Filed On 8/28/01 ˇ SEC Files 33-72424, 811-08194 ˇ Accession Number 1035704-1-500321
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
8/28/01 Financial Investors Trust 485BPOS 8/28/01 4:344 Bowne of Denver/FA
Financial Investors Trust
Document/Exhibit Description Pages Size
1: 485BPOS Post Effective Amendment No. 20 to Form N1-A 334 1,280K
2: EX-99.(I) Opinion/Consent of Davis Graham & Stubbs 3 9K
3: EX-99.(J) Consent of Deloitte & Touche 1 6K
4: EX-99.P(1) Code of Ethics 6 23K
485BPOS ˇ Post Effective Amendment No. 20 to Form N1-A
Document Table of Contents
As filed with the Securities and Exchange Commission on August 28, 2001
---------------
1933 Act Registration No. 33-72424
1940 Act Registration No. 811-8194
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 x
---
Pre-Effective Amendment No.
--
Post-Effective Amendment No. 20 x
-- ---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 x
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Amendment No. 22 x
-- ---
(Check appropriate box or boxes.)
FINANCIAL INVESTORS TRUST
-------------------------
(Exact name of Registrant as Specified in Charter)
370 17th Street, Suite 3100
Denver, CO 80202
----------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (303) 623-2577
--------------
Russell C. Burk, Secretary
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
----------------
(Name and Address of Agent of Service)
Copy to:
Lester Woodward, Esq.
Davis, Graham & Stubbs LLP
1550 17th Street, Suite 500
Denver, CO 80202
Approximate Date of Proposed Public As soon as practicable after the
Offering: effective date of this Amendment
It is proposed that this filing will become effective (check appropriate box):
X immediately upon filing pursuant to paragraph (b)
---
on (date), pursuant to paragraph (b)
---
60 days after filing pursuant to paragraph (a) (1)
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on ____________, pursuant to paragraph (a) (1)
---
75 days after filing pursuant to paragraph (a) (2)
---
on (date) pursuant to paragraph (a) (2)
---
If appropriate, check the following box:
This post-effective amendment designates a new effective date for a
--- previously filed post-effective amendment.
Title of Securities Being Registered: Shares of Beneficial Interest
Registrant registered an indefinite number of shares pursuant to regulation
24f-2 under the Investment Company Act of 1940 on July 21, 1999.
[FINANCIAL INVESTORS TRUST LOGO]
U.S. GOVERNMENT
MONEY MARKET FUND
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUNDS' SHARES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
PROSPECTUS
AUGUST 28, 2001
[Download Table]
PAGE
Investment Objective and Principal Risks 1
Performance 2
Fees and Expenses of the Fund 3
Who Manages the Fund? 4
How Do I Invest in the Fund? 5
Privacy Policy 10
Financial Highlights 11
Additional Information about the Fund Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is incorporated herein by reference, in connection
with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
TABLE OF
CONTENTS
INVESTMENT OBJECTIVE AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE -- The investment objective of the U.S. Government Money
Market Fund (the "Fund") is to seek as high a level of current income as is
consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES -- The Fund invests exclusively in obligations
issued or guaranteed as to principal and interest by the U.S. Government and
repurchase agreements collateralized to 102% by U.S. Treasury obligations and
other direct obligations of the U.S. Government or its agencies. The Fund may
also invest in mortgage related securities issued by various government
agencies, such as the Government National Mortgage Association, and government
related organizations, such as the Federal National Mortgage Association. The
Fund is required to maintain a dollar-weighted average portfolio maturity of 90
days or less and seeks to maintain its net asset value per share at $1.00 for
purposes of purchases and redemptions.
PRINCIPAL INVESTMENT RISKS -- An investment in the Fund is subject to many
risks, including:
o INTEREST RATE RISK. When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce
the market value of debt securities, while a decline in interest rates
tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk
relates to the ability of the issuer to make payments of principal and
interest when due, including default risk.
o PREPAYMENT RISK. This investment risk is primarily associated with
mortgage-backed securities. During a period of declining interest rates,
homeowners may refinance their high-rate mortgages and prepay the
principal. Cash from these prepayments flows through the mortgage-backed
securities, necessitating reinvestment in bonds with lower interest rates,
which may lower the return of the Fund.
FUND FACTS
GOAL: To provide investors with a high level of current income while seeking to
preserve principal.
PRINCIPAL INVESTMENTS:
o U.S. Government Obligations
o Asset-Backed and Mortgage-Related Securities
o Repurchase Agreements
INVESTMENT ADVISER (THE "ADVISER"):
o General Electric Asset Management, Inc. ("GEAM")
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI")
1
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the Statement of Additional
Information ("SAI").
SHOULD I INVEST IN THE U.S. GOVERNMENT MONEY MARKET FUND? The Fund primarily is
intended for municipal investors, including municipalities, counties, and state
agencies, as well as institutional investors such as broker/dealers,
corporations, investment advisers, credit unions, banks, and other financial
institutions.
PERFORMANCE
The following information illustrates the changes in the Fund's performance from
year to year. Returns are based on past results and are not an indication of
future performance.
YEAR-BY-YEAR TOTAL RETURN
[GRAPH]
[Download Table]
12/31/96 5.08%
12/31/97 5.44%
12/31/98 5.39%
12/31/99 4.95%
12/31/00 6.22%
During the periods shown in the chart for the Fund, the highest return for a
quarter was 1.61% (quarter ending December 31, 2000), and the lowest return for
a quarter was 1.11% (quarter ending April 30, 1996). The Fund's year-to-date
return for the period ended June 30, 2001 was 2.46%.
2
AVERAGE ANNUAL TOTAL RETURNS
(for the period ended December 31, 2000)
[Download Table]
INCEPTION 1 5 SINCE
DATE YEAR YEAR INCEPTION
U.S. GOV'T MONEY MARKET FUND JUNE 7, 1994 6.22% 4.55% 5.36%
FEES AND EXPENSES OF THE FUND
--------------------------------------------------------------------------------
This table describes the fees and expenses that you pay if you buy and hold
shares of the Fund.
[Download Table]
SHAREHOLDER FEES
(fees paid directly from your investment)
-----------------------------------------
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption None
Exchange None
[Download Table]
ANNUAL FUND OPERATING EXPENSES
(paid from Fund assets)
------------------------------
Management Fees 0.04%
Distribution (12b-1) Fees None
Other Expenses 0.17%*
Total Annual Fund Operating Expenses 0.21%
Fee Waiver (0.01)%*
Net Annual Fund Operating Expenses 0.20%
*The amount for "Other Expenses" includes administration fees payable
to ALPS Mutual Funds Services, Inc. ("ALPS"). ALPS has contractually
agreed to waive a portion of the administration fees that it is
entitled to receive, and/or assume a portion of Fund expenses, until
at least April 30, 2002. As a result, Net Annual Fund Operating
Expenses for the Fund will be no more than 0.33% for that period.
--------------------------------------------------------------------------------
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
3
indicated and that the Fund returns 5% each year and that the Fund's operating
expenses remain the same. After one year, the example does not take into
consideration ALPS' agreement to waive fees. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
[Download Table]
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
U.S. GOV'T MONEY MARKET FUND $ 20 $ 67 $ 117 $ 267
WHO MANAGES THE FUND?
The Adviser is a wholly-owned subsidiary of General Electric Company ("GE"). The
principal address of the Adviser is 3003 Summer Street, Stamford, CT 06905.
Through GEAM and General Electric Investment Corporation ("GEIC"), an affiliated
company of GEAM, wholly owned by GE, and their predecessors, GE has more than 70
years of investment management experience. GEAM and GEIC collectively provide
investment management services to various institutional accounts with total
assets as of June 30, 2001 of approximately $119 billion, of which approximately
$25 billion was invested in mutual funds.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to provide
a continuous investment program for the Fund, including investment research and
management with respect to the assets of the Fund. GEAM is entitled to receive
management fees of 0.04% on the first $500 million of average net assets of the
Fund, 0.06% on the next $500 million and 0.08% on average net assets in excess
of $1 billion. During the fiscal year ended April 30, 2001, the Fund paid the
Adviser 0.04% of average net assets of the Fund in advisory fees.
ADMINISTRATIVE SERVICES AGREEMENT Financial Investors Trust (the "Trust") has
entered into an administrative services agreement with ALPS. Under the
administrative services agreement, ALPS provides the Fund with certain
administrative and clerical services and generally assists in the operation of
the Fund. In addition, under the administrative services agreement ALPS also,
among other things, performs fund accounting and transfer agency services, and
pays the costs of the Fund's custodian and external auditors. Pursuant to the
administrative services agreement, ALPS is entitled to receive a fee from the
Fund that is computed daily and paid monthly at the following annual rates: the
greater of $360,000 or 0.16% of average daily net assets of the Fund up to $500
million; 0.14% of average daily net assets of the Fund in excess of $500 million
up to $1 billion; and 0.12% of the average daily net assets of the Fund that
exceed $1 billion.
4
ALPS has contractually agreed to waive a portion of the administration fees that
it is entitled to receive from the Fund and to assume a portion of fund
expenses, to the extent necessary for the Fund to maintain an expense ratio that
does not exceed 0.20% of the average net assets of the Fund, until at least
April 30, 2002.
HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE? As described below, shares of the Fund may be
purchased through ALPS. Shares of the Fund may be purchased using the Federal
Reserve Wire System ("Federal Funds") or by check or money order. Your check or
money order must be payable in U.S. dollars to the Fund and be drawn on a bank
located within the U.S.
Federal Funds should be wired to:
State Street Bank & Trust Co.
ABA# 011000028
U.S. Government Money Market Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
Orders for the purchase of shares will be executed at the net asset value per
share next determined after an order has been received in good form. All funds
received are invested in full and fractional shares of the Fund. ALPS serves as
the Fund's Transfer Agent and ALPS maintains records of each shareholder's
holdings of Fund shares. The Fund reserves the right to reject any purchase.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. Your completed application should be forwarded
to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
Orders for the purchase of shares will be executed at the net asset value per
share (the "public offering price") next determined after an order has been
received by the Fund in the proper form. If your purchase order is received in
proper order by the Fund by 5:00 p.m. Eastern Time, your order will be executed
that day. MINIMUM PURCHASE AND ACCOUNT BALANCE REQUIREMENTS - The minimum
initial investment in the Fund is $500,000 and additional investments may be
made in any amount. The minimum purchase requirements do not apply to reinvested
dividends. If your account balance falls below $125,000 due to redemptions or
5
exchanges, your account may be closed. In the event that your account is closed,
the Fund will wire the proceeds to the bank account of record, or issue a check
to the shareholder of record. The Fund will notify you when your account balance
has fallen below $125,000 and you will be given 30 days to increase your
investment above that amount.
HOW TO REDEEM FUND SHARES You may redeem all or any part of the value of your
account(s) on any day the assets of the Fund are valued (a "Business Day"). You
may redeem by mail, telephone or facsimile if you have established those options
with the Fund. Redemption orders are processed at the net asset value per share
next determined after the Fund receives your order. If the Fund receives your
redemption order before 1:00 p.m. Eastern Time on a Business Day, the Fund will
generally pay for your redeemed shares on that day. Otherwise, the Fund
generally will pay for your redeemed shares on the next Business Day. The Fund
reserves the right to pay for redeemed shares within seven days after receiving
your redemption order if, in the judgment of the Adviser, an earlier payment
could adversely affect the Fund.
REGULAR REDEMPTIONS: You may redeem shares by sending a written request to
Financial Investors Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You
must sign a redemption request. Your written redemption request must:
(i) state the number of shares to be redeemed; and
(ii) identify your shareholder account number.
EACH SIGNATURE MUST BE GUARANTEED BY EITHER A BANK THAT IS A MEMBER OF THE FDIC,
A TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL SECURITIES EXCHANGE OR OTHER
ELIGIBLE GUARANTOR INSTITUTION. THE FUND WILL NOT ACCEPT GUARANTEES FROM
NOTARIES PUBLIC. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received until
the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the same
bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
BY TELEPHONE AND FACSIMILE: You may redeem shares by telephone or facsimile.
Shareholders must check the appropriate box on the Account Application to
activate facsimile and/or telephone redemption privileges. Shares may be
redeemed by telephoning the Fund at (800) 298-3442 (or sending a facsimile
6
transmission to the Fund at (303) 825-2575 and giving the account name, account
number, Personal Identification Number (PIN#), name of Fund and amount of
redemption). Proceeds from redemptions will be wired directly to your account at
a commercial bank within the United States.
In order to arrange for facsimile and/or telephone redemptions after you have
opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "REGULAR REDEMPTIONS." The request must be signed by you with the
signatures guaranteed as described above. The Trust may modify or terminate
procedures for redeeming shares by telephone but will not materially change or
terminate it without giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or facsimile
redemptions may be difficult to complete. If you are unable to contact the Fund
by telephone or facsimile, you may redeem your shares by mail as described above
under "REGULAR REDEMPTIONS."
By electing the facsimile and/or telephone redemption option, you may be giving
up a measure of security which you might have had if you were to redeem in
writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone or facsimile
redemption transactions.
EXCHANGE OF FUND SHARES You may sell your Fund shares and buy shares of the U.S.
Treasury Money Market Fund or the Prime Money Market Fund, other investment
portfolios of the Trust, in exchange by written request. There are no fees or
commissions for exchanging Fund shares. However, you must satisfy the minimum
balance requirements of each Fund that you are considering investing in. If you
have established the privilege on your Account Application, you may also
initiate exchanges by telephone or facsimile. Exchange requests should be
directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may have
tax consequences, so you should consult your tax adviser for further
information. The Fund into which you want to exchange must be registered for
sale in your state. Prior to requesting an exchange of Fund shares you should
call
7
the Fund at (800) 298-3442 to request a current prospectus for the Fund which
you want to exchange and you should read the prospectus carefully before
investing.
During periods of significant economic or market change, telephone or facsimile
exchanges may be difficult to complete. If you are unable to contact the Fund by
telephone or facsimile, you may also mail the exchange request to the Fund at
the address listed under "REGULAR REDEMPTIONS." Neither the Trust nor ALPS will
be responsible for the authenticity of exchange instructions received by
telephone or facsimile except as set forth under "HOW TO REDEEM FUND SHARES - BY
TELEPHONE AND FACSIMILE."
The Trust can provide you with information concerning certain limitations on the
exchange privilege, including those related to frequency. The Trust may modify
or terminate the exchange privilege but will not materially change or terminate
it without giving shareholders 60 days' written notice.
HOW ARE FUND SHARES VALUED? The price at which you buy, sell or exchange Fund
shares is the share price or net asset value (NAV). The share price for the Fund
is determined by adding the value of the Fund's investments, cash and other
assets, deducting liabilities, and then dividing that value by the total number
of the Fund's shares outstanding. The Fund normally calculates its NAV at 5:00
p.m. Eastern Time.
The Trustees have established procedures designed to maintain a stable net asset
value of $1.00 per share, to the extent reasonably possible. More particularly,
the Trustees have approved and adopted procedures under Rule 2a-7. Under
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT? While municipal
investors are generally exempt from Federal income taxes, each investor should
independently ascertain its tax status. With respect to investors who are not
exempt from Federal income taxes, dividends derived from net investment income
and short term capital gains are taxable as ordinary income distributions and
are taxable when paid, whether investors receive distributions in cash or
reinvest them in additional shares, except that distributions declared in
December and paid in January are taxable as if paid on December 31. The Fund
will send to non-exempt investors an IRS Form 1099-DIV showing their taxable
distributions for the past calendar year.
8
The Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). This qualification will relieve the Fund of liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
Code and it meets other requirements for qualification as set forth in the Code.
The information above is only a summary of some of the federal tax consequences
generally affecting the Fund and its shareholders, and no attempt has been made
to discuss individual tax consequences. In addition to Federal taxes, investors
may be subject to state or local taxes on their investment. Investors should
consult their tax advisor to determine whether the Fund is suitable to their
particular tax situation.
When investors sign their account application, they will be asked to certify
that their social security or taxpayer identification number is correct, that
they are not subject to backup withholding for failing to report income to the
IRS, and that they are a U.S. person. If investors violate IRS regulations, the
IRS can require the Fund to withhold a portion of taxable distributions and
redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders each calendar year
as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived from
earned interest, it is anticipated that all dividends paid by the Fund will be
taxable as ordinary income to those shareholders who are not exempt from Federal
income taxes, and that no part of any distribution will be eligible for the
dividends received deduction for corporations.
9
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's name,
address, social security number, and information about a customer's
investment goals and risk tolerance;
o Account History, including information about the transactions and balances
in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund or
service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the customer's
authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1) FOR PURPOSES OF THIS NOTICE, THE TERMS "CUSTOMER" OR "CUSTOMERS" INCLUDES
BOTH SHAREHOLDERS OF THE FUND AND INDIVIDUALS WHO PROVIDE NONPUBLIC PERSONAL
INFORMATION TO THE FUND, BUT DO NOT INVEST IN FUND SHARES.
10
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling the Fund at
(800) 298-3442.
Selected data for a share of beneficial interest outstanding throughout the
period indicated(1):
[Enlarge/Download Table]
For the Year Ended April 30,
2001 2000 1999 1998 1997
---------- ---------- ---------- ---------- ----------
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 9.97
---------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06 0.05 0.05 0.05 0.14
---------- ---------- ---------- ---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.06) (0.05) (0.05) (0.05) (0.14)
Stock Split 0.00 0.00 0.00 0.00 (8.97)
---------- ---------- ---------- ---------- ----------
Total dividends and distributions to
shareholders (0.06) (0.05) (0.05) (0.05) (9.11)
---------- ---------- ---------- ---------- ----------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total return 6.14% 5.27% 5.16% 5.48% 5.23%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 343,856 $ 223,152 $ 352,333 $ 150,222 $ 87,416
========== ========== ========== ========== ==========
Ratio of expenses to average net assets 0.20% 0.20% 0.20% 0.20% 0.23%
========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets 5.96% 5.12% 5.01% 5.35% 5.13%
========== ========== ========== ========== ==========
Ratio of expenses to average net assets
without fee waivers 0.21% 0.22% 0.24% 0.31% 0.39%
========== ========== ========== ========== ==========
Ratio of net investment income to
average net assets without fee waivers 5.95% 5.10% 4.96% 5.24% 4.97%
========== ========== ========== ========== ==========
(1) The financial highlights prior to July 10, 1996 reflect the operations of
the Fund as the Short-Term U.S. Government Income Fund when it was not a money
market fund and had different investment policies and expenses, and a
fluctuating net asset value not maintained at $1.00 per share. The Fund changed
to a money market fund on July 10, 1996 following a Special Meeting of the
Fund's shareholders on June 27, 1996. The financial highlights prior to March
24, 1997 also reflect the operations of the Fund while the Fund's investment
adviser was FGIC Advisors, Inc. GEIM was approved as the Fund's investment
adviser at a Special Meeting of the shareholders of the Fund on March 21, 1997.
11
THIS PAGE INTENTIONALLY LEFT BLANK
12
ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-298-3442 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
The SEC also maintains a Web site located at http://www.sec.gov that contains
the SAI, material incorporated herein by reference, and other information
regarding the Fund. For more information about the operation of the Public
Reference Room, please call the SEC at 1-202-942-8090.
FINANCIAL INVESTORS TRUST FUNDS
o Are NOT insured by the FDIC, a bank or any agency of the U.S.
Government.
o Are NOT bank deposits or other obligations of or guaranteed by a bank.
o Involve investment risks, including the possible loss of the principal
amount invested.
[GE ASSET MANAGEMENT LOGO] [ALPS DISTRIBUTORS, INC. LOGO]
Investment Company Act File No. 811-08194
[FINANCIAL INVESTORS TRUST LOGO]
U.S TREASURY
MONEY MARKET FUND
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUNDS' SHARES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
PROSPECTUS
August 28, 2001
[Download Table]
PAGE
Investment Objective and Principal Risks 1
Performance 2
Fees and Expenses of the Fund 3
Who Manages the Fund? 4
How Do I Invest in the Fund? 5
Privacy Policy 11
Financial Highlights 12
Additional Information about the Fund Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is incorporated herein by reference, in connection
with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
TABLE OF
CONTENTS
FUND FACTS
GOAL: To provide investors with a high level of current income while seeking to
preserve principal.
PRINCIPAL INVESTMENTS:
o U.S. Treasury Obligations
o Repurchase Agreements
INVESTMENT ADVISER (THE "ADVISER"):
o General Electric Asset Management, Inc. ("GEAM")
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI")
INVESTMENT OBJECTIVE AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE -- The investment objective of the U.S. Treasury Money
Market Fund (the "Fund") is to seek as high a level of current income as is
consistent with preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES -- The Fund invests exclusively in U.S. Treasury
bills, notes and other direct obligations of the U.S. Treasury and repurchase
agreements collateralized to 102% by U.S. Treasury obligations. The Fund is
required to maintain a dollar-weighted average portfolio maturity of 90 days or
less and seeks to maintain its net asset value per share at $1.00 for purposes
of purchases and redemptions.
PRINCIPAL INVESTMENT RISKS -- An investment in the Fund is subject to many
risks, including:
o INTEREST RATE RISK. When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce the
market value of debt securities, while a decline in interest rates tends to
increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates
with the credit quality of the issuers of those securities. Credit risk relates
to the ability of the issuer to make payments of principal and interest when
due, including default risk.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the Statement of Additional
Information ("SAI").
SHOULD I INVEST IN THE U.S. TREASURY MONEY MARKET FUND? The Fund primarily is
intended for municipal investors, including municipalities, counties, and state
agencies, as well as institutional investors such as broker/dealers,
corporations, investment advisers, credit unions, banks, and other financial
institutions.
1
PERFORMANCE
The following information illustrates the changes in the Fund's performance from
year to year. Returns are based on past results and are not an indication of
future performance.
YEAR-BY-YEAR TOTAL RETURN
[Download Table]
12/31/96 5.17%
12/31/97 5.29%
12/31/98 5.15%
12/31/99 4.68%
12/31/00 5.98%
During the periods shown in the chart for the Fund, the highest return for a
quarter was 1.55% (quarter ending December 31, 2000), and the lowest return for
a quarter was 1.05% (quarter ending March 31, 1999). The fund's year-to-date
return for the period ended June 30, 2001 was 2.35%.
AVERAGE ANNUAL TOTAL RETURNS
(for the period ended December 31, 2000)
[Download Table]
INCEPTION 1 5 SINCE
DATE YEAR YEAR INCEPTION
U.S. TREASURY MONEY MARKET FUND MAY 25, 1994 5.98% 5.25% 5.23%
2
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you pay if you buy and hold
shares of the Fund.
[Download Table]
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption None
Exchange None
[Download Table]
ANNUAL FUND OPERATING EXPENSES
(paid from Fund assets)
Management Fees 0.05%
Distribution (12b-1) Fees None
Other Expenses 0.75%*
Total Annual Fund Operating Expenses 0.80%
Fee Waiver (0.47)%*
Net Annual Fund Operating Expenses 0.33%
*The amount for "Other Expenses" includes administration fees payable to ALPS
Mutual Funds Services, Inc. ("ALPS"). ALPS has contractually agreed to waive a
portion of the administration fees that it is entitled to receive, and/or assume
a portion of Fund expenses, until at least April 30, 2002. As a result, Net
Annual Fund Operating Expenses for the Fund will be no more than 0.33% for that
period.
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and that the Fund returns 5% each year and that the Fund's operating
expenses remain the same. After one year, the example does not take into
consideration ALPS' agreement to waive fees. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
[Download Table]
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
U.S. TREASURY MONEY MARKET FUND $34 $208 $398 $945
3
WHO MANAGES THE FUND?
The Adviser is a wholly-owned subsidiary of General Electric Company ("GE"). The
principal address of the Adviser is 3003 Summer Street, Stamford, CT 06905.
Through GEAM and General Electric Investment Corporation ("GEIC"), an affiliated
company of GEAM, wholly owned by GE, and their predecessors, GE has more than 70
years of investment management experience. GEAM and GEIC collectively provide
investment management services to various institutional accounts with total
assets as of June 30, 2001 of approximately $119 billion, of which approximately
$25 billion was invested in mutual funds.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to provide
a continuous investment program for the Fund, including investment research and
management with respect to the assets of the Fund. GEAM is entitled to receive
management fees of 0.05% on the first $500 million of average net assets of the
Fund, 0.075% on the next $500 million and 0.10% on average net assets in excess
of $1 billion but not exceeding $1.5 billion and 0.15% on average net assets in
excess of $1.5 billion. During the fiscal year ended April 30, 2001, the Fund
paid the Adviser 0.05% of average net assets of the Fund in advisory fees.
ADMINISTRATIVE SERVICES AGREEMENT Financial Investors Trust (the "Trust") has
entered into an administrative services agreement with ALPS. Under the
administrative services agreement, ALPS provides the Fund with certain
administrative and clerical services and generally assists in the operation of
the Fund. In addition, under the administrative services agreement ALPS also,
among other things, performs fund accounting and transfer agency services, and
pays the costs of the Fund's custodian and external auditors. Pursuant to the
administrative services agreement, ALPS receives a fee from the Fund that is
computed daily and paid monthly at the following annual rates: the greater of
$600,000 or 0.26% of average daily net assets of the Fund up to $500 million;
0.24% of average daily net assets of the Fund in excess of $500 million up to $1
billion; and 0.22% of the average daily net assets of the Fund that exceed $1
billion.
ALPS has contractually agreed to waive a portion of the administration fees that
it is entitled to receive from the Fund and to assume a portion of fund
expenses, to the extent necessary for the Fund to maintain an expense ratio that
does not exceed 0.33% of the average net assets of the Fund, until at least
April 30, 2002.
4
HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE? As described below, shares of the Fund may be
purchased through ALPS. Shares of the Fund may be purchased using the Federal
Reserve Wire System ("Federal Funds") or by check or money order. Your check or
money order must be payable in U.S. dollars to the Fund and be drawn on a bank
located within the U.S.
Federal Funds should be wired to:
State Street Bank & Trust Co.
ABA# 011000028
U.S. Treasury Money Market Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
Orders for the purchase of shares will be executed at the net asset value per
share next determined after an order has been received in good form. All funds
received are invested in full and fractional shares of the Fund. ALPS serves as
the Fund's Transfer Agent and ALPS maintains records of each shareholder's
holdings of Fund shares. The Fund reserves the right to reject any purchase.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. Your completed application should be forwarded
to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
Orders for the purchase of shares will be executed at the net asset value per
share (the "public offering price") next determined after an order has been
received by the Fund in the proper form. If your purchase order is received in
proper order by the Fund by 5:00 p.m. Eastern Time, your order will be executed
that day.
MINIMUM PURCHASE AND ACCOUNT BALANCE REQUIREMENTS - The minimum initial
investment in the Fund is $100,000 and additional investments may be made in any
amount. The minimum purchase requirements do not apply to reinvested dividends.
If your account balance falls below $25,000 due to redemptions or exchanges,
your account may be closed. In the event that your account is closed, the Fund
will wire the proceeds to the bank account of record, or issue a check to the
shareholder of record. The Fund will notify you when your account balance has
fallen below $25,000 and you will be given 30 days to increase your investment
above that amount.
5
HOW TO REDEEM FUND SHARES You may redeem all or any part of the value of your
account(s) on any day the assets of the Fund are valued (a "Business Day"). You
may redeem by mail, telephone or facsimile if you have established those options
with the Fund. Redemption orders are processed at the net asset value per share
next determined after the Fund receives your order. If the Fund receives your
redemption order before 1:00 p.m. Eastern Time on a Business Day, the Fund will
generally pay for your redeemed shares on that day. Otherwise, the Fund
generally will pay for your redeemed shares on the next Business Day. The Fund
reserves the right to pay for redeemed shares within seven days after receiving
your redemption order if, in the judgment of the Adviser, an earlier payment
could adversely affect the Fund.
REGULAR REDEMPTIONS: You may redeem shares by sending a written request to
Financial Investors Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You
must sign a redemption request. Your written redemption request must:
(i) state the number of shares to be redeemed; and
(ii) identify your shareholder account number.
EACH SIGNATURE MUST BE GUARANTEED BY EITHER A BANK THAT IS A MEMBER OF THE FDIC,
A TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL SECURITIES EXCHANGE OR OTHER
ELIGIBLE GUARANTOR INSTITUTION. THE FUND WILL NOT ACCEPT GUARANTEES FROM
NOTARIES PUBLIC. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received until
the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the same
bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
BY TELEPHONE AND FACSIMILE: You may redeem shares by telephone or facsimile.
Shareholders must check the appropriate box on the Account Application to
activate facsimile and/or telephone redemption privileges. Shares may be
redeemed by telephoning the Fund at (800) 298-3442 (or sending a facsimile
transmission to the Fund at (303) 825-2575 and giving the account name, account
number, Personal Identification Number (PIN#), name of Fund and amount of
redemption). Proceeds from redemptions will be wired directly to your account at
a commercial bank within the United States.
6
In order to arrange for facsimile and/or telephone redemptions after you have
opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "REGULAR REDEMPTIONS." The request must be signed by you with the
signatures guaranteed as described above. The Trust may modify or terminate
procedures for redeeming shares by telephone but will not materially change or
terminate it without giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or facsimile
redemptions may be difficult to complete. If you are unable to contact the Fund
by telephone or facsimile, you may redeem your shares by mail as described above
under "REGULAR REDEMPTIONS."
By electing the facsimile and/or telephone redemption option, you may be giving
up a measure of security which you might have had if you were to redeem in
writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone or facsimile
redemption transactions.
CHECK REDEMPTION: You may write an unlimited number of checks drawn on your
account by either requesting the privilege on your account application or by
sending a written request to the Fund. In order to establish the checkwriting
option, you must manually sign a signature card that includes all authorized
individuals. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. Checks may be made payable to the order of
any person. When a check is presented to the Transfer Agent for payment, the
Transfer Agent, as your agent, will cause the Fund to redeem a sufficient number
of your Fund shares to cover the amount of the check. Shares earn dividends
through the day the redemption is processed. There is no charge to you for the
use of the checks; however, the Transfer Agent will impose a charge for stopping
payment of a check upon your request, or if the Transfer Agent cannot honor a
check due to insufficient funds or other valid reasons. A request to reverse a
stop payment order must be received in writing.
7
Checks may not be written to redeem shares purchased by check until the date
that good funds are credited to the Fund's custodian by its correspondent bank.
If the amount of the check is greater than the value of the shares in your
account, the check will be returned marked "Insufficient Funds." Checks written
on amounts subject to the hold described above will be returned marked
"Uncollected." If your check does not clear, you will be responsible for any
loss the Fund, Custodian, or Transfer Agent may incur. A check may not be used
to close an account.
Checkwriting is not available to holders of shares in certificate form or if you
are subject to Internal Revenue Service backup withholding. It is also
inadvisable for you to write a check for an amount close to the total value of
your account. The Trust reserves the right to terminate or alter the
checkwriting service at any time.
EXCHANGE OF FUND SHARES You may sell your Fund shares and buy shares of the U.S.
Government Money Market Fund or the Prime Money Market Fund, other investment
portfolios of the Trust, in exchange by written request. There are no fees or
commissions for exchanging Fund shares. However, you must satisfy the minimum
balance requirements of each Fund that you are considering investing in. If you
have established the privilege on your Account Application, you may also
initiate exchanges by telephone or facsimile. Exchange requests should be
directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may have
tax consequences, so you should consult your tax adviser for further
information. The Fund into which you want to exchange must be registered for
sale in your state. Prior to requesting an exchange of Fund shares you should
call the Fund at (800) 298-3442 to request a current prospectus for the Fund
which you want to exchange and you should read the prospectus carefully before
investing.
During periods of significant economic or market change, telephone or facsimile
exchanges may be difficult to complete. If you are unable to contact the Fund by
telephone or facsimile, you may also mail the exchange request to the Fund at
the address listed under "REGULAR REDEMPTIONS." Neither the Trust nor ALPS will
be responsible for the authenticity of exchange instructions received by
telephone or facsimile except as set forth under "HOW TO REDEEM FUND SHARES - BY
TELEPHONE AND FACSIMILE."
The Trust can provide you with information concerning certain limitations on the
exchange privilege, including those related to frequency. The Trust may modify
or terminate the exchange privilege but will not materially change or terminate
it without giving shareholders 60 days' written notice.
8
HOW ARE FUND SHARES VALUED? The price at which you buy, sell or exchange Fund
shares is the share price or net asset value (NAV). The share price for the fund
is determined by adding the value of the Fund's investments, cash and other
assets, deducting liabilities, and then dividing that value by the total number
of the Fund's shares outstanding. The Fund normally calculates its NAV at 5:00
P.M. Eastern Time.
The Trustees have established procedures designed to maintain a stable net asset
value of $1.00 per share, to the extent reasonably possible. More particularly,
the Trustees have approved and adopted procedures under Rule 2a-7. Under
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT? While municipal
investors are generally exempt from Federal income taxes, each investor should
independently ascertain its tax status. With respect to investors who are not
exempt from Federal income taxes, dividends derived from net investment income
and short term capital gains are taxable as ordinary income distributions and
are taxable when paid, whether investors receive distributions in cash or
reinvest them in additional shares, except that distributions declared in
December and paid in January are taxable as if paid on December 31. The Fund
will send to non-exempt investors an IRS Form 1099-DIV showing their taxable
distributions for the past calendar year.
The Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). This qualification will relieve the Fund of liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
Code and it meets other requirements for qualification as set forth in the Code.
The information above is only a summary of some of the federal tax consequences
generally affecting the Fund and its shareholders, and no attempt has been made
to discuss individual tax consequences. In addition to Federal taxes, investors
may be subject to state or local taxes on their investment. Investors should
consult their tax advisor to determine whether the Fund is suitable to their
particular tax situation.
When investors sign their account application, they will be asked to certify
that their social security or taxpayer identification number is correct, that
they are not subject to backup withholding for failing to report income to the
IRS, and that
9
they are a U.S. person. If investors violate IRS regulations, the IRS can
require the Fund to withhold a portion of taxable distributions and redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders each calendar year
as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived from
earned interest, it is anticipated that all dividends paid by the Fund will be
taxable as ordinary income to those shareholders who are not exempt from Federal
income taxes, and that no part of any distribution will be eligible for the
dividends received deduction for corporations.
10
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's name,
address, social security number, and information about a customer's
investment goals and risk tolerance;
o Account History, including information about the transactions and balances
in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund or
service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the customer's
authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1)FOR PURPOSES OF THIS NOTICE, THE TERMS "CUSTOMER" OR "CUSTOMERS" INCLUDES
BOTH SHAREHOLDERS OF THE FUND AND INDIVIDUALS WHO PROVIDE NONPUBLIC PERSONAL
INFORMATION TO THE FUND, BUT DO NOT INVEST IN FUND SHARES.
11
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling the Fund at
(800) 298-3442.
Selected data for a share of beneficial interest outstanding throughout the
period indicated(1):
[Enlarge/Download Table]
For the Year Ended April 30,
2001 2000 1999 1998 1997
----------- ----------- ----------- ----------- -----------
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
INCOME FROM INVESTMENT OPERATION
Net investment income 0.06 0.05 0.05 0.05 0.05
----------- ----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.06) (0.05) (0.05) (0.05) (0.05)
----------- ----------- ----------- ----------- -----------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total return 5.92% 5.01% 4.90% 5.30% 5.15%
=========== =========== =========== =========== ===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 74,590 $ 78,943 $ 90,862 $ 138,169 $ 167,692
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets 0.33% 0.33% 0.33% 0.33% 0.30%
=========== =========== =========== =========== ===========
Ratio of net investment income to
average net assets 5.82% 4.85% 4.83% 5.18% 5.02%
=========== =========== =========== =========== ===========
Ratio of expenses to average net assets
without fee waivers 0.80% 0.72% 0.57% 0.55% 0.67%
=========== =========== =========== =========== ===========
Ratio of net investment income to
average net assets without fee waivers 5.34% 4.46% 4.59% 4.96% 4.65%
=========== =========== =========== =========== ===========
(1) The financial highlights prior to March 24, 1997 reflect the operations of
the Fund while the Fund's investment adviser was FGIC Advisors, Inc. GEIM was
approved as the Fund's investment adviser at a special meeting of the
shareholders of the Fund on March 21, 1997.
12
ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-298-3442 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
The SEC also maintains a Web site located at http://www.sec.gov that contains
the SAI, material incorporated herein by reference, and other information
regarding the Fund. For more information about the operation of the Public
Reference Room, please call the SEC at 1-202-942-8090.
FINANCIAL INVESTORS TRUST FUNDS
o Are NOT insured by the FDIC, a bank or any agency of the U.S.
Government.
o Are NOT bank deposits or other obligations of or guaranteed by a bank.
o Involve investment risks, including the possible loss of the principal
amount invested.
[GE ASSET MANAGEMENT LOGO] [ALPS LOGO]
Investment Company Act File No. 811-08194
[FINANCIAL INVESTORS TRUST LOGO]
PRIME MONEY MARKET FUND
CLASS I
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUNDS' SHARES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
PROSPECTUS
August 28, 2001
[Download Table]
PAGE
Investment Objective and Principal Risks 1
Performance 2
Fees and Expenses of the Fund 3
Who Manages the Fund? 4
How Do I Invest in the Fund? 5
Privacy Policy 11
Financial Highlights 12
Additional Information about the Fund Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is incorporated herein by reference, in connection
with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
TABLE OF
CONTENTS
FUND FACTS
GOAL: To provide investors with a high level of current income while seeking to
preserve principal.
PRINCIPAL INVESTMENTS:
o U.S. Government Obligations
o Corporate Debt Obligations
o Commercial Paper
o Foreign Bank Obligations
o Asset-Backed and Mortgage-Related Securities
INVESTMENT ADVISER (THE "ADVISER"):
o General Electric Asset Management, Inc. ("GEAM")
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI")
INVESTMENT OBJECTIVE AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE -- The investment objective of the Prime Money Market Fund
(the "Fund") is to seek as high a level of current income as is consistent with
preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES -- In seeking to achieve its investment
objective, the Fund's investments include, but are not limited to, the following
U.S. dollar denominated, short-term money market instruments: (1) U.S.
Government Obligations, including stripped U.S. Government Obligations; (2) debt
obligations of corporations, banks, savings and loan institutions, insurance
companies and mortgage bankers; (3) commercial paper, including those with
floating or variable rates of interest; (4) foreign bank obligations; (5)
repurchase agreements; and (6) asset-backed or mortgage-related securities. In
any event, however, the Fund will only invest in those securities that the
Adviser, under the direction of the Board of Trustees of Financial Investors
Trust (the "Board"), determines present minimal credit risk and that the Adviser
determines are "eligible securities." Eligible securities are those securities
that are rated in one of the two highest categories by a National Recognized
Statistical Rating Organization ("NRSRO") or, if the security is unrated, the
Adviser has determined that the security is comparable to similarly rated
securities. Only these types of securities are considered "prime" by the
Adviser. The Fund's average weighted maturity will not exceed 90 days, and its
yield will fluctuate with changes in short-term interest rates. Also, the
securities held by the Fund will, at the time of purchase, have remaining
maturities of 13 months or less.
PRINCIPAL INVESTMENT RISKS -- An investment in the Fund is subject to many
risks, including:
o INTEREST RATE RISK. When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce the
market value of debt securities, while a decline in interest rates tends to
increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund fluctuates with
the credit quality of the issuers of
1
those securities. Credit risk relates to the ability of the issuer to make
payments of principal and interest when due, including default risk.
o PREPAYMENT RISK. This investment risk is primarily associated with
mortgage-backed securities. During a period of declining interest rates,
homeowners may refinance their high-rate mortgages and prepay the principal.
Cash from these prepayments flows through the mortgage-backed securities,
necessitating reinvestment in bonds with lower interest rates, which may lower
the return of the Fund.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the Statement of Additional
Information ("SAI").
SHOULD I INVEST IN THE PRIME MONEY MARKET FUND? The Class I shares of the Fund
primarily are intended for municipal investors, including municipalities,
counties, and state agencies, as well as institutional investors such as
broker/dealers, corporations, investment advisers, credit unions, banks, and
other financial institutions.
PERFORMANCE
The following information illustrates the changes in the Fund's performance from
year to year. Returns are based on past results and are not an indication of
future performance.
YEAR-BY-YEAR TOTAL RETURN
[GRAPH]
[Download Table]
12/31/99 5.08%
12/31/00 6.29%
2
During the period shown in the chart for the Fund, the highest return for a
quarter was 1.63% (quarter ending December 2000), and the lowest return for a
quarter was 1.14% (quarter ending March 1999). The Fund's year-to-date return
for the period ended June 30, 2001 was 2.52%.
AVERAGE ANNUAL TOTAL RETURNS
(for the period ended December 31, 2000)
[Download Table]
INCEPTION 1 SINCE
DATE YEAR INCEPTION
PRIME MONEY MARKET FUND - CLASS I DECEMBER 10, 1998 6.29% 5.42%
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you pay if you buy and hold
shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
[Download Table]
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption None
Exchange None
[Download Table]
ANNUAL FUND OPERATING EXPENSES
(paid from Fund assets)
Management Fees 0.04%
Distribution (12b-1) Fees None
Other Expenses 0.29%*
Total Annual Fund Operating Expenses 0.33%
Fee Waiver (0.13)%*
Net Annual Fund Operating Expenses 0.20%
* The amount for "Other Expenses" includes administration fees payable to Alps
Mutual Funds Services, Inc. ("ALPS"). Alps has contractually agreed to waive a
portion of the administration fees that it is entitled to receive, and/or assume
a portion of fund expenses, until at least April 30, 2002. as a result, net
annual fund operating expenses for the fund will be no more than 0.20% for that
period.
3
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and that the Fund returns 5% each year and that the Fund's operating
expenses remain the same. After one year, the example does not take into
consideration ALPS' agreement to waive fees. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
[Download Table]
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
PRIME MONEY MARKET FUND $20 $93 $172 $405
WHO MANAGES THE FUND?
The Adviser is a wholly-owned subsidiary of General Electric Company ("GE"). The
principal address of the Adviser is 3003 Summer Street, Stamford, CT 06905.
Through GEAM and General Electric Investment Corporation ("GEIC"), an affiliated
company of GEAM, wholly owned by GE, and their predecessors, GE has more than 70
years of investment management experience. GEAM and GEIC collectively provide
investment management services to various institutional accounts with total
assets as of June 30, 2001 of approximately $119 billion, of which approximately
$25 billion was invested in mutual funds.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to provide
a continuous investment program for the Fund, including investment research and
management with respect to the assets of the Fund. GEAM is entitled to receive
management fees of 0.04% on the first $500 million of average net assets of the
Fund, 0.06% on the next $500 million and 0.08% on average net assets in excess
of $1 billion. During the fiscal year ended April 30, 2001, the Fund paid the
Adviser 0.04% of average net assets of the Fund in advisory fees.
ADMINISTRATIVE SERVICES AGREEMENT Financial Investors Trust (the "Trust") has
entered into an administrative services agreement with ALPS. Under the
administrative services agreement, ALPS provides the Fund with certain
administrative and clerical services and generally assists in the operation of
the Fund. In addition, under the administrative services agreement ALPS also,
among other things, performs fund accounting and transfer agency services, and
pays the costs of the Fund's custodian and external auditors. Pursuant to the
administrative services agreement, ALPS is entitled to receive a fee from the
Fund that is computed daily and paid monthly at the following annual rates: the
greater of $360,000 or 0.16% of average daily net assets of the Fund up to $500
million; 0.14% of average daily net assets of the Fund in excess of $500 million
up to $1 billion; and 0.12% of the average daily net assets of the Fund that
exceed $1 billion.
4
ALPS has contractually agreed to waive a portion of the administration fees that
it is entitled to receive from the Fund, and to assume a portion of fund
expenses, to the extent necessary for Class II of the Fund to maintain an
expense ratio that does not exceed 0.20% of average net assets, until at least
April 30, 2002.
HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE? As described below, shares of the Fund may be
purchased through ALPS. Shares of the Fund may be purchased using the Federal
Reserve Wire System ("Federal Funds") or by check or money order. Your check or
money order must be payable in U.S. dollars to the Fund and be drawn on a bank
located within the U.S.
Federal Funds should be wired to:
State Street Bank & Trust Co.
ABA# 011000028
U.S. Treasury Money Market Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
Orders for the purchase of shares will be executed at the net asset value per
share next determined after an order has been received in good form. All funds
received are invested in full and fractional shares of the Fund. ALPS serves as
the Fund's Transfer Agent and ALPS maintains records of each shareholder's
holdings of Fund shares. The Fund reserves the right to reject any purchase.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. Your completed application should be forwarded
to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
Orders for the purchase of shares will be executed at the net asset value per
share (the "public offering price") next determined after an order has been
received by the Fund in the proper form. If your purchase order is received in
proper order by the Fund by 5:00 p.m. Eastern Time, your order will be executed
that day.
5
MINIMUM PURCHASE AND ACCOUNT BALANCE REQUIREMENTS - The minimum initial
investment in the Fund is $500,000 and additional investments may be made in any
amount. The minimum purchase requirements do not apply to reinvested dividends.
If your account balance falls below $125,000 due to redemptions or exchanges,
your account may be closed. In the event that your account is closed, the Fund
will wire the proceeds to the bank account of record, or issue a check to the
shareholder of record. The Fund will notify you when your account balance has
fallen below $125,000 and you will be given 30 days to increase your investment
above that amount.
HOW TO REDEEM FUND SHARES You may redeem all or any part of the value of your
account(s) on any day the assets of the Fund are valued (a "Business Day"). You
may redeem by mail, telephone or facsimile if you have established those options
with the Fund. Redemption orders are processed at the net asset value per share
next determined after the Fund receives your order. If the Fund receives your
redemption order before 1:00 p.m. Eastern Time on a Business Day, the Fund will
generally pay for your redeemed shares on that day. Otherwise, the Fund
generally will pay for your redeemed shares on the next Business Day. The Fund
reserves the right to pay for redeemed shares within seven days after receiving
your redemption order if, in the judgment of the Adviser, an earlier payment
could adversely affect the Fund.
REGULAR REDEMPTIONS: You may redeem shares by sending a written request to
Financial Investors Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You
must sign a redemption request. Your written redemption request must:
(i) state the number of shares to be redeemed; and
(ii) identify your shareholder account number.
EACH SIGNATURE MUST BE GUARANTEED BY EITHER A BANK THAT IS A MEMBER OF THE FDIC,
A TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL SECURITIES EXCHANGE OR OTHER
ELIGIBLE GUARANTOR INSTITUTION. THE FUND WILL NOT ACCEPT GUARANTEES FROM
NOTARIES PUBLIC. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received until
the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the same
bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
6
BY TELEPHONE AND FACSIMILE: You may redeem shares by telephone or facsimile.
Shareholders must check the appropriate box on the Account Application to
activate facsimile and/or telephone redemption privileges. Shares may be
redeemed by telephoning the Fund at (800) 298-3442 (or sending a facsimile
transmission to the Fund at (303) 825-2575 and giving the account name, account
number, Personal Identification Number (PIN#), name of Fund and amount of
redemption). Proceeds from redemptions will be wired directly to your account at
a commercial bank within the United States.
In order to arrange for facsimile and/or telephone redemptions after you have
opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "REGULAR REDEMPTIONS." The request must be signed by you with the
signatures guaranteed as described above. The Trust may modify or terminate
procedures for redeeming shares by telephone but will not materially change or
terminate it without giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or facsimile
redemptions may be difficult to complete. If you are unable to contact the Fund
by telephone or facsimile, you may redeem your shares by mail as described above
under "REGULAR REDEMPTIONS."
By electing the facsimile and/or telephone redemption option, you may be giving
up a measure of security which you might have had if you were to redeem in
writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone or facsimile
redemption transactions.
CHECK REDEMPTION: You may write an unlimited number of checks drawn on your
account by either requesting the privilege on your account application or by
sending a written request to the Fund. In order to establish the checkwriting
option, you must manually sign a signature card that includes all authorized
individuals. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. Checks may be made payable to the order of
any person. When a check is presented to the Transfer Agent for payment, the
Transfer Agent, as your agent, will cause the Fund to redeem a sufficient number
of your Fund shares to cover the amount of the check. Shares earn dividends
through the day the redemption is processed. There is no charge to you for the
7
use of the checks; however, the Transfer Agent will impose a charge for stopping
payment of a check upon your request, or if the Transfer Agent cannot honor a
check due to insufficient funds or other valid reasons. A request to reverse a
stop payment order must be received in writing.
Checks may not be written to redeem shares purchased by check until the date
that good funds are credited to the Fund's custodian by its correspondent bank.
If the amount of the check is greater than the value of the shares in your
account, the check will be returned marked "Insufficient Funds." Checks written
on amounts subject to the hold described above will be returned marked
"Uncollected." If your check does not clear, you will be responsible for any
loss the Fund, Custodian, or Transfer Agent may incur. A check may not be used
to close an account.
Checkwriting is not available to holders of shares in certificate form or if you
are subject to Internal Revenue Service backup withholding. It is also
inadvisable for you to write a check for an amount close to the total value of
your account. The Trust reserves the right to terminate or alter the
checkwriting service at any time.
EXCHANGE OF FUND SHARES You may sell your Fund shares and buy shares of the U.S.
Government Money Market Fund or the U.S. Treasury Money Market Fund, other
investment portfolios of the Trust, in exchange by written request. There are no
fees or commissions for exchanging Fund shares. However, you must satisfy the
minimum balance requirements of each Fund that you are considering investing in.
If you have established the privilege on your Account Application, you may also
initiate exchanges by telephone or facsimile. Exchange requests should be
directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may have
tax consequences, so you should consult your tax adviser for further
information. The Fund into which you want to exchange must be registered for
sale in your state. Prior to requesting an exchange of Fund shares you should
call the Fund at (800) 298-3442 to request a current prospectus for the Fund
which you want to exchange and you should read the prospectus carefully before
investing.
During periods of significant economic or market change, telephone or facsimile
exchanges may be difficult to complete. If you are unable to contact the Fund by
telephone or facsimile, you may also mail the exchange request to the Fund at
the address listed under "REGULAR REDEMPTIONS." Neither the Trust nor ALPS will
be responsible for the authenticity of exchange instructions received by
telephone or facsimile except as set forth under "HOW TO REDEEM FUND SHARES - BY
TELEPHONE AND FACSIMILE."
8
The Trust can provide you with information concerning certain limitations on the
exchange privilege, including those related to frequency. The Trust may modify
or terminate the exchange privilege but will not materially change or terminate
it without giving shareholders 60 days' written notice.
HOW ARE FUND SHARES VALUED? The price at which you buy, sell or exchange Fund
shares is the share price or net asset value (NAV). The share price for the Fund
is determined by adding the value of the Fund's investments, cash and other
assets, deducting liabilities, and then dividing that value by the total number
of the Fund's shares outstanding. The Fund normally calculates its NAV at 5:00
p.m. Eastern Time.
The Trustees have established procedures designed to maintain a stable net asset
value of $1.00 per share, to the extent reasonably possible. More particularly,
the Trustees have approved and adopted procedures under Rule 2a-7. Under
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT? While municipal
investors are generally exempt from Federal income taxes, each investor should
independently ascertain its tax status. With respect to investors who are not
exempt from Federal income taxes, dividends derived from net investment income
and short term capital gains are taxable as ordinary income distributions and
are taxable when paid, whether investors receive distributions in cash or
reinvest them in additional shares, except that distributions declared in
December and paid in January are taxable as if paid on December 31. The Fund
will send to non-exempt investors an IRS Form 1099-DIV showing their taxable
distributions for the past calendar year.
The Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). This qualification will relieve the Fund of liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
Code and it meets other requirements for qualification as set forth in the Code.
The information above is only a summary of some of the federal tax consequences
generally affecting the Fund and its shareholders, and no attempt has been made
to discuss individual tax consequences. In addition to Federal taxes, investors
may be subject to state or local taxes on their investment. Investors should
consult their tax advisor to determine whether the Fund is suitable to their
particular tax situation.
9
When investors sign their account application, they will be asked to certify
that their social security or taxpayer identification number is correct, that
they are not subject to backup withholding for failing to report income to the
IRS, and that they are a U.S. person. If investors violate IRS regulations, the
IRS can require the Fund to withhold a portion of taxable distributions and
redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders each calendar year
as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived from
earned interest, it is anticipated that all dividends paid by the Fund will be
taxable as ordinary income to those shareholders who are not exempt from Federal
income taxes, and that no part of any distribution will be eligible for the
dividends received deduction for corporations.
10
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's name,
address, social security number, and information about a customer's
investment goals and risk tolerance;
o Account History, including information about the transactions and balances
in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund or
service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the customer's
authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1) For purposes of this notice, the terms "customer" or "customers" includes
both shareholders of the Fund and individuals who provide nonpublic personal
information to the Fund, but do not invest in fund shares.
11
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling the Fund at
(800) 298-3442.
Selected data for a share of beneficial interest outstanding throughout the
period indicated(1):
[Enlarge/Download Table]
For The Year Ended December 10, 1998 to
April 30, 2001 April 30, 2000 April 30, 1999(1)
-------------- -------------- --------------------
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00
-------------- -------------- -----------------
Income from investment operations
Net investment income 0.06 0.05 0.02
-------------- -------------- -----------------
Dividends and distributions to shareholders
Dividends from net investment income (0.06) (0.05) (0.02)
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00
============== ============== =================
Total return 6.23% 5.43% 4.82%(2)
============== ============== =================
Ratios/Supplemental Data:
Net assets, end of period (000) $ 120,383 $ 140,005 $ 167,257
============== ============== =================
Ratio of expenses to average net assets 0.20% 0.20% 0.20%(2)
============== ============== =================
Ratio of net investment income to
average net assets 6.06% 5.37% 4.71%(2)
============== ============== =================
Ratio of expenses to average net assets
without fee waivers 0.33% 0.28% 0.66%(2)
============== ============== =================
Ratio of net investment income to
average net assets without fee waivers 5.93% 5.28% 4.25%(2)
============== ============== =================
(1) Class I commenced operations on December 10, 1998.
(2) Annualized
12
ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-298-3442 or writing to ALPS at 370 17th_Street, Suite 3100,
Denver, Colorado 80202.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
The SEC also maintains a Web site located at http://www.sec.gov that contains
the SAI, material incorporated herein by reference, and other information
regarding the Fund. For more information about the operation of the Public
Reference Room, please call the SEC at 1-202-942-8090.
FINANCIAL INVESTORS TRUST FUNDS
o Are NOT insured by the FDIC, a bank or any agency of the U.S. Government.
o Are NOT bank deposits or other obligations of or guaranteed by a bank.
o Involve investment risks, including the possible loss of the principal amount
invested.
[GE ASSET MANAGEMENT LOGO] [ALPS LOGO]
Investment Company Act File No. 811-08194
[FINANCIAL INVESTORS TRUST LOGO]
PRIME MONEY MARKET FUND
CLASS II
PROSPECTUS
August 28, 2001
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THESE FUNDS' SHARES OR DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
TABLE OF
CONTENTS
[Download Table]
PAGE
Investment Objective and Principal Risks 1
Performance 2
Fees and Expenses of the Fund 3
Who Manages the Fund? 4
How Do I Invest in the Fund? 5
Distribution Plan 10
Privacy Policy 11
Financial Highlights 12
Additional Information about the Fund Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is incorporated herein by reference, in connection
with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
FUND FACTS
GOAL: To provide investors with a high level of current income while seeking to
preserve principal.
PRINCIPAL INVESTMENTS:
o U.S. Government Obligations
o Corporate Debt Obligations
o Commercial Paper
o Foreign Bank Obligations
o Asset-Backed and Mortgage-Related Securities
INVESTMENT ADVISER (THE "ADVISER"):
o General Electric Asset Management, Inc. ("GEAM")
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI")
INVESTMENT OBJECTIVE AND PRINCIPAL RISKS
INVESTMENT OBJECTIVE -- The investment objective of the Prime Money Market Fund
(the "Fund") is to seek as high a level of current income as is consistent with
preservation of capital and liquidity.
PRINCIPAL INVESTMENT STRATEGIES -- In seeking to achieve its investment
objective, the Fund's investments include, but are not limited to, the following
U.S. dollar denominated, short-term money market instruments: (1) U.S.
Government Obligations, including stripped U.S. Government Obligations; (2) debt
obligations of corporations, banks, savings and loan institutions, insurance
companies and mortgage bankers; (3) commercial paper, including those with
floating or variable rates of interest; (4) foreign bank obligations; (5)
repurchase agreements; and (6) asset-backed or mortgage-related securities. In
any event, however, the Fund will only invest in those securities that the
Adviser, under the direction of the Board of Trustees of Financial Investors
Trust (the "Board"), determines present minimal credit risk and that the Adviser
determines are "eligible securities." Eligible securities are those securities
that are rated in one of the two highest categories by a National Recognized
Statistical Rating Organization ("NRSRO") or, if the security is unrated, the
Adviser has determined that the security is comparable to similarly rated
securities. Only these types of securities are considered "prime" by the
Adviser. The Fund's average weighted maturity will not exceed 90 days, and its
yield will fluctuate with changes in short-term interest rates. Also, the
securities held by the Fund will, at the time of purchase, have remaining
maturities of 13 months or less.
PRINCIPAL INVESTMENT RISKS -- An investment in the Fund is subject to many
risks, including:
o INTEREST RATE RISK. When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to
reduce the market value of debt securities, while a decline in interest
rates tends to increase their values.
o CREDIT RISK. The value of the debt securities held by the Fund
fluctuates with the credit quality of the issuers of
1
those securities. Credit risk relates to the ability of the issuer to
make payments of principal and interest when due, including default
risk.
o PREPAYMENT RISK. This investment risk is primarily associated with
mortgage-backed securities. During a period of declining interest
rates, homeowners may refinance their high-rate mortgages and prepay
the principal. Cash from these prepayments flows through the
mortgage-backed securities, necessitating reinvestment in bonds with
lower interest rates, which may lower the return of the Fund.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT $1.00 PER
SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the Statement of Additional
Information ("SAI").
SHOULD I INVEST IN THE PRIME MONEY MARKET FUND? The Class II shares of the Fund
are intended for institutional investors such as broker/dealers, corporations,
investment advisers, credit unions, banks, and other financial institutions and
certain individuals that can meet the minimum investment threshold of the Fund.
PERFORMANCE
The following information illustrates the changes in the fund's performance from
year to year. Returns are based on past results and are not an indication of
future performance.
----------
YEAR-BY-YEAR TOTAL RETURN
[GRAPH]
[Download Table]
12/31/99 4.83%
12/31/00 6.07%
2
During the period shown in the chart for the Fund, the highest return for a
quarter was 1.56% (quarter ending December 2000), and the lowest return for a
quarter was 1.08% (quarter ending March 1999). The Fund's year-to-date return
for the period ended June 30, 2001 was 2.39%.
AVERAGE ANNUAL TOTAL RETURNS
(for the period ended December 31, 2000)
[Download Table]
INCEPTION 1 SINCE
DATE YEAR INCEPTION
PRIME MONEY MARKET FUND - CLASS II DECEMBER 23, 1998 6.07% 5.46%
FEES AND EXPENSES OF THE FUND
This table describes the fees and expenses that you pay if you buy and hold
shares of the Fund.
[Download Table]
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption None
Exchange None
ANNUAL FUND OPERATING EXPENSES
(paid from Fund assets)
Management Fees 0.04%
Distribution (12b-1) Fees 0.25%
Other Expenses 0.29%*
Total Annual Fund Operating Expenses 0.58%
Fee Waiver (0.13)%*
Net Annual Fund Operating Expenses 0.45%
*The amount for "Other Expenses" includes administration fees payable to ALPS
Mutual Funds Services, Inc. ("ALPS"). Alps has contractually agreed to waive a
portion of the administration fees that it is entitled to receive, and/or assume
a portion of fund expenses, until at least April 30, 2002. As a result, Net
Annual Fund Operating Expenses for Class II of the Fund will be no more than
0.45% for that period.
----------
3
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and that the Fund returns 5% each year and that the Fund's operating
expenses remain the same. After one year, the example does not take into
consideration ALPS' agreement to waive fees. Although your actual costs may be
higher or lower, based on these assumptions your costs would be:
[Download Table]
ONE THREE FIVE TEN
YEAR YEARS YEARS YEARS
PRIME MONEY MARKET FUND $46 $173 $311 $713
WHO MANAGES THE FUND?
The Adviser is a wholly-owned subsidiary of General Electric Company ("GE"). The
principal address of the Adviser is 3003 Summer Street, Stamford, CT 06905.
Through GEAM and General Electric Investment Corporation ("GEIC"), an affiliated
company of GEAM, wholly owned by GE, and their predecessors, GE has more than 70
years of investment management experience. GEAM and GEIC collectively provide
investment management services to various institutional accounts with total
assets as of June 30, 2001 of approximately $119 billion, of which approximately
$25 billion was invested in mutual funds.
Pursuant to the Investment Advisory Agreement, the Adviser has agreed to provide
a continuous investment program for the Fund, including investment research and
management with respect to the assets of the Fund. GEAM is entitled to receive
management fees of 0.04% on the first $500 million of average net assets of the
Fund, 0.06% on the next $500 million and 0.08% on average net assets in excess
of $1 billion. During the fiscal year ended April 30, 2001, the Fund paid the
Adviser 0.04% of average net assets of the Fund in advisory fees.
ADMINISTRATIVE SERVICES AGREEMENT Financial Investors Trust (the "Trust")
entered into an administrative services agreement with alps. Under the
administrative services agreement, alps provides the fund with certain
administrative and clerical services and generally assists in the operation of
the fund. In addition, under the administrative services agreement alps also,
among other things, performs fund accounting and transfer agency services, and
pays the costs of the fund's custodian and external auditors. Pursuant to the
administrative services agreement, alps is entitled to receive a fee from the
fund that is computed daily and paid monthly at the following annual rates: the
greater of $360,000 or 0.16% Of average daily net assets of the fund up to $500
million; 0.14% Of average daily net assets of the fund in excess of $500 million
up to $1 billion; and 0.12% Of the average daily net assets of the fund that
exceed $1 billion.
4
Alps has contractually agreed to waive a portion of the administration fees that
it is entitled to receive from the funds and to assume a portion of fund
expenses, to the extent necessary for class ii of the fund to maintain an
expense ratio that does not exceed 0.45% Of average net assets, until at least
April 30, 2002.
HOW DO I INVEST IN THE FUND?
HOW ARE INVESTMENTS MADE? As described below, shares of the Fund may be
purchased through ALPS. Shares of the Fund may be purchased using the Federal
Reserve Wire System ("Federal Funds") or by check or money order. Your check or
money order must be payable in U.S. dollars to the Fund and be drawn on a bank
located within the U.S.
Federal Funds should be wired to:
State Street Bank & Trust Co.
ABA# 011000028
U.S. Treasury Money Market Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
Orders for the purchase of shares will be executed at the net asset value per
share next determined after an order has been received in good form. All funds
received are invested in full and fractional shares of the Fund. ALPS serves as
the Fund's Transfer Agent and ALPS maintains records of each shareholder's
holdings of Fund shares. The Fund reserves the right to reject any purchase.
An initial investment in the Fund must be preceded or accompanied by a
completed, signed application. Your completed application should be forwarded
to:
Financial Investors Trust
370 17th Street, Suite 3100
Denver, CO 80202
Orders for the purchase of shares will be executed at the net asset value per
share (the "public offering price") next determined after an order has been
received by the Fund in the proper form. If your purchase order is received in
proper order by the Fund by 5:00 p.m. Eastern Time, your order will be executed
that day.
5
MINIMUM PURCHASE AND ACCOUNT BALANCE REQUIREMENTS - The minimum initial
investment in the Fund is $25,000 and additional investments may be made in any
amount. The minimum purchase requirements do not apply to reinvested dividends.
If your account balance falls below $5,000 due to redemptions or exchanges, your
account may be closed. In the event that your account is closed, the Fund will
wire the proceeds to the bank account of record, or issue a check to the
shareholder of record. The Fund will notify you when your account balance has
fallen below $5,000 and you will be given 30 days to increase your investment
above that amount.
HOW TO REDEEM FUND SHARES You may redeem all or any part of the value of your
account(s) on any day the assets of the Fund are valued (a "Business Day"). You
may redeem by mail, telephone or facsimile if you have established those options
with the Fund. Redemption orders are processed at the net asset value per share
next determined after the Fund receives your order. If the Fund receives your
redemption order before 1:00 p.m. Eastern Time on a Business Day, the Fund will
generally pay for your redeemed shares on that day. Otherwise, the Fund
generally will pay for your redeemed shares on the next Business Day. The Fund
reserves the right to pay for redeemed shares within seven days after receiving
your redemption order if, in the judgment of the Adviser, an earlier payment
could adversely affect the Fund.
REGULAR REDEMPTIONS: You may redeem shares by sending a written request to
Financial Investors Trust, 370 17th Street, Suite 3100, Denver, CO 80202. You
must sign a redemption request. Your written redemption request must:
(i) state the number of shares to be redeemed; and
(ii) identify your shareholder account number.
EACH SIGNATURE MUST BE GUARANTEED BY EITHER A BANK THAT IS A MEMBER OF THE FDIC,
A TRUST COMPANY OR A MEMBER FIRM OF A NATIONAL SECURITIES EXCHANGE OR OTHER
ELIGIBLE GUARANTOR INSTITUTION. THE FUND WILL NOT ACCEPT GUARANTEES FROM
NOTARIES PUBLIC. Guarantees must be signed by an authorized person at the
guarantor institution, and the words "Signature Guaranteed" must appear with the
signature. A redemption request will not be deemed to be properly received until
the Fund receives all required documents in proper form.
When the Fund wires your redemption proceeds, the wire must be paid to the same
bank and account as designated on the Fund's Account Application or in your
written instructions to the Fund. If your bank is not a member of the Federal
Reserve System, your redemption proceeds will be wired to a correspondent bank.
Immediate notification by the correspondent bank to your bank will be necessary
to avoid a delay in crediting the funds to your bank account.
6
BY TELEPHONE AND FACSIMILE: You may redeem shares by telephone or facsimile.
Shareholders must check the appropriate box on the Account Application to
activate facsimile and/or telephone redemption privileges. Shares may be
redeemed by telephoning the Fund at (800) 298-3442 (or sending a facsimile
transmission to the Fund at (303) 825-2575 and giving the account name, account
number, Personal Identification Number (PIN#), name of Fund and amount of
redemption). Proceeds from redemptions will be wired directly to your account at
a commercial bank within the United States.
In order to arrange for facsimile and/or telephone redemptions after you have
opened your account, or to change the bank account or address designated to
receive redemption proceeds, send a written request to the Fund at the address
listed under "REGULAR REDEMPTIONS." The request must be signed by you with the
signatures guaranteed as described above. The Trust may modify or terminate
procedures for redeeming shares by telephone but will not materially change or
terminate it without giving shareholders 60 days' written notice.
During periods of substantial economic or market change, telephone or facsimile
redemptions may be difficult to complete. If you are unable to contact the Fund
by telephone or facsimile, you may redeem your shares by mail as described above
under "REGULAR REDEMPTIONS."
By electing the facsimile and/or telephone redemption option, you may be giving
up a measure of security which you might have had if you were to redeem in
writing. The Trust will employ reasonable procedures to confirm that
instructions communicated by telephone or facsimile are genuine, such as
recording telephone calls, providing written confirmation of transactions, or
requiring a form of personal identification prior to acting on instructions
received by telephone or facsimile. To the extent the Trust does not employ
reasonable procedures, it and/or its service contractors may be liable for any
losses due to unauthorized or fraudulent instructions. Neither the Trust nor
ALPS will be liable for following instructions communicated by telephone or
facsimile that are reasonably believed to be genuine. Accordingly, you, as a
result of this policy, may bear the risk of fraudulent telephone or facsimile
redemption transactions.
CHECK REDEMPTION: You may write an unlimited number of checks drawn on your
account by either requesting the privilege on your account application or by
sending a written request to the Fund. In order to establish the checkwriting
option, you must manually sign a signature card that includes all authorized
individuals. Checks will be sent only to the registered owner(s) of the account
and only to the address of record. Checks may be made payable to the order of
any person. When a check is presented to the Transfer Agent for payment, the
Transfer Agent, as your agent, will cause the Fund to redeem a sufficient number
of your Fund shares to cover the amount of the check. Shares earn dividends
through the day the redemption is processed. There is no charge to you for the
7
use of the checks; however, the Transfer Agent will impose a charge for stopping
payment of a check upon your request, or if the Transfer Agent cannot honor a
check due to insufficient funds or other valid reasons. A request to reverse a
stop payment order must be received in writing.
Checks may not be written to redeem shares purchased by check until the date
that good funds are credited to the Fund's custodian by its correspondent bank.
If the amount of the check is greater than the value of the shares in your
account, the check will be returned marked "Insufficient Funds." Checks written
on amounts subject to the hold described above will be returned marked
"Uncollected." If your check does not clear, you will be responsible for any
loss the Fund, Custodian, or Transfer Agent may incur. A check may not be used
to close an account.
Checkwriting is not available to holders of shares in certificate form or if you
are subject to Internal Revenue Service backup withholding. It is also
inadvisable for you to write a check for an amount close to the total value of
your account. The Trust reserves the right to terminate or alter the
checkwriting service at any time.
EXCHANGE OF FUND SHARES You may sell your Fund shares and buy shares of the U.S.
Government Money Market Fund or the U.S. Treasury Money Market Fund, other
investment portfolios of the Trust, in exchange by written request. There are no
fees or commissions for exchanging Fund shares. However, you must satisfy the
minimum balance requirements of each Fund that you are considering investing in.
If you have established the privilege on your Account Application, you may also
initiate exchanges by telephone or facsimile. Exchange requests should be
directed to the Fund at (800) 298-3442.
Exchange transactions must be for amounts of $1,000 or more. Exchanges may have
tax consequences, so you should consult your tax adviser for further
information. The Fund into which you want to exchange must be registered for
sale in your state. Prior to requesting an exchange of Fund shares you should
call the Fund at (800) 298-3442 to request a current prospectus for the Fund
which you want to exchange and you should read the prospectus carefully before
investing.
During periods of significant economic or market change, telephone or facsimile
exchanges may be difficult to complete. If you are unable to contact the Fund by
telephone or facsimile, you may also mail the exchange request to the Fund at
the address listed under "REGULAR REDEMPTIONS." Neither the Trust nor ALPS will
be responsible for the authenticity of exchange instructions received by
telephone or facsimile except as set forth under "HOW TO REDEEM FUND SHARES - BY
TELEPHONE AND FACSIMILE."
8
The Trust can provide you with information concerning certain limitations on the
exchange privilege, including those related to frequency. The Trust may modify
or terminate the exchange privilege but will not materially change or terminate
it without giving shareholders 60 days' written notice.
HOW ARE FUND SHARES VALUED? The price at which you buy, sell or exchange fund
shares is the share price or net asset value (nav). The share price for the fund
is determined by adding the value of the fund's investments, cash and other
assets, deducting liabilities, and then dividing that value by the total number
of the fund's shares outstanding. The fund normally calculates its nav at 5:00
p.M. Eastern time.
The Trustees have established procedures designed to maintain a stable net asset
value of $1.00 per share, to the extent reasonably possible. More particularly,
the Trustees have approved and adopted procedures under Rule 2a-7. Under
guidelines of Rule 2a-7, the Fund uses the amortized cost method to value its
portfolio securities. The amortized cost method involves valuing a security at
its cost and amortizing any discount or premium over the period of maturity,
regardless of the impact of fluctuating interest rates on the market value of
the security.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT? While municipal
investors are generally exempt from Federal income taxes, each investor should
independently ascertain its tax status. With respect to investors who are not
exempt from Federal income taxes, dividends derived from net investment income
and short term capital gains are taxable as ordinary income distributions and
are taxable when paid, whether investors receive distributions in cash or
reinvest them in additional shares, except that distributions declared in
December and paid in January are taxable as if paid on December 31. The Fund
will send to non-exempt investors an IRS Form 1099-DIV showing their taxable
distributions for the past calendar year.
The Fund has qualified and intends to continue to qualify as a "regulated
investment company" under the Internal Revenue Code of 1986, as amended (the
"Code"). This qualification will relieve the Fund of liability for Federal
income taxes to the extent its earnings are distributed in accordance with the
Code and it meets other requirements for qualification as set forth in the Code.
The information above is only a summary of some of the federal tax consequences
generally affecting the Fund and its shareholders, and no attempt has been made
to discuss individual tax consequences. In addition to Federal taxes, investors
may be subject to state or local taxes on their investment. Investors should
consult their tax advisor to determine whether the Fund is suitable to their
particular tax situation.
9
When investors sign their account application, they will be asked to certify
that their social security or taxpayer identification number is correct, that
they are not subject to backup withholding for failing to report income to the
IRS, and that they are a U.S. person. If investors violate IRS regulations, the
IRS can require the Fund to withhold a portion of taxable distributions and
redemptions.
The Fund declares dividends from net investment income daily and pays such
dividends monthly. The Fund intends to distribute substantially all of its net
investment income and capital gains, if any, to shareholders each calendar year
as well as on a fiscal year basis.
Since all of the Fund's net investment income is expected to be derived from
earned interest, it is anticipated that all dividends paid by the Fund will be
taxable as ordinary income to those shareholders who are not exempt from Federal
income taxes, and that no part of any distribution will be eligible for the
dividends received deduction for corporations.
DISTRIBUTION PLAN
The Trustees have adopted a Distribution Plan on behalf of Class II of the Fund
pursuant to Rule 12b-1 (the "Rule") under the 1940 Act. The Distribution Plan
provides for payment of a fee to ADI at the annual rate of up to .25% of the
average net assets of Class II for distribution-related services. These services
include, but are not limited to the following: formulation and implementation of
marketing and promotional activities, such as mail promotions and television,
radio, newspaper, magazine and other mass media advertising; preparation,
printing and distribution of sales literature; preparation, printing and
distribution of prospectuses of the Prime Fund and reports to recipients other
than existing shareholders of the Prime Fund; obtaining such information,
analysis and reports with respect to marketing and promotional activities as ADI
may, from time to time, deem advisable; making payments to securities dealers
and others engaged in the sales of Class II Shares of the Prime Fund; and
providing training, marketing and support to such dealers and others with
respect to the sale of Class II Shares of the Prime Fund. The Distribution Fee
is an expense of Class II in addition to the Management Fee, and Administration
Fee, and will reduce the net income and total return of that Class.
10
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's
name, address, social security number, and information about a
customer's investment goals and risk tolerance;
o Account History, including information about the transactions and
balances in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund
or service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the
customer's authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1) FOR PURPOSES OF THIS NOTICE, THE TERMS "CUSTOMER" OR "CUSTOMERS" INCLUDES
BOTH SHAREHOLDERS OF THE FUND AND INDIVIDUALS WHO PROVIDE NONPUBLIC PERSONAL
INFORMATION TO THE FUND, BUT DO NOT INVEST IN FUND SHARES.
11
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling the Fund at
(800) 298-3442.
Selected data for a share of beneficial interest outstanding throughout the
period indicated(1):
[Enlarge/Download Table]
For the Period
For The Year Ended December 23, 1998 to
April 30, 2001 April 30, 2000 April 30, 1999(1)
-------------- -------------- ---------------------
Net asset value - beginning of period $ 1.00 $ 1.00 $ 1.00
------------ ------------ ------------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.06 0.05 0.02
------------ ------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income (0.06) (0.05) (0.02)
------------ ------------ ------------
Net asset value - end of period $ 1.00 $ 1.00 $ 1.00
============ ============ ============
Total return 5.97% 5.17% 4.55%(2)
============ ============ ============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 39 $ 32 $ 2
============ ============ ============
Ratio of expenses to average net assets 0.45% 0.45% 0.45%(2)
============ ============ ============
Ratio of net investment income to
average net assets 5.88% 5.11% 4.53%(2)
============ ============ ============
Ratio of expenses to average net assets
without fee waivers 0.58% 0.57% 1.24%(2)
============ ============ ============
Ratio of net investment income to
average net assets without fee waivers 5.75% 4.99% 3.74%(2)
============ ============ ============
(1) Class II commenced operations on December 23, 1998.
(2) Annualized
12
ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-298-3442 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
The SEC also maintains a Web site located at http://www.sec.gov that contains
the SAI, material incorporated herein by reference, and other information
regarding the Fund. For more information about the operation of the Public
Reference Room, please call the SEC at 1-202-942-8090.
FINANCIAL INVESTORS TRUST FUNDS
o Are NOT insured by the FDIC, a bank or any agency of the U.S.
Government.
o Are NOT bank deposits or other obligations of or guaranteed by a bank.
o Involve investment risks, including the possible loss of the principal
amount invested.
[GE ASSET MANAGEMENT LOGO] [ALPS DISTRIBUTORS, INC. LOGO]
Investment Company Act File No. 811-08194
[LOGO]
EQUITY FUND
A CLASS ABOVE
Prospectus
August 28, 2001
[PHOTO]
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THIS FUND'S SHARES OR DETERMINED WHETHER THE INFORMATION
IN THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
TABLE OF CONTENTS
[Download Table]
PAGE
----
Investment Objective, Principal Strategies and Risks ............. 1
Performance ...................................................... 2
Fees and Expenses of the Fund .................................... 3
Who Manages the Fund? ............................................ 3
How Do I Invest in the Fund? ..................................... 4
Privacy Policy ................................................... 9
Financial Highlights ............................................. 10
Additional Information about the Fund ............................ Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information ("SAI") that is incorporated herein by reference, in
connection with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
FUND FACTS
GOAL: To provide investors with long-term growth of capital and dividend income
PRINCIPAL INVESTMENTS:
o Common Stocks
o Convertible Securities
o Fixed-Income Securities
INVESTMENT ADVISER (THE "ADVISER"):
o Tempest Investment Counselors, Inc.
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI or Distributor") "
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
INVESTMENT OBJECTIVE -- The Aristata Equity Fund (the "Fund") seeks to provide
investors with long-term growth of capital and dividend income by investing
primarily in common stocks and securities convertible into common stocks.
PRINCIPAL INVESTMENT STRATEGIES -- Under normal market conditions, the Adviser
currently intends to invest at least 80% of the Fund's assets in domestic common
stocks, preferred stocks, and other securities that are convertible into common
stock. Additionally, the Fund may invest in investment grade fixed-income
securities, cash, and short-term fixed-income securities that are considered to
be cash equivalents. The Fund may also invest up to 10% of its total assets in
securities of foreign issuers, whose securities may trade in U.S. or foreign
markets. The Fund Adviser follows a strategy that first attempts to identify
undervalued industry groups within the stock market. The Adviser then employs
this "Value" investment style by selecting companies within particular
industries that appear most attractive from a valuation standpoint. The Adviser
applies this "Value" investment style by investing in a diversified portfolio of
stocks that include seasoned large, medium and small companies. Undervalued
stocks are generally out of favor with investors and consequently trade at
prices below what the Adviser feels the stocks are worth in relation to
earnings, book value, historical valuations and/or comparable companies in the
industry.
PRINCIPAL INVESTMENT RISKS -- The principal risks of investing in this Fund are:
o STOCK MARKET RISK -- The value of the stocks and other securities owned by the
Fund will fluctuate depending on the performance of the companies that issued
them, general market and economic conditions, and investor confidence. In
addition, if an assessment of a company's potential is not correct, the
securities in the portfolio may not increase in value, and could even decrease
in value.
o INVESTMENT STYLE RISK -- Market performance tends to be cyclical and, during
various cycles, certain investment styles may fall in and out of favor. If the
market is not favoring the Fund's value style of investing, the Fund's gains may
not be as big as, or its losses may be bigger than, other equity funds using
different investment styles.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ADDITIONALLY, THE VALUE OF THE FUND'S SHARES, LIKE STOCK PRICES GENERALLY, WILL
FLUCTUATE WITHIN A WIDE RANGE, SO AN INVESTOR IN THE FUND COULD LOSE MONEY OVER
SHORT OR EVEN LONG PERIODS.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the SAI.
SHOULD I INVEST IN THE ARISTATA EQUITY FUND?
The Fund may be appropriate for you if:
o You are seeking an investment that aims to provide capital appreciation over
the long term.
o You can tolerate price fluctuations and volatility that are inherent in
investing in a broad-based stock mutual fund.
o You wish to add a common stock fund to your existing investment portfolio.
1
PERFORMANCE
The following bar chart and table can help you evaluate the potential risks of
investing in the Fund. Both the bar chart and the table show the variability the
Fund has experienced in its past performance. The past performance of the Fund
does not indicate how it will perform in the future and is intended to be used
for purposes of comparison only.
The performance shown in the bar chart reflects the expenses associated with
those shares from year to year.
ANNUAL TOTAL RETURN AS OF DECEMBER 31,
[CHART]
[Download Table]
1999 6.78%
2000 9.98%
The Fund's best return for a calendar quarter was 14.90% for the second quarter
of 1999, and the lowest return for a calendar quarter was (9.29%) for the third
quarter of 1999. The year-to-date return as of June 30, 2001, was 0.67%.
The following table lists the Fund's average year-by-year return over the past
one-year period and since the inception of the Fund. The table also compares the
average annual total returns of the Fund for the periods shown to the
performance of the Standard & Poor's 500 Index.
[Download Table]
AVERAGE ANNUAL TOTAL RETURN
(FOR THE PERIOD ENDED DECEMBER 31, 2000)
SINCE INCEPTION
1 YEAR (3/2/98)
------ ---------------
ARISTATA EQUITY FUND 9.98% 8.05%
STANDARD & POOR'S 500 INDEX (9.13)% 9.82%
The Standard & Poor's 500 Index is an unmanaged index containing common stocks
of 500 industrial, transportation, utility, and financial companies, regarded as
generally representative of the U.S. Stock Market. The Index return reflects the
reinvestment of income dividends and capital gain distributions, if any, but
does not reflect fees, brokerage commissions, or other expenses of investing."
2
FEES AND EXPENSES OF THE FUND
The information in this section describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.
SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)
[Download Table]
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
[Download Table]
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
(FOR THE YEAR ENDED APRIL 30, 2001)
Management Fees 0.85%
Distribution (12b-1) Fees None
Other Expenses 0.31%
Total Annual Fund Operating 1.16%*
*The Adviser has agreed to waive that portion of its fee to the extent necessary
for the Fund to maintain an expense ratio of not more than 1.05% of average net
assets of the Fund. This waiver may be cancelled at any time by the Adviser.
EXAMPLE -- The following hypothetical example is intended to help you compare
the cost of investing in the Fund with the cost of investing in other mutual
funds. The hypothetical example assumes that you invest $10,000 in the Fund for
the time periods indicated and that total annual operating expenses set forth
above are incurred. The hypothetical example also assumes a 5% return each year
and that the Fund's operating expenses will remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
[Download Table]
One Year Three Years Five Years Ten Years
Aristata Equity Fund $118 $368 $638 $1,408
WHO MANAGES THE FUND?
Tempest Investment Counselors, Inc., ("Tempest,") acts as the investment adviser
to the Fund under the supervision of the Trust's Board of Trustees. The
Adviser's address is 1380 Lawrence Street, Suite 1050, Denver, Colorado 80204.
The Adviser manages the investment and reinvestment of the assets of the Fund
and continuously reviews, supervises and administers the Fund's investments. The
Adviser is responsible for placing orders for the purchase and sale of the
Fund's investments directly with brokers and dealers, as selected by the Adviser
in its discretion.
The Adviser utilizes a team management system for the Fund. The Adviser's
investment professional team has an average of more than 25 years of investment
research and portfolio management experience. These individuals bring a broad
base of experience, ideas, knowledge, and expertise to the Fund's management.
The Adviser's investment a team is led by H. David Lansdowne, CFA, President and
Chief Executive Officer of Tempest, and its Chief Investment Officer since 1988.
The Fund's other key investment management team members include: Robert J.
Alder, CFA; J. Jeffrey Dohse; Giles R. A. Fox, CFA; Barbara Grummel and Greg H.
Thompson, CFA.
Mr. Lansdowne earned both his B.S. (1969) and M.B.A. (1972) from the University
of Denver. He was awarded the Chartered Financial Analyst (CFA) designation in
1977. Mr. Lansdowne joined Tempest in 1983 as Director of Research. He began his
career as an Investment Officer with Colorado National Bank in Denver. He later
joined United Capital
3
Management, a subsidiary of United Bank of Denver, where he was Vice President
and Portfolio Manager, overseeing large corporate pension plans. Immediately
prior to joining the Adviser, he was Senior Vice President and Director of
Research for Financial Programs Mutual Funds and for its subsidiary for
privately-managed accounts, Financial Trust Company.
Mr. Alder earned his B.S. from the University of Colorado in 1969. He was
awarded the Chartered Financial Analyst (CFA) designation in 1977. His
investment management career began in 1969 as a portfolio manager and analyst
with the Trust Investment Division of the First National Bank of Denver. In
1977, he joined the Trust Investment Division of Colorado National Bank and
became head of the department in 1982. In 1987, he was instrumental in creating
Colorado National Bank's wholly-owned registered investment advisory subsidiary,
Colorado Capital Advisors, and was President of that subsidiary until 1993, when
he joined the Adviser in his current capacity as Executive Vice President.
Mr. Dohse earned his B.S. from Culver-Stockton College in Canton, Missouri, in
1963 and his M.B.A. from Loyola University in Chicago in 1971. He worked in the
investment industry for 15 years before joining Tempest in 1983. He began his
career with American National Bank & Trust Company in Chicago and was involved
in all facets of bank and trust investments. He then joined the United Bank of
Denver as Investment Officer, managing trust portfolios. Prior to joining the
Adviser, Mr. Dohse was a Vice President and Portfolio Manager at IntraWest Bank
of Denver, with responsibility for various investment management portfolios. Mr.
Dohse is the lead portfolio manager for the Aristata Equity Fund.
Mr. Fox earned his B.A. from the University of Western Ontario in 1986 and his
M.B.A. from the University of Virginia in 1990. He was awarded the Chartered
Financial Analyst (CFA) designation in 1995. Mr. Fox joined Tempest in 2000. His
investment career began in 1990 as a senior analyst/financial forecaster with
the Bank of Nova Scotia in Toronto, Canada. Upon moving to Denver in 1994, Mr.
Fox served as Vice President-Research with Corinthian Capital, an investment
firm specializing in small cap value stocks. In 1999, Mr. Fox joined Denver
Investment Advisors, LLC as a senior analyst with their small and large cap
value funds.
Ms. Grummel earned her B.S. from the University of Colorado in 1979. She worked
for the National Association of Securities Dealers, N. Donald and Company and
the underwriting and asset management divisions of Merrill Lynch. Immediately
prior to joining the Adviser she was Executive Vice President with Lord Abbett
and Company, a New York- based mutual fund group, where her responsibilities
included state-specific municipal bond fund management, individual fixed-income
portfolio management and new business development.
Mr. Thompson earned his B.S. from the University of Wyoming in 1967 and his
M.B.A. from the University of Denver in 1972. He was awarded the Chartered
Financial Analyst (CFA) designation in 1988. He joined the Adviser in 1987. His
previous positions include three years as a Financial Analyst with Standard &
Poor's Compustat Services, Inc. in Englewood, Colorado, and 12 years with Page
T. Jenkins, a Denver proprietorship. He was an Investment Manager and Security
Analyst with Jenkins, conducting research and managing securities and mineral
portfolios for the firm.
For the advisory services it provides to the Fund, Tempest receives from the
Fund a monthly fee, based on average daily net assets, at the annual rate of
0.85%. The total advisory fee paid to Tempest for the fiscal year ended June 30,
2001, was 0.74% of the Fund's average net assets, after waiver.
ADVISER'S PRIOR EQUITY PERFORMANCE. Although the Adviser, Tempest did not manage
a registered investment company prior to March 2, 1998, the date the Fund
commenced operations, the Adviser has been providing investment advisory
services to various clients since 1976. In fact, substantially all of the
initial March 1998 investors in the Fund previously were investors in certain
unregistered, commingled investment pools (the "Pools") that were advised by the
Adviser. The Adviser advised these Pools for 22 years from 1976 to March 1998.
As of March 1998 the Pools were converted into the Aristata Equity Fund, and
Tempest became the Fund's Adviser.
HOW DO I INVEST IN THE FUND?
HOW DO I BUY FUND SHARES?
As described below, you may purchase shares of the Fund through an authorized
broker or investment adviser, or directly from the Fund. Your orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good form. Your payment will be
invested in full and fractional shares of the Fund. Orders transmitted to the
Fund in proper form prior to the close of trading (normally 4:00 p.m. Eastern
Time) will be executed that day. You will not receive certificates for shares
that you purchase. ALPS Mutual Funds Services, Inc. ("ALPS") serves as the
Fund's Transfer Agent and maintains records of each shareholder's holdings
4
of Fund shares. Your initial investment in the Fund must be preceded or
accompanied by a completed, signed application. You may obtain additional
Account Applications by calling the Fund at 1-800-644-8595. The Fund reserves
the right to reject any purchase.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Fund is $2,000, including Individual
Retirement Accounts ("IRA") purchases. Any subsequent investments must be at
least $50, including IRA investments. To establish an IRA, you must complete a
separate application that you can obtain by calling the Fund at 1-800-644-8595.
INVESTING THROUGH YOUR BROKER OR INVESTMENT ADVISER
Shares are available to new and existing shareholders through authorized brokers
and investment advisers.
Simply complete an Account Application and contact your broker or investment
adviser with instructions as to the amount you wish to invest. Your broker will
then contact the Fund to place the order on your behalf. Authorized brokers and
investment advisers may impose additional requirements and charges for the
services rendered.
Your orders received by the Fund prior to the close of its trading (which is
normally 4:00 p.m. Eastern Time), will become effective that day. Brokers who
receive your orders are obligated to transmit them promptly. You will receive
written confirmation of your order within a few days of receipt of instructions
from your broker.
INVESTING DIRECTLY WITH THE FUND
You can invest in the Fund directly by using any of the methods described below.
BY MAIL. Make your check payable to the ARISTATA EQUITY FUND and mail it, along
with the Account Application (if your purchase is an initial investment), to the
address indicated on the Account Application. Third party and foreign checks
will not be accepted. For existing accounts please include the Fund name and
your account number on all checks.
BY BANK TRANSFER. After you have established an account with the Fund, a bank
transfer will allow you to transfer money from your bank account via the
Automated Clearing House (ACH) network to your Fund account. To use this
service, you must select this option on your Account Application. You also will
need an account with a bank that provides bank transfer services. (Your bank may
charge you a fee for this service.) Once you have established this option, you
can initiate a bank transfer by contacting a representative from your bank,
providing the required information for the bank, and authorizing the transfer to
take place. Please allow two or three days after the initial authorization for
the transfer to occur.
BY WIRE. To initiate your wire transaction, contact your depository institution
and instruct them to wire Federal Funds (monies transferred from one bank to
another through the Federal Reserve System with same-day availability) to:
State Street Bank & Trust Co.
ABA# 011000028
Aristata Equity Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program offers a simple
way to establish and maintain a consistent investment program. You may arrange
automatic transfers (minimum $50 per transaction) from your bank account to your
Fund account on a periodic basis by simply completing the Automatic Investment
Plan section of your Account Application. When you participate in this program,
the minimum initial investment in each Fund is $250. You may change the amount
of your automatic investment, skip an investment, or stop the Automatic
Investment Program by calling the Fund at 1-800-644-8595 at least three business
days prior to your next scheduled investment date.
The Fund may at its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. The Fund reserves the
right to suspend the sale of shares, or to reject any purchase order, including
orders in connection with exchanges, for any reason.
HOW DO I REDEEM FUND SHARES?
Shareholders may redeem their shares, in whole or in part, on each day the Fund
is valued (see the section entitled "HOW ARE FUND SHARES VALUED?" later in this
Prospectus). Shares will be redeemed at the net asset value next determined
after a proper redemption request has been received by the Fund in good form.
A redemption is a tax reportable transaction and any gain or loss is a taxable
event. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON
THIS INVESTMENT?" later in this Prospectus for more information.
Where the shares to be redeemed have been purchased by check, the payment of
redemption proceeds may be delayed until the purchasing check has cleared.
Shareholders may avoid this delay by investing through wire transfers of Federal
Funds. During the period prior to the time the shares are redeemed, dividends on
the shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
5
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than customary weekend or holiday closings or if an emergency condition, as
determined by the SEC, merits such action, the Fund may suspend redemptions or
postpone payment dates beyond the normal seven day redemption period.
To ensure acceptance of your redemption request, it is important to follow the
procedures described below. Although the Fund has no present intention to do so,
the Fund reserves the right to refuse or to limit the frequency of any
telephone, wire or bank transfer redemptions. It may be difficult to make
contact by telephone during periods of severe market or economic change.
Shareholders should consider alternative methods of communications during such
times.
The Fund may modify or terminate its redemption services and provisions at any
time. If the Fund terminates any particular service, it will do so only after
giving written notice to shareholders. Redemption by mail will always be
available to shareholders. For your protection, redemptions may be suspended for
a period of 15 days following an address change.
You can redeem your shares directly from the Fund using any of the methods
described below.
REDEEMING YOUR SHARES USING AN AUTHORIZED BROKER OR INVESTMENT ADVISER
You may redeem your shares by contacting your authorized broker or investment
adviser and instructing them to redeem your shares. They will then contact ALPS
and place a redemption order on your behalf.
REDEEMING YOUR SHARES DIRECTLY FROM THE FUND
BY MAIL. You may redeem your shares by sending a letter directly to the Fund. To
be accepted, a letter requesting redemption must include:
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s) along with a signature guarantee
(if required).
A signature guarantee is designed to protect you, the Fund, and its agents from
fraud. Your written request requires a signature guarantee if the check is
$10,000 or greater, if the check is being mailed to an address that has been
changed within the last 30 days, if the check is not being mailed to the address
on your account, or if the check is not being made out to the account owner. The
following institutions should be able to provide you with a signature guarantee:
banks, broker-dealers, credit unions (if authorized under state law), securities
exchanges and associations, clearing agencies, and savings associations. A
signature guarantee may not be provided by a notary public.
BY TELEPHONE. If you have established the telephone redemption privilege on your
Account Application, you may redeem your shares by calling the Fund at
1-800-644-8595. You should be prepared to give the telephone representative the
following information:
o your account number, social security or tax identification
number and account registration;
o the Fund name from which you are redeeming shares; and
o the amount to be redeemed.
The telephone conversation may be recorded to protect you and the Fund. The Fund
employs reasonable procedures to confirm that instructions communicated by
telephone to its representatives are genuine. However, if the Fund acts on
instructions it reasonably believes to be genuine, you will bear the loss.
You cannot redeem shares held in IRAs using the telephone.
BY WIRE. You may instruct the Fund to send your redemption proceeds via federal
wire ($1,000 minimum per transaction) or bank transfer to your personal bank.
Your instructions should include:
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s).
Wire and bank transfer redemptions can be made only if the privilege has been
established on your Account Application and you have attached a copy of a voided
check or a letter summarizing the wiring instructions of the account where
proceeds are to be wired. Your bank may charge you a fee for receiving a wire
payment on your behalf.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund account balance is $10,000 or more, you
may elect to have periodic redemptions made from your account on a monthly,
6
quarterly, semi-annual or annual basis by completing the Systematic Withdrawal
Plan section of the Account Application. The minimum periodic withdrawal is $100
and the transaction normally will be executed on the 5th or 20th day of the
selected month(s). You may request that these payments be sent to a
predesignated bank account or other designated party. Depending on the size of
the payment requested and fluctuation in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust your account. If a shareholder participates in the Systematic Withdrawal
Plan, all dividends are automatically reinvested unless the shareholder directs
otherwise.
EXCHANGE OF FUND SHARES
The Fund offers two convenient ways to exchange shares in one Fund for shares in
another Aristata Fund. Before engaging in an exchange transaction, a shareholder
should read carefully the Prospectus describing the Fund into which the exchange
will occur. A prospectus for any Aristata Fund can be obtained without charge by
writing to the Fund at the address listed on the back cover of this Prospectus.
A shareholder may not exchange shares of one Fund for shares of another Fund if
that Fund is not qualified for sale in the state of the shareholder's residence.
Please call the Fund at 1-800-644-8595 to see if the fund you are interested in
is available in your state. The minimum amount for an initial and subsequent
exchange is $50. The Aristata Funds may terminate or amend the terms of the
exchange privilege at any time upon at least 60 days prior written notice to
shareholders of any modification or termination of the exchange privilege. For
your protection, exchanges may be suspended for a period of 15 days following an
address change.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by a Fund in good order.
An exchange is taxable as a sale of a security on which a gain or loss may be
recognized. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX
ON THIS INVESTMENT?" later in this Prospectus for more information. Shareholders
will receive written confirmation of the exchange following completion of the
transaction.
EXCHANGE BY MAIL. To exchange Fund shares by mail, simply send a letter of
instruction to the Fund. The letter of instruction must include:
o your account number and account registration
o the Fund from and the Fund into which you wish to exchange
your investment;
o the dollar or share amount you wish to exchange; and
o an authorized signature(s).
EXCHANGE BY TELEPHONE. If you have established the telephone exchange privilege
on your Account Application, you may exchange Fund shares by telephone by simply
calling the Fund at 1-800-644-8595. You should be prepared to give the telephone
representative the following information:
o your account number, social security or tax identification
number and account registration;
o the name of the Fund from and the Fund into which you wish to
exchange your investment; and
o the dollar or share amount you wish to exchange.
The conversation may be recorded to protect you and the Fund. See the section
entitled "REDEEMING YOUR SHARES DIRECTLY FROM THE FUND - BY TELEPHONE" earlier
in this Prospectus for a discussion of telephone transactions.
INDIVIDUAL RETIREMENT ACCOUNTS
The Fund may be used as a funding medium for traditional and Roth IRAs. In
addition, a traditional or Roth IRA may be established through a custodial
account with the Fund. Completion of a special application is required to create
such an account, and the minimum initial investment for an IRA is $2,000.
Contributions to IRAs are subject to the limits and conditions established by
the Internal Revenue Service. For more information, call the Fund at
1-800-644-8595 or your tax adviser.
Additional account level fees are imposed for IRA accounts.
HOW ARE FUND SHARES VALUED?
The price at which you buy, sell or exchange Fund shares is the share price or
net asset value (NAV). The share price for the Fund is determined by adding the
value of the Fund's investments, cash and other assets, deducting liabilities,
and then dividing that value by the total number of the Fund's shares
outstanding. The Fund's NAV is calculated at the close of the regular trading
session of the New York Stock Exchange (normally 4:00 p.m. Eastern Time) each
day that the Exchange is open.
When the Fund calculates the share price for the Fund shares, it values the
securities it holds at market value. Sometimes market quotes for some securities
are not available or are not representative of market value. Examples would be
when events occur that materially affect
7
the value of a security at a time when the security is not trading or when the
securities are illiquid. In that case, securities may be valued in good faith at
fair value, using consistently applied procedures decided upon by the Trustees
of the Fund.
For more information please refer to the SAI.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT?
The Fund intends to distribute substantially all of its net investment income
and capital gains, if any, to shareholders within each calendar year as well as
on a fiscal year basis. Any net capital gains realized are normally distributed
in December. Income dividends for the Fund, if any, are declared and paid
quarterly.
FEDERAL TAXES. Distributions of gains from the sale of assets held by the Fund
for more than one year generally are taxable to shareholders at the applicable
capital gains rate, regardless of how long they have owned their Fund shares.
Distributions from other sources generally are taxed as ordinary income. A
portion of the Fund's dividends may qualify for the dividends-received deduction
for corporations. Distributions are taxable when they are paid, whether taken in
cash or reinvested in additional shares, except for distributions declared in
October, November or December and paid in January are taxable as if paid on
December 31. The Fund will send each shareholder an IRS Form 1099-DIV by January
31.
"BUYING A DIVIDEND." When shares are purchased just before a distribution
("buying a dividend"), the share price will reflect the amount of the upcoming
distribution. Consequently, a portion of the share price will be received back
as a taxable distribution.
CONVERSION OF THE FUND. On or before March 2, 1998, common trust and collective
investment fund assets ("pools") managed by the Adviser contributed assets to
the Fund in exchange for shares of the Fund. This transfer may result in adverse
tax consequences under certain circumstances to either the investors
transferring shares from the pools for shares of the Fund ("reorganizing
shareholders") or to investors who acquire shares of the Fund after a transfer
("new shareholders"). The historical tax cost basis of the pool assets is
carried forward to the Fund. Therefore, if appreciated securities are sold after
the transfer, the amount of the gain would be taxable to new shareholders as
well as to reorganizing shareholders. New shareholders would therefore incur a
tax liability on distributions of capital gains realized by the Fund even though
the value of their investment in the Fund may not have increased. The effect on
shareholders who transferred into the Fund would be to reduce their potential
liability for tax on capital gains by spreading it over a larger asset base. The
opposite may occur if the Fund acquires securities having an unrealized capital
loss. In that case, reorganizing shareholders who transferred into the Fund will
be unable to utilize the loss to offset gains, but, because the transfer itself
did not result in any realized gains (or losses), the inability of shareholders
who transferred into the Fund to utilize unrealized losses will have no
immediate tax effect. New shareholders, to the extent that unrealized losses are
realized by the Fund, may benefit by any reduction in net tax liability
attributable to the losses.
OTHER TAX INFORMATION. The information above is only a summary of some of the
federal tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In addition to
federal tax, distributions may be subject to state or local taxes. Shareholders
should consult their tax advisers for details and up-to-date information on the
tax laws in your state to determine whether the Fund is suitable given your
particular tax situation.
When you sign your Account Application, you will be asked to certify that your
taxpayer identification number is correct, that you are not subject to backup
withholding for failing to report income to the IRS, and that you are a U.S.
person. If you do not comply with IRS regulations, the IRS can require the Fund
to withhold a portion of taxable distributions from your account.
8
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's
name, address, social security number, and information about a
customer's investment goals and risk tolerance;
o Account history, including information about the transactions and
balances in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund
or service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the
customer's authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1)For purposes of this notice, the terms "customer" or "customers" includes
both shareholders of the Fund and individuals who provide nonpublic personal
information to the Fund, but do not invest in fund shares.
9
FINANCIAL HIGHLIGHTS
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's Annual Report, which is available upon request by calling the Fund at
1-800-644-8595.
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding
throughout the period indicated:
[Enlarge/Download Table]
EQUITY FUND
----------------------------------------------------------------
For the Period
For the Year Ended April 30, March 2, 1998
2001 2000 1999 to April 30, 1998
-------- --------- --------- -----------------
SELECTED PER-SHARE DATA:
Net asset value - beginning of period $ 9.34 $ 11.11 $ 10.44 $ 10.00
-------- --------- --------- -----------
Income from investment operations:
Net investment income 0.11 0.12 0.14 0.01
Net realized and unrealized gain (loss)
on investments 0.78 (0.01) 0.81 0.44
-------- --------- --------- -----------
Total income from investment operations 0.89 0.11 0.95 0.45
-------- --------- --------- -----------
DISTRIBUTIONS:
From net investment income (0.11) (0.12) (0.14) (0.01)
From net realized gain (0.78) (1.76) (0.14) -
-------- --------- --------- -----------
Total distributions (0.89) (1.88) (0.28) (0.01)
-------- --------- --------- -----------
Net asset value - end of period $ 9.34 $ 9.34 $ 11.11 $ 10.44
======== ========= ========= ===========
Total Return 10.31% 2.23% 9.39% 4.54%
======== ========= ========= ===========
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 68,707 $ 73,076 $ 94,373 $ 101,614
======== ========= ========= ===========
Ratio of expenses to average net assets 1.05% 1.01% 0.95% 0.95%(1)
======== ========= ========= ===========
Ratio of net investment income to
average net assets 1.14% 1.20% 1.41% 0.84%(1)
======== ========= ========= ===========
Ratio of expenses to average net
assets without fee waivers 1.16% 1.09% 1.11% 1.17%(1)
======== ========= ========= ===========
Ratio of net investment income to
average net assets without fee waivers 1.03% 1.12% 1.25% 0.62%(1)
======== ========= ========= ===========
Portfolio turnover rate 27.47% 16.63% 25.26% 14.20%(1)
======== ========= ========= ===========
(1) Annualized
10
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ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-644-8595 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202. In the Fund's Annual Report, you will find a discussion
of the market conditions and investment strategies that significantly affected
the Fund's performance during the last fiscal year.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
Additionally, the SEC maintains a Web site located at http://www.sec.gov that
contains the SAI, material incorporated herein by reference, and other
information regarding the Fund. For more information about the operation of the
Public Reference Room, please call the SEC at 1-202-942-8090.
ARISTATA MUTUAL FUNDS
370 Seventeenth Street
Suite 3100
Denver, CO 80202
1-800-644-8595
INVESTMENT ADVISER
TEMPEST INVESTMENT COUNSELORS, INC.
1380 Lawrence Street
Suite 1050
Denver, CO 80204
ADMINISTRATOR
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 3100
Denver, CO 80202
ARISTATA FUNDS
o [ILLEGIBLE]
o [ILLEGIBLE]
o [ILLEGIBLE]
[ALPS LOGO]
Investment Company Act File No. 811-08194
[LOGO]
QUALITY BOND FUND
PROSPECTUS
AUGUST 28, 2001
A CLASS ABOVE
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR DISAPPROVED THIS FUND'S
SHARES OR DETERMINED WHETHER THE INFORMATION IN THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO TELLS YOU
OTHERWISE IS COMMITTING A CRIME.
[PHOTO]
Table of Contents
[Enlarge/Download Table]
PAGE
----
Investment Objective, Principal Strategies and Risks ........................... 1
Performance .................................................................... 2
Fees and Expenses of the Fund .................................................. 3
Who Manages the Fund? .......................................................... 3
How Do I Invest in the Fund? ................................................... 5
Privacy Policy ................................................................. 9
Financial Highlights ........................................................... 10
Additional Information about the Fund .................................. Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information ("SAI") that is incorporated herein by reference, in
connection with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
INVESTMENT OBJECTIVE -- The Aristata Quality Bond Fund ("the Fund") seeks to
provide investors with as high a level of current income as is consistent with
the preservation of capital.
PRINCIPAL INVESTMENT STRATEGIES -- Under normal market conditions, the Adviser
currently intends to invest at least 65% of the Fund's assets in U.S. Government
obligations, corporate debt obligations, and mortgage-backed and asset-backed
securities that are rated A or better by a nationally recognized statistical
rating organization ("NRSRO") or securities that the Adviser determines are of
comparable quality. The balance of the Fund's assets will be invested in
investment-grade securities. Investment-grade securities are generally of medium
to high quality. Unrated securities deemed to be of comparable quality to the
rated securities listed above will not exceed 10% of the value of the total
assets of the Fund.
PRINCIPAL INVESTMENT RISKS -- The principal risks of investing in this Fund are:
o INTEREST RATE RISK: When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce the
market value of debt securities, while a decline in interest rates tends to
increase their values.
o CREDIT RISK: The value of the debt securities held by the Fund fluctuates with
the credit quality of the issuers of those securities. Credit risk relates to
the ability of the issuer to make payments of principal and interest when due,
including default risk.
o CALL RISK: The risk that an issuer will exercise its right to pay principal on
an obligation held by the Fund (such as a mortgage-backed security) earlier than
expected. This may happen when there is a decline in interest rates. Under these
circumstances, the Fund may be unable to recoup all of its initial investment
and will also suffer from having to reinvest in lower yielding securities.
o EXTENSION RISK: The risk that an issuer will exercise its right to pay
principal on an obligation held by the Fund (such as a mortgage-backed security)
later than expected. This may happen when there is a rise in interest rates.
Under these circumstances, the value of the obligation will decrease and the
Fund will also suffer from the inability to invest in higher yielding
securities.
o LIQUIDITY RISK: The risk that certain securities or other investments may be
difficult or impossible to sell at the time the Fund would like to sell them, or
that it may be difficult for the Fund to sell the investment for the value the
Fund has placed on it.
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ADDITIONALLY, THE VALUE OF THE FUND'S SHARES, LIKE BOND PRICES GENERALLY, WILL
FLUCTUATE WITHIN A WIDE RANGE, SO AN INVESTOR IN THE FUND COULD LOSE MONEY OVER
SHORT OR EVEN LONG PERIODS.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the SAI.
FUND FACTS
GOAL:
To provide investors with a high level of current income while seeking to
preserve principal.
PRINCIPAL INVESTMENTS:
o U.S. Government Obligations
o Corporate Debt Obligations
INVESTMENT ADVISER (THE "ADVISER"):
o Tempest Investment Counselors, Inc.
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI or the Distributor")
1
SHOULD I INVEST IN THE ARISTATA QUALITY BOND FUND?
The Fund may be appropriate for you if:
o You are seeking a high level of current income as is consistent with
the preservation of capital.
o You are seeking higher potential returns than money market funds and
you can tolerate the risks associated with investing in fixed-income
securities.
o You have a longer term investment perspective and are prepared to
maintain your investment in the Fund for several years.
PERFORMANCE
The following bar chart and table can help you evaluate the potential risks of
investing in the Fund. Both the bar chart and the table show the variability the
Fund has experienced in its past performance. THE PAST PERFORMANCE OF THE FUND
DOES NOT INDICATE HOW IT WILL PERFORM IN THE FUTURE AND IS INTENDED TO BE USED
FOR PURPOSES OF COMPARISON ONLY.
The performance shown in the bar chart reflects the expenses associated with
those shares from year to year.
ANNUAL TOTAL RETURN AS OF DECEMBER 31,
[GRAPH]
[Download Table]
1999 (0.68)%
2000 8.65%
The Fund's best return for a calendar quarter was 4.09% in the third quarter of
1998, and the lowest return for a calendar quarter was (0.76%) in the second
quarter of 1999. The year-to-date return as of June 30, 2001, was 4.08%
The following table lists the Fund's average year-by-year return over the past
one-year period and since the inception of the Fund. The table also compares the
average annual total returns of the Fund for the periods shown to the
performance of the Lehman Brothers Government/Credit Index.
AVERAGE ANNUAL TOTAL RETURN
(for the period ended December 31, 2000)
[Download Table]
SINCE INCEPTION
1 YEAR (3/2/98)
------ ---------------
ARISTATA QUALITY BOND FUND 8.65% 5.00%
LEHMAN BROTHERS GOVERNMENT/
CREDIT INDEX 11.85% 6.13%
The Lehman Brothers Government/Credit Index is an unmanaged index that is a
broad measure of bond performance that reflects the reinvestment of income
dividends and capital gain distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.
2
FEES AND EXPENSES OF THE FUND
The information in this section describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.
[Download Table]
SHAREHOLDER FEES
(fees paid directly from your investment)
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund Assets)
(For the year ended April 30, 2001)
[Download Table]
Management Fees 0.50%
Distribution (12b-1) Fees None
Other Expenses 0.29%
Total Annual Fund Operating Expenses 0.79%*
*The Adviser has agreed to waive that portion of its fee to the extent necessary
for the Fund to maintain an expense ratio of not more than 0.70% of average net
assets of the Fund. This waiver may be cancelled at any time by the Adviser.
EXAMPLE -- The following hypothetical example is intended to help you compare
the cost of investing in the Fund with the cost of investing in other mutual
funds. The hypothetical example assumes that you invest $10,000 in the Fund for
the time periods indicated and that total annual operating expenses set forth
above are incurred. The hypothetical example also assumes a 5% return each year
and that the Fund's operating expenses will remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
[Download Table]
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Aristata Quality Bond Fund $81 $252 $439 $977
WHO MANAGES THE FUND?
TEMPEST INVESTMENT COUNSELORS, INC., ("Tempest") acts as the investment adviser
to the Fund under the supervision of the Trust's Board of Trustees. The
Adviser's address is 1380 Lawrence Street, Suite 1050, Denver, Colorado 80204.
The Adviser manages the investment and reinvestment of the assets of the Fund
and continuously reviews, supervises and administers the Fund's investments. The
Adviser is responsible for placing orders for the purchase and sale of the
Fund's investments directly with brokers and dealers, as selected by the Adviser
in its discretion.
The Adviser utilizes a team management system for the Fund. The Adviser's
investment professional team has an average of more than 25 years of investment
research and portfolio management experience. These individuals bring a broad
base of experience, ideas, knowledge, and expertise to the Fund's management.
The Adviser's investment team is led by H. David Lansdowne, CFA, President and
Chief Executive Officer of Tempest, and its Chief Investment Officer since 1988.
The Fund's other key investment management team members include: Robert J.
Alder, CFA; J. Jeffrey Dohse; Giles R. A. Fox, CFA; Barbara Grummel and Greg H.
Thompson, CFA.
Mr. Lansdowne earned both his B.S. (1969) and M.B.A. (1972) from the University
of Denver. He was awarded the Chartered Financial Analyst (CFA) designation in
1977. Mr. Lansdowne joined Tempest in 1983 as Director of Research. He began his
career as an Investment Officer with Colorado National Bank in Denver. He later
joined United Capital
3
Management, a subsidiary of United Bank of Denver, where he was Vice President
and Portfolio Manager, overseeing large corporate pension plans. Immediately
prior to joining the Adviser, he was Senior Vice President and Director of
Research for Financial Programs Mutual Funds and for its subsidiary for
privately-managed accounts, Financial Trust Company.
Mr. Alder earned his B.S. from the University of Colorado in 1969. He was
awarded the Chartered Financial Analyst (CFA) designation in 1977. His
investment management career began in 1969 as a portfolio manager and analyst
with the Trust Investment Division of the First National Bank of Denver. In
1977, he joined the Trust Investment Division of Colorado National Bank and
became head of the department in 1982. In 1987, he was instrumental in creating
Colorado National Bank's wholly-owned registered investment advisory subsidiary,
Colorado Capital Advisors, and was President of that subsidiary until 1993, when
he joined the Adviser in his current capacity as Executive Vice President.
Mr. Dohse earned his B.S. from Culver-Stockton College in Canton, Missouri, in
1963 and his M.B.A. from Loyola University in Chicago in 1971. He worked in the
investment industry for 15 years before joining Tempest in 1983. He began his
career with American National Bank & Trust Company in Chicago and was involved
in all facets of bank and trust investments. He then joined the United Bank of
Denver as Investment Officer, managing trust portfolios. Prior to joining the
Adviser, Mr. Dohse was a Vice President and Portfolio Manager at IntraWest Bank
of Denver, with responsibility for various investment management portfolios.
Mr. Fox earned his B.A. from the University of Western Ontario in 1986 and his
M.B.A. from the University of Virginia in 1990. He was awarded the Chartered
Financial Analyst (CFA) designation in 1995. Mr. Fox joined Tempest in 2000. His
investment career began in 1990 as a senior analyst/financial forecaster with
the Bank of Nova Scotia in Toronto, Canada. Upon moving to Denver in 1994, Mr.
Fox served as Vice President-Research with Corinthian Capital, an investment
firm specializing in small cap value stocks. In 1999, Mr. Fox joined Denver
Investment Advisors, LLC as a senior analyst with their small and large cap
value funds.
Ms. Grummel earned her B.S. from the University of Colorado in 1979. She worked
for the National Association of Securities Dealers, N. Donald and Company and
the underwriting and asset management divisions of Merrill Lynch. Immediately
prior to joining the Adviser she was Executive Vice President with Lord Abbett
and Company, a New York based mutual fund group, where her responsibilities
included state-specific municipal bond fund management, individual fixed-income
portfolio management and new business development. Ms. Grummel is the lead
portfolio manager for the Aristata Quality Bond Fund.
Mr. Thompson earned his B.S. from the University of Wyoming in 1967 and his
M.B.A. from the University of Denver in 1972. He was awarded the Chartered
Financial Analyst (CFA) designation in 1988. He joined the Adviser in 1987. His
previous positions include three years as a Financial Analyst with Standard &
Poor's Compustat Services, Inc. in Englewood, Colorado and 12 years with Page T.
Jenkins, a Denver proprietorship. He was an Investment Manager and Security
Analyst with Jenkins, conducting research and managing securities and mineral
portfolios for the firm.
For the advisory services it provides to the Fund, Tempest receives from the
Fund a monthly fee, based on average daily net assets, at the annual rate of
0.50%. The total advisory fee paid to Tempest for the fiscal year ended June 30,
2001 was 0.41% of the Fund's average net assets, after waiver.
ADVISER'S PRIOR FIXED-INCOME PERFORMANCE. Although the Adviser, Tempest did not
manage a registered investment company prior to March 2, 1998, the date the Fund
commenced operations, the Adviser has been providing investment advisory
services to various clients since 1976. In fact, substantially all of the
initial March 1998 investors in the Fund previously were investors in certain
unregistered, commingled investment pools (the "Pools") that were advised by the
Adviser. The Adviser advised these Pools for 22 years from 1976 to March 1998.
As of March 1998 the Pools were converted into the Aristata Quality Bond Fund,
and Tempest became the Fund's Adviser.
4
HOW DO I INVEST IN THE FUND?
HOW DO I BUY FUND SHARES?
As described below, you may purchase shares of the Fund through an authorized
broker or investment adviser, or directly from the Fund. Your orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good form. Your payment will be
invested in full and fractional shares of the Fund. Orders transmitted to the
Fund in proper form prior to the close of trading (normally 4:00 p.m. Eastern
Time) will be executed that day. You will not receive certificates for shares
that you purchase. ALPS Mutual Funds Services, Inc. ("ALPS") serves as the
Fund's Transfer Agent and maintains records of each shareholder's holdings of
Fund shares. Your initial investment in the Fund must be preceded or accompanied
by a completed, signed application. You may obtain additional Account
Applications by calling the Fund at 1-800-644-8595. The Fund reserves the right
to reject any purchase.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Fund is $2,000, including Individual
Retirement Accounts ("IRA") purchases. Any subsequent investments must be at
least $50, including IRA investments. To establish an IRA, you must complete a
separate application that you can obtain by calling the Fund at 1-800-644-8595.
INVESTING THROUGH YOUR BROKER OR INVESTMENT ADVISER
Shares are available to new and existing shareholders through authorized brokers
and investment advisers.
Simply complete an Account Application and contact your broker or investment
adviser with instructions as to the amount you wish to invest. Your broker will
then contact the Fund to place the order on your behalf. Authorized brokers and
investment advisers may impose additional requirements and charges for the
services rendered.
Your orders received by the Fund prior to the close of its trading (which is
normally 4:00 p.m. Eastern Time), will become effective that day. Brokers who
receive your orders are obligated to transmit them promptly. You will receive
written confirmation of your order within a few days of receipt of instructions
from your broker.
INVESTING DIRECTLY WITH THE FUND
You can invest in the Fund directly by using any of the methods described below.
BY MAIL. Make your check payable to the ARISTATA QUALITY BOND FUND and mail it,
along with the Account Application (if your purchase is an initial investment),
to the address indicated on the Account Application. Third party and foreign
checks will not be accepted. For existing accounts please include the Fund name
and your account number on all checks.
BY BANK TRANSFER. After you have established an account with the Fund, a bank
transfer will allow you to transfer money from your bank account via the
Automated Clearing House (ACH) network to your Fund account. To use this
service, you must select this option on your Account Application. You also will
need an account with a bank that provides bank transfer services. (Your bank may
charge you a fee for this service.) Once you have established this option, you
can initiate a bank transfer by contacting a representative from your bank,
providing the required information for the bank, and authorizing the transfer to
take place. Please allow two or three days after the initial authorization for
the transfer to occur.
BY WIRE. To initiate your wire transaction, contact your depository institution
and instruct them to wire Federal Funds (monies transferred from one bank to
another through the Federal Reserve System with same-day availability) to:
State Street Bank & Trust Co.
ABA# 011000028
Aristata Quality Bond Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program offers a simple
way to establish and maintain a consistent investment program. You may arrange
automatic transfers (minimum $50 per transaction) from your bank account to your
Fund account on a periodic basis by simply completing the Automatic Investment
Plan section of your Account Application. When you participate in this program,
the minimum initial investment in each Fund is $250. You may change the amount
of your automatic investment, skip an investment, or stop the Automatic
Investment Program by calling the Fund at 1-800-644-8595 at least three business
days prior to your next scheduled investment date.
The Fund may at its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. The Fund reserves the
right to suspend the sale of shares, or to reject any purchase order, including
orders in connection with exchanges, for any reason.
HOW DO I REDEEM FUND SHARES?
Shareholders may redeem their shares, in whole or in part, on each day the Fund
is valued (see the section entitled "HOW ARE FUND SHARES VALUED?" later in this
Prospectus).
5
Shares will be redeemed at the net asset value next determined after a proper
redemption request has been received by the Fund in good form.
A redemption is a tax reportable transaction and any gain or loss is a taxable
event. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON
THIS INVESTMENT?" later in this Prospectus for more information.
Where the shares to be redeemed have been purchased by check, the payment of
redemption proceeds may be delayed until the purchasing check has cleared.
Shareholders may avoid this delay by investing through wire transfers of Federal
Funds. During the period prior to the time the shares are redeemed, dividends on
the shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than customary weekend or holiday closings or if an emergency condition, as
determined by the SEC, merits such action, the Fund may suspend redemptions or
postpone payment dates beyond the normal seven-day redemption period.
To ensure acceptance of your redemption request, it is important to follow the
procedures described below. Although the Fund has no present intention to do so,
the Fund reserves the right to refuse or to limit the frequency of any
telephone, wire or bank transfer redemptions. It may be difficult to make
contact by telephone during periods of severe market or economic change.
Shareholders should consider alternative methods of communications during such
times.
The Fund may modify or terminate its redemption services and provisions at any
time. If the Fund terminates any particular service, it will do so only after
giving written notice to shareholders. Redemption by mail will always be
available to shareholders. For your protection, redemptions may be suspended for
a period of 15 days following an address change.
You can redeem your shares directly from the Fund using any of the methods
described below.
REDEEMING YOUR SHARES USING AN AUTHORIZED BROKER OR INVESTMENT ADVISER
You may redeem your shares by contacting your authorized broker or investment
adviser and instructing them to redeem your shares. They will then contact ALPS
and place a redemption order on your behalf.
REDEEMING YOUR SHARES DIRECTLY FROM THE FUND
BY MAIL. You may redeem your shares by sending a letter directly to the Fund. To
be accepted, a letter requesting redemption must include:
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s) along with a signature guarantee
(if required).
A signature guarantee is designed to protect you, the Fund, and its agents from
fraud. Your written request requires a signature guarantee if the check is
$10,000 or greater, if the check is being mailed to an address that has been
changed within the last 30 days, if the check is not being mailed to the address
on your account, or if the check is not being made out to the account owner. The
following institutions should be able to provide you with a signature guarantee:
banks, broker-dealers, credit unions (if authorized under state law), securities
exchanges and associations, clearing agencies, and savings associations. A
signature guarantee may not be provided by a notary public.
BY TELEPHONE. If you have established the telephone redemption privilege on your
Account Application, you may redeem your shares by calling the Fund at
1-800-644-8595. You should be prepared to give the telephone representative the
following information:
o your account number, social security or tax identification
number and account registration;
o the Fund name from which you are redeeming shares; and
o the amount to be redeemed.
The telephone conversation may be recorded to protect you and the Fund. The Fund
employs reasonable procedures to confirm that instructions communicated (by
telephone) to its representatives are genuine. However, if the Fund acts on
instructions it reasonably believes to be genuine, you will bear the loss.
You cannot redeem shares held in IRAs using the telephone.
BY WIRE. You may instruct the Fund to send your redemption proceeds via federal
wire ($1,000 minimum per transaction) or bank transfer to your personal bank.
Your instructions should include:
6
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s).
Wire and bank transfer redemptions can be made only if the privilege has been
established on your Account Application and you have attached a copy of a voided
check or a letter summarizing the wiring instructions of the account where
proceeds are to be wired. Your bank may charge you a fee for receiving a wire
payment on your behalf.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund account balance is $10,000 or more, you
may elect to have periodic redemptions made from your account on a monthly,
quarterly, semi-annual or annual basis by completing the Systematic Withdrawal
Plan section of the Account Application. The minimum periodic withdrawal is $100
and the transaction normally will be executed on the 5th or 20th day of the
selected month(s). You may request that these payments be sent to a
predesignated bank account or other designated party. Depending on the size of
the payment requested and fluctuation in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust your account. If a shareholder participates in the Systematic Withdrawal
Plan, all dividends are automatically reinvested unless the shareholder directs
otherwise.
EXCHANGE OF FUND SHARES
The Fund offers two convenient ways to exchange shares in one Fund for shares in
another Aristata Fund. Before engaging in an exchange transaction, a shareholder
should read carefully the Prospectus describing the Fund into which the exchange
will occur. A prospectus for any Aristata Fund offered can be obtained without
charge by writing to the Fund at the address listed on the back cover of this
Prospectus. A shareholder may not exchange shares of one Fund for shares of
another Fund if that Fund is not qualified for sale in the state of the
shareholder's residence. Please call the Fund at 1-800-644-8595 to see if the
fund you are interested in is available in your state. The minimum amount for an
initial and subsequent exchange is $50. The Aristata Funds may terminate or
amend the terms of the exchange privilege at any time upon at least 60 days
prior written notice to shareholders of any modification or termination of the
exchange privilege. For your protection, exchanges may be suspended for a period
of 15 days following an address change.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by a Fund in good order.
An exchange is taxable as a sale of a security on which a gain or loss may be
recognized. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX
ON THIS INVESTMENT?" later in this Prospectus for more information. Shareholders
will receive written confirmation of the exchange following completion of the
transaction.
EXCHANGE BY MAIL. To exchange Fund shares by mail, simply send a letter of
instruction to the Fund. The letter of instruction must include:
o your account number and account registration;
o the Fund from and the Fund into which you wish to exchange
your investment;
o the dollar or share amount you wish to exchange; and
o an authorized signature(s).
EXCHANGE BY TELEPHONE. If you have established the telephone exchange privilege
on your Account Application, you may exchange Fund shares by telephone by simply
calling the Fund at 1-800-644-8595. You should be prepared to give the telephone
representative the following information:
o your account number, social security or tax identification
number and account registration;
o the name of the Fund from and the Fund into which you wish to
exchange your investment; and
o the dollar or share amount you wish to exchange.
The conversation may be recorded to protect you and the Fund. See the section
entitled "REDEEMING YOUR SHARES DIRECTLY FROM THE FUND - BY TELEPHONE" earlier
in this Prospectus for a discussion of telephone transactions.
INDIVIDUAL RETIREMENT ACCOUNTS
The Fund may be used as a funding medium for traditional and Roth IRAs. In
addition, a traditional or Roth IRA may be established through a custodial
account with the Fund. Completion of a special application is required to create
such an account, and the minimum initial investment for an IRA is $2,000.
Contributions to IRAs are subject to the limits and conditions established by
the Internal Revenue Service. For more information, call the Fund at
1-800-644-8595 or your tax adviser.
Additional account level fees are imposed for IRA accounts.
7
HOW ARE FUND SHARES VALUED?
The price at which you buy, sell or exchange Fund shares is the share price or
net asset value (NAV). The share price for the Fund is determined by adding the
value of the Fund's investments, cash and other assets, deducting liabilities,
and then dividing that value by the total number of the Fund's shares
outstanding. The Fund's NAV is calculated at the close of the regular trading
session of the New York Stock Exchange (normally 4:00 p.m. Eastern Time) each
day that the Exchange is open.
When the Fund calculates the share price for the Fund shares, it values the
securities it holds at market value. Sometimes market quotes for some securities
are not available or are not representative of market value. Examples would be
when events occur that materially affect the value of a security at a time when
the security is not trading or when the securities are illiquid. In that case,
securities may be valued in good faith at fair value, using consistently applied
procedures decided upon by the Trustees of the Fund.
For more information please refer to the SAI.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT?
The Fund intends to distribute substantially all of its net investment income
and capital gains, if any, to shareholders within each calendar year as well as
on a fiscal year basis. Any net capital gains realized are normally distributed
in December. Income dividends for the Fund, if any, are declared daily and paid
monthly.
FEDERAL TAXES. Distributions of gains from the sale of assets held by the Fund
for more than one year generally are taxable to shareholders at the applicable
capital gains rate, regardless of how long they have owned their Fund shares.
Distributions from other sources generally are taxed as ordinary income.
Distributions are taxable when they are paid, whether taken in cash or
reinvested in additional shares, except for distributions declared in October,
November or December and paid in January are taxable as if paid on December 31.
The Fund will send each shareholder an IRS Form 1099-DIV by January 31.
"BUYING A DIVIDEND." When shares are purchased just before a distribution
("buying a dividend"), the share price will reflect the amount of the upcoming
distribution. Consequently, a portion of the share price will be received back
as a taxable distribution.
CONVERSION OF THE FUND. On or before March 2, 1998, common trust and collective
investment fund assets ("pools") managed by the Adviser contributed assets to
the Fund in exchange for shares of the Fund. This transfer may result in adverse
tax consequences under certain circumstances to either the investors
transferring shares from the pools for shares of the Fund ("reorganizing
shareholders") or to investors who acquire shares of the Fund after a transfer
("new shareholders"). The historical tax cost basis of the pool assets is
carried forward to the Fund. Therefore, if appreciated securities are sold after
the transfer, the amount of the gain would be taxable to new shareholders as
well as to reorganizing shareholders. New shareholders would therefore incur a
tax liability on distributions of capital gains realized by the Fund even though
the value of their investment in the Fund may not have increased. The effect on
shareholders who transferred into the Fund would be to reduce their potential
liability for tax on capital gains by spreading it over a larger asset base. The
opposite may occur if the Fund acquires securities having an unrealized capital
loss. In that case, reorganizing shareholders who transferred into the Fund will
be unable to utilize the loss to offset gains, but, because the transfer itself
did not result in any realized gains (or losses), the inability of shareholders
who transferred into the Fund to utilize unrealized losses will have no
immediate tax effect. New shareholders, to the extent that unrealized losses are
realized by the Fund, may benefit by any reduction in net tax liability
attributable to the losses.
OTHER TAX INFORMATION. The information above is only a summary of some of the
federal tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences. In addition to
federal tax, distributions may be subject to state or local taxes. Shareholders
should consult their tax advisers for details and up-to-date information on the
tax laws in your state to determine whether the Fund is suitable given your
particular tax situation.
When you sign your Account Application, you will be asked to certify that your
taxpayer identification number is correct, that you are not subject to backup
withholding for failing to report income to the IRS, and that you are a
U.S. person. If you do not comply with IRS regulations, the IRS can require the
Fund to withhold a portion of taxable distributions from your account.
8
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a
customer's name, address, social security number, and
information about a customer's investment goals and risk
tolerance;
o Account history, including information about the transactions
and balances in a customer's account; and
o Correspondence, written, or telephonic, between a customer and
the Fund or service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the
customer's authorized representative.
o The Fund is required by law to release information to the
recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1) For purposes of this notice, the terms "customer" or "customers" includes
both shareholders of the Fund and individuals who provide nonpublic personal
information to the Fund, but do not invest in fund shares.
9
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's Annual Report, which is available upon request by calling the Fund at
1-800-644-8595.
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding
throughout the period indicated:
[Enlarge/Download Table]
QUALITY BOND FUND
------------------------------------------------------------------------------
For the Period
For the Year Ended April 30, March 2, 1998
2001 2000 1999 to April 30, 1998
------------ ------------ ------------ -----------------
SELECTED PER-SHARE DATA:
Net asset value - beginning of period $ 9.32 $ 9.88 $ 9.97 $ 10.00
------------ ------------ ------------ ------------
Income from investment operations:
Net investment income 0.60 0.59 0.62 0.10
Net realized and unrealized gain (loss)
on investments 0.43 (0.57) (0.08) (0.03)
------------ ------------ ------------ ------------
Total income from investment operations 1.03 0.02 0.54 0.07
------------ ------------ ------------ ------------
DISTRIBUTIONS:
From net investment income (0.60) (0.58) (0.61) (0.10)
From net realized gain -- -- (0.02) --
------------ ------------ ------------ ------------
Total distributions (0.60) (0.58) (0.63) (0.10)
------------ ------------ ------------ ------------
Net asset value - end of period $ 9.75 $ 9.32 $ 9.88 $ 9.97
============ ============ ============ ============
TOTAL RETURN 11.33% 0.28% 5.49% 0.69%
============ ============ ============ ============
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 42,399 $ 42,408 $ 51,980 $ 57,510
============ ============ ============ ============
Ratio of expenses to average net assets 0.70% 0.68% 0.65% 0.65%(1)
============ ============ ============ ============
Ratio of net investment income to
average net assets 6.25% 6.16% 6.10% 6.00%(1)
============ ============ ============ ============
Ratio of expenses to average net
assets without fee waivers 0.79% 0.75% 0.76% 0.83%(1)
============ ============ ============ ============
Ratio of net investment income to
average net assets without fee waivers 6.16% 6.10% 5.99% 5.82%(1)
============ ============ ============ ============
Portfolio turnover rate 15.72% 10.06% 9.79% 11.44%(1)
============ ============ ============ ============
(1) Annualized
10
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ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-644-8595 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202. In the Fund's Annual Report, you will find a discussion
of the market conditions and investment strategies that significantly affected
the Fund's performance during the last fiscal year.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
Additionally, the SEC maintains a Web site located at http://www.sec.gov that
contains the SAI, material incorporated herein by reference, and other
information regarding the Fund. For more information about the operation of the
Public Reference Room, please call the SEC at 1-202-942-8090.
ARISTATA MUTUAL FUNDS
370 Seventeenth Street
Suite 3100
Denver, CO 80202
1-800-644-8595
INVESTMENT ADVISER
TEMPEST INVESTMENT COUNSELORS, INC.
1380 Lawrence Street
Suite 1050
Denver, CO 80204
ADMINISTRATOR
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 3100
Denver, CO 80202
ARISTATA FUNDS
o [ILLEGIBLE]
o [ILLEGIBLE]
o [ILLEGIBLE]
[LOGO] Investment Company Act File No. 811-08194
[ARISTATA LOGO]
A CLASS ABOVE
COLORADO QUALITY
TAX-EXEMPT FUND
PROSPECTUS
AUGUST 28, 2001
[PHOTO]
AS WITH OTHER MUTUAL FUNDS, THE
SECURITIES AND EXCHANGE
COMMISSION HAS NOT APPROVED OR
DISAPPROVED THIS FUND'S SHARES OR
DETERMINED WHETHER THE
INFORMATION IN THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANYONE
WHO TELLS YOU OTHERWISE IS
COMMITTING A CRIME.
TABLE OF CONTENTS
[Download Table]
Page
----
Investment Objective, Principal Strategies and Risks ............... 1
Performance ........................................................ 2
Fees and Expenses of the Fund ...................................... 3
Who Manages the Fund? .............................................. 4
How Do I Invest in the Fund? ....................................... 5
Privacy Policy ..................................................... 9
Financial Highlights ............................................... 10
Additional Information about the Fund .............................. Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information ("SAI") that is incorporated herein by reference, in
connection with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
INVESTMENT OBJECTIVE, PRINCIPAL STRATEGIES AND RISKS
INVESTMENT OBJECTIVE -- The Aristata Colorado Quality Tax-Exempt Fund (the
"Fund") seeks to provide investors with as high a level of current income exempt
from Colorado and federal income taxes as is consistent with the preservation of
capital by investing in high-quality municipal obligations which pay interest
exempt from Colorado state and federal income taxes.
PRINCIPAL INVESTMENT STRATEGIES -- The Fund invests primarily in "quality"
municipal obligations, including those of certain non-Colorado issuers, of any
maturity that pays interest which is exempt from federal and Colorado income
taxes. The non-Colorado "quality" municipal obligations that currently qualify
are those issued by Guam, the Northern Mariana Islands, Puerto Rico and the
Virgin Islands. However, as a Colorado-oriented fund, at least 65% of the Fund's
total assets will be invested in the "quality" municipal obligations of Colorado
issuers. It is possible, but not anticipated, that up to 35% of the Fund's total
assets could be invested in obligations of non-Colorado issuers.
"Quality" municipal obligations are those rated in one of the four highest
categories by a nationally recognized statistical rating organization ("NRSRO")
such as Moody's Investors Service or Standard & Poor's Corporation or, if
unrated, are determined to be of comparable quality by the Adviser. The Fund may
invest up to 15% of its total assets in such unrated securities.
At least 80% of the Fund's net assets will be invested in obligations that will
not be subject to federal taxes, including the alternative minimum tax ("AMT")
and, accordingly, the Fund can invest up to 20% of its net assets in obligations
which are subject to the Federal AMT.
PRINCIPAL INVESTMENT RISKS -- The principal risks of investing in this Fund are:
o INTEREST RATE RISK: When interest rates change, the value of the Fund's
holdings will be affected. An increase in interest rates tends to reduce the
market value of debt securities, while a decline in interest rates tends to
increase their values.
o CREDIT RISK: The value of the debt securities held by the Fund fluctuates with
the credit quality of the issuers of those securities. Credit risk relates to
the ability of the issuer to make payments of principal and interest when due,
including default risk.
o CALL RISK: The risk that an issuer will exercise its right to pay principal on
an obligation held by the Fund (such as a mortgage-backed security) earlier than
expected. This may happen when there is a decline in interest rates. Under these
circumstances, the Fund may be unable to recoup all of its initial investment
and will also suffer from having to reinvest in lower yielding securities.
o LIQUIDITY RISK: The risk that certain securities or other investments may be
difficult or impossible to sell at the time the Fund would like to sell them, or
that it may be difficult for the Fund to sell the investment for the value the
Fund has placed on it.
o NON-DIVERSIFICATION RISK -- An investment in a non-diversified mutual fund (as
defined in the Investment Company Act of 1940) such as the Fund, entails greater
risks than an investment in a diversified mutual fund. Because the Fund is
non-diversified, it may invest a higher percentage of its assets in the
securities of a smaller number of issuers. As a result, the Fund may be more
susceptible to any single economic, political, or regulatory occurrence than a
more widely diversified mutual fund and may be subject to greater risk of loss
with respect to its portfolio securities.
o GEOGRAPHIC CONCENTRATION RISK -- The performance of the Fund is susceptible to
various statutory, political, and economic factors that are unique to the State
of Colorado. Some of these factors include the Colorado budget process, the
state economy, and the volatility of state tax collections. For more information
about the specific factors that could impact the performance of the Fund, please
refer to the SAI.
FUND FACTS
GOAL:
To provide investors with a high level of current income that is exempt from
Colorado and federal income taxes while seeking to preserve principal.
PRINCIPAL INVESTMENTS:
o Colorado Municipal Obligations
INVESTMENT ADVISER (THE "ADVISER"):
o TEMPEST INVESTMENT COUNSELORS, INC.
DISTRIBUTOR:
o ALPS Distributors, Inc. ("ADI or the Distributor")
1
AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT AND IS NOT INSURED OR GUARANTEED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY.
ADDITIONALLY, THE VALUE OF THE FUND'S SHARES, WILL FLUCTUATE WITHIN A WIDE
RANGE, SO AN INVESTOR IN THE FUND COULD LOSE MONEY OVER SHORT OR EVEN LONG
PERIODS.
For more information about the risk factors identified above, and other risks
associated with investing in the Fund, please see the SAI.
SHOULD I INVEST IN THE COLORADO QUALITY TAX-EXEMPT FUND?
The Fund may be appropriate for you if:
o You are seeking a high-quality portfolio of municipal obligations, and you
are seeking income that is exempt from both federal and Colorado income
tax, other than the Federal Alternative Minimum Tax ("AMT"). (As a matter
of fundamental policy, at least 80% of the Fund's assets will be invested
in Colorado obligations that are not subject to the Federal AMT.)
o You have a longer term investment perspective and are prepared to maintain
your investment in the Fund for several years.
PERFORMANCE
The following bar chart and table can help you evaluate the potential risks of
investing in the Fund. Both the bar chart and the table show the variability the
Fund has experienced in its past performance. THE PAST PERFORMANCE OF THE FUND
DOES NOT INDICATE HOW IT WILL PERFORM IN THE FUTURE AND IS INTENDED TO BE USED
FOR PURPOSES OF COMPARISON ONLY.
The performance shown in the bar chart reflects the expenses associated with
those shares from year to year.
ANNUAL TOTAL RETURN AS OF DECEMBER 31,
[GRAPH]
[Download Table]
1999 (0.45)%
2000 7.44%
The Fund's best return for a calendar quarter was 2.82% for the fourth quarter
of 2000, and the lowest return was (1.35%) for the second quarter of 1999. The
year-to-date return as of June 30, 2001, was 2.91%.
2
The following table lists the Fund's average year-by-year return over the past
one-year period and since the inception of the Fund. The table also compares the
average annual total returns of the Fund for the periods shown to the
performance of the Lehman Brothers Municipal Bond Index.
AVERAGE ANNUAL TOTAL RETURN
(for the period ended December 31, 2000)
[Download Table]
SINCE INCEPTION
1 YEAR (3/2/98)
------ ---------------
ARISTATA COLORADO QUALITY 7.44% 4.15%
TAX-EXEMPT
LEHMAN BROTHERS MUNICIPAL BOND
INDEX 11.68% 5.14%
The Lehman Brothers Municipal Bond Index is an unmanaged index that is a broad
measure of tax-exempt bond performance that reflects the reinvestment of income
dividends and capital gain distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.
FEES AND EXPENSES OF THE FUND
The information in this section describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.
SHAREHOLDER FEES
(fees paid directly from your investment)
[Download Table]
Maximum Sales Load None
Maximum Deferred Sales Charge None
Redemption Fee None
Exchange Fee None
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
(For the year ended April 30, 2001)
[Download Table]
Management Fees 0.50%
Distribution (12b-1) Fees None
Other Expenses 0.54%
Total Annual Fund Operating Expenses 1.04%*
* The Adviser has agreed to waive that portion of its fee and/or reimburse fund
expenses, to the extent necessary for the Fund to maintain an expense ratio of
not more than 0.50% of average net assets of the Fund. This waiver/reimbursement
may be cancelled at any time by the Adviser.
EXAMPLE -- The following hypothetical example is intended to help you compare
the cost of investing in the Fund with the cost of investing in other mutual
funds. The hypothetical example assumes that you invest $10,000 in the Fund for
the time periods indicated and that total annual operating expenses set forth
above are incurred. The hypothetical example also assumes a 5% return each year
and that the Fund's operating expenses will remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs would
be:
[Enlarge/Download Table]
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
-------- ----------- ---------- ---------
ARISTATA COLORADO QUALITY TAX-EXEMPT FUND $106 $331 $574 $1,270
3
WHO MANAGES THE FUND?
TEMPEST INVESTMENT COUNSELORS, INC., ("Tempest") acts as the investment adviser
to the Fund under the supervision of the Trust's Board of Trustees. The
Adviser's address is 1380 Lawrence Street, Suite 1050, Denver, Colorado 80204.
The Adviser manages the investment and reinvestment of the assets of the Fund
and continuously reviews, supervises and administers the Fund's investments. The
Adviser is responsible for placing orders for the purchase and sale of the
Fund's investments directly with brokers and dealers as selected by the Adviser
in its discretion.
The Adviser utilizes a team management system for the Fund. The Adviser's
investment professional team has an average of more than 25 years of investment
research and portfolio management experience. These individuals bring a broad
base of experience, ideas, knowledge, and expertise to the Fund's management.
The Adviser's investment team is led by H. David Lansdowne, CFA, President and
Chief Executive Officer of Tempest, and its Chief Investment Officer since 1988.
The Fund's other key investment management team members include: Robert J.
Alder, CFA; J. Jeffrey Dohse; Giles R. A. Fox; CFA, Barbara Grummel and Greg H.
Thompson, CFA.
Mr. Lansdowne earned both his B.S. (1969) and M.B.A. (1972) from the University
of Denver. He was awarded the Chartered Financial Analyst (CFA) designation in
1977. Mr. Lansdowne joined Tempest in 1983 as Director of Research. He began his
career as an Investment Officer with Colorado National Bank in Denver. He later
joined United Capital Management, a subsidiary of United Bank of Denver, where
he was Vice President and Portfolio Manager, overseeing large corporate pension
plans. Immediately prior to joining the Adviser, he was Senior Vice President
and Director of Research for Financial Programs Mutual Funds and for its
subsidiary for privately-managed accounts, Financial Trust Company.
Mr. Alder earned his B.S. from the University of Colorado in 1969. He was
awarded the Chartered Financial Analyst (CFA) designation in 1977. His
investment management career began in 1969 as a portfolio manager and analyst
with the Trust Investment Division of the First National Bank of Denver. In
1977, he joined the Trust Investment Division of Colorado National Bank and
became head of the department in 1982. In 1987, he was instrumental in creating
Colorado National Bank's wholly-owned registered investment advisory subsidiary,
Colorado Capital Advisors, and was President of that subsidiary until 1993, when
he joined the Adviser in his current capacity as Executive Vice President.
Mr. Dohse earned his B.S. from Culver-Stockton College in Canton, Missouri, in
1963 and his M.B.A. from Loyola University in Chicago in 1971. He worked in the
investment industry for 15 years before joining Tempest in 1983. He began his
career with American National Bank & Trust Company in Chicago and was involved
in all facets of bank and trust investments. He then joined the United Bank of
Denver as Investment Officer, managing trust portfolios. Prior to joining the
Adviser, Mr. Dohse was a Vice President and Portfolio Manager at IntraWest Bank
of Denver, with responsibility for various investment management portfolios.
Mr. Fox earned his B.A. from the University of Western Ontario in 1986 and his
M.B.A. from the University of Virginia in 1990. He was awarded the Chartered
Financial Analyst (CFA) designation in 1995. Mr. Fox joined Tempest in 2000. His
investment career began in 1990 as a senior analyst/financial forecaster with
the Bank of Nova Scotia in Toronto, Canada. Upon moving to Denver in 1994,
Mr. Fox served as Vice President-Research with Corinthian Capital, an investment
firm specializing in small cap value stocks. In 1999, Mr. Fox joined Denver
Investment Advisors, LLC as a senior analyst with their small and large cap
value funds.
Ms. Grummel earned her B.S. from the University of Colorado in 1979. She worked
for the National Association of Securities Dealers, N. Donald and Company and
the underwriting and asset management divisions of Merrill Lynch. Immediately
prior to joining the Adviser she was Executive Vice President with Lord Abbett
and Company, a New York-based mutual fund group, where her responsibilities
included state-specific municipal bond fund management, individual fixed income
portfolio management and new business development. Ms. Grummel is the lead
portfolio manager for the Aristata Colorado Quality Tax-Exempt Fund.
Mr. Thompson earned his B.S. from the University of Wyoming in 1967 and his
M.B.A. from the University of Denver in 1972. He was awarded the Chartered
Financial Analyst (CFA) designation in 1988. He joined the Adviser in 1987. His
previous positions include three years as a Financial Analyst with Standard &
Poor's Compustat Services, Inc. in Englewood, Colorado and 12 years with Page T.
Jenkins, a Denver proprietorship. He was an Investment Manager and Security
Analyst with Jenkins, conducting research and managing securities and mineral
portfolios for the firm.
4
For the advisory services it provides to the Fund, Tempest receives from the
Fund a monthly fee, based on average daily net assets, at the annual rate of
0.50%. The total advisory fee paid to Tempest for the fiscal year ended June 30,
2001, was 0.00% of the Fund's average net assets after waiver.
ADVISER'S PRIOR MUNICIPAL PERFORMANCE. Although the Adviser, Tempest did not
manage a registered investment company prior to March 2, 1998, the date the Fund
commenced operations, the Adviser has been providing investment advisory
services to various clients since 1976. In fact, substantially all of the
initial March 1998 investors in the Fund previously were investors in a certain
unregistered, commingled investment pool (the "Pool") that was advised by the
Adviser. The Adviser advised this Pool for twenty-two years from 1976 to March
1998. As of March 1998 the Pool was converted into the Aristata Colorado Quality
Tax-Exempt Fund, and Tempest became the Fund's Adviser.
HOW DO I INVEST IN THE FUND?
HOW DO I BUY FUND SHARES?
As described below, you may purchase shares of the Fund through an authorized
broker or investment adviser, or directly from the Fund. Your orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good form. Your payment will be
invested in full and fractional shares of the Fund. Orders transmitted to the
Fund in proper form prior to the close of trading (normally 4:00 p.m. Eastern
Time) will be executed that day. You will not receive certificates for shares
that you purchase. ALPS Mutual Funds Services, Inc. ("ALPS") serves as the
Fund's Transfer Agent and maintains records of each shareholder's holdings of
Fund shares. Your initial investment in the Fund must be preceded or accompanied
by a completed, signed application. You may obtain additional Account
Applications by calling the Fund at 1-800-644-8595. The Fund reserves the right
to reject any purchase.
MINIMUM PURCHASE REQUIREMENTS
The minimum initial investment in the Fund is $2,000. Any subsequent investments
must be at least $50.
INVESTING THROUGH YOUR BROKER OR INVESTMENT ADVISER
Shares are available to new and existing shareholders through authorized brokers
and investment advisers.
Simply complete an Account Application and contact your broker or investment
adviser with instructions as to the amount you wish to invest. Your broker will
then contact the Fund to place the order on your behalf. Authorized brokers and
investment advisers may impose additional requirements and charges for the
services rendered.
Your orders received by the Fund prior to the close of its trading (which is
normally 4:00 p.m. Eastern time), will become effective that day. Brokers who
receive your orders are obligated to transmit them promptly. You will receive
written confirmation of your order within a few days of receipt of instructions
from your broker.
INVESTING DIRECTLY WITH THE FUND
You can invest in the Fund directly by using any of the methods described below.
BY MAIL. Make your check payable to the ARISTATA COLORADO QUALITY TAX-EXEMPT
FUND and mail it, along with the Account Application (if your purchase is an
initial investment), to the address indicated on the Account Application. Third
party and foreign checks will not be accepted. For existing accounts please
include the Fund name and your account number on all checks.
BY BANK TRANSFER. After you have established an account with the Fund, a bank
transfer will allow you to transfer money from your bank account via the
Automated Clearing House (ACH) network to your Fund account. To use this
service, you must select this option on your Account Application. You also will
need an account with a bank that provides bank transfer services. (Your bank may
charge you a fee for this service.) Once you have established this option, you
can initiate a bank transfer by contacting a representative from your bank,
providing the required information for the bank, and authorizing the transfer to
take place. Please allow two or three days after the initial authorization for
the transfer to occur.
BY WIRE. To initiate your wire transaction, contact your depository institution
and instruct them to wire Federal Funds (monies transferred from one bank to
another through the Federal Reserve System with same-day availability) to:
State Street Bank & Trust Co.
ABA# 011000028
Aristata Colorado Quality Tax-Exempt Fund
Credit DDA# 22404081
(Account Registration)
(Account Number)
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program offers a simple
way to establish and maintain a consistent investment program. You may arrange
automatic transfers (minimum $50 per transaction) from your bank account to your
Fund account on a periodic basis by simply
5
completing the Automatic Investment Plan section of your Account Application.
When you participate in this program, the minimum initial investment in each
Fund is $250. You may change the amount of your automatic investment, skip an
investment, or stop the Automatic Investment Program by calling the Fund at
1-800-644-8595 at least three business days prior to your next scheduled
investment date.
The Fund may at its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. The Fund reserves the
right to suspend the sale of shares, or to reject any purchase order, including
orders in connection with exchanges, for any reason.
HOW DO I REDEEM FUND SHARES?
Shareholders may redeem their shares, in whole or in part, on each day the Fund
is valued (see the section entitled "HOW ARE FUND SHARES VALUED?" later in this
Prospectus). Shares will be redeemed at the net asset value next determined
after a proper redemption request has been received by the Fund in good form.
A redemption is a tax reportable transaction and any gain or loss is a taxable
event. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON
THIS INVESTMENT?" later in this Prospectus for more information.
Where the shares to be redeemed have been purchased by check, the payment of
redemption proceeds may be delayed until the purchasing check has cleared.
Shareholders may avoid this delay by investing through wire transfers of Federal
Funds. During the period prior to the time the shares are redeemed, dividends on
the shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than customary weekend or holiday closings or if an emergency condition, as
determined by the SEC, merits such action, the Fund may suspend redemptions or
postpone payment dates beyond the normal seven day redemption period.
To ensure acceptance of your redemption request, it is important to follow the
procedures described below. Although the Fund has no present intention to do so,
the Fund reserves the right to refuse or to limit the frequency of any
telephone, wire or bank transfer redemptions. It may be difficult to make
contact by telephone during periods of severe market or economic change.
Shareholders should consider alternative methods of communications during such
times.
The Fund may modify or terminate its redemption services and provisions at any
time. If the Fund terminates any particular service, it will do so only after
giving written notice to shareholders. Redemption by mail will always be
available to shareholders. For your protection, redemptions may be suspended for
a period of 15 days following an address change.
You can redeem your shares directly from the Fund using any of the methods
described below.
REDEEMING YOUR SHARES USING AN AUTHORIZED BROKER OR INVESTMENT ADVISER
You may redeem your shares by contacting your authorized broker or investment
adviser and instructing them to redeem your shares. They will then contact ALPS
and place a redemption order on your behalf.
REDEEMING YOUR SHARES DIRECTLY FROM THE FUND
BY MAIL. You may redeem your shares by sending a letter directly to the Fund. To
be accepted, a letter requesting redemption must include:
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s) along with a signature guarantee (if
required).
A signature guarantee is designed to protect you, the Fund, and its agents from
fraud. Your written request requires a signature guarantee if the check is
$10,000 or greater, if the check is being mailed to an address that has been
changed within the last 30 days, if the check is not being mailed to the address
on your account, or if the check is not being made out to the account owner. The
following institutions should be able to provide you with a signature guarantee:
banks, broker-dealers, credit unions (if authorized under state law), securities
exchanges and associations, clearing agencies, and savings associations. A
signature guarantee may not be provided by a notary public.
BY TELEPHONE. If you have established the telephone redemption privilege on your
Account Application, you may redeem your shares by calling the Fund at
1-800-644-8595. You should be prepared to give the telephone representative the
following information:
o your account number, social security or tax identification number and
account registration;
6
o the Fund name from which you are redeeming shares; and
o the amount to be redeemed.
The telephone conversation may be recorded to protect you and the Fund. The Fund
employs reasonable procedures to confirm that instructions communicated to its
representatives by telephone are genuine. However, if the Fund acts on
instructions it reasonably believes to be genuine, you will bear the loss.
BY WIRE. You may instruct the Fund to send your redemption proceeds via federal
wire ($1,000 minimum per transaction) or bank transfer to your personal bank.
Your instructions should include:
o your account number and account registration;
o the Fund name from which you are redeeming shares;
o the amount to be redeemed; and
o an authorized signature(s).
Wire and bank transfer redemptions can be made only if the privilege has been
established on your Account Application and you have attached a copy of a voided
check or a letter summarizing the wiring instructions of the account where
proceeds are to be wired. Your bank may charge you a fee for receiving a wire
payment on your behalf.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund account balance is $10,000 or more, you
may elect to have periodic redemptions made from your account on a monthly,
quarterly, semi-annual or annual basis by completing the Systematic Withdrawal
Plan section of the Account Application. The minimum periodic withdrawal is $100
and the transaction normally will be executed on the 5th or 20th day of the
selected month(s). You may request that these payments be sent to a
predesignated bank account or other designated party. Depending on the size of
the payment requested and fluctuation in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust your account. If a shareholder participates in the Systematic Withdrawal
Plan, all dividends are automatically reinvested unless the shareholder directs
otherwise.
EXCHANGE OF FUND SHARES
The Fund offers two convenient ways to exchange shares in one Fund for shares in
another Aristata Fund. Before engaging in an exchange transaction, a shareholder
should read carefully the Prospectus describing the Fund into which the exchange
will occur. A prospectus for any Aristata Fund offered can be obtained without
charge by writing to the Fund at the address listed on the back cover of this
Prospectus. A shareholder may not exchange shares of one Fund for shares of
another Fund if that Fund is not qualified for sale in the state of the
shareholder's residence. Please call the Fund at 1-800-644-8595 to see if the
fund you are interested in is available in your state. The minimum amount for an
initial and subsequent exchange is $50. The Aristata Funds may terminate or
amend the terms of the exchange privilege at any time upon at least 60 days
prior written notice to shareholders of any modification or termination of the
exchange privilege. For your protection, exchanges may be suspended for a period
of 15 days following an address change.
A new account opened by exchange must be established with the same name(s),
address and social security number as the existing account. All exchanges will
be made based on the net asset value next determined following receipt of the
request by a Fund in good order.
An exchange is taxable as a sale of a security on which a gain or loss may be
recognized. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX
ON THIS INVESTMENT?" later in this Prospectus for more information. Shareholders
will receive written confirmation of the exchange following completion of the
transaction.
EXCHANGE BY MAIL. To exchange Fund shares by mail, simply send a letter of
instruction to the Fund. The letter of instruction must include:
o your account number and account registration;
o the Fund from and the Fund into which you wish to exchange your
investment;
o the dollar or share amount you wish to exchange; and
o an authorized signature(s).
EXCHANGE BY TELEPHONE. If you have established the telephone exchange privilege
on your Account Application, you may exchange Fund shares by telephone by simply
calling the Fund at 1-800-644-8595. You should be prepared to give the telephone
representative the following information:
o your account number, social security or tax identification number and
account registration;
o the name of the Fund from and the Fund into which you wish to exchange
your investment; and
o the dollar or share amount you wish to exchange.
7
The conversation may be recorded to protect you and the Fund. See the section
entitled "REDEEMING YOUR SHARES DIRECTLY FROM THE FUND - BY TELEPHONE" earlier
in this Prospectus for a discussion of telephone transactions.
HOW ARE FUND SHARES VALUED?
The price at which you buy, sell or exchange Fund shares is the share price or
net asset value (NAV). The share price for the Fund is determined by adding the
value of the Fund's investments, cash and other assets, deducting liabilities,
and then dividing that value by the total number of the Fund's shares
outstanding. The Fund's NAV is calculated at the close of the regular trading
session of the New York Stock Exchange (normally 4:00 p.m. Eastern Time) each
day that the Exchange is open.
When the Fund calculates the share price for the Fund shares, it values the
securities it holds at market value. Sometimes market quotes for some securities
are not available or are not representative of market value. Examples would be
when events occur that materially affect the value of a security at a time when
the security is not trading or when the securities are illiquid. In that case,
securities may be valued in good faith at fair value, using consistently applied
procedures decided upon by the Trustees of the Fund.
For more information please refer to the SAI.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT?
The Fund intends to distribute substantially all of its net investment income
and capital gains, if any, to shareholders within each calendar year as well as
on a fiscal year basis. Any net capital gains realized are normally distributed
in December. Income dividends for the Fund, if any, are declared daily and paid
monthly.
FEDERAL TAXES. Distributions of gains from the sale of assets held by the Fund
for more than one year generally are taxable to shareholders at the applicable
capital gains rate, regardless of how long they have owned their Fund shares.
Distributions from other sources generally are taxed as ordinary income.
Distributions are taxable when they are paid, whether taken in cash or
reinvested in additional shares, except for distributions declared in October,
November or December and paid in January are taxable as if paid on December 31.
The Fund will send each shareholder an IRS Form 1099-DIV by January 31.
STATE TAXES. Distributions received from the Fund will not be subject to
Colorado personal income taxes to the extent such distributions are attributable
to interest on bonds or securities of the U.S. Government or any of its agencies
and certain instrumentalities, or on bonds or securities issued by the State of
Colorado or any county, municipality or political subdivision of Colorado,
including any agency, board, authority or commission thereof, without regard to
maturity.
TAXATION OF CERTAIN PRIVATE ACTIVITY BONDS. Tax-exempt interest from certain
private activity bonds and exempt-interest dividends attributable to that
interest income constitute an item of tax preference under the AMT. Therefore,
shareholders who may be deemed to be "substantial users" (or "related persons"
of substantial users) of facilities financed by private activity bonds could
suffer adverse tax consequences from investing in the Fund and, therefore,
should consult their tax advisers before purchasing Fund shares.
"BUYING A DIVIDEND." When shares are purchased just before a distribution
("buying a dividend"), the share price will reflect the amount of the upcoming
distribution. Consequently, a portion of the share price will be received back
as a taxable distribution.
CONVERSION OF THE FUND. On or before March 2, 1998, common trust and collective
investment fund assets ("pool") managed by the Adviser contributed assets to the
Fund in exchange for shares of the Fund. This transfer may result in adverse tax
consequences under certain circumstances to either the investors transferring
shares from the pool for shares of the Fund ("reorganizing shareholders") or to
investors who acquire shares of the Fund after a transfer ("new shareholders").
The historical tax cost basis of the pool assets is carried forward to the Fund.
Therefore, if appreciated securities are sold after the transfer, the amount of
the gain would be taxable to new shareholders as well as to reorganizing
shareholders. New shareholders would therefore incur a tax liability on
distributions of capital gains realized by the Fund even though the value of
their investment in the Fund may not have increased. The effect on shareholders
who transferred into the Fund would be to reduce their potential liability for
tax on capital gains by spreading it over a larger asset base. The opposite may
occur if the Fund acquires securities having an unrealized capital loss. In that
case, reorganizing shareholders who transferred into the Fund will be unable to
utilize the loss to offset gains, but, because the transfer itself did not
result in any realized gains (or losses), the inability of shareholders who
transferred into the Fund to utilize unrealized losses will have no immediate
tax effect. New shareholders, to the extent that unrealized losses are realized
by the Fund, may benefit by any reduction in net tax liability attributable to
the losses.
OTHER TAX INFORMATION. The information above is only a summary of some of the
tax consequences generally affecting the Fund and its shareholders, and no
attempt has been made to discuss individual tax consequences. Shareholders
should consult their tax advisers for details and
8
up-to-date information on the federal and state tax laws to determine whether
the Fund is suitable given your particular tax situation.
When you sign your Account Application, you will be asked to certify that your
taxpayer identification number is correct, that you are not subject to backup
withholding for failing to report income to the IRS, and that you are a U.S.
person. If you do not comply with IRS regulations, the IRS can require the Fund
to withhold a portion of taxable distributions from your account.
PRIVACY POLICY
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
o Account Applications and other forms, which may include a customer's
name, address, social security number, and information about a
customer's investment goals and risk tolerance;
o Account history, including information about the transactions and
balances in a customer's account; and
o Correspondence, written, or telephonic, between a customer and the Fund
or service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
o Prior written consent is received.
o The Fund believes the recipient to be the fund customer or the
customer's authorized representative.
o The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1) For purposes of this notice, the terms "customer" or "customers" includes
both shareholders of the Fund and individuals who provide nonpublic personal
information to the Fund, but do not invest in fund shares.
9
FINANCIAL HIGHLIGHTS
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's Annual Report, which is available upon request by calling the Fund at
1-800-644-8595.
FINANCIAL HIGHLIGHTS
Selected data for a share of beneficial interest outstanding
throughout the period indicated:
[Enlarge/Download Table]
COLORADO QUALITY TAX-EXEMPT FUND
--------------------------------------------------------------
For the Period
For the Year Ended April 30, March 2, 1998
2001 2000 1999 to April 30, 1998
---------- ---------- ---------- -----------------
SELECTED PER-SHARE DATA:
Net asset value - beginning of period $ 9.35 $ 9.89 $ 9.94 $ 10.00
---------- ---------- ---------- -------------
Income from investment operations:
Net investment income 0.46 0.46 0.49 0.08
Net realized and unrealized gain (loss)
on investments 0.23 (0.45) 0.04 (0.06)
---------- ---------- ---------- -------------
Total income from investment operations 0.69 0.01 0.53 0.02
DISTRIBUTIONS:
From net investment income (0.46) (0.46) (0.49) (0.08)
From net realized gain -- (0.09) (0.09) --
---------- ---------- ---------- -------------
Total distributions (0.46) (0.55) (0.58) (0.08)
---------- ---------- ---------- -------------
Net asset value - end of period $ 9.58 $ 9.35 $ 9.89 $ 9.94
========== ========== ========== =============
Total Return 7.50% 0.16% 5.40% 0.22%
========== ========== ========== =============
RATIOS AND SUPPLEMENTAL DATA:
Net assets, end of period (000) $ 12,725 $ 13,799 $ 17,502 $ 23,381
========== ========== ========== =============
Ratio of expenses to average net assets 0.50% 0.48% 0.45% 0.45%(1)
========== ========== ========== =============
Ratio of net investment income to
average net assets 4.81% 4.85% 4.85% 5.00%(1)
========== ========== ========== =============
Ratio of expenses to average net assets
without fee waivers and reimbursements 1.04% 0.93% 0.91% 0.92%(1)
========== ========== ========== =============
Ratio of net investment income to
average net assets without fee
waivers and reimbursements 4.27% 4.41% 4.40% 4.53%(1)
========== ========== ========== =============
Portfolio turnover rate 9.29% 12.41% 7.86% 17.64%(1)
========== ========== ========== =============
(1) Annualized
10
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ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including a Statement of Additional
Information, Annual Report, or Semi-Annual Report, free of charge, by contacting
ALPS at 1-800-644-8595 or writing to ALPS at 370 17th Street, Suite 3100,
Denver, Colorado 80202. In the Fund's Annual Report, you will find a discussion
of the market conditions and investment strategies that significantly affected
the Fund's performance during the last fiscal year.
The Statement of Additional Information provides detailed information about the
Fund and is incorporated into this Prospectus by reference. You may review and
copy, upon payment of a duplicating fee, the Fund's Statement of Additional
Information, at the SEC's Public Reference Room in Washington, D.C. You also can
obtain this information, upon payment of a duplicating fee, by writing to the
Public Reference Section of the SEC, Washington, D.C. 20549-6009. Copies of this
information may also be obtained, upon payment of a duplicating fee, by
electronic request at the following e-mail address: publicinfo@sec.gov.
Additionally, the SEC maintains a Web site located at http://www.sec.gov that
contains the SAI, material incorporated herein by reference, and other
information regarding the Fund. For more information about the operation of the
Public Reference Room, please call the SEC at 1-202-942-8090.
ARISTATA MUTUAL FUNDS
370 Seventeenth Street
Suite 3100
Denver, CO 80202
1-800-644-8595
INVESTMENT ADVISER
TEMPEST INVESTMENT COUNSELORS, INC.
1380 Lawrence Street
Suite 1050
Denver, CO 80204
ADMINISTRATOR
ALPS Mutual Funds Services, Inc.
370 Seventeenth Street
Suite 3100
Denver, CO 80202
ARISTATA FUNDS
o [ILLEGIBLE]
o [ILLEGIBLE]
o [ILLEGIBLE]
[LOGO] Investment Company Act File No. 811-08194
[UNITED ASSOCIATION S&P 500 INDEX FUND LOGO]
UNITED ASSOCIATION S&P 500 INDEX FUND
PROSPECTUS
AUGUST 28, 2001
AS WITH OTHER MUTUAL FUNDS, THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED THIS FUND'S SHARES OR DETERMINED WHETHER THE INFORMATION
IN THIS PROSPECTUS IS ACCURATE OR COMPLETE.
ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A CRIME.
Table of Contents
[Download Table]
PAGE
----
Prospectus Summary..........................................................2
Principal Strategies and Risks..............................................3
Performance.................................................................4
Fees and Expenses of the Fund...............................................4
Investment Adviser..........................................................5
How Do I Invest in the Fund?................................................5
Distribution Plan..........................................................11
Privacy Policy.............................................................12
Financial Highlights.......................................................13
Additional Information About the Fund..............................Back Cover
No person has been authorized to give any information or to make any
representation that is not contained in this Prospectus, or in the Statement of
Additional Information that is incorporated herein by reference, in connection
with the offering made by this Prospectus and, if given or made, such
information or representations must not be relied upon. Also, this Prospectus
does not constitute an offering by the Trust or its Distributor in any
jurisdiction where such an offering would not be lawful.
1
PROSPECTUS SUMMARY
================================================================================
THE UNITED ASSOCIATION S&P 500 INDEX FUND -- In this prospectus, we provide you
with information on: the principal investment strategies of the United
Association S&P 500 Index Fund (the "Fund"); the risks associated with investing
in the Fund; management and services provided to the Fund; how to invest in the
Fund; and other information.
"Standard & Poor's(R)", "S&P(R)", "S&P 500(R)", "Standard & Poor's 500", and
"500" are trademarks of The McGraw-Hill Companies, Inc. and have been licensed
for use by Financial Investors Trust. The Fund is not sponsored, endorsed, sold
or promoted by Standard & Poor's and Standard & Poor's makes no representation
regarding the advisability of investing in the Fund.
The Fund is distributed primarily to the United Association of Journeymen and
Apprentices of the Plumbing and Pipe Fitting Industry of the United States and
Canada (the "UA") either through direct investment by UA members, or through
investment by UA pension funds. Because the Fund is distributed primarily to the
UA, the Trustees will consider the UA's policy and position on certain issues
when establishing procedures for voting proxies of the underlying portfolio
securities. This will be accomplished using a proxy service approved by the UA.
The Fund may also initiate shareholder proposals as recommended by this proxy
service.
2
PRINCIPAL STRATEGIES AND RISKS
================================================================================
PRINCIPAL INVESTMENT STRATEGIES -- The Fund's investment objective is to provide
investment results that, before fund expenses, approximate the aggregate price
and dividend performance of the securities included in the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500 Index") by investing in securities
comprising the S&P 500 Index. The S&P 500 Index is made up of common stocks of
500 large, publicly traded companies. The Fund buys and holds all stocks
included in the S&P 500 Index in exactly the same proportion as those stocks
that are held in the Index. Stocks are eliminated from the Fund when removed
from the S&P 500 Index. The Adviser makes no attempt to "manage" the Fund in the
traditional sense (i.e., by using economic, financial or market analyses).
Due to its investment strategy, the Fund may buy and sell securities frequently.
This may result in higher transaction costs and additional capital gains tax
liabilities, which will lower fund performance.
PRINCIPAL RISKS OF INVESTING -- Since it purchases equity securities, the Fund
is subject to the risk that stock prices will fall over short or extended
periods of time. Historically, the equity markets have moved in cycles and
therefore, the value of the Fund's equity securities may fluctuate from
day-to-day. Individual companies may report poor results or be negatively
affected by industry and/or economic trends and developments. The prices of
securities issued by such companies may decline in response. These factors
contribute to price volatility, which is the principal risk of investing in the
Fund.
The Fund is also subject to the risk that its market segment, the S&P 500 Index
of common stocks, may underperform other equity market segments or the equity
market as a whole.
The Fund's ability to duplicate the performance of the S&P 500 Index will depend
to some extent on the size and timing of cash flows into and out of the Fund, as
well as on the level of the Fund's expenses. For additional information about
risks, see the Fund's Statement of Additional Information ("SAI").
No matter how good a job the investment manager does, you could lose money on
your investment in the Fund.
--------------------------------------------------------------------------------
FUND SUMMARY
INVESTMENT GOAL:
To approximate, before fund expenses, the investment results of the S&P 500
Index.
INVESTMENT FOCUS:
Common stocks of larger issuers
SHARE PRICE VOLATILITY:
(RELATIVE TO MUTUAL FUNDS GENERALLY)
High
PRINCIPAL INVESTMENT STRATEGY:
Investing in stocks that comprise the S&P 500 Index
INVESTOR PROFILE
Investors seeking returns similar to the S&P 500 Index, who are willing to
accept the risk of investing in equity securities.
--------------------------------------------------------------------------------
3
An investment in the Fund is not a bank deposit and it is not insured or
guaranteed by the Federal Deposit Insurance Corporation (FDIC) or any government
agency.
SHOULD I INVEST IN THE UNITED ASSOCIATION S&P 500 INDEX FUND?
The Fund may be appropriate for you if:
o You are seeking an investment that aims to provide capital appreciation
over the long term.
o You can tolerate price fluctuations and volatility that are inherent in
investing in a broad-based stock mutual fund.
o You wish to add a common stock fund to your existing investment
portfolio.
PERFORMANCE
================================================================================
There is no performance information for the Fund because it has not completed a
full calendar year of operations.
FEES AND EXPENSES OF THE FUND
================================================================================
The information in this section describes the fees and expenses that you may pay
if you buy and hold shares of the Fund.
[Download Table]
SHAREHOLDER FEES
(fees paid directly from your investment) Class I Class II
----------------------------------------- ------- --------
Maximum Sales Load None None
Maximum Deferred Sales Charge None None
Redemption None None
Exchange None None
Account Maintenance Fee (for accounts under $10,000) None $2.50/quarter
[Download Table]
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund Assets) Class I Class II
--------------------------------------------- ------- --------
Management Fees 0.01% 0.01%
Distribution (12b-1) Fees None 0.10%*
Other Expenses 0.11% 0.11%
Total Annual Fund Operating Expenses 0.12% 0.22%
Fee Waiver -- (0.05)%*
Net Annual Fund Operating Expenses 0.12% 0.17%
* ALPS Distributors, Inc. ("ADI" or the "Distributor") has contractually
agreed to waive the distribution (12b-1) fees that it is entitled to receive
from Class II to .05% for the current fiscal year.
4
EXAMPLE -- The following example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds. The
example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods and
that annual operating expenses set forth above are incurred. The example also
assumes a 5% return each year and that the Fund's operating expenses will remain
the same. However, after one year, the example does not take into consideration
ADI's agreement to waive fees. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
[Download Table]
ONE YEAR THREE YEARS FIVE YEARS TEN YEARS
Class I $12 $39 $ 68 $154
Class II $17 $66 $119 $275
INVESTMENT ADVISER
================================================================================
The Investment Adviser makes investment decisions for the Fund and continuously
reviews, supervises and administers the Fund's investment program. The Board of
Trustees of the Trust supervises the Adviser and establishes policies that the
Adviser must follow in its management activities.
National City Investment Management Company ("IMC"), with its principal offices
at 1900 East Ninth Street, Cleveland, Ohio 44114, serves as Adviser to the Fund.
The Fund pays an advisory fee to IMC of .01% of the Fund's average net assets up
to $2.5 billion, and .005% of the Fund's average net assets in excess of $2.5
billion. On June 30, 2001, IMC had approximately $27.6 billion in assets under
management.
IMC utilizes a team approach for management of the Fund. No one person is
primarily responsible for making investment recommendations to the team.
The total advisory fee paid to IMC for the fiscal year ended June 30, 2001 was
0.01% of the Fund's average net assets.
HOW DO I INVEST IN THE FUND?
================================================================================
INSTITUTIONAL SHARES -- The Fund offers Institutional Shares ("Class I" shares)
that are designed to give organizations, pension funds and other entities
(non-natural persons) or financial institutions acting in a fiduciary or agency
capacity for such entities, a convenient means of accumulating an interest in
the Fund. Class I shares are not designed for individuals and have a minimum
initial investment requirement of $500,000.
[Download Table]
Minimum Initial Investment Class I Class II
-------------------------- ------- --------
New Account $500,000 $ 1,000
IRA Account n/a $ 1,000
Systematic Investment Program n/a $ 100
Systematic Withdrawal Plan n/a $10,000
5
RETAIL SHARES -- The Fund also offers retail shares ("Class II" shares). Class
II shares are designed for individuals and other investors who seek mutual fund
investment convenience plus a lower investment minimum. Class II shares have a
$1,000 minimum initial investment requirement and offer additional services for
the individual investor. Class II shares also incur distribution fees and
account maintenance fees (for accounts under $10,000).
HOW ARE INVESTMENTS MADE?
As described below, you may purchase shares of the Fund directly from the Fund,
or through an authorized broker or investment adviser. Your orders for the
purchase of shares will be executed at the net asset value per share next
determined after an order has been received in good form. Your payment will be
invested in full and fractional shares of the Fund. Orders transmitted to the
Fund in proper form prior to the close of business (normally 4:00 p.m. Eastern
Time) will be executed that day. You will not receive certificates for shares
that you purchase. ALPS Mutual Funds Services, Inc. ("ALPS")serves as the Fund's
Transfer Agent and maintains records of each shareholder's holdings of fund
shares. Your initial investment in the Fund must be preceded or accompanied by a
completed, signed application. The Fund reserves the right to reject any
purchase.
INVESTING DIRECTLY WITH THE FUND
You can invest in the Fund directly by using any of the methods described below:
BY MAIL. Make your check payable to the UA S&P 500 INDEX FUND and mail it, along
with the Account Application (if your purchase is an initial investment). Third
party and foreign checks will not be accepted. For existing accounts please
include the Fund name and your account number on all checks. The check should be
mailed to:
UA S&P 500 Index Fund
PMB 606
303 16th Street, Suite #016
Denver, CO 80202-5657
BY WIRE. You may purchase shares by wire transfer from your bank account to your
UA S&P 500 Index Fund account. There is a $1,000 minimum for purchases by wire.
To place a purchase by wire, please call 1-888-766-8043 to speak with a
representative. To initiate your wire transaction, contact your depository
institution and instruct them to wire Federal Funds (monies transferred from one
bank to another through the Federal Reserve System with same-day availability)
to:
State Street Bank & Trust Co.
ABA# 011000028
UA S&P 500 Index Fund
Credit DDA# 69642965
(Account Registration)
(Account Number)
6
The Fund may at its discretion discontinue, suspend or change the practice of
accepting orders by any of the methods described above. The Fund reserves the
right to suspend the sale of shares, or to reject any purchase order, including
orders in connection with exchanges, for any reason.
INVESTING THROUGH YOUR BROKER OR INVESTMENT ADVISER
To purchase shares through authorized brokers and investment advisers, simply
complete an Account Application and contact your broker or investment adviser
with instructions as to the amount you wish to invest. Your broker will then
contact the Fund to place the order on your behalf. Authorized brokers and
investment advisers may impose additional requirements and charges for the
services rendered.
Your orders received by the Fund prior to the close of business (normally 4:00
p.m. Eastern Time) will be executed that day. Brokers who receive your orders
are obligated to transmit them promptly. You will receive written confirmation
of your order within a few days of receipt of instructions from your broker.
HOW DO I REDEEM FUND SHARES?
Shareholders may redeem their shares, in whole or in part, on each day the Fund
is valued (see the section entitled "HOW ARE FUND SHARES VALUED?" later in this
Prospectus). Shares will be redeemed at the net asset value next determined
after a proper redemption request has been received by the Fund in good form.
A redemption is a tax reportable transaction and any gain or loss is a taxable
event. See the section entitled "WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON
THIS INVESTMENT?" later in this Prospectus for more information.
Where the shares to be redeemed have been purchased by check or by Automated
Clearing House ("ACH") through the Automatic Investment Program, the payment of
redemption proceeds may be delayed until the purchase has cleared. Shareholders
may avoid this delay by investing through wire transfers of Federal Funds.
During the period prior to the time the shares are redeemed, dividends on the
shares will continue to accrue and be payable and the shareholder will be
entitled to exercise all other beneficial rights of ownership.
Once the shares are redeemed, the Fund will ordinarily send the proceeds by
check to the shareholder at the address of record on the next business day. The
Fund may, however, take up to seven days to make payment. Also, if the New York
Stock Exchange is closed (or when trading is restricted) for any reason other
than customary weekend or holiday closings, or if an emergency condition, as
determined by the SEC, merits such action, the Fund may suspend redemptions or
postpone payment dates beyond the normal seven day redemption period.
To ensure acceptance of your redemption request, it is important to follow the
procedures described below. Although the Fund has no present intention to do so,
the Fund reserves the right to refuse or to limit the frequency of any
telephone, wire or bank
7
transfer redemptions. It may be difficult to make contact by telephone during
periods of severe market or economic change. Shareholders should consider
alternative methods of communications during such times.
The Fund may modify or terminate certain redemption services and provisions at
any time. If the Fund terminates any particular service, it will do so only
after giving written notice to shareholders. Redemption by mail will always be
available to shareholders.
You can redeem your shares using any of the methods described below:
REDEEMING YOUR SHARES DIRECTLY FROM THE FUND
BY MAIL. You may redeem your shares by sending a letter directly to the Fund. To
be accepted, a letter requesting redemption must include:
* the Fund name and account registration from which you are redeeming
shares;
* your account number;
* the amount to be redeemed; and
* an authorized signature along with a signature guarantee (if required).
A signature guarantee is designed to protect you, the Fund, and its agents from
fraud. Your written request requires a signature guarantee if the check is being
mailed to an address that has been changed within the last 30 days, if the check
is not being mailed to the address on your account, or if the check is not being
made out to the account owner. The following institutions should be able to
provide you with a signature guarantee: banks, broker-dealers, credit unions (if
authorized under state law), securities exchanges and associations, clearing
agencies, and savings associations. A signature guarantee may not be provided by
a notary public.
BY TELEPHONE. If you have established the telephone redemption privilege on your
Account Application, you may redeem your shares by calling the Fund at
1-888-766-8043. You should be prepared to give the telephone representative the
following information:
* your account number, social security number and account registration;
* the Fund name from which you are redeeming shares;
* the amount to be redeemed; and
* PIN numbers (Class I only).
The telephone conversation may be recorded to protect you and the Fund. The Fund
employs reasonable procedures to confirm that instructions communicated to its
representatives by telephone are genuine. If the Fund fails to employ such
reasonable procedures, it may be liable for any loss, damage or expense arising
out of any telephone transactions purporting to be on a shareholder's behalf.
However, if the Fund acts on instructions it reasonably believes to be genuine,
you will bear the loss.
You cannot redeem shares held in IRAs via the telephone.
8
REDEEMING YOUR SHARES USING AN AUTHORIZED BROKER OR INVESTMENT ADVISER
You may redeem your shares by contacting your authorized broker or investment
adviser and instructing them to redeem your shares. They will then contact the
Fund and place a redemption order on your behalf.
METHODS OF REDEMPTION PAYMENTS
BY CHECK. Unless otherwise instructed, a check will be issued to the address of
record on your account. For your protection, telephone redemptions by check will
be suspended for a period of 30 days following an address change given over the
telephone.
BY WIRE. You may instruct the Fund to send your redemption proceeds via Federal
wire ($1,000 minimum per transaction) to your personal bank.
Wire redemptions can be made only if the privilege has been established on your
Account Application and you have attached a copy of a voided check. You may
change the bank account designated to receive an amount redeemed at any time by
sending a letter of instruction with a signature guarantee to the Transfer
Agent. Your bank may charge you a fee for receiving a wire payment on your
behalf.
LARGE REDEMPTIONS
It is important that you call the Fund before you redeem a large dollar amount.
The Fund must consider the interests of all fund shareholders and so reserves
the right to delay delivery of your redemption proceeds--up to seven days--if
the amount will disrupt the Fund's operations or performance. If you redeem more
than $250,000 worth of Fund shares within any 90-day period, the Fund reserves
the right to pay part or all of the redemption proceeds above $250,000 in-kind,
i.e., in securities, rather than in cash. If payment is made in-kind, you may
incur brokerage commissions if you elect to sell the securities for cash.
INVOLUNTARY SALES OF YOUR SHARES
If your Class II account balance drops below $500 because of redemptions, you
may be required to sell your shares. But, you will always be given at least 60
days written notice to give you time to add to your account and avoid the sale
of your shares.
WHAT ADDITIONAL SERVICES ARE OFFERED BY CLASS II?
AUTOMATIC INVESTMENT PROGRAM. The Automatic Investment Program offers a simple
way to establish and maintain a consistent investment program. You may arrange
automatic transfers (minimum $50 per transaction) from your bank account to your
Fund account on a periodic basis by simply completing the Automatic Investment
Program section of your Account Application. When you participate in this
program, the minimum initial investment in the Fund is $100. You may change the
amount of your automatic investment, skip an investment, or stop the Automatic
Investment Program by calling the
9
Fund at 1-888-766-8043 at least three business days prior to your next scheduled
investment date.
SYSTEMATIC WITHDRAWAL PLAN. If your Fund account balance is $10,000 or more, you
may elect to have periodic redemptions made from your account on a monthly,
quarterly, semi-annual or annual basis by completing the Systematic Withdrawal
Plan section of the Account Application. The minimum periodic withdrawal is $100
and the transaction normally will be executed on the fifth or twentieth day of
the selected month(s). You may request that these payments be sent to a
predesignated bank account or other designated party. Depending on the size of
the payment requested and fluctuation in the net asset value of the shares
redeemed, redemptions for the purpose of making such payments may reduce or even
exhaust your account. If a shareholder participates in the Systematic Withdrawal
Plan, all dividends are automatically reinvested unless the shareholder directs
otherwise.
INDIVIDUAL RETIREMENT ACCOUNTS. The Fund may be used as a funding medium for
traditional and Roth IRAs. In addition, a traditional or Roth IRA may be
established through a custodial account with the Fund. Completion of a special
application is required in order to create such an account, and the minimum
initial investment for an IRA is $1,000. Contributions to IRAs are subject to
the limits and conditions established by the Internal Revenue Service. For more
information, call the Fund at 1-888-766- 8043 or your tax adviser.
Additional account level fees are imposed for IRA accounts.
WHAT STATEMENT AND REPORTS DO I RECEIVE FROM THE FUND?
You will receive a quarterly statement and a confirmation after every
transaction that affects your share balance or account registration. A statement
with tax information will be mailed to you by January 31 of each tax year and
also will be filed with the IRS. At least twice a year, you will receive the
Fund's financial statements. Please write to the Fund at PMB 606, 303 16(th)
Street, Suite 016, Denver, Colorado 80202-5657 or call the Fund at
1-888-766-8043 to request additional copies of these reports.
HOW ARE FUND SHARES VALUED?
The price at which you buy, sell or exchange fund shares is the share price or
net asset value (NAV). The NAV for each Class of shares in the Fund is
determined by adding the value of each Class' proportional share of the Fund's
investments, cash and other assets, deducting each Class' proportional share of
liabilities, and then dividing that value by the total number of the shares
outstanding in that Class. The Fund's NAV is calculated at the close of the
regular trading session of the New York Stock Exchange (normally 4:00 p.m.
Eastern Time) each day that the Exchange is open.
When the Fund calculates the NAV for the Fund shares, it values the securities
it holds at market value. Sometimes market quotes for some securities are not
available or are not representative of market value. Examples would be when
events occur that materially affect the value of a security at a time when the
security is not trading or
10
when the securities are illiquid. In that case, securities may be valued in good
faith at fair value, using consistently applied procedures decided on by the
Trustees of the Fund.
For more information please refer to the SAI.
WHAT IS THE EFFECT OF FEDERAL INCOME TAX ON THIS INVESTMENT?
The Fund intends to distribute substantially all of its net investment income
and capital gains, if any, to shareholders within each calendar year as well as
on a fiscal year basis. Any net capital gains realized are normally distributed
in December. Income dividends for the Fund, if any, are declared and paid
quarterly.
FEDERAL TAXES. Distributions of gains from the sale of assets held by the Fund
for more than one year generally are taxable to shareholders at the applicable
capital gains rate, regardless of how long they have owned their fund shares.
Distributions from other sources generally are taxed as ordinary income. A
portion of the Fund's dividends may qualify for the dividends-received deduction
for corporations. Distributions are taxable when they are paid, whether taken in
cash or reinvested in additional shares, except that distributions declared in
October, November or December and paid in January are taxable as if paid on
December 31. The Fund will send each shareholder an IRS Form 1099-DIV by January
31.
"BUYING A DIVIDEND." When shares are purchased just before a distribution
("buying a dividend"), the share price will reflect the amount of the upcoming
distribution. Consequently, a portion of the share price will be received back
as a taxable distribution.
OTHER TAX INFORMATION. The information above is only a summary of some of the
Federal tax consequences generally affecting the Fund and its shareholders, and
no attempt has been made to discuss individual tax consequences generally
affecting the Fund and its shareholders. In addition to Federal tax,
distributions may be subject to state or local taxes. Shareholders should
consult their tax advisers for details and up-to- date information on the tax
laws in your state to determine whether the Fund is suitable given your
particular tax situation.
When you sign your Account Application, you will be asked to certify that your
taxpayer identification number is correct, that you are not subject to backup
withholding for failing to report income to the IRS, and that you are a
U.S.person. If you do not comply with IRS regulations, the IRS can require the
Fund to withhold a portion of taxable distributions from your account.
DISTRIBUTION PLAN
================================================================================
The Trustees have adopted a plan of distribution pursuant to Rule 12b-1 under
the Investment Company Act of 1940, as amended, for Class II shares of the Fund
(the "Distribution Plan"). The Distribution Plan permits the use of portfolio
assets to compensate ADI for its services and costs in distributing Class II
shares and servicing shareholder accounts.
11
Under the Distribution Plan, ADI receives an amount up to .10% of the average
net assets of the Fund that are attributable to Class II shares. For the current
fiscal year, ADI has agreed to waive the fee payable to ADI under the
Distribution Plan to .05% of the average net assets of the Fund that are
attributable to Class II. All or a portion of the fees paid to ADI under the
Distribution Plan may, in turn, be paid to certain broker-dealers, investment
advisers, and other third parties as compensation for selling Class II shares
and for providing ongoing sales support services.
Because the fees paid under the Distribution Plan are paid out of portfolio
assets on an on-going basis, over time these fees will increase the cost of your
investment and may cost you more than other types of sales charges.
PRIVACY POLICY
================================================================================
The Fund collects nonpublic personal information about its customers(1) from the
following sources:
* Account Applications and other forms, which may include a customer's
name, address, social security number, and information about a
customer's investment goals and risk tolerance;
* Account History, including information about the transactions and
balances in a customer's account; and
* Correspondence, written, or telephonic, between a customer and the the
Fund or service providers to the Fund.
The Fund will not release information about its customers or their accounts
unless one of the following conditions is met:
* Prior written consent is received.
* The Fund believes the recipient to be the fund customer or the
customer's authorized representative.
* The Fund is required by law to release information to the recipient.
The Fund does not give or sell information about its customers or their fund
accounts to any other company, individual, or group.
The Fund will only use information about its customers and their accounts to
attempt to better serve their investment needs or to suggest services or
educational materials that may be of interest to them.
The Fund restricts access to nonpublic personal information about customers to
those employees who need to know that information in order to provide products
or services. The Fund may also share personal information with companies that it
hires to provide support services. When the Fund shares personal information
with service providers, it protects that personal information with a strict
confidentiality agreement. The Fund also maintains physical, electronic and
procedural safeguards that comply with federal standards to guard customers'
nonpublic personal information.
The Fund will adhere to the policies and practices described in this notice for
current and former shareholders of the Fund.
(1)For purposes of this notice, the terms "customer" or "customers" includes
both shareholders of the Fund and individuals who provide nonpublic personal
information to the Fund, but do not invest in fund shares.
12
FINANCIAL HIGHLIGHTS
================================================================================
The financial highlights table is intended to help you understand the Fund's
financial performance since the inception of the Fund. Certain information
reflects financial results for a single Fund share. The total returns in the
table below represent the rate that an investor would have earned on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by Deloitte & Touche LLP,
whose report, along with the Fund's financial statements, is included in the
Fund's annual report, which is available upon request by calling the Fund at
(888) 766-8043.
Selected data for a share of beneficial interest outstanding throughout the
period indicated:
SELECTED PER-SHARE DATA:
Net asset value - beginning of the period
Income from investment operations:
Net investment income
Net realized and unrealized gain/(loss)
Total income from investment operations
Distributions:
Dividends from net investment income
Distributions from net realized gain
Total distributions
Net asset value - end of period
Total Return
RATIOS AND SUPPLEMENTAL DATA:
Net assets - end of period (000)
Ratio of expenses to average net assets
Ratio of expenses to average net assets without fee waivers
Ratio of net investment income to average net assets
Ratio of net investment income to average net assets without fee waivers
Portfolio turnover rate(3)
(1) Less than ($.005) per share.
(2) Annualized
(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 April 30, 2001 were
$472,578,344 and $75,439,615, respectively.
13
[Download Table]
CLASS I CLASS II
--------------------------------- --------------------------------
For the Period For the Period
For the March 2, 2000 For the March 28, 2000
Year Ended (Inception) to Year Ended (Inception) to
April 30, 2001 April 30, 2000 April 30, 2001 April 30, 2000
-------------- -------------- -------------- --------------
$ 10.54 $ 10.00 $ 10.53 $ 11.05
-------------- -------------- -------------- --------------
0.11 0.01 0.11 0.00
(1.45) 0.53 (1.44) (0.52)
-------------- -------------- -------------- --------------
(1.34) 0.54 (1.33) (0.52)
-------------- -------------- -------------- --------------
(0.11) (0.00) (0.11) (0.00)
(0.00)(1) (0.00) (0.00)(1) (0.00)
-------------- -------------- -------------- --------------
(0.11) (0.00) (0.11) (0.00)
-------------- -------------- -------------- --------------
$ 9.09 $ 10.54 $ 9.09 $ 10.53
============== ============== ============== ==============
(12.74%) 5.40% (12.69%) (4.71%)
============== ============== ============== ==============
$ 838,417 $ 579,314 $ 4,579 $ 403
============== ============== ============== ==============
0.12% 0.13%(2) 0.15% 0.15%(2)
============== ============== ============== ==============
N/A N/A 0.22% 0.21%(2)
============== ============== ============== ==============
1.17% 0.97%(2) 1.14% 0.99%(2)
============== ============== ============== ==============
N/A N/A 1.07% 0.93%(2)
============== ============== ============== ==============
9% 2% 9% 2%
============== ============== ============== ==============
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ADDITIONAL INFORMATION ABOUT THE FUND
You can request other information, including 