4 but less than 5 60% 5 but less than 6 80% 6 or more 100% This Section 8.4 shall be applicable only in the event that the Employer has adopted a variable vesting schedule under Section 9 of the Adoption Agreement which is not as favorable as the above vesting schedule in all years. If the vesting schedule under the Plan shifts in or out of the above schedule for any Plan Year because of the Plan's top-heavy status, such shift is an amendment to the vesting schedule and the election in Section 1.4(A)(3) of the Plan applies. The minimum vesting schedule applies to all benefits within the meaning of Code Section 411(a)(7) except those attributable to Employee contributions, including benefits accrued before the effective date of Code Section 416 and benefits accrued before the Plan became top heavy. Further, no decrease in a Participant's nonforfeitable percentage may occur in the event the Plan's status as a Top Heavy Plan changes for any Plan Year. 8.5 MINIMUM CONTRIBUTION UNDER TOP HEAVY PLAN (A) Except as otherwise provided in Sections 8.5(C) and (D) below, the Employer contributions and forfeitures allocated in any Plan Year in which the plan is determined to be a Top Heavy Plan or a Super Top Heavy Plan, on behalf of any Participant who is not a Key Employee, shall not be less than the lesser of three percent (3%) of such Participant's Compensation or, in the case where the Employer has no defined benefit plan which designates this Plan to satisfy section 416 of the Code, the largest percentage of Employer contributions and forfeitures, as a percentage of the first $200,000 of the Key Employee's Compensation, allocated on behalf of any Key Employee for that Year. The minimum allocation is determined without regard to any Social Security contribution. This minimum allocation shall be made even though, under other plan Provisions, the Participant would not otherwise be entitled to receive an allocation, or would have received a lesser allocation for the Year because of (1) the Participant's failure to complete 1,000 Hours of Service (or any equivalent provided in the Plan); (2) the Participant's failure to make mandatory employee contributions to the Plan; or (3) Compensation less than a stated amount. (B) For purposes of computing the minimum allocation, Compensation will mean Compensation as defined in Section 2.11 of the Plan. Page 46 (C) The provision in (A) above shall not apply to any Participant who was not employed by the Employer on the last day of the Plan Year. (D) The provision in (A) above shall not apply to any Participant to the extent the Participant is covered under any other plan or plans of the Employer, and the Employer has provided in the Adoption Agreement that the minimum allocation or benefit requirement applicable to Top Heavy Plans will be met in the other plan or plans. 8.6 MINIMUM CONTRIBUTION UNDER MULTIPLE PLANS (A) If the Employer elects to provide the additional minimum benefit under the Adoption Agreement, when the paired plans are top heavy but not super top heavy, the Employer will provide each non-key Employee who is a participant in paired defined benefit plan #01 a minimum non-integrated contribution of seven and one-half percent (7 1/2%) of Compensation. A minimum non-integrated contribution of four percent (4%) of Compensation will be provided to any non-key Employee otherwise entitled to receive top heavy contributions from this Plan who is not entitled to receive a minimum benefit from the paired defined benefit plan. (B) If the Employer does not elect to provide the additional minimum benefit under the Adoption Agreement, if the paired plans are top heavy, or when the paired plans are super top heavy, then the top heavy requirements set forth in Section 8.5 of this Plan shall apply except that each non-key Employee who is a Participant in paired defined contribution plan #02 and who is also a participant in paired-defined benefit plan #01 shall receive a minimum contribution of five percent (5%) of such Employee's total Compensation. For purposes of the Short Form Adoption Agreement, if the minimum benefit requirement is met under this Plan, the additional minimum benefit shall not be provided. 8.7 NONFORFEITABILITY OF MINIMUM BENEFIT The minimum benefit required under Section 8.5 and 8.6 of the Plan (to the extent required to be nonforfeitable under Code Section 416(b)) may not be suspended or forfeited under Code Section 411(a)(3)(B) or Section 411(a)(3)(D). 8.8 ADJUSTMENT TO DEFINED BENEFIT AND DEFINED CONTRIBUTION FRACTION FOR SUPER TOP-HEAVY PLAN In any Plan Year in which the Top-Heavy Ratio exceeds ninety percent (90%) (i.e., the Plan becomes a super Top-Heavy Plan) or sixty percent (60%) where the Employer does not elect to provide the additional minimum benefit in the Adoption Agreement the denominators of the defined benefit fraction as defined in Section 5.5(E)(2) of the Plan, and defined contribution fraction as defined in Section 5.5(E)(3) of the Plan shall be computed using 100 percent of the dollar limitation instead of 125 percent. 9.0 AFFILIATED EMPLOYER 9.1 MEMBERS OF CONTROLLED GROUP All employees of all corporations which are members of a controlled group of corporations (as defined in Section 414(b) of the Code), all employees of all trades or businesses (whether or not incorporated) which are under common control (as defined in Section 414(c) of the Code) and all employees of members of affiliated service groups (as defined in Section 414(m) of the Code) shall be treated as employed by a single employer. 9.2 LEASED EMPLOYEES (A) "Leased Employee" shall mean any person (other than an Employee of the recipient) who pursuant to an agreement between the recipient and any other Page 47 person ("leasing organization") has performed services for the recipient (or for the recipient and related persons determined in accordance with Section 414(n)(6) of the Code) on a substantially full-time basis for a period of at least one year, and such services are of a type historically performed by employees in the business field of the recipient Employer. Contributions or benefits provided a Leased employee by the leasing organization which are attributable to services performed for the recipient employer shall be treated as provided by the recipient employer. (B) A leased Employee shall not be considered an employee of the recipient if: (1) Such employee is covered by a money purchase pension plan providing: (a) A nonintegrated employer contribution rate of at least 10 percent of compensation, as defined in section 415(c)(3) of the Code, but including amounts contributed pursuant to a salary reduction agreement which are excludable from the employee's gross income under section 125, section 402(a)(8), section 402(h) or section 403(b) of the Code. (b) Immediate participation, and (c) Full and immediate vesting; and (2) Leased Employees do not constitute more than 20 percent of the recipient's nonhighly compensated workforce. 9.3 PLAN OF A PREDECESSOR EMPLOYER If the Employer maintains this Plan as a successor to the plan of a Predecessor Employer, Years of Service and Covered Years of Service with the Predecessor Employer shall be treated as Years of Service and Covered Years of Service with the Employer. 9.4 CONTROLLED TRADES OR BUSINESSES OF OWNER-EMPLOYEES (A) If this Plan provides contributions or benefits for one (1) or more Owner-Employees who control both the business for which the Plan is established and one (1) or more other, trades or businesses, this Plan and the plan established for such other trades or businesses must, when looked at as a single plan, satisfy Section 401(a) and (d) of the Code for the Employees of this and all other trades or businesses. (B) If the Plan provides contributions or benefits for one (1) or more Owner-Employees who control one (1) or more other trades or businesses, the employees of the other trades or businesses must be included in a plan which satisfies Code Sections 401(a) and (d) and which provides contributions and benefits not less favorable than provided for Owner-Employees under this Plan. (C) If an individual is covered as an Owner-Employee under the plans of two (2) or more trades or businesses which are not controlled and such individual controls at least one (1) other trade or business, the contributions and benefits provided for the employees under the plan of such controlled trade or business must be as favorable as those provided for such individual under the most favorable plan of the trade or business which is not controlled. (D) For purposes of this Section 9.4, an Owner-Employee, or two (2) or more Owner-Employees, will be considered to control a trade or business if the Owner-Employee, or two (2) or more Owner-Employees together: (1) Own the entire interest in an unincorporated trade or business; or Page 48 (2) In the case of a partnership, own more than fifty percent (50%) of either the capital interest or the profits interest in the partnership. (E) For purposes of section 9.4(D), an Owner-Employee or two (2) or more Owner-Employees will be treated as owning any interest in a partnership which is owned, directly or indirectly, by a partnership which such Owner-Employee or such two (2) or more Owner-Employees are considered to control within the meaning of Section 9.4(D). 10.0 TRUST PROVISIONS 10.1 ESTABLISHMENT OF TRUST It is the intention of the Employer that the Trust established Pursuant to this Section 10 shall be a qualified Trust under Section 501(a) of the Internal Revenue Code, and under such other Federal or State statute of a similar import, in order that the Trust created hereby may qualify as a tax exempt employees' Trust under all applicable law. However, notwithstanding any other provisions of the Trust, if the Internal Revenue Service is requested to issue to the Company a favorable written determination or ruling with respect to the initial qualification of the Plan and exemption of the Trust from tax and such request is denied, the Trustee shall, after receiving a written direction from the Employer or Administrator, pay to each Participant that portion of the Trust Fund applicable to said Participant's voluntary contributions, if any, and provided the Plan so states, pay to the Company any part of the Trust Fund attributable to Company contributions then remaining in the Trustee's possession. As a condition to such repayment, the Company must execute, acknowledge, and deliver to the Trustee its written undertaking, in form satisfactory to the Trustee, to indemnify, defend, and hold the Trustee harmless from all claims, actions, demands, or liabilities arising in connection with such repayment, and provided further that such repayment will occur within one year after the date the request for qualification is denied. 10.2 APPOINTMENT OF ADMINISTRATOR AND TRUSTEE (A) The Board shall appoint the Administrator, who may be a person or committee consisting of any number of members. Any member of the Administrator may resign by giving notice in writing to the Employer. The Board shall have the power to remove a member of the Administrator for any or no reason. A member shall cease to be such upon his death or upon being declared legally incompetent. (B) The Board shall appoint the Trustee(s) (hereinafter referred to as the Trustee). The Trustee may resign at any time upon sixty (60) days written notice to the Board. The Trustee may be removed for any or no reason at any time by the Board upon sixty (60) days written notice to the Trustee. In the event of resignation, death,or removal of the Trustee, or one or more of the Trustees, the Board shall appoint a successor Trustee who shall become effective upon acceptance in writing by the successor Trustee or Co-Trustee. Upon such resignation, death or removal of the Trustee or in the event of termination of this Trust, the Trustee shall have the right to a settlement of its account, which may be made, at the option of the Trustee, either (1) By judicial settlement in an action instituted by the Trustee in a court of competent Jurisdiction, or (2) By agreement of settlement between the Trustee and the Administrator. Upon such settlement, all right, title and interest of the Trustee in the assets of the Trust and all rights and privileges under this Agreement heretofore vested in the Trustee shall vest in the successor Trustee and thereupon all future liability of the Trustee shall terminate; provided however that the Trustee shall execute, acknowledge and deliver all documents and written instruments which are Page 49 necessary to transfer and convey the right, title and interest in the Trust assets and all rights and privileges to the successor Trustee. 10.3 ADMINISTRATOR FUNCTIONS (A) As of each Anniversary Date, the Employer shall, as soon as possible, certify to the Administrator the name, date of birth, date of employment, Hours of Service, and Compensation of each Employee who has become a Participant hereunder within the Plan Year in question; and shall also certify the name, Hours of Service, and Compensation of each Employee who was a Participant on the prior Anniversary Date and who was such at any time during the Plan Year in question. As soon as the above is determined, the Employer shall notify the Administrator of the amount of the contribution due to be made by it or made by it as of the Anniversary Date in question. The Administrator, upon receipt of such certifications from the Employer, shall compute therefrom the Accrued Benefit of each Participant. The Administrator shall keep complete records which shall show its actions under this Plan. The Administrator shall also keep such records for such periods as may be required under ERISA and regulations issued thereunder and under any other Federal law or regulations issued thereunder. The Administrator shall also maintain and retain records on matters for which disclosure is required by ERISA in sufficient detail that the information disclosed may be verified, and it shall keep such records available for examination for a period of not less than six (6) years after the filing date of documents containing the disclosed information. (B) The Administrator shall prepare, or cause to have prepared by any plan service organization as may be retained to do so, a written Participant statement to be delivered to the Participant setting forth the Accrued Benefit of such Participant. The statement of a Participant's Accrued Benefit shall not be made available for examination by any other Participant without the consent of the Administrator. (C) Upon the occurrence of an event giving rise to the payment of benefits under the Plan, the Administrator shall undertake to calculate such benefits based on the records of the Administrator and such other pertinent information as may be put before the Administrator by outside agencies or the Participant or the Beneficiary of the Participant and shall direct the Trustee to distribute the benefits at the time that such benefit becomes due and payable. (D) The Administrator shall give a Participant, or the Beneficiary of a deceased Participant, written notice, addressed to his last known address, by certified mail, of any denial of claim for benefits under the Plan, setting forth the specific reasons for such denial, written in a manner calculated to be understood by him. Such notice shall be sent within ninety (90) days after such denial and shall grant such Participant, or the Beneficiary of a deceased Participant, a reasonable opportunity within sixty (60) days after registered receipt of such notice to appear before the named members of the Administrator at a stated place, date and time for a full and fair review by them of the decision to deny the claim. Failure of the Participant, or the Beneficiary of a deceased Participant, to so appear before the Administrator within such sixty (60) day period, shall constitute an irrevocable consent by such Participant, or the Beneficiary of a deceased Participant, to the decision denying the claim made by the Administrator. The Administrator shall extend such sixty (60) day period an additional thirty (30) days and shall provide another stated place, date and time for such review or appearance, if it receives a written request to do so by the Participant, or the Beneficiary of a deceased Participant, within the first sixty (60) day period. The Administrator shall also change the stated time and date of such appearance if requested to do so by the Participant, or the Beneficiary of a deceased Participant, and if the parties are able to agree upon such other time and date. The written notice by the Administrator shall explain such irrevocable consent upon failure to appear before the Administrator at the stated place, time and date, and the right of the Participant, or the Beneficiary of a deceased Participant, to one thirty (30) day extension for his appearance, and his right to Page 50 request a different time and date within such period. The Administrator shall maintain minutes of any meeting denying a claim for benefits and of any review thereof and copies thereof shall be made available to the Participant, or the Beneficiary of a deceased Participant, upon written request. (E) The Administrator may retain and consult with legal counsel, who may be counsel for the Employer, with respect to the meaning or construction of this agreement or its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall be fully protected with respect to any action taken or omitted by it in good faith pursuant to the advice of such legal counsel, provided that the Administrator acts prudently in choosing such legal counsel. The Administrator may retain such other persons or organizations including actuaries, accountants and benefit, financial or administrative consultants to assist in the plan ministerial services. The Administrator shall have the sole ultimate to construe Plan terms and determine eligibility for benefits. (F) The Employer may directly pay the reasonable expenses of the Administrator in the administration of this Trust, including legal, accounting, and advisor fees or expenses. Should the Employer, for any reason, fail to pay such expenses, the same shall be paid by the Trustee out of the Trust. No member of the Administrator shall be entitled to compensation for his services as such member, but the Employer agrees to supply such stenographic or office help as may be necessary to assist the Administrator in the performance of his powers, duties and discretions. (G) The Administrator shall establish a funding policy so that the Trust will meet Plan needs. The Administrator shall review the funding policy just prior to the end of each Fiscal Year for its appropriateness under the circumstances then prevailing. In establishing a funding policy for the Trust, the Administrator shall follow the procedures set forth in this paragraph. The Administrator shall first determine the following matters: (1) Approximate value of the assets in the Trust; (2) Anticipated Employer contribution for the Plan Year then ending; (3) Approximate amount to be transferred to segregated accounts of the Trust during the following year; (4) Anticipated income of the Trust during the following year; (5) Estimate of the anticipated withdrawals during the following year from Participants' voluntary contribution accounts; (6) Anticipated distributions from the Trust during the following year to retired Participants, terminated Participants and to Beneficiaries; and (7) Estimate as to such distributions for the next five (5) years. Following a review of this material and consideration of anticipated contributions and income and distributions, the Administrator shall determine a funding policy for the Trust bearing in mind both the short-run and long-run needs and goals of the Plan. Such funding policy shall be communicated to the Trustee if the investment policy has been delegated to the Trustee or to the Investment Manager of the Trust, if one shall have been appointed, so that the investment policy of the Trust can be coordinated with Plan needs. 10.4 TRUSTEE FUNCTIONS The Administrator hereby delegates to the Trustee the following functions: Page 51 (A) The Trustee shall hold in safekeeping the funds and assets received by the Trustee under this Trust subject to the terms of this Agreement and for the purposes herein set forth. The Trustee shall be responsible only for such funds and assets as shall actually be received by the Trustee as Trustee hereunder. So long as a Trustee is acting, title to any of the assets of the Trust may be held or registered in the name of a nominee of the Trustee for ease of dealing with the same, provided that the books of the Trust reflect actual ownership. The assets so held or registered shall at all times remain in the possession or under the control of the Trustee. The Trustee may not maintain the indicia of ownership of any assets of the Trust outside the jurisdiction of the district courts of the United States except as authorized by Regulations. The Trustee may retain and consult with legal counsel, who may be legal counsel for the Employer, with respect to the meaning or construction of this agreement or its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall be fully protected with respect to any action taken or omitted by it in good faith pursuant to the advice of such legal counsel, provided that the Trustee acts prudently in choosing such legal counsel and in retaining such legal counsel. The Trustee may retain such other persons or organization including actuaries, accountants and benefit, financial or administrative consultants to assist in the Trust ministerial services. (B) The Trustee shall have such powers as may from time to time be necessary, appropriate or expedient to perform its functions in the management of the Trust. In addition to the powers enumerated herein, the Trustee shall have each and all the powers for trustees enumerated in the Statutes of the Home State of the Employer. The enumeration herein of a lesser, greater or other power shall not be deemed to exclude any statutory power. Without limiting the generality of the foregoing, the Trustee has the power to: (1) Receive the income of the Trust; (2) Hold uninvested any cash contributions to the Trust and to create reserves of cash or other assets of the Trust for the payment of expenses or for distribution pursuant to the Plan, or for any other purpose in connection with the Plan; (3) Enter into any contracts with, or purchase any annuities from, any insurance company or insurance companies for the purpose of providing for the payment of all or any part of the retirement income payable under the Plan, and to disburse under any such contracts or for the purchase of any such annuities any monies held in the Trust; (4) Deposit any monies at any time held in the Trust in any savings and loan association or in the savings department of any bank, including the savings department of the Trustee; (5) Purchase, or subscribe for, any securities or property and to retain the same in the Trust; (6) Sell, exchange, convey, transfer, or otherwise dispose of, any securities or property held by it, by private contract or public action, and no person dealing with the Trustee shall be bound to see the application of the purchase money or to inquire into the validity, expediency, or propriety of any such sale or other dispositions; (7) Accept and retain for such time as it shall be determined any securities or other property received or acquired by the Trustee hereunder, whether or not such securities or other property would normally be purchased as investments hereunder; Page 52 (8) Renew or extend, or to participate in the renewal or extension of, any mortgage, upon such terms as may be deemed advisable by the Plan Administrator or the Investment Manager, as the case may be; (9) Vote upon any stocks, bonds or other securities; to give general or special proxies or powers of attorney with or without powers of substitution; to exercise any conversion privileges, subscription rights or other options, and to make payments incidental thereto; to oppose, or to consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities, and to delegate discretionary powers, and to pay any assessments or charges in connection therewith; to abandon any property determined by it to be worthless; and generally to exercise any of the powers of an owner with respect to stocks, bonds, securities and other property held as part of the Trust; (10) Borrow or raise monies for the purposes of the Trust from anyone (other than a "party in interest" as defined in Section 3(14) of ERISA) in such amount, and upon such terms and conditions, as the Plan Administrator may deem advisable; and, for any sum so borrowed, to issue its promissory note as Trustee, and to secure the repayment thereof by pledging all, or any part, of the Trust; and no person lending money to the Trustee shall be bound to see to the application of the money lent or to inquire into the validity, expediency or propriety of such borrowing; it being intended that the Trustee shall also have the power to borrow from itself; (11) Settle, compromise, or submit to arbitration any claims, debts or damages due or owing from the Trust, to commence or defend suits or legal or administrative proceedings, and to represent the Trust in all suits and legal and administrative proceedings; (12) Repair, alter or improve any buildings which may be on any real estate forming part of the Trust or to erect an entirely new structure thereon; (13) Register any investment held as part of the Trust Fund in its own name or in the name of a nominee or to hold any investment in bearer form; provided, however, that the books and records of the Trustee shall at all times show that all such investments are part of the Trust; (14) Engage such attorneys, investment advisors, accountants and such other advisors as it may deem necessary or helpful in connection with the administration of the Trust, at such wages, fees, remuneration, consideration or otherwise, and upon such terms and conditions as it shall deem proper. Such compensation shall in no event be deducted from any commissions or other compensation payable to the Trustee; (15) Make, execute, acknowledge and deliver any and all documents of transfer and conveyance and any and all other instruments that may be necessary or appropriate to carry out the powers herein granted; (16) Lend or borrow securities, write or sell options or futures or enter into repurchase agreements unless specifically prohibited by the Plan Administrator, subject to such restrictions as the Trustee in its sole discretion may impose; (17) Do all such acts, and exercise all such rights and privileges, although not specifically mentioned herein, as may be necessary or proper for the accomplishment of the purposes for which the Trust is established; and (18) Settle securities trades effected by the Administrator or the Investment Manager through a securities depository utilizing an institutional delivery system. In such event, the Trustee may deliver or receive securities in accordance with appropriate trade reports or statements given to the Trustee by the Page 53 depository without having received communications or instructions directly from the Administrator or the Investment Manager. (C) The Trustee shall receive from the Employer its contributions in cash made under the Plan. If Participant contributions are required under the Plan, the Trustee shall receive from the Employer such Participant contributions in cash. All contributions so received, together with the income and earnings therefrom and any increments thereto, shall be held, managed, and administered in trust pursuant to the terms of this Plan and Trust, to provide benefits under the Plan according to its terms. The Trustee shall be under no duty to determine whether any contribution made to this Trust is in a proper amount; nor shall the Trustee have any duty or responsibility to collect any sum which the Employer is to contribute under this Trust. (D) The Trustee shall from time to time, on the written directions of the Administrator, make benefit payments out of the Trust to Participants or Beneficiaries in such manner, in such amounts, and for such purposes as may be specified by the Administrator. The Trustee shall not be responsible in any way for the purpose or application of such payments. The Trustee shall not be required to make any investigation beyond contacting the Social Security Administration to determine the mailing address of any retired or terminated Participant entitled to benefits under this agreement, or to determine the identity and mailing address of any person entitled to death benefits, and shall be entitled to withhold making any payments or deliveries until such mailing address of retired or terminated Participants, and identity and mailing address of persons entitled to death benefits, have been certified to the Trustee by the Administrator or Social Security Administration. (E) As agreed upon from time to time by the Employee and Trustee, the Trustee may be paid reasonable compensation for services rendered, or reimbursed expenses properly and actually incurred in the performance of duties with respect to the Trust. However, no Trustee who already receives full time pay from the Employer shall receive compensation from such Trust, except for reimbursement of expenses properly and actually incurred. In the absence of specific arrangement for such payments, any compensation or reimbursed expenses shall be withdrawn by the Trustee from the Trust, unless paid by the Employer. Such compensation shall include accounting, legal and administrative services rendered by or to the Trustee unless specifically excluded by appropriate written agreement. If so excluded, the Trustee may charge and withdraw from the Trust the cost of such services as may be authorized by the Employer. To the extent that the Trustee fees are to be charged against Employee contributions, the Employer shall so advise each Participant. (F) The Trustee shall keep accurate and detailed records of the administration of the Trust hereunder which shall be open to inspection at all reasonable times by any person designated by the Administrator or by the Board. At the end of each Plan Year, as soon as is practicable after the close of such other periods as may be agreed upon between the Trustee and the Employer and within sixty (60) days after the removal or resignation of the Trustee, the Trustee shall file with the Employer a written report setting forth all investments, receipts, disbursements and other transactions effected by it during such Plan Year or other period. The report shall contain an exact description of all securities, contracts, or other property purchased and sold, the cost or net proceeds of sale, (excluding accrued interest paid or received), and showing the securities and investments held at the end of such Plan Year or other period, and the cost and fair market value of each item thereof as carried on the books of the Trustee, and the total market value of the Trust at the end of such Plan Year or other period. The approval of the Administrator, or the lack of written objection from him within sixty (60) days after submission, of any report or accounting by the Trustee shall be a complete release and discharge to the Trustee and shall be binding upon all Participants and all persons claiming in place of or through such Participants, provided that they do not contain any statement that is a result of a breach of any fiduciary duty by the Page 54 Trustee or they do not omit or conceal such breach. If the Trustee shall determine that the Trust consists in whole or in part of property not traded freely on a recognized market, or that information necessary to ascertain the fair market value thereof is not readily available to the Trustee, the Trustee shall request the party determining investment policy to instruct the Trustee as to the value of such property for all purposes under the Plan and Trust, and such party shall comply with such request. The value placed upon such property by such party in its instructions to the Trustee shall be conclusive and binding upon the Employer, the Administrator, Participants, their Beneficiaries and all other persons with an interest herein. If such party determining investment policy fails or refuses to instruct the Trustee as to the value of such property within a reasonable time after receipt of the Trustee's request, the Trustee shall engage a competent appraiser to fix the fair market value of such property for all purposes hereunder. The determination of any such property shall be conclusive upon all parties interested therein and the Trustee shall have no liability in connection therewith. The reasonable fees and expenses incurred for any such appraisal shall be paid by the Trustee out of the Trust or, at the option of the Employer, by the Employer. The Trustee shall prepare and file such other reports, publications, statements, tax returns and forms required to be filed by the Trustee with the Secretary of Labor or Secretary of Treasury as the Trustee shall agree to undertake. (G) If the Administrator directs, the Trustee will commingle into one Trust the assets of two or more Employer plans each of which shall be qualified under Section 401(a) of the Internal Revenue Code. The Trustee shall have no responsibility to determine the value of each separate plan; such responsibility shall remain with the Administrator. Should one or more plans be disqualified, the Administrator shall notify the Trustee and the Trustee shall segregate the funds of such plan or plans. (H) If the Administrator directs, the Trustee shall keep full accounts of all receipts and disbursements for each Participant's account. The Trustee shall render an annual report for each Participant's account to the Plan Administrator within sixty (60) days after the end of each Plan Year, said report to contain a complete accounting showing the total assets in the Trust and the fair market value of such assets as of that date, as well as a statement of purchases, sales and any investment changes and all income, expenses and disbursements since the last such report. (I) Notwithstanding any other provision contained in this Trust, the Trustee, at the direction of the Administrator and at the election of the Participant, shall transfer, upon termination of a Participant, the non-forfeitable interest to another trust forming part of a pension, profit sharing or stock bonus plan maintained by such Participant's new employer and meeting the requirements of Code Section 401(a), provided that the trust to which such transfers are made permits the transfer to be made. With the consent of the Administrator, the Trustee may accept funds transferred from another Trust forming part of a pension, profit sharing or stock bonus plan maintained by such Participant's previous employer and meeting the requirements of Internal Revenue Code Section 401(a) for the account of a Participant under this Plan, provided that the trust from which such funds are transferred permits the transfer to be made and, in the opinion of legal counsel for the Employer, the transfer will not jeopardize the exempt status of the Trust or create adverse tax consequences to the Employer. In the event of such a transfer to a Participant's account under this Trust, the Trustee shall maintain a separate, non-forfeitable account for the amount transferred and its share of the gains or losses of the Trust hereafter, as provided under Section 4.7. (J) The duties and responsibilities of the Trustee shall be solely those set forth in this document and the Trustee shall not have the authority to interpret the Plan. Page 55 10.5 INVESTMENT OF TRUST ASSETS (A) If an individual Trustee has been appointed by the Board, the Trustee shall have the authority and duty to direct the investment and management of all of the Trust assets and the Trustee shall be the fiduciary with respect to the investment and management of such Trust assets and the Administrator shall have no responsibility therefore, to the extent that such authority and duty has not been delegated to the Administrator or an Investment Manager by the Board. If more than one (1) individual Trustee is appointed by the Board, each such individual Trustee shall have full investment and management powers with respect to the Trust assets as if such Trustee was the sole Trustee, unless such investment and management authority is restricted by the Board or the Administrator. (B) If a bank or other corporate Trustee has been appointed by the Board, the Administrator shall have the authority and duty to direct the investment and management of all of the Trust assets, to the extent that such authority and duty has not been delegated to the Trustee or an Investment Manager by the Administrator. (1) The Administrator may by appropriate action appoint the Trustee to direct the investment and management of all or a portion of the assets of the Trust pursuant to the powers enumerated in Section 10.5. Written direction of the Administrator's action shall be delivered to the Trustee whereupon the Trustee shall be the fiduciary with respect to the investment and management of such Trust assets and the Administrator shall have no responsibility therefore. Any transfer of investment and management to the Trustee may be revoked by a written notice to that effect by the Administrator. (C) The Board or the Administrator, by appropriate action, may appoint an Investment Manager to direct the Trustee to invest and manage all or a portion of the assets of the Trust pursuant to the powers enumerated in Section 10.5. If investment of the Trust Fund is to be directed in whole or in part by an Investment Manager, the Plan Administrator shall deliver to the Trustee a copy of each of the following documents: (1) Instrument appointing the Investment Manager; (2) Instrument evidencing the Investment Manager's acceptance of such appointment; (3) Investment Manager's acknowledgment that it is a fiduciary of the Plan; and (4) Certificate evidencing the Investment Manager's current registration under the Investment Advisor's Act of 1940, whereupon the Investment Manager shall be the fiduciary with respect to the investment and management of such Trust assets and the Administrator and the Trustee shall have no responsibility therefore. The Trustee shall be fully protected in relying upon such documents until such time as it is otherwise notified in writing of some change by the Plan Administrator. (D) The party who has been charged with the duty and authority to direct the investment and management of Trust assets shall have such powers as may front time to time be necessary, appropriate or expedient to perform its functions in the management of the Trust. The term "Power" is used herein in its broad sense and as including powers, implied powers, rights, privileges and immunities. Without limiting the foregoing, such party shall have the following enumerated powers: (1) To sell, convey, exchange, lease, convert, transfer, divide, repair, partition, consent to partition, or otherwise dispose of any property at any time held in trust hereunder; (2) (a) Subject to the provisions of Sections 404, 405 and 407 of ERISA, to invest and reinvest the Trust and keep the Trust invested, without distinction between principal and income in such securities or in such property, real or personal, whenever situated, as they shall deem advisable and which is available for acquisition and actually acquired through the "Sponsoring Organization." Page 56 (b) Such investment may include but shall not be limited to annuity contracts, insurance contracts, real estate, management commodity assets, stocks, common or preferred, options, futures, contract options on futures in trust and participation certificates, bonds and mortgages (including part interests in bonds and mortgages or notes and mortgages insured by the Federal Housing Administration), leaseholds on improved and unimproved real estate, qualifying securities or qualifying real property of the Employer or any of its affiliates to the maximum extent permitted under ERISA, partnership interest, interests in joint ventures, insurance company investment contracts, trust funds established by the Trustee, common or collective trust fund or pooled investment fund maintained for the investment of qualified retirement trusts by a bank, trust company or other financial institution acting in a fiduciary or custodial capacity for the Plan, (investment in a common or collective trust or pooled investment fund shall constitute adoption of the instrument or agreement creating such fund), and other evidences indebtedness or ownership provided that such investment is an investment which is available for acquisition and actually acquired through the Sponsoring Organization. (3) Borrow money, and to secure the same by mortgage, deed of trust, or pledge of the Trust, or any assets constituting a part thereof, and to pay and discharge any and all indebtedness of the Trust or any liens or other charges against the Trust; (4) Borrow the cash values of annuity or insurance contracts. Such borrowed funds may be invested in any security or other property including premiums for insurance or annuity contracts. Notwithstanding anything herein to the contrary, the Administrator will only direct the Trustee to exercise its power hereunder to the extent that the unborrowed cash values of the contracts issued to the accounts of highly compensated Participants and officers or shareholders of the Employer are proportionally no greater than the unborrowed cash values of insurance contracts issued to the accounts of other Participants; (5) To have, with respect to bonds, shares of stock and other securities, all the rights, powers and privileges of an owner, including holding securities in the name of the Trustee or in the name of a nominee with or without disclosures of the Trust, voting, giving proxies, making payment of calls, assessments, or other sums deemed by the Trustee expedient for the protection of the Trust, exchanging securities, selling or exercising stock subscriptions or conversion rights, participating in foreclosures, reorganizations, consolidations, mergers, liquidations, pooling agreements, voting trusts, and assenting to corporate sales, leases and encumbrances; (6) Settle, compromise or submit to arbitration any claims, debts, or damages due or owing to or from the Trust, to commence to defend legal proceedings for or against the Trust; and to represent the Trust in all proceedings in any court of law or equity or before any other body or tribunal. The Trustee shall not exercise these powers conferred on it without first giving notice of the action proposed to be taken by the Administrator and obtaining written approval of such action from the Administrator; (7) Invest, on a uniform basis for all Participants, in an annual premium contract on his life issued by a legal reserve life insurance company and, if permitted by the policy purchased, at the Participant's retirement, to pay to such insurance company additional amounts from the Participant's account for the purpose of converting such policy so as to provide a retirement income; (8) Invest in any common or collective trust funds in which an Employee Benefit Trust is eligible to participate if such trust is established and maintained by the Trustee. The Declaration of Trust, as amended from time to time, shall be deemed to be a part hereof to the same extent as if fully set forth at length herein at the time of execution; and Page 57 (9) Deposit funds in any interest bearing savings account at the bank which may also serve as Trustee. (E) If a Participant or Beneficiary exercises control over the assets in his account under the Plan, the Trustee shall invest such account as directed by such Participant or Beneficiary in writing. Provided, however, that the Trustee shall have no duty or obligation with respect to any such individually directed investments beyond the duties and obligations imposed upon the Trustee in this Section 10 with respect to non-individually directed investments. (F) All directions concerning investments made by the Administrator or the Investment Manager shall be verbal unless the Trustee requires written confirmation. The Trustee shall be under no duty to question any directions of the Administrator or Investment Manager nor to review any securities or other property of the Trust constituting assets thereof with respect to which the Administrator or the Investment Manager has investment responsibility, nor to make any suggestions to such Administrator or the Investment Manager in connection therewith. The Trustee shall, as promptly as possible, comply with any written directions given by the Administrator or the Investment Manager hereunder. The Trustee shall not be liable, in any manner nor for any reason, for the making or retention of any investment pursuant to such directions of the Administrator or the Investment Manager, nor shall the Trustee be liable for its failure to invest any or all of the Trust in the absence of such written direction. The Administrator or the Investment Manager shall not direct the purchase, sale or retention of any assets of the Trust if such directions are not in compliance with the applicable provision of ERISA and any Regulations or Rulings issued thereunder. (G) The Trustee shall not be liable nor responsible for losses or unfavorable results arising from the Trustee's compliance with proper directions of the Administrator or Investment Manager which are made in accordance with the terms of the Plan and Trust and which are not contrary to the provisions of any applicable Federal or State statute regulating such investment and management of the assets of any employee benefit trust. 10.6 MISCELLANEOUS (A) This Trust is declared to be irrevocable. However, although the Employer has established the Trust with the bona fide intention and expectation that it will be able to make contributions to it indefinitely, the Employer is not and shall not be under any obligation or liability whatsoever to continue its contributions or to maintain the Plan for any given length of time. The Employer may in its sole and absolute discretion completely discontinue its contributions or terminate the Trust in accordance with the provisions of the Plan at any time. Unless sooner terminated in accordance with the other provisions of this agreement, this Trust shall in any event terminate: (1) Upon the date specified in a written notice of termination of the Plan and Trust, executed by the Employer and delivered to the Trustee; or (2) Upon the complete accomplishment of all the purposes for which the Plan is created. The assets of a Plan shall never inure to the benefit of any Employer and shall be held for the exclusive purposes of providing benefits to Participants in the Plan and their Beneficiaries and defraying reasonable expenses of administering the Trust. Any contribution made by the Employer because of a mistake of fact must be returned to the Employer within one year of the contribution. In the event that the Commissioner of Internal Revenue determines that the Plan is not initially qualified under the Internal Revenue Code, any contribution made incident to that initial qualification by the Employer must be returned to the Employer within one year after the date the initial qualification is denied, but only if the application for the qualification is made by the time prescribed by law for filing the Page 58 Employer's return for the taxable year in which the Plan is adopted, or such later date as the Secretary of the Treasury may prescribe. (B) The Trustee and the Administrator as well as all other fiduciaries under the Trust shall discharge their duties with respect to this Trust solely in the interest of the Participants and their Beneficiaries; and (1) For the exclusive purpose of providing benefits to Participants and their Beneficiaries, and defraying reasonable expenses of administering this Trust; (2) Acting prudently, with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims; (3) By diversifying the investments of the Trust so as to minimize the risk of large losses, unless under the circumstances it is clearly not prudent to do so; and (4) In accordance with the terms of this Trust insofar as they are consistent with Title I of the Employee Retirement Income Security Act of 1974. (C) The Trust created hereby shall not terminate or be held to have terminated upon any theory of merger based on the fact that the same persons are, by the terms of this instrument, made sole Participant and Trustee of said Trust; and said Participants are expressly given the right and privilege to participate in the profits, dividends, earnings and increases thereof, without regard to the relation as Trustee which such Participants may bear to said Trust. (D) The Trust will be administered in the Home State of the Trustee, and its validity, construction, and all rights hereunder shall be governed by ERISA and, to the extent not preempted, by the laws of the Home State of the Trustee. If any provisions of this Agreement shall be invalid or unenforceable, the remaining provisions shall continue to be fully effective. (E) Custodial Account, Custodian and Custodianship: If elected in the Adoption Agreement: Everywhere that the terms "Trust" or "Trustee" appear in this Prototype Defined Contribution Plan and Trust, they shall be interpreted to read and mean "Custodial Account" and "Custodian," respectively, and Plan assets will be held in a custodial account by the Sponsoring Organization as custodian and the agreement shall be called a "Custodial Account Agreement" in accordance with the provisions of the Custodial Account Agreement, as authorized by section 401(f) of the Internal Revenue Code. However, under section 403 of ERISA, certain plans must have a trustee; for such plans, the Custodial Account Agreement also serves as a trust agreement, and the adopting Employer shall appoint a Trustee to serve thereunder, as named in the Adoption Agreement. 10.7 Intentionally left blank. 10.8 SPECIAL RULES FOR VOTING INVESTMENT COMPANY SHARES All Investment Company Shares shall be registered in the name of the Trustee or its nominee. Subject to any requirement of applicable law, the Trustee will transmit to Participants or the Employer, as the case may be, copies of any notices of shareholders' meetings, proxies and proxy-soliciting materials, prospectuses and the annual or other reports to shareholders, with respect to Investment Company Shares held in the Trust. The Trustee shall act in accordance with directions received from such Participants or Employer, as the case may be, with respect to matters to be voted upon by the shareholders of the Investment Company. Such Page 59 directions must be in writing on a form approved by the Trustee, signed by the addressee and delivered to the Trustee within the time prescribed by it. The Trustee will not vote Investment Company shares as to which it receives no written directions. For the purposes of this Section, Investment Company means an open-end registered investment company provided that its prospectus offers its shares under the Plan. 10.9 Intentionally left blank. 10.10 LOANS TO PARTICIPANTS (A) All loans shall be secured by assignment of fifty percent of the Participant's entire right, title and interest in and to the trust fund, evidenced by the Participant's collateral promissory note for the amount of the loan payable to the order of the Trustee. 11.0 CASH OR DEFERRED ARRANGEMENT 11.1 PURPOSE AND EFFECTIVE DATE (A) Purpose. If so elected in the cash or deferred arrangement (CODA) adoption agreement, it is the intention of the Employer to incorporate a CODA, which satisfies the requirements of Section 401(k) of the Code, as part of its profit sharing plan. (B) Effective Date. The CODA is effective upon adoption by the adopting employer. 11.2 ELIGIBILITY TO PARTICIPATE (A) Notwithstanding any other provision of the Plan, an Employee will be eligible to make Elective Deferrals on the Entry Date next following the earlier of: (1) The date on which the Employee meets the age and service requirements specified in Section 6 of the Adoption Agreement, or (2) The date on which the Employee attains age 21 and is credited with one (1) Year of Service. 11.3 DEFINITIONS The following definitions shall apply for purposes of this amendment only: (A) "Actual Deferral Percentage" or "ADP" shall mean, for a specified group of Participants for a Plan Year, the average of the ratios (calculated separately for each Participant in such group) of (1) The amount of Employer contributions actually paid over to the trust on behalf of such Participant for the Plan Year to (2) The Participant's Compensation for such Plan Year (whether or not the Employee was a Participant for the entire Plan Year). Employer contributions on behalf of any Participant shall include: (a) Any Elective Deferrals made pursuant to the Participant's deferral election, including Excess Elective Deferrals, but excluding Elective Deferrals that are taken into account in the Contribution Percentage test (provided the ADP test is satisfied both with and without exclusion of these Elective Deferrals); and Page 60 (b) At the election of the Employer, Qualified Non-elective Contributions and Qualified Matching Contributions. For purposes of computing Actual Deferral Percentages, an Employee who would be a Participant but for the failure to make Elective Deferrals shall be treated as a Participant on whose behalf no Elective Deferrals are made. (B) "Adjustment Factor" shall mean the cost of living factor prescribed by the Secretary of the Treasury under Section 415(d) of the Code for years beginning after December 31, 1987, as applied to such items and in such manner as the Secretary shall provide. (C) "Affiliated Employer" shall mean any corporation which is a member of a controlled group of corporations (as defined in Section 414(b) of the Code) which includes the Employer; any trade or business (whether or not incorporated) which is under common control (as defined in Section 414(c) of the Code) with the Employer; any organization (whether or not incorporated) which is a member of an affiliated service group (as defined in Section 414(m) of the Code) which includes the Employer; and any other entity required to be aggregated with the Employer pursuant to regulations under Section 414(o) of the Code. (D) "Average Actual Deferral Percentage" shall mean the average (expressed as a percentage) of the Actual Deferral Percentages of the Participants in a group. (E) "Code" shall mean the Internal Revenue Code of 1986. (F) "Compensation" shall mean, unless otherwise elected in the CODA adoption agreement, compensation paid by the Employer to the Participant during the Plan Year which is required to be reported as wages on the Participant's Form W-2, or which, in the case of a self-employed individual, constitutes payment for services includible in the self-employed individual's gross income. For purposes of the EZFLEX Adoption Agreement: the Employer may elect that Compensation shall not include earnings prior to the date an Employee became a Plan Participant. This definition shall apply solely for purposes of determining the Actual Deferral Percentage under Section 11.4(F) and the Contribution Percentage under Section 11.8(A). (G) "Elective Deferrals" shall mean any Employer contributions made to the Plan at the election of the Participant, in lieu of cash Compensation, and shall include contributions made pursuant to a salary reduction agreement or other deferral mechanism. With respect to any taxable year, a Participant's Elective Deferral is the sum of all Employer contributions made on behalf of such Participant pursuant to an election to defer under any qualified CODA as described in Section 401(k) of the Code, any simplified employee pension cash or deferred arrangement as described in Section 402(h)(1)(B), any eligible deferred compensation plan under Section 457, any plan as described under Section 501(c)(18), and any Employer contributions made on the behalf of a Participant for the purchase of an annuity contract under Section 403(b) pursuant to a salary reduction agreement. (H) "Employee" shall mean employees of the Employer and shall include leased employees within the meaning of Section 414(n)(2) of the Code. Notwithstanding the foregoing, if such leased employees constitute less than twenty (20) percent of the Employer's Non-highly Compensated work force within the meaning of Section 414(n)(5)(C)(ii) of the Code, the term "Employee" shall not include those leased employees covered by a plan described in Section 414(n)(5)(B) of the Code unless otherwise provided by the terms of this plan other than this amendment. (I) "Employee Contributions" shall mean contributions to the plan made by a Participant during the Plan Year. (J) "Employer" shall mean the entity that establishes or maintains the plan, any successor to such entity, and any Affiliated Employer. Page 61 (K) "Excess Contributions" shall mean, with respect to any Plan Year, the excess of: (1) The aggregate amount of employer contributions actually taken into account in computing the ADP of Highly Compensated Employees for such Plan Year, over (2) The maximum amount of such contributions permitted by the ADP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of the ADPs, beginning with the highest of such percentages). (L) "Excess Elective Deferrals" shall mean those Elective Deferrals that are includible in a participant's gross income under Section 402(g) of the Code to the extent such participant's Elective Deferrals for a taxable year exceed the dollar limitation under such Code section. Excess Elective Deferrals shall be treated as annual additions under the plan. (M) "Family Member" shall mean an individual described in Section 414(q)(6)(B) of the Code. (N) "Highly Compensated Employee" shall mean an Employee described in Section 2.23 of the Plan and in Section 414(q) of the Code. (O) "Matching Contribution" shall mean any contribution to the plan made by the Employer for the Plan Year and allocated to a Participant's account by reason of the Participant's Employee Contributions or Elective Deferrals. Matching Contributions are subject to the distribution provisions applicable to Employer contributions in the underlying Plan document. (P) "Non-highly Compensated Employee" shall mean the Employee of the Employer who is neither a Highly Compensated Employee nor a Family Member. (Q) "Participant" shall mean any Employee of the Employer who has met the eligibility and participation requirements of the Plan. (R) "Plan Year" shall mean the Plan Year otherwise specified in the Plan. (S) "Qualified Non-elective Contributions" shall mean contributions (other than Matching Contributions or Qualified Matching Contributions) made by the Employer and allocated to Participant's accounts that the Participants may not elect to receive in cash until distributed from the Plan; that are nonforfeitable when made; and that are distributable only in accordance with the distribution provisions that are applicable to Elective Deferrals and Qualified Matching Contributions. (T) "Qualified Matching Contributions" shall mean Matching Contributions which are subject to the distribution and nonforfeitability requirements under Section 401(k) of the Code when made. 11.4 ELECTIVE DEFERRALS (A) Allocation of Deferrals. The Employer shall contribute and allocate to each Participant's Elective Deferral account an amount equal to the amount of a Participant's Elective Deferrals. (B) Elective Deferrals Pursuant to a Salary Reduction Agreement. To the extent provided in the CODA adoption agreement, a Participant may elect to have Elective Deferrals made under this plan. Elective Deferrals shall include both single-sum and continuing contributions made pursuant to a salary reduction agreement. A Participant shall designate the amount and frequency of his or her Elective Deferrals in the form and manner specified by the Plan Administrator. Page 62 (1) Commencement of Elective Deferrals: A Participant shall be afforded a reasonable period at least once each calendar year, as specified in Section 10.2 of the CODA adoption agreement, to elect to commence Elective Deferrals. Such election shall not become effective before the time specified in Section 10.2 of the CODA adoption agreement. (2) Modification and Termination of Elective Deferrals. A Participant's election to commence Elective Deferrals shall remain in effect until modified or terminated. A Participant shall be afforded a reasonable period at least once each calendar year, as specified in Section 10.2(e) of the CODA adoption agreement, to modify the amount or frequency of his or her Elective Deferrals. A Participant may terminate his or her election to make Elective Deferrals at any time. (C) Cash bonuses. To the extent provided in Section 10.2 of the CODA adoption agreement, a Participant may also base Elective Deferrals on cash bonuses that, at the Participant's election, may be contributed to the CODA or received by the Participant in cash. (1) Time and Manner of Election. A Participant shall be afforded a reasonable period, as provided in Section 10.2(f) of the CODA adoption agreement, to elect to defer amounts described in Section 11.4(c) above to the CODA. Such election shall not become effective before the time specified in Section 10.2(a) of the CODA adoption agreement. (D) Maximum Amount of Elective Deferrals. A Participant's Elective Deferrals are subject to any limitations imposed in Section 10.2 of the CODA adoption agreement and any further limitations under the plan. No Participant shall be permitted to have Elective Deferrals made under this Plan during any calendar year in excess of the maximum dollar limitation under Section 402(g) of the Code in effect at the beginning of the calendar year. (E) Distribution of Excess Elective Deferrals. A participant may assign to this Plan any Excess Elective Deferrals made during a taxable year of the Participant by notifying the Plan Administrator on or before the date specified in the adoption agreement of the amount of the Excess Elective Deferrals to be assigned to the Plan. Notwithstanding any other provisions of the Plan, Excess Elective Deferrals, plus any income and minus any loss allocable thereto, shall be distributed no later than April 15 to any Participant to whose account Excess Elective Deferrals were assigned for the preceding year and who claims Excess Elective Deferrals for such taxable year. (1) The Participant's claim shall be in writing, shall be submitted to the plan administrator not later than the date elected in Section 15 of the CODA adoption agreement; shall specify the amount of the Participant's Excess Elective Deferral for the preceding calendar year; and shall be accompanied by the Participant's written statement that if such amounts are not distributed, such Excess Elective Deferrals, when added to amounts deferred under other plans or arrangements described in Sections 401(k), 408(k), or 403(b) of the Code, will exceed the limit imposed on the Participant by Section 402(g) of the Code for the year in which the deferral occurred. (2) Determination of income and loss: Excess Elective Deferrals shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Elective Deferrals is the sum of: (a) Income or loss allocable to the Participant's Elective Deferral account for the taxable year multiplied by a fraction, the numerator of which is such Participant's Excess Elective Deferrals for the year and the Page 63 denominator is the Participant's account balance attributable to Elective Deferrals without regard to any income or loss occurring during such taxable year; and (b) Ten percent of the amount determined under (a) multiplied by the number of whole calendar months between the end of the Participant's taxable year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (F) Actual Deferral Percentage. The Actual Deferral Percentage "ADP" for Participants who are Highly Compensated Employees for each Plan Year and the ADP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: (1) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 1.25; or (2) The ADP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ADP for Participants who are Non-highly Compensated Employees for the Plan Year multiplied by 2.0, provided that the ADP for Participants who are Highly Compensated Employees does not exceed the ADP for Participants who are Non-highly Compensated Employees by more than two (2) percentage points. (G) Special Rules: (1) The ADP for any Participant who is a Highly Compensated Employee for the Plan Year and who is eligible to have Elective Deferrals (and Qualified Non-elective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) allocated to his accounts under two or more arrangements described in Section 401(k) of the Code, that are maintained by the Employer, shall be determined as if such Elective Deferrals (and, if applicable, such Qualified Non-elective Contributions or Qualified Matching Contributions, or both) were made under a single arrangement. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different Plan Years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (2) In the event that this Plan satisfies the requirements of Section 401(k), 401(a)(4), or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the ADP of Employees as if all such plans were a single plan. For Plan Years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(k) of the Code only if they have the same Plan Year. (3) For purposes of determining the ADP of a Participant who is a 5-percent owner or one of the ten most highly-paid Highly Compensated Employees, the Elective Deferrals (and Qualified Non-elective Contributions or Qualified Matching Contributions, or both, if treated as Elective Deferrals for purposes of the ADP test) and Compensation of such Participant shall include the Elective Deferrals (and, if applicable, Qualified Non-elective Contributions and Qualified Matching Contributions, or both) and Compensation for the Plan Year of Family Members (as defined in Section 414(q)(6) of the Code). Family Members, with respect to such Highly Compensated Employees, shall be disregarded as separate employees in determining the ADP both for Participants who are Non-highly Compensated Employees and for Participants who are Highly Compensated Employees. (4) For purposes of determining the ADP test, Elective Deferrals, Qualified Non-elective Contributions and Qualified Matching Contributions must be Page 64 made before the last day of the twelve-month period immediately following the Plan Year to which contributions relate. (5) The Employer shall maintain records sufficient to demonstrate satisfaction of the ADP test and the amount of Qualified Non-elective Contributions or Qualified Matching Contributions, or both, used in such test. (6) The determination and treatment of the ADP amounts of any participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. (H) Distribution of Excess Contributions. Notwithstanding any other provision of this Plan, Excess Contributions, plus any income and minus any loss allocable thereto, shall be distributed no later than the last day of each Plan Year to Participants to whose accounts such Excess Contributions were allocated for the preceding Plan Year. If such excess amounts are distributed more than 2 1/2 months after the last day of the Plan Year in which such excess amounts arose, a ten (10) percent excise tax will be imposed on the Employer maintaining the Plan with respect to such amounts. Such distributions shall be made to Highly Compensated Employees on the basis of the respective portions of the Excess Contributions attributable to each of such Employees. Excess Contributions shall be allocated to Participants who are subject to the family member aggregation rules of Section 414(q)(6) of the Code in the manner prescribed by the regulations. Excess Contributions (including the amounts recharacterized) shall be treated as Annual Additions under the Plan. (1) Determination of Income or Loss: Excess Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Contributions is the sum of: (a) Income or loss allocable to the Participant's Elective Deferral account (and, if applicable, the Qualified Non-elective Contribution account or the Qualified Matching Contributions account or both) for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Contributions for the year and the denominator is the Participant's account balance attributable to Elective Deferrals (and Qualified Non-Elective Contributions or Qualified Matching Contributions, or both, if any of such contributions are included in the ADP test) without regard to any income or loss occurring during such Plan Year; and (b) Ten Percent of the amount determined under (a) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (2) Accounting for Excess Contributions: Excess Contributions shall be distributed from the Participant's Elective Deferral account and Qualified Matching Contribution account (if applicable) in proportion to the Participant's Elective Deferrals and Qualified Matching Contributions (to the extent used in the ADP test) for the Plan Year. Excess Contributions shall be distributed from the Participant's Qualified Non-elective Contribution account only to the extent that such Excess Contributions exceed the balance in the Participant's Elective Deferral account and Qualified Matching Contribution account. (3) A Participant may treat his Excess Contributions as an amount distributed to the Participant and then contributed by the Participant to the Plan. Recharacterized amounts will remain nonforfeitable and subject to the same distribution requirements as Elective Deferrals. Amounts may not be recharacterized by a Highly Compensated Employee to the extent that such amount in combination with other Employee Contributions made by that Employee would exceed any stated limit under the Plan on Employee Contributions. Recharacterization must occur no later than two and one-half months after the last day of the Plan Year in which such Excess Contributions arose and is deemed to occur no earlier than the date the last Page 65 Highly Compensated Employee is informed in writing of the amount recharacterized and the consequences thereof. Recharacterized amounts will be taxable to the Participant for the Participant's tax year in which the Participant would have received them in cash. (I) Qualified Non-Elective Contributions (1) The Employer may elect to make Qualified Non-elective Contributions under the Plan on behalf of Employees as provided in the Adoption Agreement. (2) In addition, in lieu of distributing Excess Contributions as provided in Section 11.4(H) of the Plan, or Excess Aggregate Contributions as provided in Section 11.8(D) of the Plan, and to the extent elected by the Employer in the Adoption Agreement, the Employer may make Qualified Non-elective Contributions on behalf of Non-highly Compensated Employees that are sufficient to satisfy either the Actual Deferral Percentage test or the Average Contribution Percentage test, or both, pursuant to regulations under the Code. (J) Separate Accounts. A separate account shall be maintained for that portion of a Participant's accrued benefit that is attributable to Elective Deferrals and a separate account shall be maintained for that portion of a Participant's accrued benefit that is attributable to Qualified Non-elective Contributions. Each separate account shall be credited with the applicable contributions, earnings and losses, distributions, and other applicable adjustments. (K) Under no circumstances may Elective Deferrals and Qualified Non-elective Contributions be contributed and allocated to the trust under the plan later than thirty (30) days after the close of the Plan Year for which the contributions are deemed to be made, or such other time as provided in applicable regulations under the Code. 11.5 TOP-HEAVY REQUIREMENTS (A) If the underlying plan document does not designate another plan to satisfy the top-heavy requirements of Section 416 of the Code, or if the underlying plan document allocates less than three (3) percent of each Non-key Employee's top-heavy Compensation under the Plan to such Participant's account for a Plan Year, then the minimum top-heavy allocation under the Plan shall be allocated on behalf of Non-key Employees in accordance with Section 416 of the Code. Such allocation shall not be less than the lesser of three (3) percent of such Participant's Compensation or, in the case where the Employer has no defined benefit plan which designates this Plan to satisfy Section 401 of the Code, the largest percentage of Employer contributions and forfeitures, as a percentage of the first $200,000 of the Key Employee's compensation, allocated on behalf of any Key Employee for that year. (B) For purposes of satisfying the minimum contribution on behalf of each Non-key Employee under Section 11.5(A) above, Elective Deferrals and Matching Contributions shall not be taken into account. (C) For purposes of determining whether a plan is top-heavy under Section 416 of the Code, Elective Deferrals are considered employer contributions. 11.6 SPECIAL DISTRIBUTION RULES (A) Elective Deferrals, Qualified Non-elective Contributions and Qualified Matching Contributions and income allocable thereto are not distributable to the Participant, or the Participant's Beneficiary or Beneficiaries, in accordance with the Participant's or Beneficiary's election, earlier than upon separation from service, death, or disability. (B) Such amounts may also be distributed upon: Page 66 (1) Termination of the Plan without the establishment of another defined contribution plan. (2) The disposition by a corporation to an unrelated corporation of substantially all of the assets (within the meaning of Section 409(d)(2) of the Code) used in a trade or business of such corporation if such corporation continues to maintain this Plan after the disposition, but only with respect to Employees who continue employment with the corporation acquiring such assets. (3) The disposition by a corporation to an unrelated entity of such corporation's interest in a subsidiary (within the meaning of Section 409(d)(3) of the Code) if such corporation continues to maintain this Plan, but only with respect to Employees who continue employment with such subsidiary. (4) The hardship of the Participant as described in Section 11.6(C). (5) The attainment of age 59 1/2 in the case of a Profit Sharing Plan. All distributions that may be made pursuant to one or more of the foregoing distributable events are subject to the spousal and participant consent requirements (if applicable) contained in Sections 401(a)(11) and 417 of the Code. (C) Distribution of Elective Deferrals (and earnings thereon accrued as of December 31, 1988) may be made to a Participant in the event of hardship. For the purposes of this Section, hardship is defined as an immediate and heavy financial need of the Employee where such Employee lacks other available resources. Hardship distributions are subject to the spousal consent requirements contained in Sections 401(a)(11) and 417 of the Code. (1) The following are the only financial needs considered immediate and heavy: deductible medical expenses (within the meaning of Section 213(d) of the Code) of the Employee, the Employee's spouse, children, or dependents; the purchase (excluding mortgage payments) of a principal residence for the Employee; payment of tuition for the next quarter or semester of post-secondary education for the Employee, the Employee's spouse, children or dependents, or the need to prevent the eviction of the Employee from, or a foreclosure on the mortgage of, the Employee's principal residence. (2) A distribution will be considered as necessary to satisfy an immediate and heavy financial need of the Employee only if: (a) The Employee has obtained all distributions, other than hardship distributions, and all nontaxable loans under all plans maintained by the Employer; (b) All plans maintained by the Employer provide that the Employee's Elective Deferrals (and Employee Contributions) will be suspended for twelve months after the receipt of the hardship distribution; (c) The distribution is not in excess of the amount of an immediate and heavy financial need; and (d) All plans maintained by the Employer provide that the Employee may not make Elective Deferrals for the Employee's taxable year immediately following the taxable year of the hardship distribution in excess of the applicable limit under Section 402(g) of the Code for such taxable year less the amount of such Employee's Elective Deferrals for the taxable year of the hardship distribution. (3) The determination of the existence of financial hardship, and the amount required to be distributed to meet the need created by the hardship, Page 67 shall be made by a person or persons designated by the Employer (unless a different person or persons are given authority elsewhere in the plan to approve hardship distributions). (4) All determinations regarding financial hardship shall be made in accordance with written procedures that are established by the person or persons described in Section 11.6(C)(3) above, and applied in a uniform and nondiscriminatory manner. Such written procedures shall specify the requirements for requesting and receiving distributions on account of hardship, including what forms must be submitted and to whom. All determinations regarding financial hardship must be made in accordance with objective criteria set forth in Section 7.2(a) through (c) of the CODA adoption agreement. Such determinations must also comply with applicable regulations under the Code. (5) Processing of applications and distributions of amounts under this Section, on account of a bona fide financial hardship, must be made as soon as administratively feasible. (6) If this Plan document provides for distributions on account of hardship, but does not comply with the requirements for hardship as stated in this Section 11.6(C), and as otherwise provided in applicable regulations under the Code, then Elective Deferrals may be distributed on account of hardship only in accordance with this Section 11.6(C). 11.7 MATCHING CONTRIBUTIONS (A) If elected by the Employer in the CODA adoption agreement, the Employer will make Matching Contributions to the Plan. The amount of such Matching Contributions shall be calculated by reference to the Participant's Elective Deferrals as specified by the Employer in the Adoption Agreement. (B) Separate Account. A separate account shall be maintained for that portion of a Participant's accrued benefit that is attributable to Matching Contributions. Such separate account shall be credited with the applicable contributions, earnings and losses, distributions, and other adjustments. (C) Vesting. Matching Contributions will be vested in accordance with the Employer's election in Section 13.2 of the CODA adoption agreement. In any event, Matching Contributions shall be fully vested at Normal Retirement Age, upon the complete or partial termination of the Profit Sharing Plan, or upon the complete discontinuance of Employer contributions. (D) Forfeitures. Forfeitures of Matching Contributions other than Excess Aggregate Contributions shall be made in accordance with Section 4.2 of the Plan. (E) Qualified Matching Contributions. If elected by the Employer in Section 12 of the CODA adoption agreement, the Employer will make Qualified Matching Contributions to the plan. The amount of such Qualified Matching Contributions shall be calculated by reference to the Participant's Elective Deferrals as specified in the CODA adoption agreement. 11.8 LIMITATIONS ON EMPLOYEE CONTRIBUTIONS AND MATCHING CONTRIBUTIONS (A) The Average Contribution Percentage ("ACP") for Participants who are Highly Compensated Employees for each Plan year and the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year must satisfy one of the following tests: Page 68 (1) The ACP for Participants who are Highly Compensated Employees for each Plan Year shall not exceed the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by 1.25; or (2) The ACP for Participants who are Highly Compensated Employees for the Plan Year shall not exceed the ACP for Participants who are Non-highly Compensated Employees for the same Plan Year multiplied by two (2), provided that the ACP for Participants who are Highly Compensated Employees does not exceed the ACP for Participants who are Non-highly Compensated Employees by more than two (2) percentage points. (B) Definitions: (1) "Aggregate Limit" shall mean the sum of: (a) 125 percent of the greater of the ADP of the Non-highly Compensated Employees for the Plan Year or the ACP of Non-highly Compensated Employees under the plan subject to Code Section 401(m) for the Plan Year beginning with or within the Plan Year of the CODA and (b) The lesser of 200% or two plus the lesser of such ADP or ACP. (2) "Average Contribution Percentage" shall mean the average of the Contribution Percentages of the Eligible Participants in a group. (3) "Contribution Percentage" shall mean the ratio (expressed as a percentage) of the Participant's Contribution Percentage Amounts to the Participant's Compensation for the Plan Year (whether or not the Employee was a Participant for the entire Plan Year). (4) "Contribution Percentage Amounts" shall mean the sum of the Employee Contributions. Matching Contributions, and Qualified Matching Contributions (to the extent not taken into account for purposes of the ADP test) made under the plan on behalf of the Participant for the Plan Year. Such Contribution Percentage Amounts shall include forfeitures of Excess Aggregate Contributions or Matching Contributions allocated to the Participant's account which shall be taken into account in the year in which such forfeiture is allocated. If so elected in the adoption agreement the Employer may include Qualified Non-elective Contributions in the Contribution Percentage Amounts. The employer also may elect to use Elective Deferrals in the Contribution Percentage Amounts so long as the ADP test is met before the Elective Deferrals are used in the ACP test and continues to be met following the exclusion of those Elective Deferrals that are used to meet the ACP test. (5) "Eligible Participant" shall mean any Employee who is eligible to make an Employee Contribution, or an Elective Deferral (if the employer takes such contributions into account in the calculation of the Contribution Percentage), or to receive a Matching Contribution (including forfeitures) or a Qualified Matching Contribution. If an Employee Contribution is required as a condition of participation in the Plan, any Employee who would be a Participant in the Plan if such Employee made such a contribution shall be treated as an Eligible Participant on behalf of whom no Employee Contributions are made. (6) "Employee Contribution" shall mean any contribution made to the Plan by or on behalf of a Participant that is included in the Participant's gross income in the year in which made and that is maintained under a separate account to which earnings and losses are allocated. (7) "Matching Contribution" shall mean an Employer contribution made to this or any other defined contribution plan on behalf of a Participant on Page 69 account of an Employee Contribution made by such Participant, or on account of a Participant's Elective Deferral, under a plan maintained by the Employer. (C) Special Rules: (1) Multiple Use: If one or more Highly Compensated Employees participate in both a CODA and a plan subject to the ACP test maintained by the Employer and the sum of the ADP and ACP of those Highly Compensated Employees subject to either or both tests exceeds the Aggregate limit, then the ACP of those Highly Compensated Employees who also participate in a CODA will be reduced (beginning with such Highly Compensated Employee whose ACP is the highest) so that the limit is not exceeded. The amount by which each Highly Compensated Employee's Contribution Percentage Amounts is reduced shall be treated as an Excess Aggregate Contribution. The ADP and ACP of the Highly Compensated Employees are determined after any corrections required to meet the ADP and ACP tests. Multiple use does not occur if both the ADP and ACP of the Highly Compensated Employees does not exceed 1.25 multiplied by the ADP and ACP of the Non-highly Compensated Employees. (2) For purposes of this Section, the Contribution Percentage for any Participant who is a Highly Compensated Employee and who is eligible to have Contribution Percentage Amounts allocated to his account under two or more plans described in Section 401(a) of the Code, or arrangements described in Section 401(k) of the Code that are maintained by the Employer, shall be determined as if the total of such Contribution Percentage Amounts was made under such plan. If a Highly Compensated Employee participates in two or more cash or deferred arrangements that have different plan years, all cash or deferred arrangements ending with or within the same calendar year shall be treated as a single arrangement. (3) In the event that that Plan satisfies the requirements of Section 401(m), 401(a)(4) or 410(b) of the Code only if aggregated with one or more other plans, or if one or more other plans satisfy the requirements of such Sections of the Code only if aggregated with this Plan, then this Section shall be applied by determining the Contribution Percentage of Employees as if all such plans were a single plan. For plan years beginning after December 31, 1989, plans may be aggregated in order to satisfy Section 401(m) of the Code only if they have the same Plan Year. (4) For purposes of determining the Contribution Percentage of a Participant who is a five-percent owner or one of the ten most highly-paid Highly Compensated Employees, the Contribution Percentage Amounts and Compensation of such Participant shall include the Contribution Percentage Amounts and Compensation for the Plan Year of Family Members (as defined in Section 414(g)(6) of the Code). Family Members, with respect to Highly Compensated Employees, shall be disregarded as separate Employees in determining the Contribution Percentage both for Participants who are non-highly Compensated Employees and for Participants who are Highly Compensated Employees. (5) For purposes of determining the Contribution Percentage test, Employee Contributions are considered to have been made in the Plan Year in which contributed to the Trust. Matching Contributions and Qualified Non-elective Contributions will be considered made for a Plan Year if made no later than the end of the twelve-month period beginning on the day after the close of the Plan Year. (6) The Employer shall maintain records sufficient to demonstrate satisfaction of the ACP test and the amount of Qualified Non-elective Contributions or Qualified Matching Contributions, or both, used in such test. (7) The determination and treatment of the Contribution Percentage of any Participant shall satisfy such other requirements as may be prescribed by the Secretary of the Treasury. Page 70 (D) Distribution of Excess Aggregate Contributions (1) Notwithstanding any other provision of this Plan, Excess Aggregate Contributions, plus any income and minus any loss allocable thereto, shall be forfeited, if forfeitable, or if not forfeitable, distributed no later than the last day of each Plan year to Participants to whose accounts such Excess Aggregate Contributions were allocated for the preceding Plan Year. Excess Aggregate Contributions shall be allocated to Participants who are subject to the Family Member aggregation rules of Section 414(q)(6) of the Code in the manner prescribed by the regulations. If such Excess Aggregate Contributions are distributed more than 2 1/2 after the last day of the Plan Year in which such excess amounts arose, a ten (10) percent excise tax will be imposed on the Employer maintaining the Plan with respect to those amounts. Excess Aggregate Contributions shall be treated as Annual Additions under the Plan. (2) Determination of Income or Loss: Excess Aggregate Contributions shall be adjusted for any income or loss up to the date of distribution. The income or loss allocable to Excess Aggregate Contributions is the sum of: (a) Income or loss allocable to the Participant's Employee Contribution account, Matching Contribution account (if any, and if all amounts therein are not used in the ADP test) and, if applicable, Qualified Non-elective Contribution account and Elective Deferral account for the Plan Year multiplied by a fraction, the numerator of which is such Participant's Excess Aggregate Contributions for the year and the denominator is the Participant's account balance(s) attributable to Contribution Percentage Amounts without regard to any income or loss occurring during such Plan Year; and (b) Ten Percent of the amount determined under (a) multiplied by the number of whole calendar months between the end of the Plan Year and the date of distribution, counting the month of distribution if distribution occurs after the 15th of such month. (3) Forfeitures of Excess Aggregate Contributions: Forfeitures of Excess Aggregate Contributions may either be reallocated to the accounts of Non-highly Compensated Employees or applied to reduce Employer contributions, as elected by the Employer in Section 17 of the CODA Adoption Agreement. (4) Accounting for Excess Aggregate Contributions: Excess Aggregate Contributions shall be forfeited, if forfeitable or distributed on a pro-rata basis from the Participant's Employee Contribution account, Matching Contribution account, Qualified Matching Contribution account (and, if applicable, the Participant's Qualified Non-elective Contribution account or Elective Deferral account, or both). (E) "Excess Aggregate Contributions" shall mean, with respect to any Plan Year, the excess of: (1) The aggregate Contribution Percentage Amounts taken into account in computing the numerator of the Contribution Percentage actually made on behalf of Highly Compensated Employees for such Plan Year, over (2) The maximum Contribution Percentage Amounts permitted by the ACP test (determined by reducing contributions made on behalf of Highly Compensated Employees in order of their Contribution Percentages beginning with the highest of such percentages). Such determination shall be made after first determining Excess Elective Deferrals pursuant to Section 11.4(E) and then determining Excess Contributions pursuant to Section 11.4(H). Page 71 11.9 PROFITS NOT REQUIRED UNDER THE CODA (A) If the Employer elects, Employer contributions to the CODA may be made without regard to profits in accordance with Section 10.1 of the CODA Adoption Agreement. The Plan shall continue to be designed to qualify as a profit sharing plan for purposes of Section 401(a), 402, 412, and 417 of the Code. 11.10 FORFEITURES The Participant's Accrued Benefit derived from Elective Deferral, Qualified Non-elective Contributions, Employee Contributions, and Qualified Matching Contributions is nonforfeitable. Separate accounts for Elective Deferrals, Qualified Non-elective Contributions, Employee Contributions, Matching Contributions, and Qualified Matching Contributions will be maintained for each Participant. Each account will be credited with the applicable contributions and earnings thereon. Page 72 EX-16 32 EXHIBIT 16 Small-Cap Opportunity Fund--Institutional Class TOTAL RETURN FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1994 ERV(1/n) T = [(-----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Period ended May 31, 1994: ERV = $999.75 p = $1,000 n = 1 999.75(1/1) T = [(---------) - 1] = (0.03)% 1,000 Small-Cap Opportunity Fund--Retail Class TOTAL RETURN FOR THE PERIOD FROM INCEPTION THROUGH MAY 31, 1994 ERV(1/n) T = [(-----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Period ended May 31, 1994: ERV = $955.00 p = $1,000 n = 1 955.00(1/1) T = [(---------) - 1] = (4.50)% 1,000 COLORADO TAX-EXEMPT FUND TAX-EQUIVALENT YIELD FOR THE 30-DAY PERIOD ENDED AUGUST 31, 1991 Tax-Equivalent Yield = 7.76% Formula: Tax-Equivalent Yield = (30-day yield) + (1 - Stated Tax Rate) 30-day yield = 5.60% Stated Tax Rate = 28% 1991 Federal Tax Bracket 7.76% = 5.60% + (1 - 28%) Colorado Tax-Equivalent Yield = 8.36% Formula: 8.36% = 5.60% + (1-33%) Stated Tax Rate = 5% 1991 Colorado Tax Bracket + 28% = 33% TOTAL RETURN FOR THE PERIOD JUNE 1, 1991 THROUGH AUGUST 31, 1991 ERV(1/n) T = [ (----) - 1 ] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. P = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. ERV = $ 1,016.99 p = $1,000 n = 1/4 1,016.99(1/1/4) T = [ (--------) - 1 ] = 1.70% 1,000 GROWTH AND INCOME TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990 ERV 1/n T = [(----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Year ended May 31, 1990: ERV = $1,094.19 p = $1,000 n = 1 1,094.19(1/1) T = [(------------) - 1] = 9.42 1,000 BLUE CHIP TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990 ERV 1/n T = [(----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Year ended May 31, 1990: ERV = $1,067.12 p = $1,000 n = 1 1,067.12(1/1) T = [(------------) - 1] = 6.71 1,000 MIDCO GROWTH TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990 ERV 1/n T = [(----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Year ended May 31, 1990: ERV = $1,101.39 p = $1,000 n = 1 1,101.39(1/1) T = [(------------) - 1] = 10.14 1,000 INTERMEDIATE BOND TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990 ERV 1/n T = [(----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Year ended May 31, 1990: ERV = $1,029.73 p = $1,000 n = 1 1,029.73(1/1) T = [(------------) - 1] = 2.97 1,000 INTERMEDIATE-TERM BOND Schedule for Computation of Performance Quotations --------------------------------------- YIELD FOR THE 30-DAY PERIOD ENDED MAY 31, 1990 a-b Yield = 2 [ ( ------- + 1 )6 - 1] cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = net asset value per share on the last day of the period. For the 30 day period ended May 31, 1990 a = $ 851,058.37 b = $ 53,143.20 c = 10,805,237.196 d = $ 9.91 Yield = 9.110% LONG-TERM BOND TOTAL RETURN FOR THE YEAR ENDED MAY 31, 1990 ERV 1/n T = [(----) - 1] p Where: T = average total return for the period. ERV = ending redeemable value at the end of the period covered by the computation of a hypothetical $1,000 payment made at the beginning of the period. p = hypothetical initial payment of $1,000. n = period covered by the computation, expressed in terms of years. Year ended May 31, 1990: ERV = $1,022.49 p = $1,000 n = 1 1,022.49(1/1) T = [(------------) - 1] = 2.25 1,000 LONG-TERM BOND Schedule for Computation of Performance Quotations --------------------------------------- YIELD FOR THE 30-DAY PERIOD ENDED MAY 31, 1990 a-b Yield = 2 [ ( ------- + 1 )6 - 1] cd Where: a = dividends and interest earned during the period. b = expenses accrued for the period (net of reimbursements). c = the average daily number of shares outstanding during the period that were entitled to receive dividends. d = net asset value per share on the last day of the period. For the 30 day period ended May 31, 1990 a = $ 139,952.04 b = $ 12,064.48 c = 1,779,472.442 d = $ 10.11 Yield = 8.683% EX-27.(A) 33 EXHIBIT 27(A)
6 0000357204 BLUE CHIP FUND 5 BLUE CHIP FUND (MODERN VALUE) 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 47970 64866 3496 0 9 68371 0 0 85 85 0 46690 3921 3574 184 0 4516 0 16896 68286 1477 134 0 (677) 934 8541 6773 16248 0 (977) (4827) 0 1073 (1060) 334 15740 227 801 0 0 399 0 765 61407 14.70 .25 4.03 (.27) (1.30) 0 17.41 1.25 0 0
EX-27.(B) 34 EXHIBIT 27(B)
6 0000357204 GROWTH & INCOME FUND (FORMERLY, EQUITY INCOME FUND) 6 GROWTH & INCOME FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 19987 25124 422 6 0 25552 108 0 57 165 0 19257 2060 2942 0 (144) 1137 0 5137 25387 650 61 0 341 370 3441 2696 6507 0 (540) (1458) 0 847 (1511) 151 (5513) 26 0 0 (845) 179 0 419 26249 10.50 .15 2.57 (.24) (.66) 0 12.31 1.51 0 0
EX-27.(C) 35 EXHIBIT 27(C)
6 0000357204 LONG TERM BOND FUND 8 LONG TERM BOND FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 23593 23721 1382 7 0 25110 0 0 40 40 0 24577 2615 3389 29 0 0 337 127 25070 0 2096 0 (272) 1825 811 (1392) 2451 0 (1852) 0 0 629 (1571) 168 25070 56 0 0 (474) 135 0 322 30056 9.87 .61 (.27) (.62) 0 0 9.59 1.07 0 0
EX-27.(D) 36 EXHIBIT 27(D)
6 0000357204 COLORADO TAX EXEMPT FUND 19 COLORADO TAX EXEMPT FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 13972 14128 286 1 0 14415 478 0 15 493 0 13764 1312 1008 12 0 0 (10) 156 13922 0 604 0 (50) 554 (7) (140) 407 0 (540) 0 0 334 63 32 3130 0 0 (2) (3) 57 0 163 11373 10.70 .52 (.10) (.51) 0 0 10.61 1.43 0 0
EX-27.(E) 37 EXHIBIT 27(E)
6 0000357204 SMALL CAP OPPORTUNITY FUND 24 SMALL CAP OPPORTUNITY FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 19273 24420 31 180 0 24631 646 0 34 680 0 18314 1122 667 1 0 489 0 5147 23951 205 62 0 (226) 41 1021 4454 5516 0 (49) (421) 0 557 (68) 24 13314 9 0 0 (111) 174 0 384 17056 15.95 .04 5.86 (.06) (.44) 0 21.35 2.25 0 0
EX-27.(F) 38 EXHIBIT 27(F)
6 0000357204 MIDCO GROWTH FUND 2 MIDCO GROWTH FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 432150 656390 3976 19 0 660385 2324 0 1571 3895 0 400528 28664 24963 0 (3131) 34853 0 224240 656490 1931 1736 0 (5931) (2264) 53406 126272 177414 0 0 (19219) 0 8692 (4438) 949 229054 0 666 (867) 0 3558 0 6063 538478 17.12 (.08) 6.58 0 (.72) 0 22.90 1.08 0 0
EX-27.(G) 39 EXHIBIT 27(G)
6 0000357204 INTERM. TERM BOND FUND 7 INTERM. TERM BOND FUND 1,000 12-MOS MAY-31-1996 JUN-01-1995 MAY-31-1996 82905 81974 1297 8 0 83279 0 0 240 240 0 85686 8225 9757 86 0 0 (1802) (931) 83039 0 5993 0 738 5255 850 (2092) 4013 0 (5271) 0 0 2103 (3786) 401 (2577) 102 0 0 (2651) 409 0 838 90033 10.27 .60 (.17) (.60) 0 0 10.10 .92 0 0
EX-27.(H) 40 EXHIBIT 27(H)
6 0000357204 GROWTH & INCOME FUND (FORMERLY, EQUITY INCOME FUND) 062 GROWTH & INCOME FUND - RETAIL 1,000 4-MOS MAY-31-1996 JUN-01-1995 SEP-30-1995 26767 28879 1092 9 0 29980 542 0 226 768 0 25553 349 368 0 0 1547 0 2112 29212 281 24 0 143 162 2298 (329) 6507 0 (187) 0 0 13 (374) 2 (1688) 26 0 0 (845) 66 0 146 3943 10.51 .05 .72 (.06) 0 0 11.22 1.61 0 0
EX-27.(I) 41 EXHIBIT 27(I)
6 0000357204 MIDCO GROWTH FUND 022 MIDCO GROWTH FUND - RETAIL CLASS 1,000 4-MOS MAY-31-1996 JUN-01-1995 SEP-30-1995 369936 531531 5219 36 0 536786 4857 0 1619 6476 0 351876 1525 1502 0 (925) 17765 0 161594 530310 719 787 0 (1565) (59) 17099 63626 80666 0 0 0 0 102 (1603) 0 102874 0 666 867 0 1069 0 1594 28977 17.10 (.01) 3.12 0 0 0 20.21 1.13 0 0
EX-27.(J) 42 EXHIBIT 27(J)
6 0000357204 SMALL CAP OPPORTUNITY FUND 242 SMALL CAP OPPORTUNITY FUND - RETAIL 1,000 4-MOS MAY-31-1996 JUN-01-1995 SEP-30-1995 13847 15906 54 71 0 16031 67 0 14 81 0 13652 59 59 (1) 0 240 0 2059 15950 54 20 0 (58) 16 350 1365 1731 0 (26) 0 0 2 (61) 0 8001 9 0 0 (111) 45 0 105 1013 15.95 .01 2.25 (.02) 0 0 18.19 2.53 0 0
EX-27.(K) 43 EXHIBIT 27(K)
6 0000357204 INTERMEDIATE TERM BOND FUND 072 INTERMEDIATE TERM BOND FUND - RETAIL 1,000 4-MOS MAY-31-1996 JUN-01-1995 SEP-30-1995 88971 89938 1925 12 0 91875 1689 0 449 2138 0 90780 270 250 28 0 0 (2038) 967 89737 0 2224 0 (251) 1973 612 1897 4482 0 (52) 0 0 39 (294) 4 (10453) 102 0 0 (2651) 150 0 259 2571 10.27 .20 .04 (.21) 0 0 10.30 .65 0 0
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